Friday, August 12th, 2011

A Decade in Metro Area Personal Income Growth

This week the BEA issued advance 2010 numbers for metro area personal income. This enables us to take a look back at personal income growth over the last decade, so let’s do so quickly.

Here’s a map of the percentage increase in total personal income over the 2000’s:

Percent change in total personal income 2000-2010. Source: Analysis from BEA data, image via Telestrian.

Much as with GDP, growth in total personal income is unsurprisingly correlated with population growth. The per capita numbers should show a different side to the story. Unfortunately, the BEA did not release official per capita income figures do to the process of rebaselining population estimates to the latest Census. However, I did a quick unofficial analysis using population figures from the decennial Census and here’s the result:

Percent change in per capita personal income 2000-2010. Source: Custom analysis from BEA and Census data, image via Telestrian from user uploaded data.

I had expected increasing PCPI to be associated with economic health, but that doesn’t seem to be the case. Number one among large metros was New Orleans, which seems to be driven more by a decline in population than anything else. Perhaps dittos for the other Gulf Coast metros. Others in the top ten includes places like Providence and Buffalo that don’t intuitively seem like juggernauts. But oil rich Oklahoma City and recession-proof Washington, DC are also doing well. This would be something to look into further before reading too much into this I think.

Looking at some comparison peer groups, here’s an index view of the decade’s performance for various tier one metros.

Total Personal Income 2000-2010, Index 2000=100. Source: Analysis from BEA data, image via Telestrian.

You can see the clear affect of the dot come crash on San Jose and San Francisco. And also the remorseless rise of a Washington, DC that seemingly shows no relation to anything going on in the rest of the country.

Here’s a similar chart for Midwest metros.

Total Personal Income 2000-2010, Index 2000=100. Analysis from BEA data, image via Telestrian.

This clearly shows the uniquely struggling positions of Detroit and Cleveland. Everyone else was in a pretty narrow band, with Kansas City taking the crown. Another thing this chart tells me is that the Midwest metro economies are tightly linked in performance. Perhaps this suggests a common linkage to each other and/or the general macro economy that should be a message to them to find common cause? I find it interesting that it isn’t Chicago or Minneapolis who stand apart from the group, but the stragglers. Perhaps the idea that these global type cities can simply declare independence from their region in favor of membership in some Hanseatic League of Global Cities is more ambition than reality.

Topics: Economic Development

4 Responses to “A Decade in Metro Area Personal Income Growth”

  1. Chris Barnett says:

    This economist-military dad immediately recognized one huge factor in per-capita income growth:

    The percent change in per-capita income map seems to show pretty clearly that counties dominated by military installations did well over the decade of war: DC and suburbs; USMA & Stewart AFB, NY; Norfolk/Newport News, VA; Fort Knox and Fort Campbell, KY; Fort Sill, OK; Camp Lejeune, NC; Eglin AFB and Pensacola NAS, FL; Pine Bluff Arsenal, AR; Fort Benning, GA; Fort Bliss and Fort Hood, TX; Yuma Proving Ground, AZ. It turns out that a high percentage of those dark blue spots actually represent spinoff effects from the military budget.

    (Note that Oklahoma City is home to a major air force base, Tinker. Even their success might not be mostly oil & gas.)

  2. Chris Barnett says:

    Oops. Left out the Rock Island arsenal in the Quad Cities area of Illinois/Iowa; Fort Riley, KS; Warren AFB, WY; Ellsworth AFB, SD; Kirtland AFB and Los Alamos, NM; Sheppard AFB and Dyess AFB, TX.

    One would need to look at whether the slow-growth metros are net contributors to the Feds. If so, one could reasonably postulate that redistribution accounts for the effects shown. America’s lost decade?

  3. Alon Levy says:

    Aaron, be careful with the 2010 census numbers; if they undercount entire metro regions, rather than just specific areas in metro regions (namely, inner cities), then they’ll screw with your per capita income numbers. Best to wait until the BEA issues its own comparable per capita income numbers, maybe.

    Fortunately, the trends tend to accord with the BEA’s own 2000-9 numbers. In both Providence and Upstate New York, there was fast per capita growth. Upstate New York is doing very well in the recession, with below-average unemployment; manufacturing that isn’t connected to the auto industry is doing okay. On the other hand, Rhode Island has very high unemployment. And in both cases, the trend for an increase in per capita income was noticeable even before the recession. Maybe Rochester, Buffalo, and Syracuse are undergoing the same process of rising from the ashes that Boston underwent in the 1980s.

  4. Chris Barnett says:

    Alon, undercounting in larger metros would only drive down per-capita numbers there, and highlight even further the military effect.

    I do not know how the Census Bureau counted people living on military reservations, especially reserve and Guard members on mobilizations, versus how BLS counts their pay. (BLS does not count full-time military members as employed or as part of the workforce, but clearly those paychecks represent personal or household income.) It is possible that the income effect in Aaron’s maps is associated only with the civilian support staff of government and defense-contractor employees around bases. Even then, the redistributive effect is still demonstrated.

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