Photo Credit: Wikimedia/S300896, CC BY-SA 4.0
The Kansas City metro area is surely one of America’s most unusual. Among large metro areas spanning multiple states, it has the highest percentage of its population living in the state that does not contain its central city (apart from the perhaps even more anomalous case of Washington, DC). There are two municipalities called Kansas City, one in Missouri and one in Kansas, with the regional central city being the one in Missouri. And Kansas City is essentially the only large metro area in the country in which the “favored quarter” affluent suburbs are in a state that doesn’t contain the central city.
This raises some interesting questions. Kansas City usually shows up on my list of higher performing Midwest metro areas. But is this because of the Missouri portion of the metro or the Kansas portion? Or both?
I recently did a study for the Show-Me Institute in Missouri that looks at this very question. I look at the performance of the Missouri portion of the metro area vs. the Kansas portion across a number of economic and demographic factors: population, jobs, GDP, personal income, high and very high income households, educational attainment, etc.
In every case, the Kansas part of the metro area, with its affluent suburbs in Johnson County, outperforms the Missouri portion, sometimes significantly.
The Missouri side of the metro has a population of 1.3 million, similar to Louisville. That would make it a major metropolitan area in its own right. So I also looked at how just the Missouri side of the region would rank were it a standalone region. Its rankings would drop significantly in most cases, putting it in the bottom ten of all major metros in most categories.
While a concern about city-suburb splits in growth and wealth are common in the country, Kansas City has a unique spin on it because the central city and the most affluent suburbs are in different states. It surely makes for interesting regional dynamics.
Click over to read the full report.
It seems as if there could be some other interesting situations to analyze, at least for a Hoosier: Kentucky and Indiana portions of Cincinnati metro; Indiana portion of Louisville metro; Indiana suburbs and exurbs of Chicago (with and without Gary).
Cincinnati might be the most interesting comparison with KC since the newer affluent ‘burbs and metropolitan airport are in Kentucky. (Are Cold Spring and Crestview KY “the favored quarter” there now, or has the “gravity” of Toyota Georgetown pulled development over toward the I-75 corridor?)
Southern Indiana is pretty blue collar. Most of the upper middle class in the Louisville region lives in Kentucky, and most of that in Jefferson County (thought that’s changing).
Cincinnati doesn’t have as clearly defined favored quarter as many other places. The affluent parts of the city and most elite inner suburbs are to the east. The suburban county with the highest per capita income is Warren to the north.
Northern Kentucky has more higher income residents and higher end business than Southern Indiana, but it’s nothing like Johnson County, KS, which is like a larger version of Indy’s Hamilton County.
But a similar analysis could indeed be done for any multi-state metro area.
Metro Cincinnati’s newer affluent suburbs are Montgomery, Blue Ash, Loveland, Milford, Mason, West Chester. But, some of the most favored neighborhoods in the metro are still within the borders of the city of Cincinnati itself, such as Hyde Park, Oakley, and Mt. Lookout. They are all in Ohio. No one who cares about school quality, access to professional class jobs, or social status generally is choosing to live on the Kentucky side of metro Cincinnati. People live in Kentucky for lower taxes and to avoid the democratic, though still moderate, politics of the Ohio side. The modest number of more well-off people on the Kentucky side are ‘new money’..often small business owners or first generation professionals who are insecure about their social position and feel uncomfortable among the established professionals with graduate degrees who dominate Cincinnati’s northeastern burbs. Some middle-class, not professional class, households have fled to Boone County, KY and toward, but not necessarily across, the Indiana border as the western neighborhoods of Cincinnati itself collapse into a shocking state of poverty and decay. Still, Cincinnati doesn’t have the ‘sectoral’ patterns of race and class found in newer cities. It’s an old-school checkerboard in which rich and poor live near, but not with, each other. In this way, as in every other, Cincinnati resists the forces that structure most of American society. However questions of coordinating metro economies might be developed, don’t look to Cincinnati for any promising examples.
