Executive Summary

The Distressed Communities Index (DCI) illuminates the ground-level disparities in where and how we live. The DCI sorts U.S. zip codes based on seven complementary economic indicators into five even quintiles of well-being: prosperous, comfortable, mid-tier, at risk, and distressed. In all, the DCI captures 99 percent of the U.S. population and all 25,400-plus zip codes with at least 500 residents.

This report covers the years 2000 to 2018 to examine the arc of community well-being in this young century. It finds that national growth largely failed to raise the floor of well-being for its most vulnerable people and communities. While some groups and regions have experienced meaningful progress since the turn of the century, chronic inequities remain a troubling feature of the American experience. Altogether, over half of the 50.5 million Americans living in distressed communities are people of color, and gaps between Black and white households have grown wider in consequential ways. Now, the coronavirus pandemic and recession are disproportionately threatening the very same vulnerable communities that national growth left behind.

So far in the 21st century, national economic growth has failed to lift the country’s most vulnerable communities.

On measures of income, poverty, and work, the typical distressed zip code remained just as far behind the typical prosperous zip code in 2018 as it was in 2000. Distressed communities represent an alternate, increasingly left-behind America: on average, 25 percent of the population lives below the poverty line, 35 percent of the prime working age adult population is out of work, and more than 20 percent do not have a high school diploma. It is also the only quintile in which jobs and businesses decreased in the average zip code deep into the national recovery from the Great Recession, highlighting just how removed distressed communities have become from national growth and prosperity. 

At 50.5 million, the number of Americans living in distressed communities held mostly constant since the turn of the century even as the country’s population grew significantly. As a result, the share of the total U.S. population residing in economically distressed zip codes fell from 18 percent in 2000 to 16 percent in 2018. By contrast, the middle quintile of well-being added 13.1 million people over the period, triggering a clear shift in the preponderance of the country’s population towards higher tiers of well-being. Population now increases as economic well-being does. At the high end, prosperous communities lead with 82.4 million residents as of 2018, stable at 26 percent of the country’s total population.

Gaps in community well-being are sustained over time by disparities in growth and education. For example: Prosperous zip codes from 2000 went on to gain 8.7 million jobs between 2000 and 2018, capturing 61.8 percent of total U.S. job growth over the period. Meanwhile, zip codes that were distressed at the turn of the century recorded a net job loss over the two economic cycles through 2018. 

 

Similarly, well-off areas have boosted college attainment rates faster than worse-off ones. Nearly half of all adults in prosperous zip codes now hold at least a Bachelor’s degree, compared to only 15.9 percent in distressed zip codes. In the end, two-thirds of zip codes that ranked as prosperous in 2000 remained prosperous in 2018, and two-thirds of zip codes that were distressed at the turn of the century remained so on the eve of the pandemic.

The geography of well-being has shifted as cities and the West gain ground.

Urban zip codes have seen the greatest advances in well-being since the turn of the century, while rural zip codes were disproportionately likely to become distressed. The total population of prosperous urban zip codes doubled from 2000 to 2018 as well-being improved and the country’s urban geography expanded, especially in the West. In 2000, 34.3 percent of the country’s urban population resided in distressed zip codes; by 2018, the figure was 21.7 percent. By contrast, the share of the country’s rural population living in distressed zip codes rose to 23.6 percent. Through it all, suburbs have maintained their hold on American prosperity: Fully two-thirds of the nation’s suburban zip codes rank as prosperous or comfortable on the DCI.

Regionally, 53.4 percent of the population in the West resides in a prosperous or comfortable zip code, a greater share than in any other part of the country. The region overtook the Midwest, which led in American economic well-being in 2000 but now falls behind even the Northeast. Even as the relative standing of the South has improved over the period, it maintains the smallest share of its population in prosperous or comfortable zip codes (40 percent) and largest in at risk or distressed ones (41 percent). 

In spite of significant progress, Americans’ exposure to community prosperity and distress remains profoundly divided along racial lines.

Blacks, Hispanics, and Native Americans are much more likely to live in a distressed zip code than whites. The Black, Hispanic, and Native American shares of the population steadily rise in each quintile as economic well-being declines, whereas the white and Asian shares of each quintile’s population increase as well-being rises. 

Nevertheless, the nation’s leading zip codes are gradually becoming more diverse. The minority share of the population in prosperous zip codes jumped from 16.3 percent to 26.9 percent between 2000 and 2018. Although communities of color remain significantly underrepresented in well-off zip codes and overrepresented in struggling ones,  real progress has been made since 2000 in closing the gap. Today, mid-tier communities most closely resemble the demographic composition of the country as a whole.

Racial inequality is observed at every level of community well-being but especially in distressed areas. The median household income (MHI) for the typical Black household in a prosperous zip code was 92 percent that of the typical white household. In distressed zip codes, it was only 66 percent. These racial disparities have not only persisted but widened at every tier of economic well-being since 2000.

Conclusion

The pandemic has pushed the American economy into uncharted waters and placed low-wage service industries and the people of color predominantly employed in them at the epicenter of a deep recession that has left other industries, professions, and demographics relatively unscathed. Its worst economic impacts will therefore be experienced most acutely in the already distressed and at risk neighborhoods where directly-affected workers and populations tend to reside. As a result, the pandemic will test the fragility of the more equitable, more diverse prosperity that was taking shape across the country and threaten the modest progress made in many Black communities since the turn of the century.

The DCI shows how seemingly abstract forces such as a pandemic that should be color blind end up not being so when they map on top of pre-existing inequalities. In that sense, the pandemic should be a wake up call that the magnitude of our current divides leaves our economy and society more vulnerable in the face of outside shocks. 

Make no mistake, there is much to celebrate about the past decade and the breadth and duration of the economic expansion that followed the Great Recession, which demonstrated the positive impact tight labor markets can have for low income families. Yet, it is now clear that modest gains briefly enjoyed can slip away in an instant, while the foundations of prosperity for well-off people and places stand on much firmer ground. In retrospect, the 2010s looks like a grievous missed opportunity to invest in a more inclusive future that narrows the gaps between communities, rather than preserves them.

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