Growth Without Growth

A new, provocative report finds places where the economy is growing strong even though the population isn't.
April 2002
William Fulton
By William Fulton  |  Columnist
Director of the Kinder Institute for Urban Research at Rice University and former mayor of Ventura, Calif.

Is St. Louis better off than Portland, Oregon? Are things better in Pittsburgh than in Orlando?

Well, not exactly. But according to a new Brookings Institution report, things aren't as dismal in Rust Belt metropolitan areas such as St. Louis and Pittsburgh as you might think. They are the nation's two leading examples of a phenomenon known as "growth without growth"- -places where the economy is growing strong even though the population isn't.

As for Orlando and Portland, they're examples of the opposite pattern--metropolitan areas where the population is growing faster than the national average while real per-capita income is going up more slowly than the national average.

These are the provocative results of new research by Paul Gottlieb, an economist at Cleveland State University, who measured the population growth and growth in real per-capita income in the 100 largest metropolitan areas between 1990 and 1998 to see who falls where. Most of the results were not surprising. Many thriving metros-- Atlanta, Austin, Dallas, Phoenix--were above the national average in both categories. Many struggling ones, including Cleveland itself and all the metropolitan areas in Upstate New York, were below the average in both categories.

Surprisingly, however, Gottlieb found that almost half of the 100 largest metro areas fit neither category. They're either "wealth builders"--places such as Chicago, Detroit, Memphis, Pittsburgh and St. Louis--that saw income go up faster than population, or they're "population magnets--places such as Daytona Beach, El Paso, Knoxville, Orlando and Portland--that saw the reverse.

A lot of people will glom on to Gottlieb's report for their own purposes. "Slow-growth" politicians where I live in coastal California will almost certainly use it to advocate closing the door to new residents. They'll say that these statistics reveal that population growth often isn't worth the cost and that just because you stop adding population doesn't mean that you call a halt to prosperity. (Six of the 23 "population magnets" were in California, although this might have been affected by the state's deep early '90s recession.) Indeed, part of Gottlieb's motivation in doing the study seems to have been to challenge conventional wisdom. Limiting population growth doesn't inevitably harm a metropolitan area's prosperity.

But I'm not so sure that this new research supports the slow-growth argument in quite this fashion. Of the 23 "wealth builder" metro areas whose income gains exceeded population growth, the only one engaged in widespread population restrictions as a public policy goal was San Francisco. The Bay Area sure looks like a slow-growth advocate's dream: An affluent and highly educated population, growing slowly, creates one economic miracle after another, even as housing prices reach stratospheric levels.

But San Francisco was the exception rather than the rule. In most cases, the "wealth builders" were older, blue-collar places in the Northeast, the Midwest and the South: Kansas City, Little Rock, Milwaukee, New Orleans, Providence and Tampa. Population may be growing slowly in most of these cities, but the tepid rates are not because of government slow-growth policies.

What is the difference between these cities and the ones that had both low rates of population increase and little economic growth? That is, places such as Buffalo, Cleveland, Hartford, Oklahoma City, Philadelphia and Charleston, West Virginia. After all, both groups of cities have lower educational attainment and strong manufacturing bases. Even more baffling, why are some of these gritty, non-dazzling metropolitan areas doing better on Gottlieb's "growth without growth" index than supposed superstars such as Atlanta, Austin, Las Vegas and Orlando?

The answer appears to be that not adding population has some benefits. First, much of the nation's population growth in recent years has been driven by immigration, and recent immigrants pull down the overall per-capita income. And second, many of the fastest-growing metros--Las Vegas and Orlando among them--have parlayed climate and raw land into a tourism-based economy, which tends to create low-wage jobs.

The "growth without growth" champs, such as St. Louis and Pittsburgh, may experience higher levels of educational attainment and high-tech employment--more than Buffalo and Cleveland, and, at the same time, more than Las Vegas and Orlando.

In Ventura County, California, our local voters are always trying to restrict growth and send surplus residents somewhere else. I've always thought maybe it should be official government policy to ship all those extra folks to Pittsburgh and Detroit and other Rust Belt towns.

Now I'm not so sure. Maybe back in the Rust Belt, they're better off without the rest of us.