No one who cares about school quality, access to professional class jobs, or social status generally is choosing to live on the Kentucky side of metro Cincinnati. People live in Kentucky for lower taxes and to avoid the democratic, though still moderate, politics of the Ohio side. The modest number of more well-off people on the Kentucky side are ‘new money’..often small business owners or first generation professionals who are insecure about their social position and feel uncomfortable among the established professionals with graduate degrees who dominate Cincinnati’s northeastern burbs.
Replace “Kentucky” with “Northwest Indiana” and “Cincinnati/Ohio” with “Chicago/Illinois” and this is still mostly true. Though I’d add a lot of relatively well-off people who are owners or highly skilled in the trades to Da Region, and note that there are some “creative class” types hanging around the Dunes.
I think we’re also overlooking the local professional classes. A doctor or lawyer who practices in Hammond, Indiana isn’t going to commute across downtown every day from Wilmette, Illinois (or their Cincinnati-area equivalents).
The doctor in Hammond has a range of possible residence extending from New Lenox/Homer Glen on the IL side sweeping east sweeping over to Chesterton south of the Dunes. This was also a range popular with University of Chicago tenured and upper administration.
Directly south along 41 is for the ironworkers, the first gen business owners, and the holdouts leaving the SE side of Chicago, Thornton, Bloom and Rich townships.
There are big differences between Chicago and Cincinnati. The latter is not just Chicago in miniature with hills. As the middle and working classes head southward and across the border into Indiana, the Loop and surrounding areas have surged as a hotbed of tech, media, professional services, corporate headquarters, finance, art & culture, etc. Cincinnati’s middle classes are not moving so far; not putting as much distance and as many political borders between them and the city they’ve left. Nor is central Cincinnati seeing any increase in high-end employment…or any employment for that matter. Even if Cincinnati is experiencing some modest effects of the larger economic and political forces at work in America, they are much more muted and have much less effect on Cincinnati. In many ways, Chicago’s response to the new economy is much more functional than Cincinnati’s. The departure of the working and middle classes and their replacement by the young, grads, and highly paid professionals is good for Chicago. It gives new sources of growth around which Chicago can reorganize its politics. That’s not happening in Cincinnati. As people leave Cincinnati, the city they leave behind remains unchanged. The shifts necessary for Cincinnati to adapt just aren’t happening.
All of this may be true in January, 2020. Not so sure it will be so in the future.
Are you suggesting that Cincinnati WILL have a sudden surge in professional class employment? Or that middle and working class people will stop leaving Chicago because of the pandemic?
No way to reply below your response to me, so hopefully you will see this.
No…I was more skeptical about the continued success of the Loop. As others have noted in other threads, the downtown-centered and concentrated wealth of employment and amenities in places like the Loop has been dealt a serious blow. I also follow Socket Site, and the dumping of downtown San Francisco commercial and office real estate has begun. As some of the wags over there put it: Why spend all this money on a tiny SF apartment when there are no bars, no sports, no restaurants…no amenities period. And when the City has allowed/enabled the growth of shanty towns worthy of Apartheid-era South Africa or Brazil? Chicago may have less of the homeless favela situation (would anyone want to be homeless in a Chicago winter? I still remember my winter living in Chicago! Brrrrrrr).
Why is everyone assuming that cities are the weak link? These comments are very revealing about where people think money and power come from in America. They come from cities, not suburbs. Cities have grown because they support the professional networks that drive growth. Urban growth is not some sort of corporate conspiracy that has been foisted on Americans. Young grads and professionals are in cities because other young grads and professionals are in cities, not because of commercial real estate markets. Commercial real estate followed the networks, not the other way around. Changes in commercial real estate will respond to changes in the economy. It won’t CAUSE them. Cheaper or more plentiful residential choices in cities may well increase their attractiveness to the young and ambitious who’ve been priced out in recent years.
