NEW YORK, NY — The Great Recession that began in 2007 is supposedly over. America has seen eight years of job gains. Unemployment is at its lowest point in half a century. Gross domestic product is on track to have its best year since the mid-2000s. You’d get no argument that “America is back” from some prosperous towns around the United States. For many towns, though, the recession continues and the “recovery,” if any, has been anemic at best.
According to the bipartisan Economic Innovation Group, those national headlines are not reflective of what’s happening on a local level. The think tank, based in Washington, D.C., published a new study this week that indicates job gains have been gobbled up by just a few areas. Prosperous zip codes, areas with high levels of education and income and low levels of poverty and adults who are out of work, fully recovered by 2013. By 2016, they had added 3.6 million jobs. Meanwhile, the rest of the country — the bottom 80 percent — have fewer total jobs than they did in 2007.
“The economy rewarded places that had certain attributes more exclusively than it did in the past,” John Lettieri, president and CEO of the think tank, told Patch. He noted that prosperous places aren’t necessarily doing better than ever — the rest of the country is simply worse off.
“That’s a really important distinction,” he said.
The study looked at five tiers of communities between 2007 and 2016 to see how they’ve recovered. The tiers ranged from healthy economies — prosperous and comfortable — to unhealthy economies — at-risk or distressed.
In the years immediately after the recession, jobs plummeted no matter what tier you were in by between 1.5 million and 1.8 million each. But beginning around 2011, there was an “incredible divergence” in job growth, Lettieri said, with prosperous ZIP codes seeing the vast majority of the recovery.
The national story of job growth isn’t national at all, he said. Prosperous ZIP codes are driving the total net new jobs and more than 200 million Americans have actually seen their communities lose more jobs than they’ve gained.
The study tracked the changes in the well-being of each community using its “Distressed Communities Index.” The index gives a score out of 100 points, with 100 representing the most distressed. The score is based on a variety of factors, such as housing vacancy rate, percent of residents without the equivalent of a high school diploma and how many business were added or lost.
A “great reshuffling,” as the group calls it, allowed prosperous places to recover at a much faster clip than the rest of the country when it comes to jobs, business creation, human capital and population growth. And while it has generally always been true that communities do better when they have a highly educated local workforce or a knowledge-based economy, that essentially became a requirement for recovery after the recession — something that wasn’t true before.
The number of businesses being formed since the recession still remains at record-low levels, he added, a problem that becomes magnified because those businesses are tightly packed in just a few places. Lettieri emphasized this uneven recovery means the likelihood that an area sees jobs return, as well as the size of that comeback, largely depends on which tier you’re in.
“That’s part of, in essence, what’s new about this era that we’re in. You didn’t previously see such a gap separating one tier of places from everybody else,” he said.
Perhaps the starkest example of that inequity — five counties added more businesses (55,500) than the country as whole (52,800). The overall number has lagged due to the overwhelming number of counties that never recovered. Fewer than 25 percent of counties replaced all the businesses they lost, and distressed counties were on track to never recover. Some areas lost hundreds of businesses, or more such as Baltimore County, Maryland, where more than 1,200 businesses disappeared.
Without the success of those five counties, America would actually have fewer active business establishments than it did before the recession.
Lettieri suggested those living in areas with no prospects and a terrible labor market ought to consider packing up and heading for greener pastures. “Where your kids don’t have a meaningful shot of the American dream, you should consider leaving,” he said.
Policymakers, who can’t wait for people to move, should focus on bringing opportunities to people, and vice versa, he added. They should also refrain from enacting exclusionary policies, such as restrictive zoning laws.
“Attacking that from both directions, I think, is the right policy framework,” he said.
Photo: NEW YORK – JUNE 24: Joshua Persky, an unemployed financial engineer, stands in front of the Charles Schwab building at 50th Street and Park Avenue with a sign proclaiming ‘Experienced MIT Graduate for Hire’ June 24, 2008 in New York City. Persky, who lost his job in the volatile banking industry six months ago, thought standing on a corner passing out resumes would be a novel approach over networking and writing emails at home. Persky is married and supports five children. (Photo by Spencer Platt/Getty Images)