In a blog post released earlier this week that has sparked some lively reaction from economists and bloggers, Michael Mandel — formerly of Business Week — wonders which metro areas “prospered the most” from 2000-2008.
He asks: “Were the winners the highly-educated communities that make up the Creative Economy? Or did someone else zoom ahead?”
To answer this question, he calculated real-per-capita income for all metro areas and looked for the highest and lowest percentage gains. This is what he found:
For the growth areas, Mandel points out:
The common themes are guns and oil. The big gains in the #1-ranked Houma region are mainly connected with the increase in oil drilling, since BLS data shows that wages in the mining/oil industry in Terrebonne Parish, where Houma is located, soared from $58K a year to $78K from 2005 to 2008. #2 Jacksonville (NC) is the location of Camp Lejeune. Fayetteville (NC). #5 Fayettville (NC) is home to Fort Bragg, one of the larget military bases in the world. #6 Killeen is obviously home to Fort Hood. #8 Odessa, Texas, is riding the oil boom.
For the loss areas, he writes:
There’s Silicon Valley at the top (or the bottom) of the list, where incomes didn’t recover from the popping of the tech bubble that peaked in 2000. But other tech-type metro areas, such as Raleigh and Austin were hit hard as well.
Brains and education did not seem to count too much in success in the last business cycle. Overall, the top ten cities, measured by growth in per capita income, had an average college graduate rate of 17.7% The bottom ten cities had a college graduate rate of 31.8%.
Mandel’s point that MSAs heavily influenced by innovation and creativity — like San Jose and Raleigh — lagged behind other less-obvious areas in the last business cycle has led to some thought-provoking articles and discussion:
- Felix Salmon weighed in on his Reuters blog, pointing out that time frame of Mandel’s analysis is the reason for the “historical anomaly.” (Salmon also included a few thoughts from EMSI’s own Mark Beauchamp.)
- Tyler Cowen linked to Mandel at Marginal Revolution and noted that Mandel is “one of the most important economists writing today.”
- The Economist’s Free Exchange blog also opined on the post, emphasizing that the same metro areas at the bottom of Mandel’s list “have been growing, in population terms, at a blistering pace. Since the 2000 Census, Austin has been the eighth fastest growing metro area and Raleigh the fourth. Austin’s population has increased by 36% and Raleigh’s has grown by 41%.”
On our end, we’re all for looking at regional income and population data. But averaging the data out — as Mandel does — favors regions that have explosive income growth (especially jobs that pay above the previous average), and population growth that lags behind the job growth.
Conversely, the ratio will not favor areas that have a high amount of population growth with concurrent losses in total income. Also, by this metric, an MSA that had awful (but equal) percentage losses in population and income would rank exactly the same as a region that grew gangbusters at an equal percentage rate.