Suburbs with lower than average incomes and working class towns dominated by one industry or one company are clearly the week link, not downtown SF or Chicago. If you own real estate in Chicago’s southern burbs or in Rockford or Peoria, Illinois, put it on the market now! You can’t make money on it. If you own property within sight of the Loop, hold onto it. You can’t lose money on it.
@basenjibrian: I’ve said before that the Loop (and environs) is so centripetal to Chicagoland and really the Midwest that it’s basically invincible, although it’s probably headed for a lot of short-term economic pain and, let’s say, real estate bargains. It’s a logistical workhorse and not really comparable to a pure lifestyle city with already dispersed employment like San Francisco (i.e. the Google bus to the suburbs). I do think we’re going to see a halt to the westward expansion of Chicago’s central business district as well as the gentrification frontier in, say, Albany Park for at least 5-10 years if not a generation, but actual contraction or reversal seems unlikely.
The real concern should be for downtowns in metro areas that aren’t really built around them and where downtown ‘vibrancy’ is a novelty, like Indianapolis and Detroit. Also keep an eye on acceleration of the retail apocalypse in the suburbs, which was already a revenue issue and source of blight before the COVID-driven spike in e-commerce.
If you are concerned for downtown Indy, then you should be concerned for all of Indy. Billions have been invested in central Indy. If it doesn’t produce a return on investment, metro Indy will take a big hit. Calling anywhere a “lifestyle city” suggests that no one is there for economic reasons; that they are there because of the inherent features of that place. That’s insane. I’m sure many in SF don’t want to be there. They feel they have to been there to achieve their financial/professional goals. Aaron himself has written about the way in which many see their time in SF as a ‘tour of duty’ they must go through to make the connections and get the experience they want. They are not there for a lifestyle. You’re right about suburban retail. Suburban areas without professional class employment will be seriously hurt by the loss of sales and property tax. But, the idea that we are going to ‘return’ to some previous economic circumstances in which what has happened in the last 20 years will be ‘undone’ is misguided. We’ve moved on and non-favored suburbs are the weak link. They’ve seem their physical infrastructure decline. They’ve lost power in their ability to attract employment. They’ve invested in a hugely expensive road and parking infrastructure that increasingly looks useless in a world of Amazon, declining consumption, and the concentration of wealth and power in cities and their most favored suburbs. History doesn’t move ‘forward’ or ‘backwards.’ We will never return to where we’ve been and we’ve never been where we are. The only constant is change.
As long as Indy has Eli Lilly, Anthem, Cummins, and NCAA headquarters operations (all downtown), along with all professional and grad schools at IUPUI and the seat of state government, I don’t think there’s a lot to worry about in downtown Indy.
Big Pharma, health insurance, diesel power, college sports, law/medicine/dentistry, and state government aren’t going anywhere.
Don’t forget about Indy’s ample parking, excellent golf courses, and friendly can-do spirit!
I wonder what this kind of analysis looks like for border towns, like Ciudad Juarez/El Paso.
I have to wonder if part of the issue is residential segregation. The vast majority of the African-American population of the KC metro area lives on the Missouri side of the border, and then in heavily segregated neighborhoods. The identification of Kansas City, Kansas as the favored quarter for investment may have less to do with state and city policy choices and more to do with discrimination, both legacy and ongoing.
I don’t know that the Show-Me Institute would want to talk up that problem–traditionally, it seems that libertarian-leaning think tanks don’t want to deal with issues of racism because that problem necessitates the kind of government intervention they dislike–but it still would have been worth mentioning this as a possible cause in your report.
It does seem likely that race was a factor for people wanting to leave the Kansas City school district.
Aaron – there’s a few factors at play here, as always. You hit on a big one, which is the ease of suburban expansion across the state line. Notably, before the Kansas suburbs developed, the trend for a favored quarter of sorts was already south from downtown. Racial segregation and redlining practices (especially in the several thousand acres developed by JC Nichols) turbo-charged the trend, especially since the vast majority of African-American residents are on the Missouri side or in Kansas City, KS. Johnson county, KS was able to develop in its early decades as a fairly homogenous, white, middle class area. Of course this is the same as in many other metros, but it is made more stark here because of the state line and the separate jurisdictions – especially school districts.
