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Improving economy not helping all

It’s not always just about the jobs.

While jobs get most of the attention, the broader picture is more important.

Are the new jobs pushing up incomes? Are the opportunities spread throughout the community?

There’s no guarantee that simply creating more jobs will give an entire community an economic lift.

“What’s important to metro area economies is not just jobs,” said Richard Shearer, a senior research analyst at the Brookings Institution. “It has to do with a rising standard of living for all of an area’s residents.”

A new study by Shearer and his Brookings colleagues found that most big U.S. cities aren’t doing a great job of growing and spreading the wealth around.

While a lot of U.S. cities had robust growth during the recovery from 2009 to 2014, just nine of the 100 biggest metro areas managed to grow and spread that newfound prosperity throughout all segments of its population.

In the vast majority of metro areas – 80 of the top 100 – the median wage fell during that five-year period, which means that the job growth in those communities didn’t translate into better wages for the workers in the bottom half of the income spectrum.

The Buffalo Niagara region was one of those metro areas where more jobs didn’t mean greater prosperity for everyone.

But the region did do better than most in sharing the wealth.

Overall, our economy was nothing special from 2009 to 2014. Our job growth was subpar, averaging 0.6 percent a year to rank 80th out of the top 100 markets. Our overall economic growth was modest, averaging 1.6 percent a year to rank in the middle of the pack.

But because our population was shrinking for most of that period, even a little growth can pack a bigger punch on a per-person basis. Our average wage growth ranked in the top half. Our productivity growth was in the top quarter, while our per capita economic growth ranked in the top fifth.

Those are all good marks, and they were strong enough to rank the Buffalo Niagara region 28th for improving prosperity.

“It’s not seeing especially fast growth,” Shearer said. “But it has become a more productive place, so wages are rising.”

When it comes to sharing the wealth, we did pretty well, too. Poverty rates dropped and more people were working. But our median wage still dropped by 3.7 percent over the five-year period, indicating that the benefits from that improvement in overall prosperity and productivity didn’t filter down to the bottom half of wage-earners.

“Buffalo’s growth and its rising prosperity – while good – are not necessarily benefiting the people in the bottom half,” Shearer said.

One thing to remember about the Brookings data: It only goes until 2014, which excludes any of the employment gains from 2015, when the region enjoyed its fastest job growth since 1999.

When we talk about the Buffalo Niagara economy, most of the attention is on jobs.

It’s understandable. Job growth puts more people to work, which drives down unemployment. As the labor market tightens, wages start rising, which pushes up our standard of living.

Most of the region’s economic development policies, especially at the local and county level, are geared toward job creation. The state, with help from Brookings, has developed a more advanced development strategy, through its regional economic development councils, that puts more focus on targeted growth, worker training and infrastructure.

But that hasn’t stopped the minority community from protesting that not enough of the construction jobs from the state’s marquee Buffalo Billion projects, from SolarCity to the Buffalo Niagara Medical Campus, have been going to minority workers.

Indeed, the poverty rate among non-Hispanic minorities is about 50 percent higher than it is for whites in the Buffalo Niagara region, Shearer said.

And the gap between the richest and poorest workers in the Buffalo Niagara region is pretty wide – although not as wide as it is nationwide. And the gap has narrowed a bit since 2007, when workers in the top 5 percent of the local income scale earned 8.5 times more than the workers in the bottom fifth. By 2014, the wealthiest workers earned 8.2 times the income of the poorest workers, according to Brookings data.

The gap narrowed not because poor workers earned more – their earnings were flat from 2007 to 2014 – but because the incomes of the wealthiest workers fell by 1 percent, the Brookings data showed.

“While Buffalo is making progress, there’s still progress to be made,” Shearer said.