The Urbanist Musings of Pete Saunders

CSY At Forbes: Wealth Is Returning To Cities – And The Suburbs Better Get Ready

Quintessential suburban development. Source:

(Note: This was originally posted at my Forbes blog last December. One thing I want to clarify is that I don’t believe conventional suburbia is “doomed”, per se. I think it’s going to remain the predominant development type in America for at least the rest of my lifetime. However, suburbia is getting some unforeseen challenges to its hegemony, and the response from those who support it hasn’t always been a good one. I liken the suburban response to city revitalization to the response of the Big Three automakers to foreign automaker competition starting in the ’70s: “It’s a phase; people will come back to our product; our cars are clearly superior in quality.” American automakers are still here, but they’re nothing like they were when they went unchallenged. The same will happen with cities and suburbs. Check this out. -Pete

For as long as there have been cities, particularly in America, people have been measuring their attractiveness and effectiveness largely by one measure – population growth. But as our nation has matured and moved past the rapid growth phase of its development, that’s increasingly ineffective. Is there a better way to evaluate cities? Yes – by measuring their ability to attract wealth. By that measure, many cities are pulling away from their suburban hinterlands, and larger metro areas are pulling away from medium-sized and smaller ones.

Recently I pulled some U.S. Census American Community Survey data on aggregate income for the 51 largest U.S. metros (those with more than one million residents), for 2010 and 2015. I factored out aggregate income numbers for the core cities for each metro area, and found some revealing patterns:

  • Between 2010 and 2015, population in the core cities of the 51 largest U.S. metros grew 5.8%, yet aggregate income (all in real dollars) grew by 23.9%. Core city population grew from 45 million to 47.5 million, and aggregate income grew from $1.13 trillion to $1.4 trillion.
  • Over the same period, population in the suburbs of the 51 largest U.S. metro areas grew 5.9%, yet aggregate income grew by 19.8%. Suburban population grew from 123 million in 2010 to 130 million in 2015, while aggregate income grew from $3.6 trillion to $4.3 trillion.
  • On a per capita basis, cities are closing the income gap between themselves and their surrounding suburbs. Per capita income rose in cities from $25,170 in 2010 to $29,490 in 2015 a gain of 17.2%, and from $28,919 to $32,715 in the suburbs over the same period, a gain of 13.1%.

But as always, the devil is in the details, and when you look at individual metros you can find some very surprising results. For instance, Providence, RI and Salt Lake City, UT lead the way in terms of city income growth. City income growth in Providence grew by 17.6% between 2010 and 2015, while income growth actually fell in its suburbs by 1.7%. City income growth in Salt Lake City grew by 42.1%; its suburban income growth grew by only 4.6%.

Despite the presence of Providence and Salt Lake City at the top of the list, the nation’s largest metros and their core cities lead the way. City aggregate income is growing at least fifty percent faster than the rate of surrounding suburbs in New York, Chicago, Washington, Miami, Atlanta, Philadelphia and Seattle, among others. Charlotte, Indianapolis and Virginia Beach are the metros with the biggest suburban income gains, where suburban aggregate and per capita income grew by nearly five times the rate in their respective core cities. In all, the core cities in 28 of the 51 largest metros are outpacing their suburbs in aggregate and per capita income, with 17 of the 51 having their strongest aggregate and per capita income growth in the suburbs.

How are cities able to dramatically increase their income profile, while only modestly adding new residents – or even declining? Chicago’s example provides one clue. There, DePaul University’s Institute for Housing Studies recently reported that Chicago counted almost 3,600 fewer homes in 2016 compared to 2010, driven by its loss of 2-4 unit buildings. Geoff Smith, director for the Institute of Housing Studies, noted that “It’s clear that that two- to four-unit stock is facing a lot of pressure from both ends of the market, as they’re getting demolished in lower-cost neighborhoods and converted to single-family homes in higher-cost neighborhoods.”

This shift – a transfer of wealth from suburb to city – is just as profound as the city-to-suburb shift that preceded it in the middle of the twentieth century, and presents a new challenge to both. It’s certainly fueled concerns around inequality and potential displacement in our big cities. That’s gotten a lot of our attention. But it’s also challenging long-held assumptions about suburbs and their sustainability. What happens when suburbs that were built for the middle class are no longer attractive to them? What happens when suburban municipalities are forced to consider sizable fiscal challenges with a shrinking pool of resources?

For better or worse, cities largely had the fiscal support, social infrastructure and media attention to weather the storm prior to their rebirth over the last 25 years or so. New York City was famously denied federal assistance by President Gerald Ford in 1975, and narrowly avoided bankruptcy. Fiscal rule of Washington, D.C. by the Congress-appointed Financial Control Board between 1995-2001 is largely forgotten. But who will speak up for the fragmented, and increasingly politically disenfranchised, suburbs as the wealth transfer continues?

Our metro areas may be finding ourselves at the start of a new conversation about cities and suburbs. It may be time for cities to develop a magnanimous approach to their suburban brethren.   Instead of ignoring the suburban challenges, perhaps cities should offer their expertise, developed over decades of overcoming serious urban crises.

Where the money goes is more important than where the people go.

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