Where are the Most Productive Workers?

November 27, 2017

Yes, your metro works hard, but is it productive?

 

Per-capita GDP takes a metro’s GDP and divides it by the population. This simple calculation yields some surprising results. We may think that people work hard everywhere, and that is true, but GDP on a per-capita basis is quite varied throughout the country. We can see the full scope of this variation in just one state, California. Of the 53 largest metros (those with at least 1 million people) we see per-capita GDP range from a high in San Jose, of nearly $120,000 to a low of $28,869 in Riverside-San Bernardino.

 

The map below divides the largest metros roughly into fifths. The highest productivity metros are in blue, while the lowest productivity metros shown in red.

 

 

 

There is something of a geographic pattern as most high-productivity metros are on the coasts, with Dallas and Houston thrown in. The middle performing metros (the green, yellow and orange dots) are scattered with a concentration in the Midwest. The lowest productive metros are a strange mix ranging from old rust-belt metros in Western New York (Buffalo and Rochester) to booming Southwest metros like Phoenix and Las Vegas.

 

It is worth emphasizing San Jose’s productivity because it truly is in a class by itself. Its per-capita GDP of $120,000 is almost 38 percent higher than second place, San Francisco.

 

WHAT DO HIGH PRODUCTIVITY METROS DO?

 

There is a more interesting pattern that emerges when we look at the types of jobs that are prevalent in these metros. For this analysis, we grouped the metros into the same productivity groupings we used in the map. We then calculated the occupation location quotient for each group to see what occupations each group specialized in. The location quotient is simply the share of total employment in each occupation relative the national share of employment in that occupation. A location quotient over 1 indicates a specialization in that occupation.

Our most productive metro group (the blue dot) has a higher level of specialization in several key occupations. The most productive group leads in STEM (Science, Technology, Engineering and Math) occupation groups like computer and math occupations and life, physical and social science occupations. The presence of  engineering-heavy Detroit in the lower-mid productivity group (orange) moves that group to the top of architecture and engineering specialization. Our top productivity group also separates itself in legal occupations and art, design, entertainment, sports and media occupations (the inclusion of Los Angeles is largely responsible for this location quotient).

 

It is also useful to see the occupations this high-productivity group doesn’t specialize in. Ironically, the top production group has the lowest location quotient in production (manufacturing) occupations.

 

Healthcare (practitioners and technical) is another area that the top production metros don’t specialize in. Since healthcare is a local sector (it serves the local area and is not easily exportable) it is difficult to really specialize in it and most metros have location quotients near 1. 

 

It is important to note however, that manufacturing and healthcare related jobs are large and important part of the economy, but they are not driving high productivity.

 

So, what does high productivity mean for a local economy? We will follow this post up with a look at how incomes, equity, and costs vary in our productivity groupings. We will also discuss how metros can work to boost their productivity.

 

The data used in this post is available here.

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