Real Estate

The Money's in Manhattan. Manhattan, Kansas


Manhattan has weathered the recent economic downturn better than most other metro areas in the U.S. Per capita personal income has jumped 4.8 percent over 2009, according to the U.S. Bureau of Economic Analysis (BEA). But good luck trying to walk in Central Park or shopping at Bloomingdale's. If you want to do so, you'll have to drive about 21 hours due east.

That's because the Manhattan in question is in Kansas. Home to Fort Riley, Manhattan, Kan., is the metro area in the U.S. with one of the highest increases in personal income over the past year. The area employs more than 5,540 civilian personnel, according to the Economic Development Division of the Manhattan (Kansas) Chamber of Commerce, and personal income rose to $40,345 in 2009, BEA data show. Manhattan also had the third biggest jump in per capita income, 48 percent, from 2000 to 2009.

Over the past year some smaller areas that rely on government and military for employment, such as Jacksonville, N.C., and Manhattan, Kan., have experienced per capita income increases, while more affluent regions, such as the area that covers Manhattan, N.Y., watched per capita income drop 4.6 percent, to $52,375, over the same period. Another affluent area, Bridgeport-Stamford-Norwalk, is at the top of the country's metropolitan statistical areas in per capita personal income—$73,720 in 2009, according to the BEA—but overall income has dropped 6.8 percent.

For the past three years the Bridgeport metro, as well as the metro areas of San Francisco and Naples, Fla., have held the top spots for per capita personal income, but levels have gradually decreased since 2007 as unemployment rose, according to BEA data.

Wealthy individuals remain concentrated near large cities with business and finance hubs, but William H. Frey, a Brookings Institution demographer, says state capitals, military towns, and college towns also often have higher-than-average incomes due to their ability to survive economic downturns, as their main industries are buffered by government-related funds.

Income Drops in Affluent Areas

Personal income dropped in most places around the country last year, according to the BEA. Per capita personal income, or total personal income divided by total population, does not indicate the income disparity in an area but is a broad indicator of an area's economic well being, says Mark Mather, associate vice-president for domestic programs at the Population Reference Bureau. It can also be a good indicator of the cost of living, since areas with high incomes tend to have higher housing costs and other expenses.

"Fairfield County is a hotbed for financial entrepreneurs, and this resulted in the growth of other businesses to service these financial firms and their wealthy owners," says Gregory H. Skidmore, president and chief investment officer of Belray Asset Management, a Greenwich (Conn.) wealth management firm.

While the number of millionaire households in the U.S. has rebounded since 2008, according to a study by the Boston Consulting Group, capita income decreased slightly in affluent metros in 2009 as private sector wages stagnated and unemployment rates increased.

For example, in the Bridgeport metropolitan area, per capita personal income fell 6.8 percent in 2009, from $79,108 in 2008, BEA figures show. The unemployment rate rose to 8.6 percent in August 2010 from 8.2 percent a year earlier, according to U.S. Bureau of Labor Statistics data.

In Naples-Marco Island, Fla., a wealthy metro of 318,537 people, per capita personal income fell 8 percent, to $57,548, in 2009. Unemployment ticked up to 13.6 percent in August 2010.

The biggest percentage drop was in Midland, Tex., an oil rich area where per capita income fell 8.4 percent, to $49,441. Midland had the highest per capita income among Texas' metros in 2009, according to BEA data.

Government Salaries Rise

In 2009, workers' net earnings increased in only 57 of the country's 366 metropolitan statistical areas, and "gains were concentrated in the government sector," according to the BEA. Military earnings growth was particularly strong in Jacksonville and Fayetteville, N.C., Manhattan, Kan., Elizabethtown, Ky., Lawton, Okla., Clarksville, Tenn., and Killeen-Temple-Fort Hood, Tex., the bureau's figures show.

Of large metropolitan areas with populations of 1 million or more, only three had an increase in both net earnings and personal income in 2009: Washington, D.C., San Antonio, and Virginia Beach—all areas with significant government and military presences. Congress passed a bill increasing federal and military salaries by 3.9 percent in 2009, according to GovCentral.com.

Jacksonville, N.C., had the biggest increase in per capita income among all U.S. metros: 11.9 percent, to $44,664. Unemployment fell to 7.9 percent in August 2010, from 8.3 percent a year earlier. The major employers in the Jacksonville area, which has an estimated population of 173,064, according to the Census Bureau, include the Defense Dept. and Camp Lejeune Marine Corps Community Services. Per capita income in Jacksonville increased 66 percent from 2000 to 2009, the biggest jump in the country, reported firstcoastnews.com.

Overall per capita personal income in the U.S. increased 29 percent during that period.

Science and Education Hubs

In addition to government, PRB's Mather says education plays a large role in creating wealth. Communities with universities and science research centers tend to support industries with high-paying jobs that require an educated work force. "Once you start being able to attract more highly educated individuals, it starts to feed itself. The workforce starts to create more jobs in the area," he says.

A 2007 report by Mather says scientists and engineers have paychecks nearly twice the national average. Thus the science and engineering labor force can boost tax revenue, housing values, and consumption on goods and services in the communities where they live and work.

Mather says science hubs have grown in smaller cities as well as in suburbs of larger metro areas. Science hubs such as those of Boston, Seattle, and Boulder are also the wealthiest metros in their states in terms of per capita personal income, according to BEA data.

The National Science Board estimates that the U.S. science and engineering workforce is about 17 million people, although estimates vary widely depending on whether people in science-related occupations, as well as scientists and engineers themselves, are counted. The Population Reference Bureau estimates that the U.S. had 7.4 million scientists and engineers in 2009, or about 5 percent of the total labor force.

Income Disparity

Wealthy areas are not without their inequalities. The Bridgeport metro area has the highest per capita income but also ranks No. 1 among metro areas in income disparity, followed by New York City and Miami. According to U.S. Census Bureau data, the top 5 percent of income earners in the Bridgeport area account for 28 percent of the wealth.

"[Per capita income] doesn't tell us anything about the distribution of income or the level of inequality in an area," says Mather. "An area could have an average level of per capita income but a lot of poor and rich families that balance each other out."

Larry Martin, principal at research firm Gadberry Group, adds that high-income areas such as New York, Chicago, Houston, Los Angeles, and Miami are also "gateway" cities for immigrants. In large numbers and with low earnings, they significantly affect per capita income. "The complexity of those areas is unlike most of the U.S.," he says.

While government employment and financial sector improvements have boosted income in certain demographics, the overall population has yet to start seeing gains in wealth again. But if Manhattan, Kan., continues to see such big increases, there may be a Bloomingdale's there yet.

Click here to see the metropolitan area in each state with the highest per capita income, and how it has changed in the last year.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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