Insider Q&A: Distressed communities experience slower job growth

Economic recovery since 2010 has been sharply uneven

By Christopher S. Rugaber
AP Economics Writer

WASHINGTON (AP) - Steady economic growth can fuel gains in the financial markets. But what if that growth isn't widely shared?

That may become a key question for investors. New research finds that the U.S. economic recovery since 2010 has been sharply uneven: The bulk of job growth and new-business creation has gone to the wealthiest 20 percent of communities.

John Lettieri, co-founder of the Economic Innovation Group, a think tank, says that as a result of the top-heavy recovery, the typical U.S. community has experienced much slower job growth and far fewer new businesses than are reflected in the national average. Many of the hardest-hit areas were still losing jobs four years after the recession had officially ended.

Lettieri discussed what this means for the economy and for a presidential race that could roil the stock market in the coming months. His answers have been edited for length and clarity:

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Your group created a "distressed communities index" that looks at the nation by ZIP code. What does the index tell us about the economy?

What we found was essentially a pulling apart of top and bottom communities. The top ZIP codes were experiencing really strong growth in both businesses and jobs.

And we saw double digit losses in both jobs and business establishments between 2010 and 2013 (in distressed communities). These are peak years of the national recovery, at a time when job growth at the national level was positive and GDP growth was positive.

It's that recovery-gap story that this really helped shine a bigger spotlight on. One of the big findings of the report is just how disconnected many of these communities are - and therefore so many American individuals are - from that national narrative of uninterrupted job growth and uninterrupted GDP growth.

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Does this shed some light on the political atmosphere surrounding the presidential campaign?

It helps clarify why so many Americans have this visceral anger at their elected officials and the anxiety you see in poll after poll.

For many Americans, they've seen little or no growth at all. And it wasn't just the worst-performing ZIP codes. We looked at the median ZIP codes, and the median in jobs and business growth lagged far behind the national average. In jobs, it's less than half the national average.

So the vast majority of Americans are living nowhere near that watermark that the national recovery has set.

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Yet unemployment has fallen since the recession has ended, and the economy is growing at a modest yet steady rate. Does your research suggest our economy isn't as healthy as we thought?

The decline in unemployment, GDP growth - these are positive signs - but they tell a very incomplete story about what's happening. In our calculation, there are 50 million Americans that are living in a distressed community.

We're shining a bigger spotlight on this at a time that the national conversation has turned pretty dramatically into this winners-and-losers conversation. It's the right time to really change the way we're evaluating (national) metrics.

We're learning about the extent of geographic disparities. Within a metropolitan area, you find these pockets of distress that have been impervious to the growth happening around them. So it's not to say that growth isn't happening in, say, Cuyahoga County (Ohio). It's just not reaching many of the communities most in need of that growth.

And that's a story that we see writ large across the country. It's easy to lose that story if you're just looking at top-line data.

Published: Wed, Mar 30, 2016