The results of this study may seem counterintuitive, but not if you reject that article of faith that says people in a given place enjoy the benefits of economic growth in equal measure. In other words, what we see at the national level is also true on the local level: the trickle down of wealth is not inevitable, or even likely.
If this is true it's scary because our policy makers and businessmen really have no new ideas for sustainable economic growth in their communities.
By Eben Fodor
January 14, 2011 | The Daly News
Most cities in the U.S. have operated on the assumption that growth is inherently beneficial and that more and faster growth will benefit local residents economically. Local growth is often cited as the cure for urban ailments, especially the need for local jobs. But where is the empirical evidence that growth is providing these benefits?
I have completed a new study examining the relationship between growth and prosperity in U.S. metro areas. I found that those metro areas with the most growth fared the worst in terms of basic measures of economic well-being.
The study looked at the 100 largest U.S. metro areas (representing 66% of the total U.S. population) using the latest federal data for the 2000-09 period. The average annual population growth rate of each metro area was compared with unemployment rate, per capita income, and poverty rate using graphical and statistical analysis.
Some of the remarkable findings:
- Faster-growing areas did not have lower unemployment rates.
- Faster-growing areas tended to have lower per capita income than slower-growing areas. Per capita income in 2009 tended to decline almost $2,500 for each 1% increase in growth rate.
- Residents of faster-growing areas had greater income declines during the recession.
- Faster-growing areas tended to have higher poverty rates.
I also compared the 25 slowest-growing and 25 fastest-growing areas. The 25 slowest-growing metro areas outperformed the 25 fastest-growing in every category and averaged $8,455 more in per capita personal income in 2009. They also had lower unemployment and poverty rates.
Another remarkable finding is that stable metro areas (those with little or no growth) did relatively well. Statistically speaking, residents of an area with no growth over the 9-year period tended to have 43% more income gain than an area growing at 3% per year. Undoubtedly these findings offer a ray of hope that stable, sustainable communities may be perfectly viable — even prosperous — within our current economic system.
Eben Fodor is the founder of Fodor & Associates, a consulting firm that specializes in community planning, land use, and environmental sustainability. Fodor is also the author of Better, Not Bigger: How to Take Control of Urban Growth and Improve Your Community.
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