The Urbanist Musings of Pete Saunders

For Metro Areas, the Devil is in the Details

View of the Life Sciences Complex, UB School of Medicine at the University at Buffalo, with downtown Buffalo, NY in the background.  Panoramas such as this can make any place look fantastic, but the devil is in the details.  Source: medicine.buffalo.edu

Frequently I see examples of metro areas comparing themselves to other, more successful metro areas.  Metro area movers and shakers take a deep dive into the intricacies of what makes a “good” place tick, and try to implement the takeaways in their metro.  This is a reasonable action, but I believe it misses the point.  There is more to examine by taking a deep dive within your own metro than looking at another.

Surely there are physical scale, density and economic differences between metro areas that are worth exploring.  But those differences can be overstated.  Milwaukee, for example, will never be the Silicon Valley, for a host of reasons.  Just as importantly, the reverse is true.

When I see that, say, Kansas City wants to do what Portland’s doing, or Grand Rapids wants to do what Nashville’s doing (totally fabricated examples, I might add), I cringe for three reasons — 1) distinctiveness, not homogeneity, should be the hallmark of cities and metro areas; 2) metro areas are already far more alike than different, in terms of their built environment and even their economies; and 3) there is more inequality that is evident within metro areas than between them.

Why is it that, when looking at the marketplace of metros, they try to emulate successes rather than striking out for distinctiveness?  This generally stands in opposition to what happens in business, where firms seek to deliver a product that is of better quality, or less expensive, or offers more options, in order to stand out in the marketplace.

Unfortunately we end up having metro areas chasing advantages they will never be able to attain.  The Bay Area’s combination of entrepreneurship and top-tier education, leading to the R&D work that supports Silicon Valley, is only tangentially replicable in a handful of metros nationwide.  The low-tax, low-cost advantage that many interior metro areas enjoy over their coastal brethren is not something that can be done in the high-tax, high-cost coastal metros.

Addressing the third point will lead to greater city and metro growth than trying to replicate what any other metro area purports to be doing at a metro scale.

Let me offer one example.  Below you’ll see a table that shows the top 25 metro areas from 2010, organized by median household income.  The data is from the Census Bureau’s American Community Survey in 2011 (although there is more recent data available, the reason for using this dataset will become clearer below):

Median household income for the top 25 metro areas falls within a fairly narrow range.  Together, the metros have a median of medians, if you will, of $57,783, with a standard deviation of about $7,300.  The Tampa/St. Petersburg metro area comes in at the lowest ($46,890), while San Francisco/Oakland comes in as the highest ($76,911).

At the metro level, there are easy answers to explain why some metro areas are where they are — the supercharged, tech-driven or eds-and-meds economies lift San Francisco and Boston, while the presence of larger numbers of retirees in some Sun Belt metros, and deindustrialization that saw jobs move away, depresses incomes in Tampa, Miami, Pittsburgh or Detroit.

It’s data like this that reinforces the simple tropes that drive our understanding of metro areas.

But what if we look within a metro area?

I have a dataset that has 2011 American Community Survey data for 283 municipalities within the Chicago metro area, as well as the 55 zip codes that comprise the city of Chicago.  This data covers about 8.5 million of the 9.5 million within the broader metro area, excluding a handful of outlying exurban counties in Illinois as well as a few counties in Indiana and Wisconsin.  By looking at finer grained data that examines municipalities, and breaks down the behemoth that is the region’s core city of Chicago, we can see how there are greater differences within the a metro area than between them.

Median household income falls within a far broader range within the Chicago area than in the top 25 MSA dataset.  In 2011, the median of median household incomes for the 338 places identified was $68,325, which is completely understandable when one considers higher income suburban municipalities being over-represented in the dataset.  The range, however, is what stands out — the highest median household income was in North Shore Kenilworth ($242,188) while the lowest was in Chicago’s 60621 zip code, which corresponds with the city’s Englewood neighborhood ($19,692).  What’s crazy, though, is that the standard deviation for median household income in the Chicago area in 2011 ($32,700) is nearly double the actual number for the 60621 zip code.

There were 68 municipalities and city zip codes that had median incomes below $50,000 in 2011; there were 54 municipalities and city zip codes above $100,000.  One group presently drives metro area economic policymaking, while another remains largely ignored.

There is greater variation within metros than there is between them.  This idea should inform our urban policymaking.  (Note: I use Chicago only because I have the data for it.  I imagine other metros, particularly large ones, will have similarly large ranges; the range likely decreases as metros get smaller, but remains to some extent.)

For decades economic developers have relied on two economic strategies to improve conditions that influence data points like median household income — 1) attract more skilled businesses and workers, and 2) work like hell to retain skilled businesses and workers.  The first strategy works in metros that have relied on migration for growth; the second works almost nowhere.

