America's economic recovery has created 'two different countries'

By Fusion Staff  |  February 25, 2016 | 2:04pm
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A new study finds that America’s poorest areas have seen little to no benefit from the economic recovery that kicked in following the Great Recession.

The Economic Innovation Group, a new nonprofit research and advocacy organization, found that from 2010 to 2013, the most distressed 10% of zip codes, defined as having high poverty, low education, and low employment, lost 13% of their jobs and saw more than one in 10 business establishments close. More than 50 million Americans live in these zip codes.

Meanwhile, the most prosperous 10% of zip codes saw jobs grow 17.4% and had business establishments in their neighborhoods climb by 8.8%.

“It’s almost like you are looking at two different countries,” Steve Glickman, executive director of the Economic Innovation Group, which created a new tool called the Distressed Communities Index, told The New York Times.

Zip codes mere miles apart occupy vastly different planes of community well-being—and few people are truly mobile between them, the study found. This table shows the differences in these two communities:

Many of the cities home to the largest numbers of people in distressed zip codes are, on the whole, relatively prosperous. For example, more than 1.3 million New Yorkers live in distressed zip codes, but city-wide distress levels are moderate and on most measures New York remains a top-performing economy. This table illustrates the phenomenon.

“The recovery gap stands out as particularly urgent and alarming because it suggests that well-being will continue to worsen for residents of locales that are locked in a downward spiral,” the study said. “The economy—measured as businesses and jobs—is slowly vanishing from the country’s worst-off rural and urban areas.”

Distressed zip codes were likely to be low density rural or very high density urban communities, with over half of the country’s distressed population living in the South.

And yet, more than half of the top-10 most prosperous cities were also in the south.

Most American communities are not distressed, the study said, but have basically gone nowhere during the recovery. Jobs in the median zip code grew at 2.3%, less than half the national rate (5.6%) over the recovery years. And the number of businesses in the median community remained flat, while increasing 1.2% nationally.

“As a result, the recovery remains tepid in the median U.S. community,” the study said.

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.

 
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