American cities are getting richer. Rural areas are getting left behind.

As Millennials and Boomers move into cities, will this trend continue?  How will cities and regions allocate funds? Will this exacerbate the problem? All questions we need to understand before it is too late.

by Timothy B. Lee on September 13, 2016

The latest Census Bureau data on income and poverty has good news for almost everyone. It shows the first significant growth in average household incomes in almost a decade — 5.4 percent between 2014 and 2015 — with all races, age groups, and regions of the country enjoying gains.

But one group that didn’t have a lot to celebrate from the new numbers were people in rural areas.

The census counted more than 20 million households as being located outside any metropolitan area — that is, in rural America. And it found that these households saw their incomes drop by 2 percent between 2014 and 2015: from $45,534 to $44,657.

There were 63 million households inside metropolitan areas but outside the area’s principal city — that is, in the suburbs. These households enjoyed healthy income growth of 4 percent, from an already high $61,671 to $64,144.

But the biggest gains accrued to the 41 million households located in the principal city of a metropolitan area. They saw their incomes grow an impressive 7.3 percent. Their incomes went from $47,095 to $51,378.

In short, this is proving to be a fundamentally urban economic recovery. Cities are gaining income faster than their suburbs, which in turn are doing better than rural areas. And while suburban households still earn more, on average, than urban households, city-dwellers are closing the gap.

This recovery isn’t like other recent ones

The latest census numbers confirm a trend that I’ve reported on before: The current recovery is seeing big cities reap the largest economic gains. That was a big change from the economic boom of the 1990s, which saw less populous areas gaining more.

In the past, smaller counties tended to grow faster than larger counties. This made a certain amount of sense — large counties like Los Angeles or Dallas were already expensive and crowded places to live, so it was easier for economic growth to happen in smaller towns or outlying suburbs.

But in the latest recovery, the pattern has reversed. The largest counties saw the fastest growth in jobs, with Los Angeles County, Miami-Dade County, and Kings County (Brooklyn) leading the way. Meanwhile, the least populous counties have been suffering the weakest recovery in decades.

To be clear, this chart isn’t directly comparable to the new census numbers, since it shows gains in jobs rather than incomes. And it breaks regions of the country down somewhat differently — based on county populations rather than whether a region is a principal city, suburb, or rural area.

But both charts show the same clear pattern: Economic gains are flowing disproportionately to urban areas, while less populous areas are getting left behind.

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