The Metro Story: Growth Without Growth

The conventional wisdom presumes that growing populations bring economic growth. But what drives wealth isn't how many people a place is adding, but how much more productive its workers are becoming.  Yesterday, I showed that population growth and productivity growth are unrelated on the level of states. Today, drawing on my ongoing research with Kevin Stolarick of the Martin Prosperity Institute and Jose Lobo of Arizona State University, I'll take a look at the pattern for 350 plus U.S. metro areas. The disconnect is even more pronounced.


The map above charts population growth across metros. Sunbelt metros (from dark to lighter blue on the map) grew at the fastest clip. East and West Coast metros (shaded green) grew at a considerably slower pace. The slowest-growing metros (beige) are concentrated in the Midwest.


The second map charts the change in productivity - measured as gross metropolitan product per capita. This map looks completely different than the first one.  The top productivity gainers (highlighted in blue) are spread throughout the country. They include metros like Pascagoula, Mississippi; Corvallis, Oregon; Casper and Cheyenne, Wyoming, and Vallejo, California.  College towns like Manhattan, Kansas; Durham-Chapel Hill, North Carolina and Binghamton, New York also register impressive gains. Among large metros (those with over one million people), San Jose, California, Portland, Oregon, and Oklahoma City, Oklahoma saw the largest productivity increases.  But the productivity laggards are concentrated in two areas: the Sunbelt and the Midwest.


The third map also charts the change in productivity, this time measured as gross metropolitan product per worker. This map is even more telling.


The same large metros and the same college towns as on the last map are well-represented, as are heartland metros like Casper, Wyoming; Sioux Falls, South Dakota, and Des Moines, Iowa, which saw impressive gains of 15 percent better. Even Frostbelt metros like Buffalo, Baltimore, Philadelphia, and Pittsburgh, whose very names have become bywords for decline, registered productivity gains of between 7 and 10 percent. But the five metros with the fastest population growth all saw their productivity decline. Palm Coast, Florida's dropped a whopping 18 percent, the fourth worst figure in the nation. Cape Coral, Florida's fell by 13 plus percent, Raleigh, North Carolina's by 9 percent (more than Frostbelt metros like Dayton or Toledo, Ohio), St. George, Utah's by more than 5 percent, and Las Vegas, Nevada by 1 percent. Atlanta's productivity fell by more than 12 percent, which puts it in the same league with Detroit.

A decade ago, urban economist Paul Gottlieb coined a term for this disconnect between population and economic growth. He called it "growth without growth," a construct former Ventura Mayor Bill Fulton has picked up on in recent writings.  When Gottlieb compared population growth to growth in real per-capita income in the 100 largest U.S. metropolitan areas, he found a pattern similar to what we discovered for states. Like states, U.S. metros divided into four categories.  Some -- like Atlanta, Austin, and Dallas -- were above the national average in both categories. Others, including many older Rustbelt metros, were below average in both. But it's the last two categories that were more interesting.  Much as we found with states, half of the 100 largest metros divided into "population magnets" -- places where population grew but not income, and "wealth builders," where incomes rose much faster than population.

When Stolarick, Lobo, and I looked at the connection between population growth and productivity across America's 350 metro regions over the past decade, we found that, if anything, the disconnect has become even more pronounced. Just one in three metro areas experienced gains in both productivity and population that exceeded the national average--and we found no statistical association whatsoever between population growth and productivity growth, either for metros or states. This not only challenges the notion that population growth is a proxy for economic growth, it puts the lie to economic development strategies that encourage population growth as an end in itself. A rising population can create a false illusion of prosperity, as it did in so many Sunbelt metros, which built their house-of-cards economies around housing construction and real estate development, leaving ghost towns, mass unemployment, and empty public coffers in their wake when the bubble inevitably burst.

The south and the west may be winning the demographic race, but America's economic winners are the places that have improved their productivity--something which doesn't turn on the sheer numbers of workers they have on tap, but rather on how skilled and innovative they are.