Uneven Growth in the Post-Recession Economy
A recent report released by the Economic Innovation Group paints a lopsided picture of how the United States has recovered from the Great Recession of 2007-08. According to the study, job growth and new business formation in the post-recessionary period has been heavily concentrated in roughly 70 counties and almost exclusively clustered in large metropolitan regions. Twenty counties, which account for less than one percent of roughly 3,100 counties in the U.S., were home to half of new business startups between 2010 and 2014. Likewise, half of the new jobs created in the same time period were located in only 73 counties.
The report, which analyzes data from the U.S. Census Bureau, compares business and job growth trends from the last three recovery periods: 1992-1996, 2002-2006, and 2010-2014. The study found that between 2010 and 2014, far fewer new businesses were formed in comparison to earlier recovery periods. For instance, in the mid-90's recovery 421,000 new businesses opened their doors, with 400,500 being established between 2002 and 2006. This stands in sharp contrast to the 166,500 new businesses added between 2010 and 2014.
Job growth during the recession was also found to be lopsided and narrower than in previous recovery periods. Thirty-one percent of counties continued to lose jobs throughout the 2010-2014 recovery, compared to twenty-eight percent in 2002-2006 and fourteen percent in 1992-1996. The share of U.S. counties that matched or exceeded the national job growth average fell from fifty-eight percent during the 1992-1996 recovery to just twenty-eight percent between 2010 and 2014.
The 20 counties with the largest increases in employment from 2010 to 2014 were primarily found in Sun Belt and Coastal states such as California, Florida, Texas, and New York. States with strong energy sectors such as North Dakota, Oklahoma, and Texas experienced employment gains in the 2010s, as did states with large technology and high-end service industries such as Colorado, Oregon, Minnesota, and Utah.
According to the report, nearly two-thirds of rural counties experienced a net loss of businesses between 2010 and 2014, while metropolitan areas with strong ‘innovation economies’ such as Dallas, Houston, Los Angles, New York, and San Francisco experienced strong job growth and attracted new firms and startups. This has important considerations for rural states, especially those without economies bolstered by oil and natural gas reservoirs. The findings of this report raise concerns about the ability of rural states to compete with more populated states in attracting new businesses and startups and what state leaders can do to ensure that rural counties are not left behind.
This report also compliments other evidence that the landscape of the post-recession economy features a widening gap between high and low paying jobs. The EIC report found that half of the 9.1 million jobs created during the 2010-2014 recovery period were lower wage positions and that 1.8 million middle income jobs lost during the ‘Great Recession’ have yet to be recovered.