No More 10 Minute Breaks: For U.S. Cities, Size Increasingly Matters

The best indicators of a city’s future growth prospects may increasingly be its size and population density.

Initial population has become a more significant determinant of employment and population growth in recent years than it was in previous decades, a recent analysis from the Federal Reserve Bank of Kansas City found. From 2000 to 2017, a majority of U.S. communities with fewer than 25,000 residents saw declining population and employment, while nearly all metropolitan areas with more than 500,000 residents saw their populations rise.

“The relationship between size and growth became much more important after 2000,” author and senior economist Jordan Rappaport said.

The research provides some context for the urban-rural divide that many Americans have witnessed in recent years as cities have grown more prosperous while other areas languished. It also comes with sobering implications regarding the policy options available to less populous communities.

“Small locations seeking to reverse declining population and employment face a formidable challenge,” Mr. Rappaport writes, noting that many of the smaller communities that bucked the trend are bestowed with natural attributes like warm winters, scenic mountains or oil and gas deposits. “For small locations that lack such offsetting characteristics, public policy may be more effective ameliorating the negative consequences of decline than reversing it.”

While growth doesn’t always translate into a higher standard of living for a community’s residents, depopulation causes a host of problems. As residents depart, counties and towns can be left with more infrastructure than they can afford to maintain, declining property values, a shrinking tax base and burgeoning pension deficits.

Economists say cities are gaining economic momentum as the benefits of matching firms to skilled workers grows. Large population centers often have a wider range of industries, more educational institutions and attractive amenities like restaurants and professional sports teams. Evidence has also shown that researchers and workers tend to learn more from one another when they are in the same location.

Bigger isn’t always a harbinger of faster growth, Mr. Rappaport noted. Cities with high population densities grew more slowly than their more spread-out counterparts, suggesting traffic congestion and unaffordable housing offset some of the advantages to size.

U.S. Population Grew at Slowest Pace in More Than 80 Years (Dec. 19)

Big Cities’ Success Reflects Deepening Urban-Rural Divide (Nov. 14)

The Divide Between America’s Prosperous Cities and Struggling Small Towns—in 20 Charts (Dec. 29, 2017)

Rural American Is the New ‘Inner City’ (May 26, 2017)

from Real Time Economics https://on.wsj.com/2Se7JdL