A better, not bigger, Lexington

Isn’t population growth what Lexington needs?

Here’s a new study that helps to explode the myth that population growth is automatically the way to improve the economy.  Listen carefully when our local leaders expound on the benefits of “growth.”  This study shows that slow/no growth is better for incomes, employment rates, and poverty rates.

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By Eben Fodor

Fodor & Associates LLC
December 2010

“Most cities and metro areas in the U.S. are actively pursuing growth through a combination of public policies, investments, tax incentives, and subsidies. Growth has many economic, social, and environmental impacts, but this pursuit of growth is typically based on a stated desire to provide jobs and economic prosperity for people living in the area. “We have to grow to provide jobs,” or even “We have to grow or die,” are common axioms from local officials. These statements favoring growth are usually made without evidence as to their validity. They seem to be based on the assumption that additional jobs that may result from expansion of an urban area will benefit existing residents by giving them more employment opportunities and better wages.”

“This study examines the relationship between growth and economic prosperity in the 100 largest U.S. metropolitan areas to determine whether certain benefits commonly attributed to growth are supported by statistical data. The annual population growth rate of each metro area from 2000 to 2009 is used to compare economic well-being in terms of per capita income, unemployment rate, and poverty rate. The study finds that faster growth rates are associated with lower incomes, greater income declines, and higher poverty rates. Unemployment rates tend to be higher in faster growing areas, though the correlation is not statistically significant at the 95% confidence level. The 25 slowest-growing metro areas outperformed the 25 fastest growing in every category and averaged $8,455 more in per capita personal income in 2009. The findings raise questions about the efficacy of conventional urban planning and economic development strategies that pursue growth of metro areas to advance the economic welfare of the general public.”

Read the whole report here

Summary of Findings

  • Finding #1: Incomes tend to be higher in metro areas with lower growth rates.
  • Finding #2: Faster-growing metro areas tended to have a bigger drop in income last year (2009).
  • Finding #3: Metro areas that grew faster from 2000 to 2009 tended to have greater declines in personal income during the Great Recession (2007-09).
  • Finding #4: Metro areas with slower growth had bigger income gains over the 2000-2009 period.
  • Finding #5: Per capita personal income in faster-growing metro areas was more severely impacted by the recession.
  • Finding #6: Higher growth rates occurring 10 or more years in the past have a stronger correlation to lower incomes than do more-recent periods, indicating that there may be long-term adverse consequences to local residents from faster growth.
  • Finding #7: Metro areas with faster growth rates do not tend to have lower unemployment rates.
  • Finding #8: Metro areas with faster growth rates do not tend to see their employment conditions improve more than slower-growing areas.
  • Finding #9: Faster growth rates tend to correspond with higher poverty levels, but not at the statistically-significant 95% confidence level.
  • Finding #10: Metro areas with higher growth rates during the previous decade (1990-2000) tend to have higher poverty rates in 2009.
  • Finding #11: The slowest-growing metro areas outperformed the fastest-growing areas in every category used in this study to reflect the prosperity of local residents. Residents of the slowest-growing metro areas averaged $8,455 more per capita in personal income than those of the fastest-growing areas.
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