A disparate recovery
10 years after start of Great Recession, thriving cities leave others behind
As the nation’s economy was still reeling from the body blow of the Great Recession, Seattle’s was about to take off. In 2010, Amazon opened a headquarters in the little-known South Lake Union district — and then expanded eightfold over the next seven years to fill 36 buildings. Everywhere you look, there are signs of a thriving city: building cranes looming over streets, hotels crammed with business travelers, tony restaurants filled with diners.
Seattle is among a fistful of cities that have flourished in the 10 years since the Great Recession officially began in December 2007, even while most other large cities — and sizable swaths of rural America — have managed only modest recoveries. Some cities are still struggling to shed the scars of recession.
In Las Vegas, Nev., half-finished housing developments, relics of the housing boom, pockmark the surrounding desert. Families there earn nearly 20 percent less, adjusted for inflation, than in 2007.
In the decade since the recession began, the nation as a whole has staged a heartening comeback: The unemployment rate is at a 17-year low of 4.1 percent, down from 10 percent in 2009. Employers have added jobs for 86 straight months, a record streak. And last year, income for a typical U.S. household, adjusted for inflation, finally regained its 1999 peak.
Yet the rebound has been uneven. It’s failed to narrow the country’s deep regional economic disparities and in fact has worsened them, according to data analyzed exclusively for The Associated Press. A few cities have grown much richer, thanks to their grip on an outsize share of lucrative tech jobs and soaring home prices. Others have thrived because of surging oil and gas production.
But many Southern and Midwestern cities — from Greensboro, N.C., to Janesville, Wis. — have yet to recover from the loss of manufacturing jobs that have been automated out of existence or lost to competition from China, before and during the recession. Like others, they have fewer jobs and lower household incomes than before the downturn.
Those disparities complicate the rosy picture painted by most nationwide economic data. With the nation enduring a widening wealth gap, an overall robust U.S. economy doesn’t necessarily translate into widely shared prosperity.
“There’s definitely a pattern of the coasts pulling away from the middle of the country on income,” said Alan Berube, an expert on metro U.S. economies at the Brookings Institution. “There are a large number of places around the country that haven’t gotten back to where they were 15 years ago, never mind 10 years ago.”
That said, for all the economic might the top-flight cities have gained in the past decade, many city officials and business leaders have become concerned
that their success is running up against limits. Surging home prices and rents have made housing unaffordable for many. With cities like Seattle and San Francisco choked with traffic, engulfed by homeless people and requiring ever-larger incomes to live comfortably, quality of life may be at risk.
In the Western United States, inflation reached nearly 3 percent in October compared with a year earlier, according to government data. By contrast, inflation rose just 1.5 percent in the Midwest and New England.
“It’s the first time I have noticed a persistent spread between inflation in one area and the rest of the country,” says Steve Cochrane, an economist at Moody’s Analytics who has studied regional economics for 25 years.
Mindful of the financial burden on employees, some tech companies have decided to set up shop or expand where expenses are more manageable. Snapchat and Hulu have put down roots on the slightly more affordable west side of Los Angeles, joining outposts of Google and Facebook in an area now known as “Silicon Beach.”
Last year, nearly as many people moved out of Silicon Valley — defined as Santa Clara and San Mateo counties — as moved in, according to a report by Joint Venture Silicon Valley, a civic group. It was the first time since 2010 that the number of arrivals and departures have been roughly equal.
The trend isn’t entirely surprising given that commuting times in San Francisco have lengthened by 40 minutes a week in the past decade, the report said. The price of a typical San Francisco home has reached an eye-watering $1.2 million, according to Trulia, an online real estate data provider.
Housing costs, inflated by local regulations restricting homebuilding, can act as a barrier to opportunity. They make it harder for people in poorer areas to move for better opportunities. With fewer people
able to move to places with more jobs and higher pay, the national economy tends to suffer, economists say.
Among the nation’s 100 largest metro areas, San Francisco experienced the biggest gain in median household income in the decade after the recession began. Adjusted for inflation, it jumped 13.2 percent, according to data compiled by Moody’s Analytics. San Jose, Calif., which is part of Silicon Valley, enjoyed the second-largest increase, at 12.7 percent, followed by Austin, Texas, with 8.8 percent.
By comparison, median household income in the 100 largest metro areas actually fell 2.7 percent, on average. And the income gap between the 10 richest and 10 poorest metro areas has widened in the past decade, Moody’s data shows.
Eight of the 10 cities with the largest income gains are “tech hubs,” with heavy concentrations of software architects, data analysts and cloud-computing engineers. They include Denver; Portland, Ore.; Provo, Utah; and Raleigh, N.C.
Pittsburgh has experienced the ninth-largest income gain, thanks to increased tech and health care jobs. Oklahoma City, where inflation-adjusted incomes are up 5.5 percent, has benefited from the oil and gas boom.
Most Americans haven’t received raises anywhere near that large. Data compiled by Brookings shows that 65 percent of Americans who live in urban areas — defined as cities with populations above 65,000 — live in places where the typical household income is still below its 1999 level.
“There’s a spreading out of the tech economy, but it remains a different tech economy in the middle of the country than what you find in the Bay Area, Boston, New York and Austin,” Berube said.
Software may be more widely used, but when it comes to actually inventing new software, “that is still a phenomenon you find in only four of five places in the United States.”