An Industry-based Typology for the Employment Strength of Metro Areas in the Recovery

However, these trends must not be analyzed in isolation. The industry composition of the local job market matters a lot. So, we also classify the top 100 metros by their dominant industries: Education and Health; Government; Manufacturing; Trade, Transportation, and Utilities; Leisure and Hospitality; Professional and Business Services, and Retail Trade. Nearly every metro area has at least one dominant industry; 17 do not and make up an eighth category called Balanced.

The Resistant category includes 23 metropolitan areas, many with relatively dominant Government and Education and Health industries.  These metros generally did very well during the recession and are continuing to remain strong during the recovery.  Most lost a smaller share of jobs during the recession and are gaining jobs just above or below the median rate of growth for the 100 largest metros.  These metro areas are primarily located in the Northeast and South.  Six of the Southern region's "Resistant" metros are in Texas.

Of the 28 "Resilient" metros, 75 percent have relatively large shares of Manufacturing; Professional and Business Services; Leisure and Hospitality; or Trade, Transportation, and Utilities employment.  The majority of these areas lost larger shares of jobs than other areas during the recession, but are making gains in employment faster than other metros.  "Resilient" metro areas are strongly represented in the Midwest, the deep South, and West; there are none in the Northeast.  Only one of California's 12 largest metro areas (San Jose) is classified as "Resilient".

Many of the 27 "Down, Not Out" metro areas, where the recession was relatively mild but the recovery is sluggish, are dominated by Government employment or do not have one dominant industry.  Notably, these "balanced" metros are much more clustered around the median rates of growth than the areas with focal industries.  This suggests that areas with a more diverse industrial mix were relatively insulated from the national economic conditions than those with one or two powerful industries.  The slow employment growth and rising unemployment rates in some of the areas with dominant Government industries may reflect the end of Recovery Act funding and the subsequent scaling back of local governments.  "Down, Not Out" metros are most prevalent in the Northeast, Midwest, and South.

The areas of highest concern are metros that are the "Vulnerable" metros, which have experienced both steep recessions and slower than average recoveries, include many metros dominated by Retail Trade, Leisure and Hospitality, or Trade, Transportation, and Utilities. Half of the 22 "Vulnerable" metros are in the West and all but two are in California.  The other half are split almost evenly between the other three regions.

The patterns revealed in this analysis show that employment recovery is largely related to areas' focal industries.  It's important to closely monitor the recovery progress in these communities and may be worth exploring additional industry-specific economic interventions similar to those that stimulated manufacturing growth.  Further, areas that rely on one dominant industry are particularly vulnerable when that industry weakens.  Targeting resources to broaden the industrial mix of such communities could help to strengthen employment growth and cushion the fall during future downturns, particularly if those resources are targeted to industries that are somewhat "recession-proof", like health care and education.