While cities like Dallas and San Francisco have rebounded strongly since the recession, many other places are still struggling for economic growth and prosperity. As time goes on, we're seeing a divergence between successful parts of the country and the non-successful parts.
More than 50 million Americans live in "distressed" ZIP codes, according to a new report from the Economic Innovation Group, a Washington D.C. think-tank. These areas—largely concentrated in the South, Southwest, and the Rust Belt—are suffering a "recovery gap" driven by low home investment, shuttering businesses, and poor job opportunities.
"The United States is still a land of opportunity for many. But when it comes to life outcomes, geography is too often destiny," the report says.
Using Census Bureau data, the Distressed Communities Index (DCI) scores 26,000 ZIP codes across seven measures: population percentage without a high school degree, the housing vacancy rate, adults not working, poverty rate, median income ratio (median income for that area relative to the state number), percent change in employment from 2010 to 2013, and percent change in the number of businesses in the same period.
"Distressed" communities are those in the bottom 20% of ZIP codes. On average in these areas, almost a quarter of adults have no high school degree, more than half of adults are not working, and the median income is only two-thirds of the state level.
The South has by far the most such communities and people. The area from Maryland and Delaware to Oklahoma and Texas contains 52% (26.3 million) of the 50.4 million residents living in distressed ZIP codes. Among states, Texas has the most distressed ZIPs. Alabama, Mississippi, and West Virginia have the greatest population shares living in distressed communities.
"From 2010 to 2013, the most distressed 10% of ZIP codes lost 13% of their jobs and saw more than one in 10 business establishments close," the report says. "During that same period, the most prosperous 10% of ZIP codes saw employment rise by a staggering 22% and the number of business establishments rise by 11%."
The report shows how the recovery, such as it is, is two-step, doing well by some people, but leaving many others behind. "The DCI findings underscore just how dramatically geography impacts one’s experience of the post-Great Recession economy," the report concludes.
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