The geography of business formation and job growth is concentrated in less than two dozen counties across the nation.
There is much talk about national income inequality, but America continues to suffer from deepening geographic inequality as well. Just 20 large urban counties nationwide—less than one percent of the nation’s 3,000-plus counties—accounted for half of new business establishments, according to a report released today by the Economic Innovation Group. The report uses Census data to examine the number of business establishments and jobs created over the first five years of the most recent recoveries: 1992 to 1996, 2002 to 2006, and 2010 to 2014.
Los Angeles County comes in first place, with around 14,500 new establishments, followed by Miami-Dade County (about 6,800), Kings County, New York, or Brooklyn (6,500), Harris County in Houston (6,000), and Orange County, outside L.A. (4,400). Queens, Dallas County, Cooks County in Chicago, San Francisco County, Santa Clara County, San Diego County, and Manhattan (New York County) also number among the top 20, as the table below shows. These counties make up less than one percent of America’s counties and are home to just 17 percent of the nation’s population.
The map below takes a broader view, charting the change in the number of business establishments during the most recent period of recovery. Most of the map is covered in light blue, indicating a decline in businesses. Those areas that experienced positive growth (shown in dark blue) are primarily located in Southern California, Texas, Florida, Nevada, Utah, and states in the Northern Plains.
Overall, the report finds that more and more counties are witnessing a decline in business establishments during periods of national expansion. In the first five years of the 1990s recovery, for instance, 17 percent of counties saw net declines in their business establishments. By the 2000s recovery, the share of counties with a decrease in business establishments reached 37 percent. And by the 2010s, the share more than tripled to 59 percent. In fact, from 2010 to 2014, around three in five counties saw more business establishments close than open, and only a quarter of all counties added business establishments at the same rate as the national economy.
This skewed distribution of economic advantage is unbelievably striking, even in light of my own long-held argument that America’s economic landscape is increasingly concentrated in large, urbanized centers, which draw in talent and are responsible for the lion’s share of innovative and entrepreneurial activity.
The same pattern can be seen with job growth, which is also concentrated in a small number of counties nationwide. Just 73 counties accounted for half of the jobs created from 2010 to 2014, as the map below shows. This amounts to just 2.5 percent of all U.S. counties, which are home to roughly a third (34 percent) of the population and 39 percent of national employment.
The table below shows the 20 counties with the largest increase in employment from 2010 to 2014. Again, L.A. County tops the list with the addition of over 350,00 new jobs. Harris County in Houston comes in second with nearly 258,000 new jobs, followed by New York County (220,000), Cook County in Chicago (165,000), and Orange County, California (150,000). Miami-Dade County, Santa Clara County, San Diego County, San Francisco County, Dallas County, and King’s County, New York (Brooklyn) also number among the top 20. Troublingly, the share of U.S. counties that did not lose jobs during a recovery period fell from 86 percent in the ‘90s to 72 percent in the 2000s, and, finally, to 69 percent during the most recent recovery.
A number of the leading counties are located in large Sunbelt metros like Miami, Tampa, Orlando, Phoenix, and Charlotte. The report also notes that Rustbelt counties such as Erie County in Buffalo, Monroe County in Rochester, and Allegheny County in Pittsburgh had strong recoveries. That said, recent job growth has been exceedingly concentrated in a select few large urban areas.
This economically and geographically uneven recovery has hit hardest at middle-class jobs and workers. By the end of 2014, only three out of five middle-wage jobs lost to the Great Recession were recovered by the economy. The Great Recession and recovery has further divided America’s economy into a small share of high-wage jobs and a large share of low-wage jobs, alongside an increasingly missing middle-class.
All in all, large counties (those with over one million people) contributed a whopping 3.3 million jobs from 2010 to 2014—more than twice as many as they created during the two previous recoveries.
Ultimately, America’s new economy is increasingly uneven not just across classes, but across geography, with a few big winners and many more losers. This is a product of the decline of manufacturing and the rise of an increasingly concentrated knowledge economy, which is propelled by the clustering of knowledge, talent, and innovation. As the report notes, “wide swathes of the country will soon be contending with the consequences of a missing generation of enterprise.” In other words, whole regions of the nation are being left behind as economic advantage concentrates in the largest and most dynamic urban areas off the coasts of the U.S.