Midsize Cities Struggle to Keep Up with Larger Counterparts

The news about the economy is positive, overall. Unemployment continues low, while wages are moving up. The problem, however, is that prosperity is impacting a limited set of successful cities. Midsize cities aren’t quite so prosperous. There is, in fact, a widening gap between those successful metros — which attract both corporations and highly-educated workers — and secondary and tertiary municipalities.

The reasons why? Mainly, the move from a manufacturing economy to a tech-based one. According to an article in the New York Times, “cheaper labor that smaller metropolitan areas offered, attracting investment when factories ruled, no longer has much pull.” The tech companies, which now lead the economy, are more inclined to set up in larger cities, which have amenities that will attract highly-educated and younger workers. As housing costs rise in these cities, workers in lower-paying jobs are pushed out.

It wasn’t always this way — in fact in the decades following World War II, poorer and smaller cities were catching up with larger, richer municipalities. However, “many midsize cities and small towns that found manufacturing-based prosperity in the 20th century have lost their footing in the tech-heavy economy of the 21st,” the New York Times observed.

The article also noted that the shifting economic geography is also altering domestic migration. Silicon Valley and New York are attracting the more affluent, younger population, while pushing out residents who are older, less educated and in the lower-income stratus. On the other end, populations of smaller cities, such as Winston-Salem, NC, are growing, even as their incomes drop.

The article’s focus was on Winston-Salem. Once a busy center of tobacco, textile and furniture manufacturing, the city’s income-per-person has declined to 90.9% of the average for metropolitan areas in 2017, from 93.7% in 2008. Private-sector employment is “barely higher than it was in 1999,” while the $16.87 per hour median wage is $2 below the national average. The poverty rate is also higher. The metro has lost almost half its factory jobs since 1993.

If there is any good news for Winston-Salem, it’s that it is home to five universities, which can provide the talent for bio-tech jobs. Wake Forest University, in fact, has an Innovation Quarter, which is a research district in former factories belonging to R.J. Reynolds. Furthermore, the city has selling points, such as a low cost of living and uncongested streets, not to mention a greater opportunity to stand out.

“The top talent is going to go to the coasts, no doubt about that,” Graydon Pleasants, head of real estate development for the Innovation Quarter told the New York Times. “But there are plenty of smart people who will come here.”

Pictured: Winston-Salem, NC

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