INCLUSIVE

The few US cities where economic growth benefited everyone

Obsession
"America First"
Obsession
"America First"

The World Economic Forum in January suggested a new way of measuring a country’s economic growth, one that took into account how widely gains from economic expansion were spread. In the Inclusive Development Index, which combined growth with parameters for development, inclusion, and intergenerational equity and stability, the US came in 23rd—faring worse than Estonia, the Czech Republic, and South Korea.

Now, a new report by The Brookings Institution has found that inclusive economic growth is also elusive for most US cities. From 2010 to 2015, only 11 metropolitan areas that prospered by increasing productivity, raising average wages and improving the standard of living spread those gains widely among their populations. Overall, Brookings looked at 100 of the largest metro areas and found 63 that added new jobs at young firms—a measure of healthy entrepreneurship—and, of those, 30 also showed increased productivity, higher average wages and an improved standard of living.

Only eight US cities achieved overall economic growth, improved prosperity and improved economic outcomes for people across racial lines: Albany, Austin, Charleston, Denver, Des Moines, Houston, Milwaukee, and San Francisco. Inclusive economic growth was measured by examining employment rates, median wages and relative poverty.

Cities that didn’t show economic growth did improve on measures of inclusion. Overall job increases led to a rise in employment rates in 95 of the 100 largest metropolitan areas, while median wages rose in 53 metro areas. Tightening labor regulations meant that wages in the bottom half of the income distribution improved, causing relative poverty to fall in 72 metro areas.

The authors found that metro areas that achieved inclusive growth tended to add jobs in high-skilled sectors while also adding lower-skilled, lower-paid jobs.

Of course such studies may do little to change federal policies—the new administration’s chief economist believes that rising income inequality in the United States is a myth.

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