The Cities of America’s Future

Raleigh, North Carolina. (Photo: Doug Kerr)

Writing in Foreign Policy, James Manyika, Jaana Remes, and Javier Orellana of the McKinsey Global Institute argue that cities in general and particularly smaller cities will power the new U.S. economy:

It is America’s large cities, and particularly the broad swath of middleweights, that will be the key to the U.S. recovery and a key contributor to global growth in the next 15 years. Large cities in the United States will contribute more to global growth than the large cities of all other developed countries combined. We expect the collective GDP of these large U.S. cities to rise by almost $5.7 trillion — generating more than 10 percent of global GDP growth — by 2025. While New York and Los Angeles together are expected to grow at a compound annual rate of 2.1 percent between 2010 and 2025, the top 30 middleweights (measured by GDP) are expected to outpace them with a growth rate of 2.6 percent.

While these middleweight cities all owe their economic growth mostly to population growth, their paths to success are widely varied:

Rapidly growing “gazelles” such as Austin, Texas, and Raleigh, North Carolina, have outperformed the U.S. average in both per capita GDP and population growth by building on their high-tech presence and strong collaboration with local universities. Other cities such as Dallas, Texas, and Atlanta, Georgia — which we might call “affordable metropolises” — have outperformed the average national GDP growth because their populations have expanded rapidly (despite per capita GDP growth that was slower than average). These affordable metropolises have managed to offer their citizens a good quality of life at a reasonable price by containing housing costs, for instance. Another set of large, established cities such as Boston, Massachusetts, and Washington, D.C. — “alpha middleweights” — outperform others with significantly above-average per capita GDP and sustain moderate growth by leveraging the strength of their existing economic base.

The authors advise policy-makers to carefully evaluate the strengths, weaknesses, and potential of their cities and “tailor their growth strategy accordingly.”

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  1. Kim says:

    Where does Denver rank/fit in?

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  2. DaveyNC says:

    It wasn’t that long ago that Washington DC and its surrounding areas were solidly middleweights. Gee, I wonder what spurred all that growth? To borrow from this post: http://www.freakonomics.com/2012/04/20/acemoglu-and-robinson-answer-your-questions/ methinks a bit of extraction happened.

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  3. Keith says:

    I live in St Louis and have little hope that my city will be part of this phenomenon. We’re weighed down by vicious politics and a lot of local corruption. We also have a state government that seems preoccupied with cutting education and other social programs in favor of direct subsidies and tax credit regimes for business.

    To illustrate how badly the local establishment “doesn’t get it” I will relate the following experience I had today:
    I was at a kind of economic or community development forum put on to spark discussion in the local community which is the northern part of St Louis City. This is the second one these particular organizers have put on and today there was a panel discussion. There were two speakers, one a developer and the other a resident of the area this developer wants to build on.

    This developer has done other local commercial developments (some pretty big) and they are always well supported with state and local tax breaks, loan guarantees and many times with direct subsidies. He’s very active politically and always makes heavy political donations even when he’s financially not doing so well, like now. His latest project covers 2.5 square miles immediately north of downtown St Louis. He’s invested tens of millions and other than one new smallish business he got to move from another part of the metro area nothing is happening. The proposed development covers a low-income area that’s got some newer residential developments (80′s, 90′s, and 00′s) but still needs a lot of work. It’s also about 90% African American.

    The developer starts off by talking about how it’s all about jobs. Then goes on to point out how he’s really working on attracting high-tech companies to his project and goes on to point out that the poor community surrounding the area of his project doesn’t have a whole lot of people trained to do this work. He doesn’t come out and say it but I get the general idea that he’s telling the people there who are locals not to expect his project to generate a lot of jobs for them in a kind of “managing expectations” way. St Louis does have a notoriously bad school system and is very similar to Baltimore. The city and county divorced a long time ago and during the white flight era most of the wealthy and middle class left to live in the suburbs and exurbs outside of the city limits. It’s pretty much the donut effect, a strong ring of well-off suburbs and a hollowed out center. Since roughly the end of WWII the population of the metro area has remained roughly the same while the urban and suburban land area has expanded two- or three-fold.

