How the Great Plains Won the Recession


570 great plains.jpg
Here are two pictures of the United States. The first is a map of unemployment, with hard hit states in darker shades. The second comes from the Brookings Institution's Metro Monitor, which selects the 20 best and worst performing cities in the country. In short, the Great Plains have never deserved their adjective more than now:

Unemployment map USA.pngBrookings Cities.png

Why is the heartland suddenly winning the race? A few thoughts:

1. No Real Estate Boom...
The real estate bust can be felt in almost every state, but it's concentrated in four states: California, Florida, Arizona and Nevada. Falling housing prices started a domino effect that toppled local economies. No great real estate boom in the plains meant no bust, and no domino effect. What's more, by resisting the CaliFlAriVada housing rush, many of these smaller economies successfully diversified away from an economy that was over-reliant on realtors, construction and exotic financial services -- the industries that took it on the chin.

2. ... But an Energy Boom
As author Joel Kotkin wrote in Newsweek, energy is driving growth in many plains states. "The energy boom has placed states like the Dakotas and Texas in an enviable fiscal situation. Oil and gas revenues are filling up their coffers, allowing them to eschew the painful cutbacks affecting most coastal states."

3. Local Services
Call it the "eds and meds" effect. If you're looking for the most resilient industries in the recession, you're look at government spending and its handmaidens: education and health care. Midwestern cities that avoided exotic lending and didn't get crushed by the manufacturing bust (like Michigan and Ohio) have thrived, or at least stayed alive, by leaning on local services like health care and education.

4. Low wages
Living in the plains is cheap, and thank God because you're not paid much to live there. According to the most recent Labor Department list of wages, 15 of the top 17 metro areas with the highest wages were touching (or nearly touching) an ocean on either coast. The exceptions were Minneapolis and Chicago.The cities with wages listed as below average include: Lincoln, NE, Great Falls, MT, Springfield, MO, Oklahoma City, OK, Iowa City, IA, and Kansas City, MO-KS. Great plains economies and wages have grown slowly, and when the economic tsunami passed over them, there wasn't as much standing up to knock down.

To read more about how Texas beat the recession, click here.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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