Growing Large Versus Growing Well

We can't take it for granted that a metro area that's growing a lot is growing equitably. Perhaps some so-called slow-growth metros might be showing how it should be done.

Source: gettyimages.com

Here’s a philosophical question for you. What’s the purpose of a city? Why did humans create cities?

The answer usually comes down to economics. Cities offer people the best opportunities for economic growth, to be a marketplace for goods, services and ideas. There are ancillary benefits that come with cities, however. The desire to prosper from goods, services and ideas forces people to think of ways to improve those very goods, services and ideas. People improve on the means of production, or means of thought, to create better products for the marketplace. That leads to innovation, culture, education, and ultimately shared experiences that build community.

I think there comes a point with cities, however, that actual growth is no longer meaningful and equitable growth. There are businesses that are founded, jobs being created and filled, in service of the growth engine – not in the service of overall prosperity. If there’s anything I’ve learned in my Rust Belt upbringing, it’s that serving the growth engine without contributing to the prosperity of those who support it is a recipe for disaster.

Put another way, growing large and growing well are two entirely different things. That’s a distinction that’s lost on many.

Since 2015, the Brookings Metro program of the Brookings Institute has produced an annual report called the Metro Monitor, exploring the prosperity and inclusivity of economic growth at the level of American metro areas. I’ve covered releases in years past, with a focus on the metros of the Midwest. The 2024 version came out this past spring, but I’m just getting to it now. It’s an interesting read every year, and I don’t think it gets the attention it deserves.

Each year the report evaluates five factors of metro success. The first is growth, or measuring the change in size of the metro economy and its entrepreneurial activity. Second is prosperity, or monitoring changes in average wealth and income. The last three are all measures of inclusion. The general inclusion factor evaluates changes in employment and income are distributed among individuals, racial inclusion analyzes gaps in economic indicators among white non-Hispanic persons and people of color, and geographic inclusion, which explores gaps in economic indicators between the top 20% and bottom 20% of census tracts in a given metro area. In this piece I’ll just focus on the growth and prosperity metrics.

A quick methodology note. Being a Midwest native, I like to compare Midwestern metros with metros from other parts of the nation. For at least the last 12 years, I’ve been tracking various metrics on the Midwest’s metro areas with more than one million residents. Here they are, ordered by their 2023 population rank:

Some observers will note that I included metros that are not typically associated with the Midwest in this category – Rochester, Buffalo, Pittsburgh and Louisville. I long ago made the executive decision to include these metros with the Midwest. Why? In Rochester and Buffalo’s case, they’re located on the Great Lakes, and, despite being in New York State, have local cultures more like what you’ll find in Cleveland or Detroit than New York City. Similarly, Pittsburgh and Louisville, river cities at the starting point (Pittsburgh) and midway point (Louisville) of the Ohio River, have more in common with similar river cities like Cincinnati and St. Louis, maybe even Kansas City (Don’t worry, though; I don’t consider Washington, DC and Baltimore to be in the South anymore, either. I include them in the Northeast).

Putting it all together, I categorize the metros by their general region in the U.S., one of four regions – Northeast (7 metros), Midwest (15), South (18), and West (14). I do it to see if there’s anything that can be learned from any regional differences.

Metro Area Growth

So there’s our universe and our focal points. Let’s look at the growth metrics:

Looking nationally at the 54 U.S. metros with more than one million residents, the high growth metros should not be surprising. Austin, TX leads the list, based on its nation-leading job growth, gross metropolitan product growth, and job growth among firms founded within the previous five years, between 2012 and 2022. Raleigh, Charlotte, Nashville and Orlando round out the top five.

Metros located in the South and West dominate the top of the high growth list. In fact, the top 22 metros in terms of overall growth were from either the South or West, with eleven each. The lowest ranked Western metro was Tucson at 46^th; the lowest ranked Southern metro was Memphis at 51^st.

The bottom half of metros in terms of growth is largely comprised of Northeastern and Midwestern metros. Rochester, NY (which I actually categorize as a Midwest metro, along with Buffalo and Pittsburgh) ranked the lowest for growth on the same measures. The bottom five also included Memphis, Cleveland, Tulsa and Hartford, CT.

As you might expect, Midwest metros did not fare well in terms of traditional growth metrics. The best performing of the 15 Midwestern metros I track were Columbus, OH, and Grand Rapids, MI, tied for 23^rd overall. Indianapolis was right behind them at 24^th, Cincinnati at 26^th, and Louisville at 29^th. Rochester, ranking 52^nd nationally, and Cleveland, ranking 50^th, were the lowest ranking Midwestern metros in the region. They were joined in the bottom five by Pittsburgh (46^th), Chicago (43^rd) and Buffalo (42^nd).

Metro Area Prosperity

Look below to see how the metros ranked in terms of creating prosperity:

Southern and Western metros don’t dominate the prosperity metric rankings as completely as they do the growth metrics, but they’re still well represented. The top five metros in prosperity gains, based on increases in productivity, average annual wages and standard of living, were San Jose, San Francisco/Oakland, Seattle, Austin and Miami. Tulsa ranked lowest in prosperity, followed by three more Southern metros – Houston, Oklahoma City and Virginia Beach – as well as Hartford.

The Midwestern metros I track had a surprising leader, in my opinion, in bringing prosperity to its residents. Buffalo ranked first among the fifteen large Midwestern metros, and 15^th nationally. Buffalo performed better than high economic growth metros like Nashville and Atlanta at delivering rising productivity, average annual wages and standard of living, despite ranking only tenth among Midwestern metros and 42^nd nationally in overall growth metrics. The region’s top five also included Cincinnati (22^nd), Columbus (25^th), and Louisville and Kansas City (tied for 26^th).

The metro at the bottom of the Midwest region’s prosperity rankings was Milwaukee, listed as 48^th out of the 54 largest metro areas. Milwaukee was preceded by Detroit (46^th), St. Louis (43^rd), Rochester (34^th), and the Twin Cities (33^rd).

Combining Growth and Prosperity

As I analyzed the growth and prosperity data, what stood out was the numbers for Buffalo. What does it mean for a metro area to be a low performer in overall economic growth, but a high performer in bringing greater prosperity to its region? It means that increases in the overall number of jobs, gross metropolitan product and new jobs in startups tell only a part of the story.

Looking at the data, I found I could sort the metros to gain some insight on how they’re growing. This table below tells a more complete story:

Here I simply sorted the metros by their positional ranking in the growth and prosperity categories. The metros in the upper half of growth or prosperity were given the “high” designation, in the lower half the “low” designation.

Generally I’m concerned with the first three columns, recognizing that the high growth/high prosperity metros are victims of their success, not any failure. Low growth/low prosperity metros certainly have their challenges. To me, high growth/low prosperity metros represent a rather unique kind of dysfunction, relying on large numbers of low-wage workers to keep a metro economy humming. What’s most interesting to me is the second column, places that aren’t seeing especially strong growth but delivering a good deal of prosperity. Buffalo shows up here, joining Los Angeles, Louisville, Kansas City and New York City. An odd, but interesting, group.

Then, I had a thought. How do the metros look if we assume growth and prosperity should rise and fall together? How does metro economic performance look then?

Viewed this way, the difference is dramatic:

High growth metros that don’t have equal parts growth in prosperity tend to fall in the rankings, while low growth metros that deliver greater prosperity to tend to rise.

Could it be that Buffalo is growing slowly but healthily, while Austin is growing quickly but less healthy? That Chicago is outpacing Dallas in equitable growth? I’d love to have economists weigh in on this.