As I see it, there is an opportunity for dramatic metro area improvement by those that focus on talent development, rather than talent attraction or retention.  When metro areas focus on the successes of our nation’s metro area “winners”, and try to implement a talent attraction/retention strategy, they relegate themselves to the whims of a select group who, for a variety of reasons, can choose to be anywhere.  Developing talent — investing in early, secondary and higher education, forging strong links between higher education and the business community, supporting entrepreneurship and investment — can pay dividends.  At some point, metros that become proficient at talent development will find that that activity evolves into talent attraction, creating the vibrant economic environment that all metros desire.

3 Responses to “For Metro Areas, the Devil is in the Details”

  1. Alon

    This is true of the US, which by first-world standards has unusually high inequality within its metro areas, and relatively low inequality between its regions. Ideally, we'd have Thiel indices for each country, since they decompose neatly into within-group and between-group inequality. But even with more easily accessible data, you can compare metro area Ginis as computed by the Census Bureau with the national Gini. The metro area range in the US is about 0.42 to 0.5, where 0.5 is an outlier (New York); the national Gini is 0.47, so not much more than in the average metro area. Clearly, this is not really about interregional inequality.In contrast, look at the vast gaps between rich and poor regions in most of Europe, even regarding each country individually rather than the entire EU as a whole: London vs. the North of England and the West Midlands, Northern Italy vs. Southern Italy, southern Germany vs. former East Germany, Paris vs. the rest of France, Madrid and Catalonia vs. the rest of Spain, Flanders vs. Wallonia. In extreme cases, such as Milan vs. Naples, there's a factor of 2 difference in per capita income. On top of this, the Belgian division is ethnic, and leads to some nationalist ugliness, as Flemish right-wingers are pissed about subsidizing the Walloons (who subsidized them until WW2) and want out.

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  2. Pete Saunders

    Alon, you are right in describing how US metro areas differ from European ones — deep inequality within them but less so between them, while the opposite is true in Europe. I think what you describe also applies to what I see in much of the Midwest, too, but with less extremes. If you compare Chicago, the Twin Cities, St. Louis, Indianapolis or Columbus with the surrounding rural areas you'll find similarly wide gaps.I guess what I'm trying to do is pose questions that begin to change the general discussion regarding how we stimulate metro area growth. It seems to me the talent attraction/retention route benefits two types of metros: the global cities we all know about, or the low-tax, low-cost metros that can compete with global cities in terms of costs. The subset of higher income \”creative class\” types will choose either access and amenities or value. Metros that are a tier or two below the global cities in terms of access and amenities can't necessarily compete there, and they might not be as value-discounted as smaller metros. They're caught in-between, in a sense. That's why talent development, an admittedly tougher thing to do that doesn't pay immediate dividends, is mentioned here as an alternative solution.

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  3. Anon

    Pete, great article. Point I'd like to drive home is not specifically a \”metro\” development story. Skills drive income (or at least potential to generate income). There are 2 secular shifts going on in the global economy driven by technology/globalization: 1. top tier skills become MORE valuable as they can be applied across larger and larger companies (that serve more and more customers); 2. middle & low skill jobs in the US are under attack on 3 fronts:A. outsourcing/offshoring/global competition creates new labor supply; B. technology decreases low-skill labor demand (replaced w/ automated systems that require high skill labor to build/operate/monitor).C. Global population growth disproportionately increases middle & low skill labor supply (because it's driven by Non-OECD countries). I like to say that today there are 2x as many people on earth as when my father was born (in the '50s).To me, this is the overarching theme from the past 5/10/20/40 years that explains increasing inequality in the United States (leaving income tax policy aside, which also has a significant impact).Whether at the national, state, or local level, the focus should be 1. An all-of-the-above strategy to develop talent. We are in global competition as a nation, and the more horses we have pulling the sled (proportion of high skilled workers) the easier it is to maintain/improve the subsidies that drive what we perceive in the West as an acceptable social safety net.2. How do we break the cycle of low-income neighborhoods (and thereby preponderance of low skill breadwinners as heads of household) that create an incredibly unfair, uphill battle for children to develop skills and economic freedom (from birth to college grad)? I know you focus on integration between low & middle/high income neighborhoods, but I think the policy solutions need to be bolder and broader (pulling more K-12 education funding up to the state/national level) and generally investing much more heavily in it with strategies that are PROVEN (early childhood education, smaller class sizes, teacher training) NOT fancy moonshots that claim to \”disrupt\” education. Math, Reading, Writing. Pre-K – 8 fundamentals. Get at-risk kids engaged in school, in their future, and on track. Improve economic mobility. Reduce skills/income inequality. Improve US economic prosperity/security in the face of vast global competition.Fantastic scatter plot here:http://www.npr.org/sections/money/2014/03/18/289013884/who-had-richer-parents-doctors-or-arists

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