U.S. Metro Economies: Past and Future Employment Levels

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Metro Employment in 2016

 

• The US economy added 2.3 million jobs in 2016. Metro areas generated over 2 million new jobs, more than 95% of all US gains.
• Over 300 metros experienced job growth in 2016, with the New York and Dallas metros each adding over 100,000 jobs in 2016, and Los Angeles was close, at 90,000. Orlando (4.2%), Salt Lake City, San Jose, and Seattle, each at 3.4%, led in rates of job growth among large metros.
• At year end, unemployment rates had fallen to less than 2.5% in Ames, IA, Boulder, CO, Sioux Falls, SD, and Burlington, VT, less than 3% in 15 others including Boston, Denver and Salt Lake City, and to less than 4% in 75 more.
• Chicago, at 5.4% had the highest unemployment rate among large metros (over 1 million in population), though 71 smaller metros had rates exceeding 6%.

 

Metro Employment during the Recovery

 

• Overall Metros gained 13.3 million jobs over this recovery period, an annual growth rate of 1.9%. One hundred and two saw growth in excess of 2% annually, and thirty greater than 3%, including Denver, Dallas, and San Francisco. During 2016, 78 metro areas at long last surpassed their prerecession peak employment level.
• Since January 2009, 315 metros, 83% of all metros, gained jobs. Twelve metros, led by Provo at 29% and Austin at 27%, exceeded a 20% growth rate over the 2009-2016 period. Ninety-one metros, or 24%, achieved double digit growth, and 208 of them, or 55%, saw more that 5% gains.
• But over 2010-2016, thirty-two metros lost jobs and 104 more saw growth of less than 1% per year, including Pittsburgh among the large metros. (See Figure 1 and Appendix Table 1)
• But it is still the case that 121 metros (32%) entered 2017 with fewer jobs than they supported almost a decade ago. These metros are predominantly older Midwestern communities suffering from the loss of heavy manufacturing jobs and an aging population and infrastructure.
• In 2017 and 2018 we forecast US employment to increase by 1.31% and 1.25% respectively, but only 7 of the lagging metros will return to pre-recession peak levels this year, followed by 15 in 2018, and 9 in 2019.
• Thus, at the end of the decade, 88 metros, almost one in four, 23%, of the total will still have fewer jobs than in 2008. (see Appendix Table 5)

 

Longer Term Metro Performance 1990-2016

 

• From 1990 to 2016, employment in metro areas increased by 34%, averaging 1.1% per year. Metro job gains of 32.2 million represented 93% of total US job gains.
• But this growth was highly uneven across metros. Twenty-three metros have employment levels below that of 1990, with seven of them (Flint, Binghamton, Dayton, Weirton-Steubenville, Mansfield, Pine Bluff, and Danville) falling more than 10% behind 1990 levels.
• Eighteen of these metros are in the ‘Rust Belt’ area stretching from upstate New York to Illinois, where manufacturing was once the dominant, and thriving, industry.
• There are two long term trends in the US economy that have disadvantaged these metros. First was the flow of interstate migration from the northern states to the Sun Belt states. The second trend was the evolution of the US, and other advanced economies, from goods production towards a services economy.
• During this time the nation lost 5.4 million manufacturing jobs. For the Midwest the implications were dire – in 1990 manufacturing jobs were more crucial to the local economy, making up 20.8% of its employment. In 2016 that share has fallen to 13.0%, as the region lost 28% of its production jobs.
• Twenty-three metros have lost jobs since 1990, and 140 more have grown at less than 1%. But sixty-two had annual growth rates above 2%, thriving in the new, information-based economy. They were led by Dallas, Houston, and Phoenix, which combined for 3.7 million new jobs.

 

 

 

Growth Prospects

 

• For the rest of the decade, 2017-2020, median metro job growth will be 1.0% per year. Las Vegas, Orlando, and Austin will lead the way, leading eight metros averaging at least 2.5% per year. Thirty-two metros will see growth in excess of 2%, though none in the Northeast or Midwest.
• Meanwhile, seventy-three (19% of all metros) of the eighty-six metros which have lost jobs since 2000 will not recover them by 2020. As a group these metros accounted for over 15 million jobs in 2000, then lost 11% of them (1.6 million) by 2010, and though they have regained 0.7 million in the recovery, are still 6% (0.9 million) below 2000 levels.

 

Transportation and the Role of Infrastructure Investment

 

• Infrastructure monies should be directed where the potential returns are greatest, and that will largely be in metropolitan areas. Metros contribute 91% of the production of goods and services that make up the nation’s total gross domestic product (GDP), and we expect that over the next 30 years 93% of US economic growth will occur in metro areas.
• Metros are the most congested areas in the US. Investment in roads, rails, and other forms of transportation will help relieve the bottlenecks impeding economic expansion; for example, the 4.8 billion hours of travel delay Americans experienced in 2014, cost our metros $160 billion.
• The total congestion cost, which is the value of wasted time and fuel, is estimated to have cost US urban areas $160 billion in 2014, or $960 per commuter. The total cost to the US economy equals 0.91% of GDP.
• Public spending on transportation and water infrastructure was 2.4% of GDP in 2014, a share that has been trending lower over the last few decades. Public spending on infrastructure and water last peaked at 3% of GDP in 1959, and averaged 2.7% through the 1960s and 1970s. However, since the mid-1980s the share has settled in around 2.4% except for a brief jump following the boost of funds provided by the ARRA.
• In 1980, 56% of vehicle miles traveled in the US were done in urban and suburban areas, but with rapid economic growth in major cities, that share grew to 70% in 2015.
• The largest urban areas, not surprisingly, incur the highest congestion costs. Congestion costs per commuter exceeded $1,400 in Washington and New York on the East Coast; Chicago in the Midwest; Houston in the South; and Los Angeles, San Francisco, and Seattle on the West Coast.
• Los Angeles and San Francisco are two highly congested metros that saw inflation-adjusted congestion costs fall over the last 20 years, down 12% and 14%, respectively.
• From 2013 to 2014 95 of the nation’s largest 100 metros saw increased traffic congestion, up from 61 from 2012 to 2013. The US has been on solid economic footing and congestion costs will continue to trend higher in the coming years, creating a greater drag on the overall economy.

Metro Growth in Coming Decades

• Employment growth through 2024 will be faster than the previous ten years in 307 of the 381 metros, and in many instances significantly so. This prospect will pose severe problems in areas already grappling with painful congestion costs.
• Over the next decade, the 20 metros with the largest increases in employment will be adding at least a quarter of a million jobs each. Dallas, the top metro, will see payrolls increase by over 800,000. Los Angeles, which did a good job mitigating its rise in congestion over the last two decades, will be tested as employment rises by 600,000 from 2014-24. The pressure on current transportation infrastructure cannot be understated as 17 of these 20 metros already rank among the 20 highest in congestion per commuter.
• In the next 30 years, U.S. metro population will grow by 66.7 million people.
• Total metro area population will grow by 24% from 2016-2046 and will be especially fast in some of the nation’s largest metros. Population will advance by over 50% in Dallas, Houston, Phoenix, Riverside, Austin, Orlando, and San Antonio.
• Taking a broader look, population will grow by over 25% in 127 metro areas, over 50% in 36, and over 70% in 8 over the next 30 years (Appendix Table 8). By 2046, 72 metros will have population exceeding 1 million, compared to 2016 where only 53 achieved this feat. And by 2046, five metros will have over 10 million people – whereas just 2 were that large 30 years prior.