Report Shows Uneven Economic Progress Among Cities

The Metropolitan Policy Program at the Brookings Institution recently released its annual report, Metro Monitor. Metro Monitor tracks economic progress in the 100 largest metropolitan areas in the U.S. using an Inclusive Growth Index. The report shows widespread but uneven progress across most metropolitan areas between 2015 and 2016, and racial disparities in relative poverty persist.

The report’s Inclusive Growth Index charts the performance of the nation’s 100 largest metropolitan areas across economic indicators in three broad categories that define economic success: growth, prosperity, and inclusion. It finds considerable variation in how different metro areas fared in their progress toward inclusive economic growth and prosperity in 2016, the most recent year for which complete data are available. Economic growth is measured by the changes in gross metropolitan product (GMP), total number of jobs, and number of jobs at young firms.

Between 2015 and 2016, 93 of the 100 metro areas experienced increases in GMP and 96 added jobs. The construction, finance, and high-tech sectors tended to be the primary drivers behind increases in GMP, while the oil and gas and government sectors tended to slow GMP growth. Metro areas with large manufacturing, government, and education sectors showed slower job growth. Metro areas on the East and West Coasts and in the Sunbelt experienced the most growth, with Middle America continuing to lag by comparison.

Prosperity is measured by the changes in average wage per job, productivity (GMP divided by total jobs), and standard of living (GMP per capita). A majority of metropolitan areas experienced growth in average wages, driven mostly by services, tech, construction, and health care, while declines in wages were associated with metros reliant on energy, manufacturing, and government spending (e.g., state capitols). Despite increasing wages, productivity declined in 64 metro areas, mainly because in metros with job increases, output didn’t increase correspondingly, reducing the amount of output per worker. The 87 metros with increases in standard of living were also metros with increases in employment and productivity.

And inclusion is measured by the changes in the employment rate, median wage, and relative earnings poverty rate. Eighty-two metros experienced rising employment rates, and none of the 18 others saw statistically significant declines. Higher employment rates drove tighter labor markets, resulting in increases in median wages in 73 metros and modest decreases in relative poverty in 55 metros. Economic inclusion by race saw some progress in 2016, but challenges remain. Though 53 metros reduced racial disparities in employment rates, employment rates rose for both white people and people of color in only 26 metros. Further, the racial disparity in relative poverty rates declined in only two metros.