The tax situations haven’t helped matters in recent decades, but also it’s noteworthy to consider issues such as bankruptcy laws and limitations on liability for doctors. Both sets of laws are far more protective of high-earning or potentially high-earning people in KS as opposed to MO. In essence, if you are undertaking risk such as starting a business, you can live in KS and not lose your house to bankruptcy. In MO, it’s not protected. These sorts of laws are more commonly known by people who could benefit from them than are realized by the layperson. So what happens is the favored quarter status of Johnson County feeds on itself in multiple dimensions.
I’m not an expert on the historical development of the situation, though Nichols’ role has been mentioned to me. The laws around bankruptcy and limitations on liabilities for doctors is an interesting one I hadn’t heard of.
BK laws are federal, not state, and whether you lose your house in bankruptcy has nothing to do with the state the house is in. Some of it has to do with how you structure your business entity.
Liability protection is a different matter, and states can protect homes from liability judgements.
I believe there are some interactions of state law with bankruptcy, particularly when it comes to homes. See:
https://www.natlbankruptcy.com/saving-your-home-through-bankruptcy/
Chris – sorry, you are mistaken,
Yes, after posting something nagged me and I did a little lookup and there are varying state laws on exemption of houses and home equity, and Kansas’ is very liberal.
That said, I was once an entrepreneur who bet the home equity on a business. I didn’t look that far down the line (into BK code) at negative consequences…since I had to pledge home equity, I assumed I’d lose the house if I defaulted on the loan.
It seems entirely an issue of what economists call externalities. All the regional draws are in Missouri..the airport, CBD, convention center, social, cultural, nightlife, c-suites, etc. You can have access to them while still being in Kansas. Kansas City, MO or the state of Missouri has to figure out a way to get those legally resident in Kansas to pay for what they use in Missouri. Without that, metro KC creates it’s own internal limits on its growth. Successful cities figure out ways to pay for themselves. Detroit failed because it couldn’t pay for itself. NYC succeeds because, despite the relentless attacks on it by outside interests, it always manages to pay for itself. Successful cities invest in themselves. They are successful because they invest in themselves.
NYC pays for itself at least partly because the vampire squids of the “financial services industry” can parasitically drain the blood of the rest of the country and the world.
Cities create the “blood” that sustains the rest of the country and the world. Markets give value to land and raw materials. You have it all completely backwards.
No, with respect to hedge funds, they do indeed suck capital out of real-world businesses not in NYC. That is NOT “wealth creation”, it is “wealth extraction”.
Strip mining for a modern age: strip-mining money through debt-fueled corporate takeovers.
Who creates wealth?
What “blood” did Bain Capital create? Or the sharp dealing Ayn rand-quoting weirdo who accelerated the (probably inevitable) demise of Sears create? Is Jamie Dimon REALLY the wealth creator?
Who creates “wealth”? Well, the first task is to define “wealth”. Is a poisonous product created to extract money from foolish teens with addictive poisons “wealth” (Someone on Socket Site was bemoaning the departure of Juul from San Francisco). But again, “consulting fees” and “management charges” and usurious debt levels are not by any definition new wealth. Sure…one can argue that some of the financial services “industry” helps allocate capital and provide access to funding for growth. But not all “growth” is good. (Oh good…Purdue Pharmaceuticals’ profits from Oxycontin are skyrocketing! Praise the holy wealth creators!) And so much of the financialization of our econo9my is spreadsheet diddling and extraction. Purportedly so the 1% can extract an even greater percentage of the country’s wealth, but in many cases not even there. (Is there a clear benefit to the nonsense by many hedge funds? Or does it benefit the vampire squids and spreadsheet diddlers primarily? That is the question).
