It’s Not Just the Superstar Cities That Are Getting Richer

(Bloomberg Opinion) -- There has been a ton written over the past few months — some but far from all of it inspired by Inc.’s “second headquarters” search — about the diverging economic fortunes of America’s metropolitan areas. A lot of it has been very interesting and informative. Taken as a whole, though, it can be pretty confusing.

Are we, for example, supposed to be worrying about “The Growing Inequality Between America’s Superstar Cities, and the Rest,” as urban scholar Richard Florida wrote in CityLab last month, or cheering the fact that “Second-Tier Cities Boast First-Rate Job Figures,” as the Wall Street Journal’s Shayndi Raice reported a few days later?

One partial explanation for the warring narratives is that regional wealth disparities are continuing to grow, but the insane housing market conditions this has created in the richest metropolitan areas are driving many of their residents toward places where the cost of living is lower. I’m starting to think, though, that a better description of what’s going on may simply be that some metropolitan areas are doing well and some aren’t, and there isn’t always an easy shorthand for separating the winners from the losers.

Ben Casselman offered a nice illustration of this in the New York Times this week by describing the diverging fortunes of booming Nashville, Tennessee, and not-so-booming Birmingham, Alabama. The cities are less than 200 miles apart, and in 1980 their metropolitan-area populations were nearly identical. Now metro Nashville has 65 percent more people and 106 percent more economic output than metro Birmingham, even though (disclosure: I am a former Birmingham resident who still loves the place) Birmingham is awesome.

Here’s another way of illustrating diverging metropolitan fortunes:

It’s Not Just the Superstar Cities That Are Getting Richer

I ranked the 100 largest metropolitan areas, which together account for two-thirds of the U.S. population, by change in real per capita gross domestic product since 2001, and these are the top 15. The chart also shows the change since 2010, but some areas score well on that mainly just because they were bouncing back from especially awful experiences during the Great Recession, so I figured the former was, on balance, a better metric. It is, however — as you can see in the next table, which shows the bottom of the same ranking — kind of unfair to Atlanta.

It’s Not Just the Superstar Cities That Are Getting Richer

The metro areas in the bottom 15 have a lot in common. All feature per capita incomes well below the national metro-area average of $53,617, and all but one are in the Sun Belt. Most of the top 15 have incomes above that threshold, but five are below it. They also hail from every region of the country. It’s sort of the opposite of that line from “Anna Karenina”: All unsuccessful metropolitan areas are alike; each successful metropolitan area is successful in its own way.

That’s not quite right, though. Among the cities in the latter list, for example, some are experiencing rapid population growth while some are barely growing at all. Population growth is of course usually taken as a sign that a region is succeeding, but in some of the growth hubs of the South and West, it has been accompanied by falling incomes, which isn’t good.

Clearly, a lot hinges on the definition of success. Still, rising per capita GDP seems like a reasonable one, and it happens to support the general narrative that “superstar cities” keep getting super-starrier — the metropolitan areas with the highest incomes and the biggest populations saw faster per capita GDP growth than the rest — while making clear that there is room for exceptions.

Tulsa, Des Moines, Provo, Pittsburgh, San Antonio and Buffalo (Buffalo!) really don’t fit the label of superstar cities, and their inhabitants aren’t rich, either. But they are getting richer, which is a hopeful sign that maybe other less-than-glamorous metropolitan areas can learn to do the same.

850,505 for metro Nashville, 847,487 for metro Birmingham.

I also used population change from 2010 to 2017 instead of from 2000 to 2017 mainly because the former can be summoned from the Census Bureau's website in a matter of seconds, while the latter would take a while to assemble.

That is, the 25 metro areas with the highest per capita GDPs as of 2001 saw real per capita GDP grow an average of 11.8 percent from 2001 to 2017, while the other 358 experienced average growth of 10.8 percent, and the 25 metro areas with the largest populations as of 2010 experienced average per capita GDP growth of 9 percent from 2010 to 2017 while growth in the rest averaged 5 percent.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”

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