Resurgence of the Country? How Performance on One Prosperity Measure Trumps Urban Triumphalism

In an article entitled Why Some Places Prosper and Others Do Not published in 2009, Andy Isserman and colleagues argued that the conventional measures of economic competitiveness provide a skewed picture of the wellbeing of communities across the United States and motivate policy initiatives that may very well hinder place-based prosperity. Per capita income is a suspect measure because it fails to incorporate regional cost-of-living differences and ignores distributional issues. Economic growth is problematic because it doesn’t gauge improvement in the average welfare of existing community residents. Economic growth can raise or lower average income, and it often benefits in-commuters and migrants rather than existing residents. Therefore, it has an uncertain effect on community wellbeing. From a community vantage point, both the quality and the beneficiaries of the growth matter.

In lieu of those commonly adopted but somewhat flawed measures, Isserman introduced the idea of a “prosperity index” that captures essential characteristics of economically and socially healthy communities. This index was built on four component measures, all of them derived from the U.S. Census Bureau, Summary File 3 (i.e., the decennial census “long form” questions): (a) percentage of individuals living below the poverty level, (b) unemployment rate, (c) percentage of the 16-19 population that dropped out of high school and (d) percentage of the occupied housing units that has one or more of four undesirable physical and financial conditions (i.e., incomplete plumbing or kitchen facilities, over-occupancy, or unaffordability). A county notched one point for each component that exceeded the corresponding U.S. average value for the measure. Therefore, the prosperity index ranges from zero (below the U.S. on all four measures) to four.

When Isserman et al. crunched the numbers and mapped the prosperity results for all 3,140 U.S. counties back in 2000, a surprising and geographically uneven picture emerged. Contrary to what might be expected, the most “prosperous” counties are located in many of the slower growing areas of the Midwest and Northeast. Fast-growing Sunbelt counties generally rated poorly. A notable exception is Virginia, a Sunbelt state where the Shenandoah Valley and northern/central areas of the state fare very well. Isserman focused most of their attention on rural differences. They found that prosperous rural counties had “diverse, vigorous” economies with more entrepreneurship, greater social capital, and higher per capita incomes.

This portrait of a successful community described by Isserman stands in marked contrast to that described by Harvard economist Edward Glaeser. In his book Triumph of the City, Professor Glaeser touts the benefits of urban agglomeration, its accompanying creative chaos and ability to integrate poor newcomers. Such places stimulate productivity, learning, and innovation, and maximize migrant economic potential. Though he does not offer an urban-friendly prosperity index, one could imagine constructing one with weighted variables representing population density, patent activity, educational achievement levels, migration rates, and demographic diversity.

To investigate this issue further, we updated the prosperity index to the most current period available. With the U.S. Census Bureau American Community Survey available, it is now possible to revise the prosperity index each year using the 5-year estimates. The geographical pattern that emerges for 2006-2010 is not all that different than 2000 with the exception of a more fragmented Midwestern picture and greater geographical diffusion of prosperity.

The values were then charted along the USDA rural-urban continuum (which runs from low values for counties in highly urbanized metro areas to high values for non-metropolitan counties with less urbanization and greater isolation from metropolitan areas). The figure below shows the prosperity values weighted by population for each continuum category.

Non-metropolitan areas generally did better in 2006-2010 on average than metro areas (2.22 prosperity index for nonmetro counties compared to 2.05 for metro counties) and very rural non-metro counties generally do better than less rural non-metro counties. Clearly, lower land rents in the rural periphery and thus better performance on the housing criterion account for this gap. But, this gap also grew from 2000 to 2010 and decreasing housing affordability in metropolitan areas provides only part of the explanation. For the very largest metro counties (1 million or more), about two-thirds of the loss in average prosperity is explained by lower housing criterion performance. For the second metropolitan category (metro areas of 250,000 to 1 million), four-fifths of the regression occurred along the dimensions of poverty and unemployment.

Metropolitan areas are a heterogenous bunch. So, it is worthwhile to take a closer look at the success stories. Generally speaking, the top performers are smaller, slower growth cities located in the interior of the country. Yet several larger metropolitan areas score in the top 50 (Rochester, NY; Pittsburgh, PA; Minneapolis, MN; Raleigh, NC; Cincinatti, OH, St. Louis, MO; Richmond, VA; Salt Lake City, UT; Baltimore, MD; San Diego, CA). And, what about Glaeser’s hometown and inspiration for Triumph of the City? Well, it ranks a distant 245th.