New York City, arguably, used to create a lot of wealth. But the manufacturing economy (I would argue that manufacturing, not “derivatives trading” creates real wealth), for example, has been largely driven out.
We call the ‘blood’ ‘capital’ in the modern economy. Things only have the value that markets give them in a capitalist economy. The concept of ‘utilitarian value’ doesn’t exist in capitalism. Marx went over all this more than 150 years ago. You’re confusing form and function. Forms don’t have value, functions do. If something doesn’t function, it doesn’t have value in a capitalist economy. Just because Sears, your house, or The City That Shall Not Be Named exist, doesn’t mean they have any market value.
Why would people with such anti-urbanist views participate in an urbanist forum?
‘Wealth’ is ‘market value.’ Things are worth what someone will pay for them. Sears is worth what someone will pay for it. Kansas City is worth the aggregate value of what people will pay for their respective piece of it. You’re running yourself around in circles rationalizing your resentment of successful cities.
I don’t “resent successful cities”. I live in the metropolitan area of one (SF Bay Area) (at least in the recent past).
But I disagree with your too-broad definition of “wealth”. Usurious interest rates that drain a company dry are not “wealth”, although they may pay for a megamansion in Greenwich. In a real, long term socially conscious definition, Juul is not creating “wealth”. The profits from addicts to Oxycontin are not REAL wealth. Is a gambling casino really creating “wealth” in any real sense? Profits from derivatives are only peripherally wealth, they are just gambling. New York has increasingly specialized in the kind of extractive, “gambling casino” kind of economy that I cannot define as simplistically and blithely as “wealth” that you do.
You can resent the place you live in. Many do. Transfers of wealth don’t create wealth, true. But without access to capital, investments that increase wealth cannot be made. Cities exist for the purposes of gathering capital and investing it. Again, this presumption that cities are ponzi schemes and that suburbs and small towns are some how ‘real’ is the issue. The idea that farming, building, and manufacturing are ‘real’ while the work of financing, marketing, and distributing these things isn’t real is just romanticizing the past. Yes, we need food, housing, and manufactured goods, but we can’t finance their production or distribution without the concentration of capital, that is wealth, in cities. Manhattan and Silicon Valley aren’t the ponzi schemes in america today, lower middle and working class suburbs are. If Indy can’t manage to get its hands on some of that capital and get a return on it in some way, then all of Indy is in trouble, not just its center.
The problem is when these “financing, marketing, and distributing” functions become the dominant ones, become extractive, distort the underlying economy. “Financialization” of the economy. I am not an economist. But many would argue that this financialization HAS become a burden, his become distorting. hence the original comment that New York profits at least partially if not largely, from this extraction.
Until you can really explain what an “underlying economy” is, I don’t really know how to respond. Do you just mean the economy of a former era? What caused this “underlying economy” to wither in your view? What would America look like without this “burden” of an unreal economy? It just sounds like you’re arguing that America should have stopped developing at some point. Are you arguing that financial specialization hurt cities? Or that it helped some and hurt others? Should America have retreated from the world and invested in public services and infrastructure instead of it’s military? That would have led to a much less secure world and allowed authoritarianism to thrive. America is turning away from the world now. You may get your wish!
I don’t know where you got some of the ideas you are attributing to me in your latest “response”, Matt, so I don’t know what more to say. I give up, Bain Capital and the weirdo quoting Ayn rand who helped kill Sears, and Bernie Madoff and Lehman Brothers, heck, the Church selling “bleach cures” and spending a trillion dollars on the war in Afghanistan generate lots more wealth than farming or manufacturing or trading or other “old school” activities. Every scam or foolish expenditure by our New York and Washington and Silicon Valley Lords of the Universe is just peachy kean.
Matt, look up GDP. The things included in it are the “real” or “underlying” economy. They are goods and services that people and companies and government pay money for.
