From Madera and Joplin to New York: Dispersed, Not Dense Urban Areas Dominate GDP


For some time, the mainstream press and conventional urban planners have been obsessed with a “dense urban” narrative. This is largely a myth, as has been demonstrated by resurgent growth in suburbs and exurbs.

The Dense Urban Narrative

The “dense urban narrative” emerged most recently from New York Times columnist Farhad Manjoo, who criticizes the failures of progressive governance in core cities (to his credit). Manjoo also lamented the failure of Senate Bill 50 (SB 50), which sought to densify urbanization in California in California, already home to the three densest large urban areas in the nation, as well as the overall highest urban density. Joel Kotkin and I recently expressed an opposite view on SB 50 in the Orange County Register, suggesting the bill ignored the fundamental causes of California’s severely unaffordable housing, notably radical restrictions on new greenfield development.

Clarifying Urban Geography

Manjoo offers this view of cities and their role in economic production, but uses two incompatible definitions of cities in his analysis:

“Cities are the standard geographical unit of the global economy. Dense urban areas are quite literally the “real America” — the cities are where two-thirds of Americans live, and they account for almost all national economic output.”

Manjoo’s point that that nearly all of America’s economic output is produced in cities, comes from the McKinsey Global Institute. In Urban America: US cities in the Global Economy, McKinsey found that 85 percent of economic output in 2010 was produced in “large cities.” But these are not dense cities or dense urban areas, but metropolitan areas, which all have more rural land than urban. McKinney defines “large cities” as the 259 metropolitan areas (labor markets) with more than 150,000 population. This includes not only the megacities of metropolitan New York and Los Angeles, also such places as Madera, California, Joplin, Missouri, Elkhart, Indiana and Bangor, Maine. By neither historical or international standards does America have any dense urban areas and none of these 259 metropolitan areas is characterized by dense urbanization.

To be sure there are pockets of high density in some urban areas, but overall densities are low in every urban area. Data from the premier urban area, New York, makes the case. The four densest boroughs of New York city (Manhattan, Brooklyn, The Bronx and Queens) each have higher densities than all of the largest 100 incorporated cities in the United States. The other borough, Staten Island, is largely post-War suburban and is less dense than at least 75 municipalities in California. Outside the city of New York, suburban densities average about one-half that of Los Angeles suburbs. These low suburban densities more than neutralize the hyper-densities of Manhattan and the rest of the urban core --- so much so that the New York urban area, as defined by the Census Bureau, has a lower density than Los Angeles, San Francisco and even San Jose (itself nearly all post-War suburban, with only a negligible urban core).

Pre-World War II American urban areas were far more dense than today. In 1940 the urban cores (central cities) in metropolitan areas (then called metropolitan districts) of over one million population were home to two-thirds of the their corresponding metropolitan area population, more than four times the current rate. Today, urban cores constitute only 14.5 percent of metropolitan areas with over 1,000,000 residents (Figure 7 and Note).

In addition, the column mentions that “cities are where two-thirds of Americans live.” This is a vivid example of the semantic problems with the term “city.” These “cities” are not the same thing as the cities (metropolitan areas) cited by McKinsey. They are from a Census Bureau report totaling the 2010 population of incorporated municipalities, popularly called cities. These include “cities” of every size, from the city of New York (as opposed to the New York metropolitan area) with its 8.5 million residents to the village of Monowi, Nebraska (population 1), and about 19,500 jurisdictions in between. Many of these “cities” are in rural areas, outside urban areas. Indeed, many residents of the cities defined as metropolitan areas live in unincorporated areas, not in incorporated municipalities. For example, in 2010, nearly 6,000,000 residents of the New York metropolitan area lived outside cities as defined in the Census Bureau report (there is nothing wrong with the Census Bureau report, but proper use requires understanding what it means by “cities”). This is as many residents and lived in the Philadelphia metropolitan area, which was the fifth largest in the nation in 2010.

Pages 4 though 9 of Demographia World Urban Areas provides detailed definitions of these and other urban terms.

Economic Production by Intensity of Urban Development

Even so, economic production is nearly monopolized by the large cities, as indicated by McKinsey. This continues to be the situation. We have updated the figures with a 2017 analysis that produced similar results.

Only the urban cores are “dense urban.” The size of the urban cores varies from zero or near zero in a number of metropolitan areas (such as Phoenix, San Jose, Charlotte, Nashville, Atlanta and more than 250 others) to 52 percent in the New York metropolitan area. Only nine metropolitan areas were more than 25 percent dense urban (Figure 1). Among the 353 metropolitan areas, the urban cores average only three percent (unweighted) of the population, with 97 percent in the suburbs and exurbs.

