The recovery has been characterized by yawning gaps between the rich, the middle, and the poor. But, as Trump’s election made clear, it has also been characterized by yawning gaps between cities, the suburbs, and rural parts of the country. “Once you go beneath those big, national, largely encouraging statistics, you see a lot of variation,” said Mark Muro, a senior fellow at the Brookings Institution. “This is about big-county, cosmopolitan metropolitan areas pitted against small-population rural counties and some small metros. It is absolutely clear that the economic story has been much more difficult in that second group of non-big-metro counties.”
Indeed, the employment rate in rural areas was actually 2.9 percent lower in mid-2016 than it was in early 2007, just before the Great Recession started: There has been no jobs recovery in those spottily-populated swaths of the country. The employment rate in metropolitan areas, in contrast, is 4.8 percent higher than its 2007 level, and businesses are adding jobs twice as fast in urban areas as they are in rural ones. The far-flung counties that boomed during the Clinton expansion started to lag during the Bush expansion, and really fell behind during the Obama expansion. “The urban counties of large metros actually did better in the recession and recovery than they did” during the housing-bubble years of the 2000s, Kolko said.
And some metros are doing far better than others, with New York and the Bay Area in particular booming, minting millionaires and launching new businesses. (One stark data point: Wages are so high in San Jose, San Francisco, and New York that some economists think building more housing to let more people move there would boost national economic output by an astounding 10 percent.) The story is not just about New York beating rural Illinois, but New York beating St. Louis. Government policies that had made the country more equal across regions—among them antitrust protections—were forgotten or rolled back in the late 20th century. And fortunes diverged.
According to a report from the Economic Innovation Group, an entrepreneurship-oriented research and advocacy organization, the economy is growing more and more reliant on a smaller and smaller number of “super-performing” counties, some of them in or near Los Angeles, Miami, and New York City. Just 20 counties, out of more than 3,000 nationwide, accounted for half of the net increase in new businesses between 2010 and 2014. The number of counties seeing net job growth has dwindled, too. All in all, this adds up to, in the report’s words, “a massive and historically unprecedented imbalance” in geographic dynamism.
The kinds of jobs in places like Dallas and Las Vegas and San Francisco, versus eastern Kentucky or far-west Texas or the Nebraska-South Dakota border, might explain why the recovery feels more durable in denser areas, too. Workers in rural areas are far more likely to be involved in industries like farming, forestry, mining, and manufacturing, sectors in which job growth has been undercut and remains threatened by offshoring and automation. “These are thin economies. … Other than the hospital or local government, there isn’t a whole lot going on,” Zandi said. It’s just stagnation.” Workers in urban areas, on the other hand, are more likely to be involved in knowledge or service jobs, like corporate law or home health work, that are harder to offshore or pass off to a robot—which is true even for many jobs that are not particularly well-compensated.