Prosperity halts exodus,
fuels Northeast rebirth

By Haya El Nasser
USA TODAY

BELFAST, Maine-The exodus from the Northeast, a trend that seemed irreversible the past two decades, is finally over.

For the first time since the 1970s, the Northeast is gaining roughly as many people as it's losing-a significant reversal of fortune for the most densely populated region of the country. One in five Americans, 52 million people, live in the nine-state region that consists of the six New England states and New York, New Jersey and Pennsylvania.

"The good news out of the Northeast is that it's not as bad off as it used to be and it may get better," says Robert Lang, senior research fellow with the Fannie Mae Foundation, a housing research group. "It's not the Sun Belt yet, but at least it's not hemorrhaging."

Throughout the 1980s and 1990s, old factories fell victim to automation and cheaper labor elsewhere, and people fled in search of job in the flourishing West and South. Those who didn't lose their jobs left as soon as they retired. Even areas where the economy boomed in the mid-1980s took a savage beating when a recession arrived in 1990.

Since 1981, more than 11 million have moved out of the Northeast. Only 6.5 million moved in from other regions of the country. The losses peaked in 1991, when 585,000 more people left than arrived.

The shift in domestic migration back to the Northeast is seen as a sign that the region has become economically vibrant again. People stay in a region, or are attracted there, when they see good jobs, affordable housing, and improving quality of life. When people leave, the tax base shrinks, businesses are hurt and a weak economy can erode further.

The Northeast's population didn't actually decline during that time. Yet it grew by only 1.5 million since 1981, a small gain considering the size of the region. That's largely because births exceeded deaths and some people moved to the Northeast from other countries.

The most recent Census Bureau estimates of domestic migration show that in 1997, only 119,000 more people left than came on from other regions in the USA. The loss is so small that it's statistically insignificant. In effect, the Northeast's to-and-fro-traffic is at a virtual break-even point.

Massachusetts and Maine are leading the turnaround as they gain residents. And were it not for continued migration from Pennsylvania and New York, the region might be showing not just an end to the drain, but a gain in population.

Northeasterners still moving out of state are more likely to go to another state within the region because the economy is good. College graduates are finding work back home. Retirees are turning their backs on the Sun Belt and moving to small cities in picturesque Maine or Vermont. More retirement communities are being built in states like New Jersey because many seniors want to retire close to home.

Immigrants from other countries who settle first in New York City or Newark are finding job opportunities in New England, where lower-paying jobsabound because unemployment is so low.

Paul Egan, a Rhode Island demographer, was asked recently how many Brazilians live in the state. "I would have assumed we had no Brazilians in Rhode Island," he says. But he looked it up and found 529, a substantial number for a state with a population of less than 1 million.

Small cities benefiting

The turnaround is most dramatic in small industrial cities and military towns that had been devastated by the loss of manufacturing jobs overseas or to the Sunbelt, as well as defense cutbacks in the 1980's and '90s.

Old mill towns in Massachusetts and New Hampshire that surround thriving Boston are benefiting now from suburban sprawl; many are becoming coveted bedroom communities. Coastal cities such as Belfast, Maine, are experiencing a renaissance because clean financial services industries have replaced grimy factories.

Terry Prescott grew up just north of Belfast. He remembers vividly what the city was like when he was a child. On the bridge over the Passagassawakeag River, the stench from the poultry processing plants on the harbor would force him to hold his breath. The water had a sickening reddish hue from the chicken blood that flowed out of the plants. Year-round, trucks transporting chickens to slaughter left a flurry of feathers through the city.

"I could not believe this town," says Prescott, 51. "I wouldn't have lived in Belfast if they had given me the waterfront."

MBNA provides boost

But by the mid-1980s, the old poultry plants could no longer compete with cheaper labor in the South. Shoe and textile factories along the harbor shut down. What remained were a gutted economy and double-digit unemployment - until MBNA America Corp. moved to town in 1996.

A credit-card processing center created 1,400 jobs in Belfast and 500 in nearby Camden. MBNA expects its Belfast employment to more than double the next few years.

