New BLS Data Show Bounceback for Job and Wage Growth in Large Metros; Rural Areas Lag

The strong national economic recovery in recent years hides big differences across local labor markets. Today unemployment ranges from less than three percent in some states to more than six percent in others. Many downtowns have seen a revival, luring both educated young adults and some corporate headquarters back to city centers. The gap between rich and poor metros is growing, affecting our politics: The 2016 presidential election was more geographically polarized than previous elections, and the vote in small-town and rural areas and economically struggling regions swung strongly toward President Trump.

As these gaps in local economic performance grow and become more urgent, we’re watching whether these trends are continuing or changing. Yesterday the Bureau of Labor Statistics’ (BLS) Quarterly Census of Employment and Wages (QCEW) — which provides the most current and complete look at jobs at the county level — published data for the third quarter of 2016. We classified counties by their metropolitan size and whether they are urban or suburban; metropolitan areas are made up of one or more counties (see note). Here are the highlights of the data release.

The Suburbs Lead in Job Growth, While Rural Areas Slipped

Job growth from the third quarter of 2015 to the third quarter of 2016 was fastest in the lower-density suburbs of large metropolitan areas, with populations over one million. In those counties, employment grew 2.2%, slightly ahead of growth in higher-density suburban counties (2.1%) and in urban counties (2.0%) of large metros. Despite the publicized moves of some jobs to downtowns, job growth is slightly faster in the more suburban portions of large metros. Similarly, population is now growing faster in suburban than urban areas, consistent with the long-term trend.

Large metros — both their urban and suburban portions — account for almost 60% of U.S. jobs. In the rest of America, where the other 40% work, job growth lags. Employment increased 1.6% in mid-size metros and just 0.9% in small metros, while falling ever so slightly (by 0.02%) in non-metropolitan, largely rural areas.

Wages Grew By Almost 7% in Urban Counties

Wage growth, however, was strongest in the urban counties of large metros, where aggregate wages grew by 6.9%. (Both employment growth and wage growth per worker contribute to aggregate wage growth.) Unlike employment, aggregate wages are rising faster in urban counties than in suburban counties of large metros — consistent with the movement of some headquarters with well-paid executives to downtowns. Wage growth, like job growth, lags in midsize and smaller metros, with non-metropolitan areas even further behind.

This most recent year of data reveals a bounceback for large metros generally and their urban counties in particular. From 2000 to 2007, as the housing bubble formed and peaked, job growth in non-metropolitan areas exceeded that in large-metro urban counties. Then, from 2007 to 2015, during the bust and recovery, these urban counties bucked the national trend and saw faster job growth than in the…

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