1% of US Counties Dominate Economy

Editors’ Note: Excerpted from Bloomberg, December 16, 2019.

By Andre Tartar and Reade Pickert

While America’s economy has grown for over a decade, that growth is increasingly concentrated in 1% of the nation’s 3100+ counties.

Just 31 counties, or the top 1% by share, made up 32.3% of U.S. gross domestic product in 2018, according to data released last week by the Bureau of Economic Analysis that included nearly 20 years of county-level GDP data. That’s despite these counties having only 26.1% of employed Americans and 21.9% of the population last year. Their combined GDP share is also up from a recession low of 30.1% in 2009.  Research from other sources indicates some 157 million Americans are employed.  Respectively, then, the 31 counties represent about 41 million employed and 71 million in a population of 325 million.

The nation’s economy is becoming increasingly concentrated in large cities and by the coasts—and less so in rural counties—spurring the question of whether rural areas will be increasingly left behind.

The nation’s economy is becoming increasingly concentrated in large cities and by the coasts—and less so in rural counties—spurring the question of whether rural areas will be increasingly left behind. The growing concentration of the country’s economic activity could impact a variety of things from infrastructure spending to labor mobility, but it’s unclear how rural areas will fare as their share of economic output continues to dwindle.

Looking at the leading counties by output, Los Angeles County, which has a GDP equivalent to Saudi Arabia, added $395.2 billion to total U.S. GDP from 2001 to 2018. New York County, home to Manhattan, added $340 billion.

The top 1% of counties–whose population totals 22% of the nation–were spread across 16 states and the District of Columbia, and populous states like California, Florida and Texas each had multiple counties make the cut. But all 31 counties either included or were near major U.S. cities.

[Fairfax County–including Fairfax City and Falls Church–make up 0.6%. Los Angeles has the largest county GDP, 3.8%. And New York City’s five counties together produce 4.8% of U.S. GDP.]

A large population and workforce is only part of the story. Last year, these counties represented $1.3 trillion more of nationwide GDP than the share of workers alone would account for. Looking at population, their combined share of GDP rose even as their share of overall population fell. The difference may stem from other aspects of a city, such as clusters of activity or networks, that improve productivity.  

Political implications and inferences are woven into these data. As wealth concentrates increasingly in urban centers, so will political campaigns, especially fundraising.  Comparing the 71 million population in the 31 counties to the most popular-vote-getter in the 2016 presidential election with 65 million creates another attractive opportunity.  Dependent upon the pace at which this disparity continues, the fate of less populated and poorer rural areas poses an increasing inequality of wealth.

The data also highlight differences in industry concentration. The information sector, dominated by West Coast tech giants like Apple Inc., Alphabet Inc.’s Google and Amazon.com Inc., is particularly consolidated, with nearly three-fifths of its output squeezed into just a few dozen counties.

Finance and the arts are also highly concentrated. While the New York City region still dominates national finance, Manhattan’s grip on the industry has eased since 2014. Los Angeles has held the top spot in the arts and entertainment space from 2001 to 2018, but New York has increased its share from 4.6% to 7.2% over the period.

Still most industries didn’t see that level of consolidation. Some businesses that need to be close to consumers like logistics, hospitality and retail are less concentrated.

Yet, some industries are decentralizing. Transportation and warehousing has become less concentrated since its peak in 2017, while agriculture, forestry, fishing and hunting, a sector that was already relatively dispersed, continued in that direction. Tech and finance are among the most concentrated industries.

The entire article–complete with 17 graphics–can be found here: https://www.bloomberg.com/graphics/2019-us-gdp-concentration-counties/


Categories: Issues, Local, National, wealth inequality

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