Thursday, October 5, 2017

New Research Alert: 2017 Distressed Communities Index

By Ranada Robinson

Recently, the Economic Innovation Group (EIG) published its 2017 Distressed Communities Index. EIG, a bipartisan public policy organization founded in 2013, took a look at seven data indicators:

l  Housing vacancy rate
l  Poverty rate
l  Percentage change in number of jobs from 2011 - 2015
l  Percentage change in number of businesses from 2011 - 2015
l  Percent of unemployed adults between the ages of 25 and 64
l  Percent of population aged 25 and older without a high school diploma
l  Each geography’s median income as a percentage of its state’s median income

From there, a distress score is calculated by taking the average of the rankings in each of the data indicators. Then, the geographies are grouped into quintiles: “distressed” refers to the worst-performing quintile, the fourth is “at risk”, the third is “mid-tier”, the second-best is considered “comfortable”, and the best-performing quintile is “prosperous”. This was done for ZIP codes, cities, counties, and states.

The following are high-level and very intriguing takeaways from the report, shedding light on characteristics of and disparities affecting distressed communities across the nation.

  • One in six, or 52.3 million, Americans live in economically distressed ZIP codes. Of these, approximately 13 million are children.
  • Distressed communities collectively have not yet recovered from the recession, with a 6.0 percent average decline in employment and a 6.3 percent average decrease in establishments from 2011 to 2015. Meanwhile, the country as a whole added 10.7 million net jobs and 310,000 net establishments. Over half of the national increase in establishments (57 percent) and in jobs (52 percent) occurred in prosperous communities.
  • Many of the distressed ZIP codes have experienced no gains at all since 2000, long before the Great Recession. In fact, two-thirds of distressed ZIPs had fewer jobs in 2015 than they did in 2000.
  • Over half of the nation’s population living in distressed ZIP codes live in the South. In the South, distressed communities are primarily rural. In the Northeast, these communities are mostly urban. In the Midwest, distressed populations are pretty evenly spread across neighborhood types. Prosperous communities are largely suburban.
  • Not surprisingly, understanding the close link between economic well-being and physical health, the average life expectancy is shorter in distressed ZIPs – nearly five years shorter than residents of prosperous ZIP codes. Mental illness, substance abuse, and life-threatening diseases are more prevalent in distressed communities. Research shows that if in a distressed community, a person with disabilities is more likely to leave the labor force.
  • Most minority groups are overrepresented in distressed communities and underrepresented in prosperous ones, while white and Asian residents are overrepresented in prosperous and comfortable ZIPs. However, though they are underrepresented in distressed ZIPs, white residents make up the largest demographic living in distressed ZIP codes, accounting for 22.9 million of Americans living in the lowest quintile communities.

Why does this matter? It’s important for regions to understand intraregional dynamics, understanding that some areas may need more attention, more investment, and different approaches than others. To ensure that communities are thriving, understanding the linkages and likelihood for success of the varying levels of prosperity or lack thereof can help guide solutions. Keeping in mind that quality of place is one of the top two priorities in economic development today, behind only talent, improving distressed communities can only make regions more attractive, thereby making them more competitive for talent and jobs. Take a look at this report for more details of how distressed communities compare to others, and take a look at the website to find out how your community fares.