If you live in a metropolitan area of a million people or more, the U.S. economy looks pretty healthy. If you don't, it looks terrible.
Some recently released data emphasized the regional disparities in job growth. LinkedIn, in its monthly workforce report, said the Seattle; Austin, Texas; Denver; and Portland, Ore., areas gained LinkedIn members at the fastest pace over the past 12 months, while the Hartford, Conn.; Providence; Norfolk, Va.; and Pittsburgh areas were the biggest losers. The Brookings Institution's Mark Muro and Sifan Liu, meanwhile, found five big metro areas – San Francisco; San Jose, Calif.; Austin; Dallas; and Phoenix – accounted for 28 percent of job growth in technology from 2010-15.
High-end, white-collar jobs continue to concentrate in a limited number of big metro areas. In LinkedIn's report, the Charlotte, N.C.; West Palm Beach, Fla.; Tampa-St. Petersburg, Fla; Nashville, Tenn.; Las Vegas; and Dallas areas all were in the top 10 for job growth. And the metro areas with the fastest job growth in Kolko's survey were Deltona-Daytona Beach, Fla.; Provo-Orem, Utah; and Boise, Idaho.
What we're seeing, I think, are the "agglomeration effects" described by University of California at Berkeley economist Enrico Moretti in his book, "The New Geography of Jobs," running up against the difficulties of building new housing in the most in-demand cities. That is, the logic of knowledge work calls for concentrating as many people as possible in one place, but the logic of real estate makes that impossible.
Wages are rising fastest in the urban counties of large metro areas, but employment growth is fastest in the outer suburbs, where there's more room to grow. To some extent, this is a missed opportunity: Moretti and the University of Chicago's Chang-Tai Hsieh wrote a paper a couple of years ago arguing that by keeping more people from moving in, housing regulations in the San Francisco, San Jose and New York areas had reduced U.S. gross domestic product by 9.5 percent.
The divide raises all sorts of questions of what to do about it. The standard answers in recent years have mostly involved going with the flow – accept that economic activity is going to keep moving to big metro areas, and make it possible for more people to move there by building more housing and subsidizing (or at least not penalizing) those who move in search of economic activity. I think this is mostly right … but I get why a lot of people don't jump at the chance. Do you stay in your declining, small town where housing is cheap and your parents can babysit, or do you try for a $100,000 job in Silicon Valley where child care costs $17,000 a year per kid and your $2,250-a-month, two-bedroom is a 90-minute drive from work?
Understandably, given that he owes his presidency to people outside of large metropolitan areas, President Donald Trump has been trying to go against this flow. On the positive side, there's been much talk, and some action, about bringing back manufacturing jobs – which are more likely to be found on the fringes of, or outside of, big metro areas than white-collar work is.
Then there's the Trump administration's refusal to release funding for the electrification of Silicon Valley's commuter rail line. There are multiple political reasons for this, but I'm going to propose that it's a way to temper employment growth in a region that already has gobs of jobs. Which gets at the perversity of going against the flow. Powerful economic forces are steering job creation toward the big metro areas. Fight too hard against those forces, and you might just end up with fewer jobs, period.