Local growth is strong, healthy and ... a bit surprising
Recent news that the Census Bureau had named Seattle the fastest growing large city in America generated quite a buzz. A generation ago, this report might have elicited groans and cries for growth controls, but this time it was greeted with approval. Growth, it seems, is no longer such a dirty word in Seattle.
But, to a large degree, the stories missed the point. The report referred only to growth in the population within the Seattle city limits. Rapid growth in Seattle proper tells us that many households prefer to live in the city — a very good thing, considering the decades of decline in central cities across the country — but tells us little else.
To really understand growth we need to look at the larger picture of the metropolitan area. Puget Sound is not noted as a retirement community, so population growth will closely follow job growth. Employment tends to spread out across the region, and since most people do not live in the same city where they work, it is hard to evaluate growth in anything but a regional context.
Before jumping into regional growth, it is worth noting that the relationship between central cities and their larger metro regions varies widely around the country. In some regions, either through city-county mergers or just aggressive annexation, the bulk of the population lives in the central city. For example, the cities of San Antonio and Jacksonville have over 60 percent of their region’s population. At the other end of the spectrum, the cities of Miami and Atlanta contain less than 10 percent of their region’s population. Seattle, with just 18 percent of the population of the Seattle-Tacoma-Everett Metropolitan Statistical Area falls on the small side of central cities. Boston, which Seattle recently passed in city size, has an even smaller share, at 14 percent.
While the Seattle metropolitan statistical area is not the fastest growing large metro area in the country, it is in a respectable position. In the three years from the 2010 census through 2013, greater Seattle has grown 5 percent, making it the 12th fastest growing of metro areas with more than 1 million people. Out of the 11 large metro areas that have grown faster than Seattle, only two — Washington, D.C. and Denver — are outside of the Sunbelt. Seattle, moreover, has been growing faster than any other large metro area on the West Coast.
In the past few decades, successful metro areas have tended to follow one of two distinct patterns, demonstrating either quantitative or qualitative growth. In what we might call the Sunbelt pattern, a very business-friendly climate and a low cost of living have attracted large employers in relatively low-wage industries. These areas tend to experience high population growth (quantitative) but lower growth in average wages (qualitative).
What we might call the Coastal pattern is the opposite. The combination of high wages and a restrictive development environment raises the cost of living and doing business. These areas tend to experience slower population growth but high average wage growth.
Curiously, the Seattle region seems to follow both patterns. Only one other metro area, Washington, D.C., has experienced both higher average wages and higher population growth. A few other regions are in the ballpark of Seattle, such as Denver and Houston (both benefiting from the national energy boom). So, how has the Seattle metro area pulled this off?
Several factors seem to have allowed the Seattle region to grow both quantitatively and qualitatively. The first is the magic of the multiplier effect, though which local jobs are created as a result of new jobs in the so-called traded sector (those industries with customers outside the area). The average multiplier in the region is about 3.5, meaning that for every new job in the traded sector, another 2.5 jobs spring up in retail, local government, real estate, healthcare etc. But Microsoft, with its abundant local outsourcing and its well-paid, free-spending employees, yields a multiplier of nearly seven, meaning that every new Microsoft job creates almost six other jobs.
An economic impact study performed by Dr. Theo Eicher at the University of Washington concluded that Microsoft is responsible for nearly all job growth in the region over the past two decades, through both its own growth and its multiplier effect. Amazon is now picking up the slack of a slowing Microsoft, and while it may not have the same multiplier, it is proving to be a powerful job and, therefore, population generator.
Tech companies are also responsible for much of the strong average wage growth in the region. But the other key factors are Boeing and the ports, which provide tens of thousands of well-paid manufacturing and transportation jobs. This strong middle helps keep average wages high. The Puget Sound region has managed to avoid the hourglass or barbell economy, with lots of high-paid tech jobs and lots of low-paid service jobs.
In the late 1980s, when the impacts of growth really started to become an issue, the three-county population (King, Pierce and Snohomish counties) stood at about 2.3 million. Since then, the region has added another 1.3 million people, or roughly the current population of Wyoming and North Dakota, combined. That translates into an average annual growth rate of 1.6 percent, with over half of growth coming from net in-migration from elsewhere.
The forces that have led to that growth — a strong job market that attracts people and a high quality of life that keeps them here — show no signs of serious weakness. Worsening traffic and high housing costs have not slowed growth in recent decades, and there is little reason to believe they will have an impact on growth going forward. If the region’s historic growth rate of about 1.5 percent continues to hold, we will add 1.7 million more people, or roughly the current population of metro Nashville, in the next 25 years. This will bring the regional population to 5.3 million, or today’s population of metro Atlanta.
Will we be ready? Given our weak ability simply to repair and replace current infrastructure, it seems unlikely that the state or region will invest sufficiently to keep this growth from placing further strains on already overloaded systems. Experience tells us that lack of infrastructure will not stop growth. The growth will come whether we are ready or not, and the price will be paid by those least able, in the form of punishing commutes to affordable housing on the periphery.
Residents within the Seattle city limits can pat themselves on the back for creating such an attractive place to live. But nearly all of those 1.7 million new people are going to live outside the city. We can celebrate Seattle’s success, but not for long. We have too much work to do across the region.