EP photo/Shutterstock

It can create a troubling illusion of prosperity.

When we think of the growth of cities and metros, we often think in terms of population growth. But this growth bears little relation to economic growth, and it's a terribly misleading indicator of it.

As I wrote in my feature on economic recovery for The Atlantic, while many people use population as a way to gauge regional growth or decline, it actually tells us little about economic growth. To shed light on the connection or, really, lack of  one between population growth and economic growth, my team and I tracked not just the recovery period but also for the entire decade of the 2000s.

Using figures from the U.S. Census and the Bureau of Economic Analysis, José Lobo of Arizona State University and my colleagues at the Martin Prosperity Institute examined the trends in population growth and productivity growth (measured as economic output per capita) for all 350-plus U.S. metros over the decade spanning 2001 to 2011.

Their main conclusion: There is little, if any connection, between the two. Roughly 46 percent metros had above average population growth, while 43 percent had above average productivity growth over this period. Here's the rub: Across the nation, fewer than one in five metros (19 percent) experienced both population growth and productivity growth over the past decade. There was no statistical association between the two, according to the team's analysis.

•       •       •       •       •

The map below by MPI's Zara Matheson charts the average annual population growth rate by metro.

The blue areas (those with the highest rates of growth) are mainly in the Sunbelt the South and West with the exception of the California coastline. The California coast and the Northeast are lighter green indicating much more moderate growth, while the Midwest is yellow indicating low or no growth.

The table below shows the top ten metros with the highest annualized rates of population growth over the past decade and includes their productivity growth rate and rank in parentheses for comparison's sake. All are in the Sunbelt with the exception of tenth place Kennewick, Washington.

The disconnect between population growth and productivity growth is striking. Palm Coast, Florida, which leads the country in population growth, also has the lowest  level of productivity growth of any metro in the country. Cape Coral, Florida, with the fifth highest level of population growth, logged the second lowest level of productivity growth. Myrtle Beach which is sixth in population growth had the eighth lowest level of productivity growth. Only one of the top 10 leading population growth metros broke into the top 100 in terms of productivity growth, Austin in 64th place. Six of out of the top 10 metros with the highest rates of population growth saw real declines in productivity over the course of the decade. And the average rate of economic growth across these top 10 metros was also negative, (-0.53 percent per year) and beneath the U.S. metro average (of 0.48 percent annually). When it comes to fast growing large metros, Houston and Atlanta both experienced considerable population growth rates over the past decade, while seeing real declines in productivity over the period.

Top 10 Metros with the Highest Annualized Population Growth
Rank Metro Population Growth Productivity Growth (Rank)
1 Palm Coast, FL 6.08% -3.18% (366)
2 St. George, UT 4.13% -0.64% (317)
3 Raleigh-Cary, NC 3.40% -0.46% (297)
4 Provo-Orem, UT 3.22% 0.83% (113)
5 Cape Coral-Fort Myers, FL 3.19% -2.18%(365)
6 Myrtle Beach-North Myrtle Beach-Conway, SC 3.18% -1.51% (359)
7 McAllen-Edinburg-Mission, TX 3.06% 0.67% (130)
8 Austin-Round Rock-San Marcos, TX 3.05% 1.33% (64)
9 Las Vegas-Paradise, NV 3.04% -0.58% (307)
10 Kennewick-Pasco-Richland, WA 3.01% 0.40% (158)


The second map charts average annual productivity growth across U.S. metros, as measured by growth in real GDP per capita. The maps could not be more different. Now the Northeast and West coasts are blue, indicating the higher rates. There are some areas of high productivity in the Sunbelt, but they are mainly isolated along energy-producing coast of Louisiana and Texas. The traditional Deep South is dotted with yellow, indicating low level of productivity growth, and much of the rest of the Sunbelt is green, indicating modest levels of productivity growth.

The table below lists the top 10 metros for productivity growth. The top ten includes a mix of knowledge-based metros like Corvallis and Portland, Oregon, in first and second place; Durham-Chapel Hill, in North Carolina's Research Triangle, in third; San Jose, the heart of  Silicon Valley, in fifth; and several energy-producing metros in Texas and Louisiana. The table again illustrates the striking disconnect between population growth and productivity growth. Just two metros in the top ten metros for productivity growth are among the top 100 in population growth: Durham-Chapel Hill, North Carolina, at 78th and Odessa, Texas, at 92nd.

Top 10 Metros with the Highest Annualized Productivity Growth
Rank Metro GDP Growth Population Growth (Rank)
1 Corvallis, OR 8.99% 0.91% (183)
2 Portland-Vancouver-Hillsboro, OR-WA 4.21% 1.39% (104)
3 Durham-Chapel Hill, NC 3.65% 1.66% (78)
4 Beaumont-Port Arthur, TX 3.61% 0.20% (304)
5 San Jose-Sunnyvale-Santa Clara, CA 3.49% 0.68% (219)
6 Odessa, TX 3.46% 1.49% (92)
7 Victoria, TX 2.92% 0.35% (286)
8 Peoria, IL 2.90% 0.38% (275)
9 Longview, TX 2.83% 1.04% (162)
10 Houma-Bayou Cane-Thibodaux, LA 2.81% 0.66% (222)


Taken together, these top ten leaders in productivity growth averaged population growth of 0.88 percent per year, beneath the metro average of around 1 percent per year. These metros were able to substantially increase their productivity without substantially growing their populations. Boulder, for example, which has been lauded as a center for innovation and start-up companies, was able to substantially increase its productivity while seeing its population decline.

As these maps and tables indicate, population and productivity growth are very different animals. Not a single metro overlaps the two top ten lists. The high population growth metros were mainly in the Sunbelt, while the high productivity growth metros are a combination of knowledge-based regions and energy-belt metros.  

The graph below which plots population against productivity growth for every metro in the country illustrates the lack of connection between the two.

Chart by MPI's Michelle Hopgood

It's time to put to rest the conventional notion that a growing population equals a growing economy. More than a decade ago, urban economist Paul Gottlieb dubbed this disconnect between population and economic growth  "growth without growth," dividing metros into "population magnets," where population grew but not income, and "wealth builders," where incomes rose much faster than population. Population growth, in fact, creates a troubling fake illusion of prosperity.

America's economic winners are not those places that are growing population fastest, but those that are developing the skills and capabilities that improve their underlying productivity.
 
All maps by MPI's Zara Matheson. Top image Shutterstock.com/EP photo.
 
 

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