Red and Blue Economies Are Heading in Sharply Different Directions

I have long maintained that part of the economic problems facing "red states" and red rural areas is that their social reactionary nature and hostility towards non-whites, non-straights and non-Christians makes them unattractive to the business of the 21st century and the future.  Here in Virginia, Southwest Virginia is a prime example.  That region continues to demand that state monies be used to turn around the region economically yet the residents (and, yes, there are exceptions) continue to embrace social, religious and political views that are anathema to the economic change they claim to want.  Now a study, as reported in the New York Times looks at the diverging paths of so-called blue economies associated with rising urban areas and those of red economies associated with rural and reactionary regions.  And yes, the red areas tend to be far more white and perhaps more racist.  Here are article highlights:

At a quick glance, red and blue metropolitan areas are performing equally well on average in the most watched indicators of labor market health. . . . Silicon Valley (blue) is booming. So is Provo, Utah (red).

But below the surface, red and blue local economies are worlds apart on enduring, fundamental measures that determine their future prospects and their biggest economic challenges.

The correlations between deeper economic measures and how the contrasting metro areas voted in 2016 are striking.

In bluer metros, more residents have college degrees: The 10 large metros with the highest educational attainment each voted for Hillary Clinton by at least a 10-point margin. Median household incomes are higher in bluer metros even after adjusting for the cost of living, which is higher in bluer metros as well. (Metro area is a better measure for a local labor market than a neighborhood, city, county or state.)

And bluer metros have a more favorable job mix for the future, with fewer manufacturing jobs, a higher share of harder-to-automate “non-routine” jobs, and a higher share of jobs in occupations projected to grow faster.

These measures — education, household income, cost of living, non-routine jobs and projected job growth — are highly correlated with one another, and with voting Democratic.

Other economic measures are less strongly correlated with partisanship but still show a pattern. Bluer metros have less year-to-year volatility of job growth. In part that’s because goods-related sectors like manufacturing and mining are more volatile and are clustered in Republican-leaning areas.

Home values have risen more in bluer metros than in redder ones. And blue metros have a higher prime-age employment-population ratio, even though the unemployment rate varies little by partisanship. That’s because red metros have a higher share of prime-age adults who are not in the labor force and therefore aren’t counted in the unemployment rate.

But there are a few places that vote differently than you’d expect from their local economic fundamentals. Colorado Springs and the Provo-Orem area, for instance, have education levels and an occupation mix more typical of blue metros but voted for Donald J. Trump in 2016 by a wide margin. On the flip side, Stockton, Calif., and El Paso look more like red metros economically but voted for Mrs. Clinton.

Why do some metros vote differently than their economics might suggest they would? Race, ethnicity and religion. Metros that vote Democratic despite having lower education and a job mix more typical of redder metros tend to have large Hispanic populations, including many in inland California and on the Texas border. Metros that vote more Republican despite having higher education and a blue-metro job mix tend to be whiter.

[I]ncome inequality — and all the social and political challenges that come with it — tends to be lower in redder metros. And while cost-of-living-adjusted household incomes are higher in bluer metros, cost-of-living-adjusted salaries for a given occupation are typically higher in redder metros.

There’s a reason for this difference: Bluer metros tend to have higher-paying occupations and fewer prime-age adults out of the labor force, which increases household incomes. But if you move from a bluer to a redder metro and find a job in the same occupation, you’re likely to get an increase in salary after taking living costs into account.

The economic challenges of blue metros — unaffordability and inequality — are different than those of red metros, which face lower living standards and greater risks of job loss. Even if the economy takes a back seat in the 2020 election to health care, immigration and President Trump’s record, these economic differences won’t be far from the surface. And if national economic conditions soften, these differences will become more reason for partisan disagreement on urgent policy priorities.

If the places that moved left between 2012 and 2016 continue getting bluer — and the places that swung Obama-to-Trump keep getting redder — the local economies of red and blue America will keep growing further apart.

Innovation and progressive thinking gravitates to blue regions while "conservatism," closed mindedness and an unwelcoming atmosphere toward those who are different concentrates in red regions. Both bring economic consequences.