By the time MBNA arrived, Belfast had cleaned up its harbor on Penobscot Bay and erased most signs of its industrial past. MBNA's arrival helped transform one of Maine's historically weakest regions into the state's fastest-growing. Other clean industries came in, including Ducktrap Farms, maker of smoked salmon and other delicacies.

Belfast's population increased from 6,200 in 1990 to almost 7,000 today. And in just a few years, the city best known for its stomach-turning odors and sights became a charming and thriving coastal community.

That's when Prescott rediscovered Belfast Like millions of Northeasterners, he had fled south, in his case from Bangor, Maine, to Texas. But he grew tired of Dallas' urban sprawl.

He sold his flower shop and decided to return to coastal Maine to open a bed-and-breakfast He found the ideal spot in Belfast, in a 150 year-old mansion called The White House.

"We did our, research," says Prescott, who owns the stately inn with partner Robert Hansen. "Belfast was the place to move."

Coming home

Such was the case for Lois Higer's daughter, Brenda. The 3 1 -year-old came back to Belfast last year after working for upscale clothing retailer Abercrombie & Fitch in Boston, New York and Dallas.

"We never thought as parents that she would come back here to work," says Higer, whose father-in-law founded one of the old poultry plants. Brenda works for MBNA. "It has afforded her an opportunity to come back and make a living here."

Mark Martelon, 35, and Lisa Whiting, 32, honeymooned in Northport, Maine, a few miles south of Belfast, 10 years ago. Martelon, who specializes in architectural restoration, is from Denver. Whiting, an executive pastry chef, is from New Jersey.

The two lived in New York and Denver, but in 1993 they began looking for a small community to open a business. They considered Taos, N.M., the San Francisco area and parts of the Northwest. They landed in Belfast instead, a community they call quirky and artsy, yet still very much working-class.

Here they found a striking Gothic-style, 120-year-old building in the middle of town that was so cheap that Martelon is embarrassed to say how little he paid.

The building, which once housed a bank and a newspaper office, is now The Gothic, a cafe where Whiting makes everything on the menu from scratch, and the Landmark Architectural Antiques store, run by Martelon. The two live on the top floor.

"This was a fairly seedy little town" 10 years ago, Martelon says. Now there are art galleries, theaters and even movie houses that show art films. Three restaurants serve lattes.

As young people move in, they're often followed by their retired parents, who want to be closer to their children and grandchildren, Higer says. She recently sold a house to a couple who had retired to Florida but then decided they wanted to be close to their children.

Mary Page Worth, 74, has been the mayor of Belfast since 1986. She says her city is attracting retirees, artists and entrepreneurs largely because housing prices haven't yet skyrocketed.

Real estate rebounds

There is little construction going on but plenty of home remodeling. Almost every house seems to have a ladder on it. City officials and real estate agents foresee a need for more rental housing.

Some Belfast old-timers worry that their community will become too slick and crowded. But most cheer the changes.

"I grew up in the shadow of the chicken factory, and I've been waiting all my life for it to change," says Duane Warren, 52, the owner of A Cut Above hair salon. "So I'm happy."

His wife, Brenda, kept losing her retail job every time another department store closed in the 1980s. Now, she has a steady job at MBNA, a company known for good pay and benefits.

Even if the U.S. economy sours, economists don't expect the Northeast to be hit as hard as it was in the last 15 years.

"The last time we had all these (economic) problems . . . New England went down five times as hard as the country as a whole because there was overbuilding," says Nick Perna, chief economist for Boston-based Fleet Financial Group, one of the nation's largest financial institutions.

When the recession hit, banks were hurt by the real estate collapse. But now, if the Northeast suffers from anything, it's underbuilding - a safer position for the region to be in if the economy goes south.

Belfast is less likely to experience rough financial times than it was before. MBNA, which processes calls to Visa or MasterCard's 800 numbers, is pretty much recession-proof. Credit-card use actually goes up in bad times. And Belfast's employment base no longer relies on one or two big industries.

Besides MBNA, there are eight companies in various industries - from light manufacturing to graphic design - that employ about 100 people each. If one suffers, the city can survive.

"In another 10 years, it's going to be the biggest little city in the country," says Bill Kief, 61, owner of Kief's Barber Shop.

Contributing: Paul Overberg