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Can cities achieve inclusive growth?

May 18, 2017 / Carolina Small Business / Economic inequality, Economy

Rising inequality is something we have discussed many times on this blog. In North Carolina, the latest labor market data show that our rural communities continue to lag behind in job creation. But even within our cities, we see a growing divide between people who have benefited from economic growth, and those who continue to struggle to achieve economic and financial security.

This trend is not unique to North Carolina. Across the country, we have seen disparities within metropolitan areas that have experienced economic growth in the years since the Great Recession. As cities grow, is it possible for them to achieve more inclusive growth, in which the benefits are more widely shared? The Brookings Institution’s Metro Monitor seeks to answer that question. It looks at the economies of the 100 largest metropolitan areas in the country. In a recent report, it found that only a handful of cities were able to increase inclusivity as they also achieved greater prosperity and economic growth.

The report examines local economies along three parameters between 2010 and 2015:

Cities were then given a composite score and ranked. Below is a table showing the five metro areas in North Carolina and their ranks along each parameter.

Overall, metropolitan areas experienced growth between 2010 and 2015, with North Carolina’s metro areas among the fastest growing job markets. But prosperity was mixed bag– productivity only increased in 45 of the cities, while average wages and the standard of living increased in most.

In regard to inclusion, overall employment rates improved, as well as the poverty rate and wages for the bottom half of the income distribution. However these gains were not widely shared. Median wages for workers with just a high school diploma or equivalent only increased in half of the cities, and median wages across educational attainment levels only increased in seven cities. Only 40 metropolitan areas saw wage increases for both whites and people of color. In cities where poverty rates dropped, only 58 saw decreases for people of color.

All in all, only 14 of the cities received higher than average scores for growth, prosperity and inclusion. This includes two of NC’s metro areas: Raleigh and Charlotte-Concord-Gastonia. While it is encouraging that a few of our metro areas rose to the top, as many residents can attest, there is still more work to be done. That all cities in this analysis saw job growth, but only about half saw wage increases, points to a severe disconnect between growth and broadly-shared prosperity. The disparities along racial lines also point to systemic challenges.

As the report states, “Economic growth that improves standards of living for all people is possible, but not as common as one might hope.” The fact that it is possible should encourage us. If we continue to advocate for policies and programs that create a level playing field for all, we may begin to imagine a future where inclusion becomes common.