Metros with moola: the richest metropolitan areas in America aren't likely to change in the next decade

American Demographics, Dec, 1997 by Shannon Dortch

The richest metropolitan areas in America aren't likely to change in the next decade. But per-capita income may rise in some unexpected places, such as Rustbelt cities on the rebound and college metros. Most anyone who sells a product or service on a national scale wants to know which U.S. metros will be growing fast in the future. But there's more to doing well in a market than having many people to target. It helps if those people have money to spend.

The potential to spend money can be measured in many different ways, from average home value to household income. The latter tells us how much money a household has coming in each year. But a moderately well-off household with many members may not have as much money to sling around as someone living alone with a lower income. Per-capita income, on the other hand, tells us how much money is available for each person.

NPA Data Services of Washington, D.C., annually updates its projections of per-capita income, employment, population, and other characteristics of U.S. metropolitan areas. In the next decade, the geographic patterns of wealth in metros won't change much.

Money should continue to cluster around big cities on the coasts. San Francisco could continue its reign as the most affluent city in America, with projected per-capita income of $40,780 in 2008. The other metros in the top-20 for per-capita income are a familiar group of places around New York City, including the city metro itself, four New Jersey metros, two metros in Connecticut, and the ever-present Long Island metro of Nassau-Suffolk, New York.

The migration of affluent Americans from the Northeast is probably one reason why a couple of Florida metros are projected to be among the highest for per-capita income in 2008. Naples ($35,300) and Sarasota-Bradenton ($33,870) are retirement meccas for elderly Northerners.

Despite the ongoing flow of both retirees and workers of all ages out of the Northeast, New York City and its environs are still centers of affluence and spending. And that's not likely to change--ever, says Nestor Terleckyj of NPA Data Services, an economist and expert in regional economic trends. As long as New York City remains the center of U.S. financial activity, people who work in the industry's high-paying jobs will live in and around New York. "You won't have stock analysts moving out of Manhattan or lobbyists leaving Washington, D.C.," he says.

Yet plenty of other industries are moving jobs away from big cities and high-priced coastal areas. "Employment migrates to lower-cost and lower-wage areas," Terleckyj says. "If an industry that pays well begins to grow or moves to a new place, then per-capita income there could increase."

This movement of employment to places where wages and the cost of living are low is one reason why many of the metros projected to have rapid growth in per-capita income are small. The number-one metro for fast income growth--Laredo, Texas--sits on the Mexican border. Both its population and per-capita income are projected to grow rapidly between 1998 and 2008, by 26 percent and 29 percent, respectively.

Even with the nation's highest rate of income growth, per-capita income in Laredo may still be well below the U.S. average of $26,500 in 2008, at $14,980. One reason may be household size. Laredo's population has a large share of Hispanics. And Hispanics, especially recent immigrants, typically have larger households than do non-Hispanics. Since a household's income is distributed across all members to arrive at per-capita income, metros with many large households may have low per-capita income averages.

Another reason why Laredo may top the fast-growth list is because its per-capita income is so low to begin with. Even with income growth of 29 percent, Laredo may still rank third-to-last in per-capita income for all U.S. metros in 2008. The only metros projected to have lower income are two other Texas-Mexico border communities Brownsville-Harlingen-San Benito ($13,770) and McAllen-Edinburg-Mission ($12,690).

Five of the top-20 metros for fast-growing per-capita income are in northern California. The reasons for the projected growth probably have more to do with commuters than booming economic activity in the counties that comprise the metros, says Stephen Levy, director of the Center for the Continuing Study of the California Economy. "These are counties to which commuters are beginning to spread out," he says. "They are not places where one expects income-producing growth."

Per-capita income in metros like Merced, Modesto, and Stockton-Lodi, California, are probably growing because more well-paid workers from the Bay Area are living in them, Levy says. One exception is Vallejo-Fairfield-Napa, where there is some growth in the metro's commercial base. The metro is also strategically located between the Bay Area and the state capital in Sacramento.

Vallejo-Fairfield-Napa borders Alameda County, which belongs to the adjacent Oakland metropolitan area. With projected income growth of 17 percent between 1998 and 2008, Oakland doesn't make the top-20 metros for growth. However, it is among the 20 best-off, with projected per-capita income of $33,740 in 2008. "Oakland is the second ring of suburban development in the Bay Area," Levy says. "It is more [economically] heterogeneous than San Francisco, but still has high income because it has a good economic base."