By Alan Berube, Eli Byerly-Duke
At the onset of the COVID-19 pandemic in the United States in March 2020, the U.S. economy was riding the crest of a decade-long expansion. The Brookings Metro Monitor found that from 2009 to 2019, 179 of the nation’s 191 largest metro areas had posted growth in jobs, adult employment rates, and median earnings. While that growth did not consistently close significant economic gaps by race and place, a tightening labor market in the late 2010s seemed to finally be spurring more inclusive outcomes in many metro areas.
That momentum dissipated nearly overnight. Between February and April 2020, the U.S. economy shed 22 million jobs—nearly 15% of total employment. Shortly thereafter, Brookings Metro began to track the local impacts of the pandemic economic crisis in our Metro Recovery Index. Over the succeeding 12 months, the Index revealed significant differences in the pace of the economic rebound across metro areas, with local trends in the labor market and other indicators of economic activity often tracking the ups and downs of successive COVID-19 waves.
Now, a little more than two years removed from the pandemic’s onset, we are revisiting the data to see whether metro area economies are truly back on their feet, even as their residents continue to navigate the effects of a persistent virus and the more recent challenge of inflation. While the data does not yet tell us much about who is benefiting—or not—from the recovery (e.g., by race, gender, age, or other demographic characteristics), it does indicate where the recovery has been stronger and weaker. The picture, as ever, remains mixed.
Most metro areas still have fewer jobs and higher unemployment than before the pandemic
The U.S. economy has posted a stronger, faster jobs recovery than almost anyone anticipated in the spring of 2020. Starting in May 2020, the economy added an average of nearly 900,000 jobs per month over the subsequent 22 months. Nevertheless, there were still 1.2 million fewer jobs economy-wide in March 2022 versus just prior to the pandemic—equivalent to a 0.8% decline.
Not surprisingly, then, most of the nation’s largest metro areas still fall somewhat short of their pre-pandemic job totals (Map 1). Of 191 U.S. metro areas with populations of at least a quarter million, 121 (63%) had fewer jobs in March 2022 than in February 2020. In many of these metro areas, the jobs shortfall was relatively minor, similar to the national average. A dozen metro areas, however, had at least 5% fewer jobs than before the pandemic, including several in the Eastern Great Lakes area, and a couple (Honolulu and New Orleans) in which significant tourism sectors have not fully rebounded.
By the same token, there were a handful of metro areas that posted significant job gains over pre-pandemic levels. Most were in states whose economies and populations were growing quickly prior to the pandemic, such as Idaho, Florida, Texas, and Utah. Indeed, the rate of job growth a metro area experienced from 2010 to 2019 alone explained more than one-third of the variation in metro area job trends over the two-year recovery period.
However, patterns in metro area unemployment rates were quite different. Similar to the jobs trend, 116 metro areas (61%) overall had a higher unemployment rate in March 2022 than prior to the pandemic. However, the metro areas with the largest increases in unemployment included not only tourism-dependent economies (including Atlantic City, N.J. and Las Vegas, in addition to Honolulu and New Orleans), but also several in Texas. Texas metro areas were gaining working-age residents even as jobs increased, slowing the decline in local unemployment. By contrast, several metro areas in states such as Indiana, Minnesota, and Ohio, where jobs recovered more modestly, nonetheless experienced reductions in unemployment rates compared to pre-pandemic. This seemed to be because their labor forces grew more slowly—or in many cases, shrank—likely due to a mix of retirements, out-migration, and people dealing with sickness (such as long Covid) or caring for family members.
Trips to workplaces are still down everywhere, but retail vacancy has also dropped in many metro areas
In the early stages of the pandemic, mobility data from Google based on users’ geolocation data showed that fewer than half of workers in many metro areas were traveling to their usual place of work. Nearly anyone who could work from home did; only essential workers made daily trips to their workplaces, risking exposure to COVID-19 in the process. These rates of workplace visits began to rebound in many metro areas in the summer of 2020, as many cities and states reopened restaurants and entertainment venues.
Yet in metro areas with particularly large populations of office workers, trips to workplaces were slower to rebound, and remain well below pre-pandemic levels given the persistence of the virus and growing trends in remote/hybrid work. Not one of the 192 metro areas we analyzed had met or exceeded their January 2020 levels of workplace visits (Map 2). Yet that deficit ranged widely, from just 3% in Ocala, Fla. to 33% in the San Francisco Bay Area. In several other tech capitals—Boston, Los Angeles, New York, San Diego, San Jose, Calif., and Seattle—workplace visits were down at least 25%, reflecting what may be a permanent reduction in the prevalence of office work in tech industries. At the other extreme, a range of midsized metro areas around the country had workplace visits in March 2022 that neared pre-pandemic levels. This may indicate that these regions have relatively fewer office jobs that can be performed remotely, or a stronger cultural leaning toward in-person work.
