Thinking About Population Change and the Economic Health of U.S. Cities: Will Post-COVID Trends Change the Story?
Thinking About Population Change and the Economic Health of U.S. Cities: Will Post-COVID Trends Change the Story?
Population growth is not a universally positive measure when it comes to assessing the overall economic health of an urban region across the world today.
The term "megacity" is used to describe an urban area with more than 10 million residents. Megacities are the fastest growing places on the planet. Oxford Economics, for example, projects that the number of megacities around the world will increase from 44 today to 67 by 2050, which will correspond to an increase of 266 million more megacity residents.
Yet most of the growth of megacities will occur in the Asia Pacific region and Africa, where megacity growth is fueled by the daily arrival of tens of thousands of desperately poor rural residents, a growing number of whom are climate refugees. Moving into squalid urban slums is often the only alternative they have to a life of permanent abject poverty and deprivation in the rural countryside.
The influx of rural migrants into Asia Pacific and African megacities overwhelms the rate of new job growth in these cities. The result of this rapid urban population growth is simply more concentrated human misery, not broader prosperity.
Yet the social dynamics of urban population growth are quite different in advanced industrial economies like those in the United States.
Although America's urban areas certainly have unacceptable rates of income inequality and many neighborhoods of concentrated poverty, their local economies often create more jobs than can be filled by local residents alone. In addition, the relative affluence of many urban residents in the U.S. gives them greater capacity to relocate to different cities in search of those new and better job opportunities. Relatively few domestic migrants in the U.S. move from rural to urban areas. Most move from one urban area to another.
Together, these factors create systems conditions where population change over time is a more reliable measure of a city's overall economic health. People have more choices, and they tend to move to places with more opportunities.
Prior to the outbreak of the COVID-19 pandemic in March of 2020, the broad story about how population growth reflects economic health across the landscape of the American system of cities had two main subplots.
The first subplot was the long-term shift of population and prosperity from the older, colder, industrial Northeast and the Midwest to the Sunbelt: the South; the Southwest; and the Pacific West Coast. This pattern of evolutionary change began to take shape in the years after World War Two and continued to build momentum to the present day.
The second subplot was the long-term decline of population and prosperity in the industrial Midwest, the so-called Rust Belt, where older manufacturing sectors were dominated by inflexible mass production technologies, expensive unionized labor, obsolete and obstinate management culture, and decaying infrastructure.
These subplots combined to tell a story of overall growth and geographic repositioning in both population and prosperity for the nation as a whole. But national growth came at the cost of decline in the older urban subsystems in the Northeast and Midwest, with the exception of a few urban areas like Boston, New York, Washington DC, and sometimes Chicago.
These cities were the exceptions because they were able to leverage extraordinary combinations of advanced technologies, "World City" concentrations of corporate headquarters, and sophisticated global business & financial services. These factors allowed this handful of older cities to continually attract enough new domestic and international migrants to stave off the worst effects of population loss from industrial decline and fast-growing proportions of older residents. The result was enough systematic local job growth in newer high-wage sectors to overcome the powerful factors of decline that were also affecting them.
Elsewhere in the South, the Southwest, and the West, however, new regional systems of population growth and increasing prosperity grew as the national economy expanded at a healthy pace from the top of one economic cycle to the next.
Then the COVID-19 global pandemic hit in March of 2020. This sudden external shock seemed to disrupt the overall geographic pattern of change that had dominated the story of America's shifting locations of population and prosperity.
Suddenly, it seemed like hundreds of thousands of the most prosperous workers who lived in the largest central cities in all areas of the country began to create an entirely new story. The new story had two components. The first was to escape close contact with other people by moving away from central cities. The second was to exploit the newly discovered benefits of working from home by moving to smaller cities, exurbs, and even rural counties where lower real estate prices could be exploited by buying much larger homes, often with acres of land that were unimaginable in center cities.
Initial data seemed to blur the "frostbelt to sunbelt" part of the old story. Workers in warmer, sunny cities like Los Angeles and Dallas were creating new patterns by moving to cold mountain resorts at the same time that workers in New York and Chicago were following old pattens by moving to warm places like Phoenix and Las Vegas. A new series of geographic stories were beginning to emerge, but no geographic patterns had become clear.
Yet one overall pattern did seem clear. America's biggest cities, regardless of region, were losing their share of the most prosperous workers. Census data from 2020 to 2023 estimate that America's three megacities, New York, Los Angeles, and Chicago lost a combined total of 1,044,000 residents, making them the only megacities in the world to lose population, in sharp contrast to global trends.
