Big Cities Are Getting Richer, Leaving Suburbs Behind

It’s a massive shift in the dynamic between outlying communities and urban cores.
December 2018
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By Pete Saunders  |  Columnist
Urban planner

For as long as cities have existed, their overall attractiveness and effectiveness have largely been determined by one measure: population growth. But as our nation has moved past the rapid growth phase of its development, that’s increasingly become ineffective. A better way to evaluate cities is by measuring their ability to attract wealth. That’s what really improves their capacity to address fiscal issues.

By applying such a measure, it appears that cities are finally closing the affluence gap between themselves and their suburbs. I recently gathered Census data for 2010 and 2015 on aggregate income for the 51 largest U.S. metros (those with more than 1 million residents) and found some revealing patterns: Between 2010 and 2015, population in the core cities of the 51 largest U.S. metros grew 5.8 percent, yet aggregate income, all in real dollars, grew by 23.9 percent. Over the same period, population in the suburbs of the 51 largest metro areas grew 5.9 percent, yet aggregate income grew by 19.8 percent.

City aggregate income is growing at least 50 percent faster than the rate of surrounding suburbs in Atlanta, Chicago, Miami, New York, Philadelphia, Seattle and Washington, D.C., among others. Per capita income rose in cities from $25,170 in 2010 to $29,490 in 2015, a gain of 17.2 percent, and from $28,919 to $32,715 in the suburbs, a gain of 13.1 percent.

Meanwhile, Charlotte, Indianapolis and Virginia Beach, Va., are the metro areas with the biggest suburban income gains, where aggregate and per capita income grew by nearly five times the rate in their respective core cities. In all, the core cities in 28 of the 51 largest metros are outpacing their suburbs in aggregate and per capita income, with 17 of the 51 having their strongest aggregate and per capita income growth in the suburbs.

This transfer of wealth from suburbs to cities is just as profound as the city-to-suburb shift that preceded it in the middle of the 20th century, and presents a new challenge to both. It’s certainly fueled concerns around inequality and potential displacement in our big cities. That’s gotten a lot of our attention. But it’s also challenging long-held assumptions about suburbs and their sustainability. What happens when suburbs that were built for the middle class are no longer attractive to that cohort? What happens when suburban municipalities are forced to consider sizable fiscal challenges with a shrinking pool of resources?

For better or worse, cities largely had the fiscal support, social infrastructure and media attention to weather the storm prior to their rebirth over the last 25 years or so. New York City was famously denied federal assistance by President Gerald Ford in 1975, but narrowly avoided bankruptcy when the state Teachers’ Retirement System lent it money and Ford eventually relented. It’s largely been forgotten that Washington, D.C., was headed for fiscal ruin when Congress stepped in and appointed a financial control board between 1995 and 2001.

Of course, it’s not certain whether this trend is temporary or part of a longer lasting event, and it’s certainly not an indication that suburbs are doomed. Many will retain their affluence, just as many cities will continue to have areas that struggle. But it’s still pertinent to ask who will speak up for the fragmented and increasingly politically disenfranchised suburbs if wealth transfer continues.

Indeed, our metro areas may be finding themselves at the start of a new conversation about cities and suburbs. It may be time for cities to develop a magnanimous approach to their suburban brethren. Instead of ignoring the suburban challenges that will inevitably arise as wealth declines, perhaps cities should offer their expertise, developed over decades of overcoming serious urban crises. Where the money goes is more important than where the people go.