Notwithstanding the across-the-board decline in regular workplace visits, retail vacancy rates in most metro areas (113 of 192, or 59%) are at least somewhat below their pre-pandemic levels. Many of these metro areas, particularly midsized ones, experienced a small initial rise in vacancies after the pandemic’s onset, which has since abated. Of the metro areas experiencing significant increases in retail vacancies, several are college towns—Ann Arbor, Mich.; Boulder, Colo.; College Station, Texas; Lansing-East Lansing, Mich.; and Santa Cruz, Calif.—in which the extended absence of students seems to have resulted in permanent business closures and challenges for landlords seeking to re-lease those properties.
To be sure, the metro-wide figures tracked here tend to mask trends in big-metro submarkets—particularly, highly impacted central business districts. The often-cited Kastle Back to Work Barometer still shows only 43% office occupancy in the 10 cities where Kastle’s clients’ buildings are most highly concentrated. Many tech capitals are beginning to confront the need to rethink the role and design of their downtowns, which for the foreseeable future seem unlikely to serve as large a commuter class as they did before the pandemic.
Rents and home prices are up nearly everywhere from pre-pandemic levels
In stark contrast to the Great Recession, which brought—and was brought on by—a crash in home prices, the pandemic recession fueled a run-up in residential real estate prices. Households sought more space as they stayed home more, took advantage of exceedingly low borrowing costs, moved to new locales for remote work, and/or repurposed savings once reserved for travel and entertainment to acquire more square footage.
The upshot: Prices for homes and apartments rose nearly everywhere, albeit by varying degrees. The median listing price for homes was higher in March 2022 than March 2020 in 169 of 192 metro areas (88%), and the median apartment rent was higher in 146 of 148 metro areas (99%) for which data is available.
Median home listing prices skyrocketed by 40% or more in metro areas, including second home/retirement destinations (several in Florida alone), secondary metro areas just outside large tech capitals (e.g., Bridgeport, Conn. outside New York; and Salinas, Calif. outside San Jose), and emerging hubs for tech growth and remote work (e.g., Austin, Texas; Boise; and Huntsville, Ala.) (Map 3). The small handful of metro areas where home prices declined since the pandemic’s onset were mainly places with older industrial economies in the Midwest (e.g., Cleveland, Detroit, Milwaukee, and Toledo, Ohio) and South (e.g., Birmingham, Ala.; Memphis, Tenn.; and Roanoke, Va.).
Rents also jumped significantly in Florida metro areas, as well as in a wider set of Sun Belt destinations such as Albuquerque, N.M.; Asheville and Greensboro, N.C.; Killeen-Temple and Waco, Texas; Phoenix and Tucson, Ariz.; and Riverside, Calif. By contrast, rents plateaued or even dropped slightly in some of the largest metro areas where tech and professional services jobs dominate: Boston, Chicago, Minneapolis-St. Paul, San Jose, San Francisco, Seattle, and Washington, D.C. Several of these ranked among the regions experiencing the largest domestic out-migration during the first year of the pandemic, which appears to have alleviated the pressure on several previously overheating rental markets.
Both home listing price and rental price trends in metro areas tracked closely with job trends; where jobs rebounded most strongly, price increases tended to follow.
Toward convergence, or divergence?
Two years on from COVID-19’s outbreak in the United States, our metro areas exhibit a wide spectrum of economic recovery. It remains to be seen, though, whether their diverse experiences will eventually narrow economic gaps across our places, further expand them, or leave us somewhere in between.
On the one hand, the pandemic has greatly impacted some of America’s most economically prosperous regions. “Superstar” metro areas such as Boston, New York, the San Francisco Bay Area, Seattle, and Washington, D.C. have not posted strong job recoveries, their office workers have not returned in large numbers, and their rental markets have softened considerably. While there is understandable concern about what all this means for their continued ability to spur innovation and national growth, these regions could undoubtedly stand to become more affordable and accessible. Meanwhile, regions that have rebounded more strongly while remaining somewhat more affordable—such as Atlanta, Dallas-Fort Worth, Raleigh-Durham, and Utah’s Wasatch Front—could yet become more prominent drivers of national prosperity in the pandemic’s wake.
On the other hand, the two years since COVID-19’s onset do not appear to have fundamentally altered the long-standing uphill battle for growth and prosperity in much of the nation’s heartland. Many of the same metro areas that were growing slowly before the pandemic—in regions such as the Great Lakes, Appalachia and the Piedmont, and the older industrial Northeast—continue to do so today. Their unemployment rates remain low mainly because they are losing working-age residents. Their downtowns, many of which were beginning to show new signs of life just before the pandemic, confront a difficult road ahead. These regions are most in need of a national response that invests in a broader geographic distribution of innovation-led, inclusive economic growth, through initiatives such as the Economic Development Administration’s Build Back Better Regional Challenge, the National Science Foundation’s Regional Innovation Engines program, and the proposed regional technology hub program in the U.S. Innovation and Competition Act.
With potentially choppier economic waters ahead, the pace and character of our nation’s diverse metro area recovery bear continued monitoring and national policy responses.