Raising buyout funds and buying (and selling) existing assets (whether tangible or intangible) does not qualify. Layering debt on productive assets does not qualify.
Chris, The value of services are included in GDP. Which services are “real” and which are not? Here’s a list of metro GMP, Gross Metropolitian Products. What does this tell you? https://www.statista.com/statistics/183808/gmp-of-the-20-biggest-metro-areas/
Conveniently enough, I ran across this little screed that describes the kind of spreadsheet diddling, often tied to public corruption and funny business, that “financial services” specialists in places like London and New York specialize in. Wealth creation? I don’t think so, except for even more piling up of filthy lucre by a tiny slice of questionable people.
https://www.craigmurray.org.uk/archives/2020/07/banana-republic-corruption/
For ongoing coverage of this stuff, Naked Capitalism is invaluable (despite some of the commentariate’s sympathy for Trump)
If inequality is your issue, there are forums where you can discuss that.
Don’t give up Basenjbrian. You don’t seem really interested in cities, but I’m sure you can find a forum about American reindustrialization to discuss your concerns. The kinds of developments you mention wouldn’t occur in cities, for the most part. Big new factories would require cheap land and an affordable work force. That’s why most manufacturing in American has moved to the South. Cities are where people, ideas, and capital meet. A reinvigoration of manufacturing in America has a non-urban geography.
KCMO has a 1% income tax for this purpose, which applies to people that work or reside in the city. It also has quite high sales taxes. No doubt all of it could be better done or more targeted, but much has been tried over the years.
But is there some kind of “tax treaty” between the states?
Since Indiana levies local income tax based on county of residence and has suburbs of three out-of-state cities, there is accommodation for Indiana suburbanites so they don’t get double-taxed by Illinois, Ohio, or Kentucky if they work in those states.
I do not disagree that many of our suburban communities are also “Ponzi Schemes.” I think Charles Marohn makes a good point.
The suburbs that lack a broad enough economic and tax base are in the greatest trouble. That is, suburbs built on housing and retail alone. If they don’t have enough salaried and professional class employment and don’t have the mix of infrastructure, particularly non-car based infrastructure, they will become increasingly marginalized in the decades ahead. They will become the dumping grounds of poverty and dysfunction that cities became from the 1960s through the early 21st century.
I’m curious about the impact of the University of Kansas being in such close proximity on the Kansas side. While Lawrence technically isn’t part of the KC metro area, it’s about the same distance to the KC core as Ann Arbor is to Detroit and Boulder is to Denver. Lawrence is a pretty classic college town with all of the positive attributes that come with it, such as high educational attainment and incomes. I don’t think KU necessarily explains the disparity between the Kansas and Missouri sides of the KC metro area, but it’s certainly an advantage.
One factor regarding Kansas is that the Kansas suburbs of KC are really the top urban area in the state and have that draw – at least that’s my impression. I can’t state it definitively but it’s indicative in the data and I’ve heard that’s the case. The state is very sparsely populated and places like Wichita and Topeka are not big draws.
Topeka has to be one of the dullest, grimmest cities I have ever visited. How could it be otherwise in a State that elects its current roster of ideological idiots?
Frank – there’s certainly a relationship. One joke or story for many years has been that people who move to KC from small towns and rural areas of KS tend to live on the KS side, and those from small towns or rural areas in MO live on the MO side. Is that actually true? Who knows, but it has anecdotally seemed possible to me. And no doubt there’s a significant share of people that grow up in the KS suburbs, attend KU or K State in Manhattan, and then find their way back to the Johnson County, KS suburbs.
Could part of the reason for the success of Johnson County then be because Kansas has no other major attracting metro area, whereas Kansas City, MO has to compete with St. Louis, which may have a devastated central city but certainly has some suburbs that are very successful?
“You can resent the place you live in. Many do.”
That’s certainly true of one commenter.
It’s true of many people.
Only noting for irony purposes…
Where’s the irony here?