Downtown Houston. Photo credit: Shutterstock
(Note: This was published at my Forbes site on May 28, 2016. Feel free to check out my other writing outlet. -Pete)
This question was raised to me in a Twitter conversation a couple weeks ago. A response from one reader on Twitter said that population growth rates are the one true indicator of metro health. People, he said, acting rationally, typically vote with their feet and move to areas where opportunity is greatest. I commented that I view population growth rates in metro areas often as a lagging indicator; once a place obtains a narrative that it has abundant opportunities, it holds on to that distinction long past opportunities begin to dry up. In essence, people think they are acting rationally, but people also often make decisions without full or up-to-date information.
My thinking? We should evaluate metro areas by how well they produce, instead of simply how well they grow. If we are to look at metro areas as economic entities, one sure way to evaluate them would be on the economic health of its residents. I suggested changes in median household income at the metro level, or even metro area gross domestic product (GDP).
Of course, me being a Rust Belt advocate, I had ulterior motives. I’ve long felt that the population growth proponents mistake attractiveness with health and productivity, and also mistake population stagnancy or loss with general economic decline. I also believe that metro areas are often at entirely different ends of the city life cycle spectrum, and that comparing one city that’s experiencing something of an adolescent growth spurt to a mature, middle age (or older) place, can be unfair. Like comparing the growth patterns of a 15-year-old boy with his 45-year-old dad.
So I did some investigation to see what the numbers tell me.
I pulled some data for the 50 largest metro areas in the U.S., roughly corresponding to all those with a population of 1 million or more. Using U.S. Census data from the 2010 Census and the 2015 American Community Survey, and Bureau of Economic Analysis data, I looked at population and GDP for each of the 50 largest metros, to see what the numbers would reveal.
First, here’s the 50 largest metro areas, ranked by population change between 2010 and 2015:
For anyone who follows these things, there are no surprises here. Combined, the top 50 metros grew by 5.6% since 2010. The list is headed by Austin, TX, which grew by nearly 17 percent in five years. The rest of the top of the list is populated by many of the Sun Belt metros we associate with rapid growth, with economies rooted in energy (Houston, Dallas, Oklahoma City) or in tourism (Orlando, Las Vegas). New Economy innovation metros are in the middle of the list. Washington, DC, San Jose and San Francisco/Oakland are firmly in the middle sections of the list, with Boston and New York slightly lower. The bottom third of the list are stable (or stagnant, depending on your opinion) Rust Belt former industrial centers. Buffalo, Hartford, Pittsburgh and Cleveland actually lost population over the five-year period.
Now, let’s look at how wealthy the metro areas are, as measured by GDP per capita. This table ranks the metros by GDP per capita in 2014, the most recent year available :
Again, no surprises. The average GDP per capita for the top 50 metros in 2014 was $55,771. The New Economy innovation metros head the list, with San Jose and San Francisco/Oakland being the only two metros with a GDP per capita figure over $80,000. Other tech or finance centers like Seattle, Boston, New York and Washington, DC are near the top as well, and joined by energy-driven metros like Houston and Dallas. The Rust Belt metros that occupied the bottom of the population growth table are largely in the middle of this group, and a handful of high-growth Sun Belt metros appear at the bottom here, including Miami, Orlando, Phoenix and Las Vegas.
But who is wealthy doesn’t tell the whole story. If we look at rates of change in GDP per capita between 2010 and 2014, covering the post-Great Recession recovery period, we can see which metros that are, at a minimum, becoming more productive:
Here you can the the Sun Belt/Rust Belt distribution changes dramatically. High growth Sun Belt metros, like tech hubs San Jose and San Francisco/Oakland, and energy centers like Houston, are still near the top. However, they are joined by Rust Belt metros like Detroit, Pittsburgh, Cincinnati and Cleveland, which appear to be making the economic adjustments to improve productivity in the aftermath of the Great Recession. That’s certainly not true of all Rust Belt metros; St. Louis and Indianapolis are closer to the bottom than the top. Yet it’s also true that more than a few Sun Belt metros are mired in the bottom third of this list as well, showing signs of relative weak progress in productivity gains.
Things become interesting when you combine the population growth and GDP per capita data. I developed a scatterplot chart that organizes the metros by population growth rate and metro area GDP in real dollars, and the metros fall into one of four quadrants (trust me, it’s easier to view in this infographic rather than the chart itself):
The cream still rises to the top here, with many of the usual suspects falling in the more productive and more affluent quadrant. However, using this data you could begin to make a case that a handful of Rust Belt metros have rebounded well since the Great Recession, while some Sun Belt may still be lagging economically. While many people might not put Buffalo and Austin or Cleveland and Nashville in the same category, their recent rebound puts them more or less on equal footing over the last five years. Perhaps more attention should be paid to the group of metros that are in the less-productive, less-affluent quadrant, which is populated by more than a few Sun Belt metros.
But if you correlate productivity with population growth, even more differences become evident:
It appears that a few Rust Belt metros might be mimicking the patterns of metros like New York and Boston, with reasonable economic growth yet stable/stagnant population growth. The Rust Belt metros in the lower right quadrant stand in particular contrast to those in the upper left — largely Sun Belt metros that still struggle with productivity yet still continue to draw large numbers of new residents.
There are plenty of exceptions and caveats that apply. Rust Belt metros are probably rebounding from decades-long declines in productivity stemming from the loss of manufacturing, and any uptick can look enormously positive. Some metros don’t fit simple categorization, and there are factors causing some metros to overperform or underperform our general understanding of them.
What does this all mean? It could mean that the a metro area’s narrative means as much — if not more — to its ability to attract people as its actual economic performance. It could mean that it’s well past time to put aside old narratives that link metro area health with absolute population growth, and maybe we should look at how metros perform as much as what they attract.