Cities Are Powering the U.S. Jobs Recovery

The Great Recession may have wiped out millions of jobs, but employment is bouncing back and urban areas are leading the way, according to a new study by the think tank City Observatory. For the first time in a half-century, American cities are the focal points of job growth—not just population growth—which could mark the end of a major socioeconomic trend.

Up until 1960, there were more Americans working in big cities than living there. Then came deindustrialization and white flight. The jobs followed residents to the suburbs, triggering a rapid decentralization of the workforce and rebalancing of the live-work ratio of cities.

In 1996, an average of only 16 percent of jobs were located within three miles of the nation’s central business districts. The picture was even more dire for Philadelphia. “Since 1970, every county in the region added jobs to its 1970 base except for Philadelphia, which has 25% fewer jobs than it had in 1970,” the Center City District reported last year, in a study examining employment up to the year 2011.

But the City Observatory study suggests a pivot has occurred, with annual job growth within downtowns (.5 percent) having outpaced that of outlying areas (which shrunk .1 percent) between 2007 and 2011, using a sample of 41 metropolitan areas. In Philadelphia, the disparity was even wider, City Observatory found, with 2.0 percent annual growth in Center City jobs over that span, and a slight decrease in the outside region.

If the study is correct, this is news. Potentially really huge news. But is it right? Prior research has concluded that the suburbs were still besting Philadelphia in terms of job creation, even as other cities were gaining ground.

For instance, a Brookings analysis placed the share of jobs within 3 miles of our central business district at 15.3 percent in 2007, and dipping to 15.2 in 2010 (already down from 16.7 in the year 2000). Nationally, though, the same report found a “slight uptick in urban core job share.”

What gives? Some of the differences between the studies can be chalked up to methodology. While both studies defined “Center City” as three miles or less away from the central business district, the boundaries of the non-city center were entirely different. Brookings captured the urban periphery as up to 35 miles away (a zone that accounts for 95 percent of jobs within metropolitan areas nationwide). In contrast, City Observatory marked its outer boundaries by following the Census’s metropolitan statistical area, which is a much broader swathe that includes parts of New Castle County, Delaware and Cecil County, Maryland (both 50+ miles away).

So is job generation in Philadelphia outpacing the suburbs or not? It seems we don’t yet have a completely definitive answer, which is unfortunate, because it’s information that could inform high stakes conversations around issues such as tax reform and infrastructure decisions.

What is clear is that, even if Philadelphia is now generating jobs more quickly than the counties surrounding it, the city’s job market is still softer than it should be. Office space in the city is far cheaper than in other big cities, owing to weak demand. In fact, the real story is probably not that Philadelphia is generating more jobs than the suburbs, but rather that it is losing jobs not quite as quickly as it has in past decades.

That’s encouraging, as far as it goes. Which is not very far at all.