Think growth always brings prosperity? Not so fast

One study by an Oregon-based consultant challenges the assumption that fast-growing cities attract more jobs and greater wealth.

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Mary Newsom

One study by an Oregon-based consultant challenges the assumption that fast-growing cities attract more jobs and greater wealth.

Optimists prefer to look forward, not back. But especially during a month named for the two-headed Roman god Janus — a month when state legislatures are convening only to face mammoth budget shortfalls — maybe we all need a clear-eyed look backward as well as ahead.

A look back at the past decade from an Oregon consulting company, Fodor & Associates, ought to get plenty of people thinking about whether some assumptions of the past need re-examining. The report looked at growth rates and prosperity in the 100 largest U.S. metro areas. Its findings may challenge a bedrock assumption for many local and state government leaders: that “growth” in and of itself automatically brings jobs and more wealth.

Fodor looked at 2000-2009 data and found that on a series of measures, fast-growing cities were less prosperous than slow-growing ones. Fast-growing cities had lower incomes and during the Great Recession (i.e. 2007-09) saw greater income drops. He found no correlation between growth rate and unemployment.

I have some quibbles with his methods: His report doesn’t appear to have looked at whether fast-growing cities might, until the recession slammed them, have had greater income growth. Many of the fast-growing cities are in the South, where incomes were lower to start with and where the recession has hit particularly hard.

But Fodor’s point is that this bedrock assumption that growth automatically brings prosperity might not be true after all.

This column shouldn’t be taken as an endorsement of the “stop growth” genre of activism. Because metros and economies are complex in ways that aren’t always readily apparent, efforts to restrict growth — like allowing only low-density, single-family subdivisions — can have unintended consequences, such as driving up housing prices. They can result in economic or racial segregation. One town’s efforts to fend off growth can force new growth to sprawl farther out.

I showed the Fodor study to Ike Heard, who teaches urban planning and economic development at UNC Charlotte. He pointed to possible reasons for lower incomes in fast-growing cities: Job seekers, especially the young (who tend to be paid less) and the homeless, head for growing cities. High-growth areas attract megastores (Wal-Mart, etc.), and their impact tends to depress pay levels for low-skill workers. And where employers can choose from many available workers, they may hire those who’ll work for less.

So while this isn’t an anti-growth manifesto, policymakers everywhere might be well advised that maybe it’s not so smart to pin their state’s or city’s future on a belief that may be only myth — that growth automatically brings prosperity.

It’s particularly ill-advised at a time when so many places’ prosperity seems at risk, and so many governments are staring into a frightening budget abyss. The National Conference of State Legislatures last July estimated that the states’ aggregated budget gap for fiscal year 2010-11 was at least $83.9 billion. And 35 states project gaps for the next budget year, estimated to total $82.1 billion.

Similarly, the National League of Cities in May found that three-quarters of city officials were reporting that overall economic and fiscal conditions had worsened during the past year, with 22 percent of cities saying they’d already had to make cuts in public safety — usually a last-resort.

In Charlotte, the local newspaper for which I work has, over the past few years, run a variety of articles about problems like gangs, crime, foreclosures, and high-poverty schools. Maps of the city ran with the articles, and if you layered the maps over one another you’d see they all dealt with basically the same area — an arc almost encircling the downtown, except for the affluent southern quadrant. It’s a collection of neighborhoods the city government characterizes as “challenged” or “transitioning.” And it’s where the city’s growth policies allowed large numbers of single-family-home, suburban-style starter-home subdivisions — subdivisions where foreclosures now cause big problems.

In large part because of those low-income subdivisions, more than half the residential property sales in the county in 2010 involved foreclosed or on-the-brink homes. Similar problems exist elsewhere in the country, of course — in fast-growing Las Vegas, Florida and parts of the Pacific Northwest, among other spots. The foreclosures bite deep into local property tax bases, lowering property values across the spectrum and reducing governments’ ability to provide essential services like public schooling, mental health services, and even police protection.

In Charlotte, city policies blessed the building of mile after mile of starter-home subdivisions. While a developer trying to build a mixed-use project at a light-rail stop would endure months of bureaucratic torture to win the political support for a rezoning, those cheap subdivisions didn’t even require rezonings or City Council votes. That’s because decades ago the city zoned all undeveloped land for single-family, suburban-style subdivisions — no rezonings needed, development on auto-pilot. And the reason, naturally, was to encourage growth — because we all know that growth brings prosperity. Except, apparently, when it doesn’t.

Janus symbolized transitions — from youth to maturity, from past to future. The old god would probably understand what the nation’s once-booming cities need to do now: to look backward with a clear vision, to see which old beliefs and habits need reassessing, so that the future can learn from the past.

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