America’s Urban Distress: Which States And Regions Set Up Their Cities To Fail?

Submitted by F.F. Wiley of Cyniconomics

America’s Urban Distress: Which States And Regions Set Up Their Cities To Fail?

In 2011, the four U.S. cities with the highest unemployment rates were:

1. Stockton, California (20.2%)
2. Detroit, Michigan (20.0%)
3. Flint, Michigan (19.0%)
4. San Bernardino, California (17.8%).

Today, only one of those cities is still standing. Bankruptcy-free, I mean. Stockton went bust in June 2012, San Bernardino in August 2012 and Detroit last month.

With facts like these, I’ll go out on a limb and argue that our job creation and municipal solvency problems are nearly one and the same. And city leaders in Stockton, San Bernardino, Detroit and elsewhere failed to balance their books partly because they didn’t keep enough of their constituents employed.

But the stories behind these bankruptcies extend beyond the respective city borders to circumstances prevalent throughout certain states or regions. Urban distress tends to be concentrated in particular parts of the country, and I’ll take a closer look at those locations here.

I’ll share a collection of maps, charts and tables showing which cities face the greatest challenges based on a combination of unemployment and geography.  I’ll also include population loss figures to maintain continuity with my earlier article on cities that could follow Detroit’s example.

There are three steps in the analysis:

1. Construct a data set of 285 cities – those with over 100,000 people in 2010 and any others that made the Census Bureau’s list of 100 most populous cities anytime after 1950.
2. Using averages for 2012, calculate median city unemployment rates for each state.
3. Based on a longer history beginning in 1990, group the states into six regions with distinct employment patterns.

Median city unemployment rates

The following three maps show the 2012 median city unemployment rates for all states with at least one qualifying city, including the number of cities in each state (these are the figures in parenthesis):

And here are a few thoughts on the regions with the highest urban unemployment rates:

New Jersey, Connecticut and Rhode Island

Most of the cities in these states share problems with the rest of the Northeast and Midwest, such as deindustrialization and population loss. But they have the added misfortune of being in close competition with the region’s mega-cities (Boston, New York, Philadelphia, Baltimore and Washington D.C.). The five larger coastal cities – all with over 600,000 people  – have their share of troubles but remain attractive to professionals, entrepreneurs, university students and tourists. The cities in New Jersey, Connecticut and Rhode Island, on the other hand, are all smaller than 300,000 and haven’t been nearly as successful at drawing the same job-creating mix of people. Simply put, they’ve been outplayed by their neighbors. Here are the numbers for all 11 cities in these states:

Michigan, New York, Pennsylvania, Maryland and Delaware

Most of the cities in these parts of the country are battling population loss, some more effectively than others. Here are the five highest unemployment rates in 2012:

Wisconsin, Illinois, Indiana and Ohio

These are “double-belted” states – they’re situated where the Corn Belt meets the Rust Belt. The agricultural side to their economies helps explain the fact that their 2012 median city unemployment rates were lower than all of the other Northern states mentioned above. Nonetheless, this area of the country isn’t without its problem cities. The four cities with the highest unemployment rates are all former manufacturing hubs located within 100 miles of Chicago. Just as they’ve lost jobs to global competition, these cities also struggle to compete with Chicago in the battle to attract professionals and job creators (in the same way that the New Jersey and Connecticut cities have underperformed their larger neighbors in the Northeast). Here are the four cities and their 2012 unemployment rates:

California and Nevada

The cities in these states face difficulties linked partly to decades of strong population growth (oddly, the opposite situation to the population losses of the Northeast and Midwest). Throw in a slew of other challenges – huge numbers of underwater homeowners, unusually high state taxes (in California, not Nevada) and a penchant for financial mismanagement, to name a few – and this region claims a disproportionate number of the nation’s troubled cities. Of the 54 cities with 2012 unemployment rates over 11%, more than half (28) are located in California or Nevada. Here are the eight highest unemployment rates:

Everywhere else

The last table shows the worst unemployment rates in the rest of the country, using the same 11% cut-off that I used for the Northern states listed above. The three Massachusetts cities are all located near their state’s southern borders, reinforcing the lower New England region’s poor performance as shown by the Connecticut and Rhode Island data above.

Six regions with distinct employment patterns

A deeper look at the data shows that some differences in unemployment rates were unique to the past couple of years, whereas others were more enduring. Based on trends from 1990 to 2012, six regions seem to stand out, as defined below:

Setting aside “Californevada” and Florida for a moment, here’s a history of median unemployment rates for the other four regions:

In a nutshell:

• Relatively low unemployment rates for the “Western Leaders” aren’t just an artifact of recent strength in, say, energy production and commodities. These states have consistently outperformed the rest of the country.
• Abysmally high unemployment rates for the “Eastern Super-laggards” have also persisted for over two decades, exceeding all other parts of the country.
• The “Northern Coastal and Great Lakes Laggards” and “Western Laggards and Southeast” fall somewhere between the other two regions, but always favoring the southern states over the northern states.

Lastly, here are the results for “Californevada” and Florida, compared to the Western Leaders:

Not surprisingly, California, Nevada and Florida are more volatile than the other regions, cycling well above and then back toward the Western Leaders in each of the past two decades. Also, the unemployment problems in California and Nevada have been consistently worse than Florida’s unemployment.

These trends and the others I’ve mentioned may or may not persist in coming years. But if your goal is to anticipate the next Stockton, San Bernardino or Detroit, I suggest watching the unemployment data closely and paying particular attention to the cities listed above.