These same 353 metropolitan areas with more than 100,000 residents --- not merely the dense urban parts -- accounted for 89 percent of the economic production (gross domestic product or GDP) in 2017 (Based on data from US Department of Commerce Bureau of Economic Analysis). By 2010, the dense urban portions of these metropolitan areas had a weighted average of only 10.5 percent of the population, while 89.5 percent was suburban or exurban, based on a City Sector Model analysis (Figure 7 and Note).

Concentration of National Economic Output in Less Intensive Urban Areas

Economic output is concentrated in the metropolitan areas with the least dense urban population (Figure 2). The largest share of the economic output is produced in the metropolitan areas that are less than 2.5 percent dense urban. Another 14 percent is produced in metropolitan areas that are from 2.5 percent to less than 10 percent dense urban. Together, these two least intense categories account for more than 50 percent of the nation’s economic output.

Metropolitan areas that are from 10 percent to under 25 percent dense urban account for 20 percent of national economic input. The metropolitan areas with the greatest dense urban concentration, 25 percent and over, represent 18 percent of national economic output. Another indicator of dense urbanization is high transit use, which Figure 3 shows to be concentrated in the metropolitan areas with dense urban of 25 percent and more. In every other category, transit work access is near the national average of 5.0 percent and working at home exceeds the transit market share (Figure 3)

Leading Metropolitan Areas by Per Capita Economic Production

The highest performing metropolitan areas in economic output per capita are illustrated in Figure 4. Energy producing Midland, Texas has the highest economic output per capita, at $156,000. Tech giant San Jose trails at $138,000, followed in third place by nearby San Francisco, at $106,000. Bridgeport-Stamford is fourth at $104,000, while rising information technology hub Seattle ranks fifth at $91,000.

The second five includes (in order), Boston, Des Moines, New York, Washington and Elkhart, Indiana, the “recreational vehicle capital” of the world. The top ten includes three in the Heartland (an area bounded by the Canadian Border from Ohio to North Dakota to the Gulf Coast from Texas to Alabama), three in the West and four in the Northeast Corridor. The second ten includes three in the Heartland, three in the Northeast Corridor (from Virginia to Maine) and one in the South Atlantic (North Carolina to Florida).

Decentralizing Economic Production

The metropolitan areas slightly increased their dominance between 2010 and 2017, with an increase in their share of economic production from 88.7 percent to 89.4 percent (an increase of 0.8 percent). But contrary to conventional wisdom, economic production increased the most in metropolitan areas that are the least dense urban (Figure 5). Those with under 2.5 percent dense urban populations experienced an increase of 1.7 percent in their share of economic output. There was also a smaller 1.1 percent increase in economic output among the metropolitan areas with the most dense urban population (25 percent and over).

353 Dispersed Metropolitan Areas Produce Nearly 90% of US GDP

Thus, consistent with the McKinsey research cited, metropolitan areas continue to nearly monopolize economic output. Of course this includes New York, Los Angeles and Chicago, but it also includes 350 smaller metropolitan areas, from Tyler, Texas to Grand Forks, ND-MN, Medford, OR and a host of additional metropolitan areas that don’t jump to mind reading such reports (Figure 6). Journalists and even academics have far too frequently confused “apples and oranges,” in urban analyses. Their audiences would be better served by an appropriate level of clarity.

Note: City Sector Model: The City Sector Model classifies small areas (ZIP codes, more formally, ZIP Code Tabulation Areas, or ZCTAs) in metropolitan areas in the nation based upon their function as urban cores, suburbs, or exurbs. The City Sector Model avoids the far less precise reliance on municipal jurisdictions for measuring urbanization, which is unable to differentiate between dense urbanization and suburban development within core cities (For example, much of Staten Island in New York city is suburban, not urban core). The criteria used are generally employment and population densities and the extent of transit use versus car use (Figure 7). The purpose of the City Sector Model is to replicate, to the best extent possible, the urban form as it existed before World War II, when urban densities were much higher and a far larger percentage of urban travel was on mass transit. The suburban sectors replicate the automobile-oriented suburbanization that began in the 1920s and escalated strongly following World War II. The suburban areas are largely within the continuous built-up urban areas, while the exurban areas are generally in the metropolitan areas, but outside the built-up urban areas. A listing of the research using the City Sector Model will be found at Sector Model. The design of the City Sector Model is described in greater detailed in Infinite Suburbia (edited by Alan Berger, Joel Kotkin and Celina Balderas Guzman), in chapter 2.3: “Measuring Urban Cores and Suburbs in the United States.” (Page 196).

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed by Mayor Tom Bradley to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. Speaker of the House of Representatives appointed him to the Amtrak Reform Council. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photograph: Midland, Texas: Top GDP per capita metropolitan area over 100,000 population.,_Midland,_TX_DSC...