Governing: In Some Cities, Population Growth Does Not Equal Wage Growth

Article Posted on November 26, 2018

By: Tim Henderson, Stateline

Since the beginning of the 21st century, Sun Belt cities have drawn flocks of new residents looking for warm weather, recreation and a low cost of living. But instead of creating widespread wealth, the influx has led to a proliferation of low-wage jobs in stores and restaurants that cater to tourists and retirees.

Incomes have stagnated or shrunk since 2000 in some of the nation’s fastest-growing areas in the South and West, leading to concerns about their long-term prosperity — especially since many of the low-wage jobs that have been created are vulnerable to automation.

Nationwide there are 10 metro areas whose populations grew more than 30 percent since 2000 — almost twice the national average for metros — but whose per-capita income grew less than half the U.S. average.

That includes Sun Belt cities such as Atlanta, Las Vegas, Orlando and Phoenix, along with three other areas in Florida, plus Boise, Idaho; Reno, Nevada; and Colorado Springs. The economies of those areas depend on tourism, retiree spending or warehouses — all sectors in which jobs are quickly being lost to automation technology.

“Places like Las Vegas and parts of Florida have seen their growth on the back of very low-wage jobs, so in a sense they’re growing poorer as they grow,” said Paul Flora, an economic analyst at the Federal Reserve Bank of Philadelphia.

Other high-growth metro areas such as Austin have put themselves in a better position with higher-paying tech jobs like electronics manufacturing, with average pay over $120,000 a year, Flora said.

By contrast, Las Vegas’ economy is driven more by taxi, hotel and bartender jobs with average pay of $28,000 to $40,000, according to Flora’s research, set to be published in 2019.

Florida’s dominance as a retirement destination, especially for people of modest means, has long been a concern for the state. The large retired population tends to create relatively low-paying service jobs.

The state draws more than 200,000 retirement moves a year, more than twice as many as any other state.

For decades the state’s orange groves and tomato fields have been giving way to tourist and retirement meccas that enrich local coffers with property taxes in boom times, but provide little cushion when values fall in cyclical busts.

The recession that began in late 2007 wiped out many of Florida’s high-paying jobs.

In the years since, construction and hospitality jobs have dominated the comeback, while higher-paying positions in finance, manufacturing, government and computer technology have not reappeared, according to a 2016 study by the state’s Bureau of Economic and Business Research, housed at the University of Florida.

Florida’s challenge is to bring back those higher-paying jobs, said the bureau’s director, Christopher McCarty.

“The question is, how do you do that?” McCarty said. To lure large employers, Florida has offered economic incentives of the kind that New York and Virginia used to attract tech giant Amazon. But the effectiveness of those incentives is debatable…

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