EIG: Updated index highlights disconnect in economic well-being

While more Americans live in communities that are “prosperous” compared to “distressed,” large gaps persist across geographies, demographics, and educational attainment, according to a new report from the Economic Innovation Group (EIG). The 2017 Distressed Community Index, an update to last year’s release, is comprised of seven related metrics and categorizes communities into one of five tiers based on performance: prosperous, comfortable, mid-tier, at risk, and distressed. To “reconnect” distressed communities and foster economic inclusion, the report’s authors recommend activities to support grassroots economic growth and reversing policies (e.g., restrictive zoning, occupational licensing requirements, and discriminatory housing policies) and other actions that have helped “tip the scales” in favor of the prosperous.

Overall, the 2017 DCI finds that economically distressed communities – those communities that score in the bottom fifth percentile of the index – represent 17 percent of the U.S. population, or 52.3 million people. Prosperous communities – those scoring in the top fifth percentile – represent 27 percent of Americans (84.8 million people), the highest share of any tier. More than one half of the recovery’s new jobs and business establishments were in prosperous communities, where the number of jobs increased by one-quarter from 2011 to 2015.   The presence (or lack) of these new businesses and jobs has spillover effects, affecting areas like housing and health.

A geographic look at distressed communities finds they are widespread throughout the country and across states. Distressed communities exist throughout the country, covering inner cities, suburbs, and rural areas, while the overwhelming majority of prosperous counties are suburban in nature. The urban-rural divide is especially stark at the county level: Of counties with more than 500,000 people, roughly half are prosperous compared to 14 percent of counties with less than 100,000 people. Smaller counties are 11 times more likely to be distressed than larger counties. An interactive map of EIG’s Distressed Community Index is embedded below: 

The authors conclude by noting the urgency and complexity of “reconnecting” those distressed communities. They recommend that policymakers encourage activities to support grassroots economic growth and entrepreneurship while working to reverse those policies (e.g., restrictive zoning, occupational licensing requirements, and discriminatory housing practices) that have mainly benefitted incumbents and the prosperous.