    Now this guy has been a key player in lobbying the state legislature for lots of real estate and economic development subsidies for businesses, especially his. He does do some talking about how he’s trying to work to get trade schools into North St Louis to help with the education situation, but that is kind of pointless when so few graduate from high school in the first place.

    What he doesn’t do, and what none of the local politicians try to do, is to get more resources for the city schools. Part of it is that Missouri is a red state and a large segment of the population thinks that public schools and teacher’s unions are the entire problem. Never mind that the charter schools that the public school detractors advocate do about the same on average as the local schools they compete against. In fact, using state test scores, the best school in the city is a public school.

    So the local establishment all talk about jobs, jobs, jobs and then advocate subsidies, subsidies, subsidies. And people like this developer go around telling the people they, in some cases, will displace to supposedly create these jobs that they don’t in fact have the skills to get these jobs after they’ve been created. Then they continue to cut education and social program funding while expanding the business subsidies to create the jobs that the local people don’t have the education to get. We have so many problems in St Louis that pretty much come down to a lack of resources and education that it’s really difficult to watch the social program cuts while business subsidies are expanded again and again. This is why I think St Louis will not share in this mid-rank city growth if it comes to pass. I think the people at the top of the regional power structure are just too greedy and will not change any time soon.

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  4. Cjohn says:

    If I hear the phrases “creative class” or “universe-cities,” I think I’ll throw-up. (Reading….Phew!)

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  5. James says:

    Granted that quality of life is a pretty subjective measure, I’m hard put to comprehend how any city, small, medium, or large, can honestly claim to provide a good quality of life.

    I think the authors are overlooking a bit of both history and technology. Yes, for centuries (millenia, if you consider Rome &c) young people have headed for the cities to find fame & fortune. However, the lucky few who found them left soon afterwards, while many died of city-generated disease.

    Nowadays, technology has made the city (or at least actually living in the city) unnecessary for many of us, a trend that can only increase.

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    • Fitty Stim says:

      Hidden due to low comment rating. Click here to see.

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      • James says:

        Bad guesses. The boondocks part is right, but the “closet” (which includes garage & stable) is full of hiking boots, cross-country skis, bikes (both mountain & road), a sailboard or two, a horse & associated gear, a couple of dogs… All of this contributes significantly to my (admittedly subjective) quality of life: how could I have them in a city?

        I suspect your problem is that you just don’t know what you’re missing, and so try to fill the void with museums, nightlife, and so on. Again subjective, but I find that sort of thing terminally boring at best – excepting the fireworks, which we do have hereabouts.

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      • James says:

        After thinking this over (while out riding the horse, actually), I realized that both of us have gotten sidetracked by our personal tastes. Whatever those are, they are just single data points.

        The discussion should be about whether and to what extent cities will continue to exist/serve a useful purpose. For most of history, goods and information moved at a speed that was fundamentally limited by the speed of a horse-drawn wagon or sailing ship. Having anything beyond an agrarian economy required people to gather within walking distance of each other, and of their work. This meant that pretty much anyone except farmers and the wealthy had to live in cities.

        In today’s world, that is simply no longer true for many people. I can order pretty much anything I need from Amazon or other on-line retailer, and have next-day delivery. I can sit in my home office, and collaborate with people from San Jose to Switzerland. Indeed, I know a couple of recent graduates who commute (over an 8900 ft mountain pass that’s often closed in winter) from their city apartments to an office in a small town : once they’ve finished their trial periods, they’ll be telecommuting.

        So given the spread of the enabling technology, how many people will chose to either forego urban life entirely, or treat it as a short life stage, akin to college?

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  6. Statspotting says:

    Discussions on US cities can easily get slippery. For example, you will never guess this – did you know that Hartford is the most productive city in the WORLD?

    http://statspotting.com/2012/03/youll-never-guess-the-most-productive-city-in-the-world/

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  7. Mike B says:

    I thought the Children are our future.

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