In the first year of the pandemic, other patterns were also disrupted. Many older cities that had been experiencing population loss for decades continued to do so. Examples were Detroit (-16,000), Cleveland (-13,600), and Pittsburgh (-4,700). But these cities were unexpectedly joined by cities that had been star performers in the old patterns, such as San Francisco (-122,400), San Jose (-43,800), Boston (-27,190), Miami (-24,600), San Jose (-20,800), and even Seattle (-11,300). These were not cities that were accustomed to population loss.
Smaller cities and even non-metropolitan rural counties across the country began gaining their share of these coveted domestic migrants from unexpected places. William H. Frey, a well-respected demographer at the Brookings Institution, recently compiled data showing that non-metropolitan counties began growing in population beginning in 2020, reversing decades of decline. Despite the high rate of population loss in these counties from what demographer’s call "natural" causes (i.e. the difference between births and deaths), the sudden surge of domestic migration into these rural counties was enough to overcome their high rates of death caused by the pandemic.[i]
Frey's most recent analysis suggests that the shock of the COVID-19 pandemic may be beginning to wear off. Although he argues that smaller cities and non-metropolitan rural counties continued to grow during 2022 and 2023, the signs of relative decline among the 56 metropolitan areas with more than 1,000,000 residents are slowing, and many of these cities are beginning to grow again.
Although America's three megacities have not yet begun to grow, each experienced less loss in 2022-23 than in the previous two years. And Frey argues that most of the nation's 56 major metropolitan areas are experiencing similar positive population shifts. As he writes, "Positive post-pandemic population shifts were not unique to the very largest metro areas; they occurred in all regions of the country. Among other metro areas that flipped from population losses to gains in 2022-23 were Louisville, Ky., Milwaukee; Minneapolis-Saint Paul; Seattle, and Providence, R.I. Among those that showed increasing gains were Charlotte, N.C., Cincinnati; Columbus, OH; Denver; Indianapolis; and Jacksonville, Fla."[ii]
Although Frey raises the prospect that the most disruptive shocks of the pandemic caused by sudden changes in domestic migration may not become fundamentally new stories within the geographic patterns of population and prosperity within the U.S., the data he presents does suggest that at least one part of the older story has blurred considerably.
The long-term pattern of Rust Belt population decline is emerging from the pandemic with a much more complicated plot. As noted above, Chicago continues to lose population, as does Detroit. Yet Pittsburgh, which is often cited as a city that has overcome its rusty image, experienced greater population loss (-18,000 in 2021-22 and -9,800 in 2022-23) than its nearby rival Cleveland, which is often criticized for not aggressively pursuing strong job growth (-9,800 in 2021-22 and only -1,700 in 2022-23). Yet both Pittsburgh and Cleveland stand in sharp contrast to Columbus and Cincinnati, neither of which experienced any annual population loss during the pandemic years and each of which saw accelerated growth in 2022-23 (+12,800 for Cincinnati and +18,200 for Columbus).
Finally, Frey suggests that the most important change that has taken hold of urban population and prosperity trends since the pandemic is an unexpected plot twist: international migration. Just as the "frostbelt to sunbelt" story has become more complex, the "rust belt" story has become more nuanced, and the "work at home" from exurbs and rural resorts story seems to be losing some steam, Frey's analysis of Census data reveals that an unexpected surge of international migration has become the principal determining factor in restoring population growth to major metro areas.
As Frey states, "Of the 37 major metro areas that gained population over the two-year period from 2021 to 2023, immigration account for over half of the gains in six and at least a quarter of the gains in 18. Moreover, 11 of these metro areas -- including Miami, Boston, Washington, D.C., and Seattle -- would have lost population were it not for immigration from abroad. And many metro areas that lost population in the past two years would have lost considerably more in the absence of immigration; for example, metropolitan New York's two-year loss of 222,943 residents would have instead been a loss of 426,700 without international immigration."[iii]
In a prosperous nation like the U.S., population growth may not be the only indicator of overall economic health. But changes in population are certainly relevant as a sign of prosperity, or at least the potential for prosperity in different cities.
The global COVID-19 pandemic created an enormous external shock to America's internal geographical patterns of population and prosperity. And like most external shocks to a complex system, the initial result scrambled previous patterns of change. It is still unclear what the long-term effects of the shock will be, but initial results suggest that old patterns are shifting quickly, and at least one new pattern -- international migration -- may become much more important to our future prosperity.
Bob Gleeson
[i] William H. Frey, "New census data hints at an urban population revival, assisted by immigration," Brookings, dated April 15, 2024.
[ii] Frey, Ibid.
[iii] Frey, Ibid.