The situation in neighboring New Mexico is similar. It population grew by 25% during the last decade. The workforce has become more crowded with immigrants. That trend is expected to continue. There probably will not be enough job growth to accommodate the people who will need jobs just a few years from now. A state with a large and growing number of residents needs to add jobs at a faster rate than a state with an older population. Arizona and New Mexico will need to add employment opportunities at a blazing speed to keep up with job-seekers.
The overriding financial problem of most states is that their tax receipts have fallen because of a sharp drop in home prices, the growth in unemployment and an increase in money-losing businesses. Many of these states will not recover their financial equilibrium for some time. Short-term, nearly ten states face an aging population that probably will not be replaced by younger residents. Other states face increases the number of residents who are less affluent younger people who tend to have large numbers of children. Having large numbers of old and young residents creates financial burdens, and none are easily relieved by states which already have record deficits. This could stymie the recovery.
It is better to think of the US financially as a collection of regions or states than as one large nation. The problems of Montana do not resemble many of those in Mississippi. Rhode Island has a set of challenges that does not mirror those in Arizona. Experts believe that the US will need to add 500,000 or more jobs a month to offset the huge layoffs and small business failures of the recession which have left over 13 million Americans out of work. Even at a 500,000 rate of job growth a month, it will take over two years for unemployment to get back to a “normal” 5%. About 225,000 a month are being created now. States with large numbers of older people will not tend to add significantly to their employment rolls over time. Neither will those with young populations where joblessness is particularly high. America also faces the trouble that deficits are not the unique property of the federal government. State imbalances are in many cases even more pressing than the US’s is. At least the Treasury can “print money”. The states do not have that luxury and must exist financially through their borrowing power in the capital markets, and those markets are skeptical about their prospects. States which are strapped for cash have and will have trouble supporting large groups of young people who are out of work or large numbers of people who have retired. The austerity movement in Washington will likely cause less federal support for the old, the unemployed, and the young who need social service.
This is the 24/7 Wall St. “States With The Oldest And Youngest Residents”, and it is, among other things, a story about the long-term financial and demographics that America faces.