Key Findings
The Distressed Communities Index (DCI) illuminates geographic inequality in the United States down to the zip code level. The DCI combines seven complementary economic indicators into a single score and sorts communities into five even tiers, or quintiles, of well-being: prosperous, comfortable, mid-tier, at risk, and distressed. In all, the DCI captures more than 99 percent of the U.S. population and all 26,000-plus zip codes with at least 500 residents. (Distress scores are also calculated at the county and congressional district levels, available online and in other analyses). This year’s DCI captures the end of a decade of economic growth, during which the fruits of national expansion continued to accrue to places that were already quite well off.
At the top of the economic ladder are America’s prosperous zip codes, boasting robust employment and business growth alongside high levels of household earnings and educational attainment. On average, just 5.3 percent of residents are below the poverty line, median household income (MHI) is around $96K, and 42 percent of adults hold at least a college degree. Those values compare quite favorably to the country overall in 2020, when the national poverty rate stood at 12.8 percent, MHI was just under $65k, and about one-third of residents held a college degree or higher. More people reside in the country’s prosperous communities than any other tier of economic well-being in the DCI; these communities are the most desirable zip codes in the country, offering the highest levels of economic opportunity.
Distressed communities, meanwhile, represent an alternate, left-behind America that bear signs of profound disconnection from the country’s overall economic success. These communities span the geographic spectrum and can be found in urban centers, the rural heartland, and even suburbia. On average, 23.7 percent of the population live below the poverty line, 34.5 percent of the prime working age adult population are out of work, and more than 19 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 during a period when the country was well into a record-long economic expansion just before the pandemic-induced recession hit (the business and employment change data are through early March 2020), highlighting just how isolated distressed communities have become from national growth and prosperity.
Nearly 48 million Americans reside in economically distressed communities.
The number of residents in each DCI quintile steadily increases along with higher levels of economic well-being, with more than 83.1 million people—or more than one in four Americans—calling prosperous zip codes home. At the other end of the spectrum, just over 47.9 million people live in distressed zip codes, or 14.8 percent of the population covered by the DCI, the smallest share among the five quintiles. Even as the country’s overall population has grown in recent decades, there are now fewer people in distressed zip codes than in 2000, when more than 50 million people—or 18 percent of the population—were residing in economically distressed zip codes. This decline is partially the product of the changing composition of zip codes in the bottom quintile (growing more rural and less urban over the period), as well as the tendency of economically struggling zip codes to also experience population loss.
Mississippi has the greatest share of its population living in a distressed community, while Utah reports the largest share residing in the top-tier of national well-being.
The geographic distribution of economic well-being remains highly uneven across the U.S., with pockets of distress and prosperity clearly clustered around the country. The South is home to more than half (51.2 percent) of the country’s population in distressed zip codes, even though the region only contains about 38 percent of the total U.S. population. The South also has the lowest percentage of residents who reside in prosperous and comfortable communities. A trio of relatively rural Southern states including Mississippi (46.7 percent), West Virginia (41.4 percent), and Kentucky (38.6 percent) contain the greatest shares of residents living in distressed zip codes.
Prosperity, on the other hand, tends to predominate in fast-growing states across the West such as Utah—where 53.8 percent of residents live in prosperous zip codes—and Colorado (42.8 percent), or within highly-educated coastal states like Massachusetts (42.3 percent) and Washington (37.5 percent). The relative economic success of the West has enabled nearly 29 percent of its residents to live in a prosperous zip code, just edging out the Midwest as having a greater share than in any other region.
The state-level pattern of economic well-being is in part determined by the types of communities within each state. Suburbs retain their status as bastions of economic prosperity, as 42.7 percent of suburban residents live in a prosperous zip code. Nonmetro rural areas, by contrast, are among the most economically distressed type of communities, where 30.3 percent of residents are in a distressed zip code.
Prosperous communities are disproportionately home to the country’s highly-educated professional class.
The differences in the geography of economic well-being closely align with the geography of educational attainment. Higher education has increasingly become a precondition for financial advancement; yet, just 17 percent of residents in a distressed community hold a college degree. An even greater barrier to advancement for those living in the lowest quintile is the fact that one-fifth of adults in distressed communities lack a high school diploma—a share that is four times greater than in prosperous zip codes.
Nationally, about one in three adults hold a college degree or higher, meaning that mid-tier communities as a whole reflect the national distribution of educational attainment most closely. College graduates make up the largest cohort of residents in prosperous (48.5 percent) and comfortable communities (37.5 percent), while it is most common for someone’s highest level of educational attainment to be a high school degree in distressed places (34.4 percent) and at-risk zip codes (31.4 percent).
The types of employers and occupations present in a community are a reflection of the knowledge and skill sets held by local residents. The country’s highly-paid digital, knowledge-based, and high-end services industries concentrate in prosperous zip codes which are home to a large share of workers with college and advanced degrees, further reinforcing their economic advantage. Fully 38 percent of all U.S. residents with at least a bachelor’s degree reside in a prosperous zip code, just about the same share that reside in the bottom three tiers of economic well-being combined (37 percent).
Management and professional occupations dominate in prosperous zip codes, with more than half of residents holding employment in those fields. That share falls to 27 percent in distressed zip codes, although that still represents a plurality of residents (nationwide, 39.5 percent of the population is employed in the sector). Conversely, service and production/transportation occupations are relatively overrepresented at lower levels of economic well-being.
Even over the last five years of economic expansion from 2016 to 2020, distressed communities still lost jobs.
Employment and business growth was widespread and robust across economically well-off communities over the latter portion of the post-Great Recession economic expansion—but nonexistent in the most economically distressed places. In a highly troubling sign, national economic success never flowed into the country’s distressed communities, where the total number of residents, jobs, and businesses declined between 2016 and 2020. Total employment in distressed zip codes decreased by 2 percent, or more than 339,000 jobs, while the total number of establishments decreased by 3.2 percent (on average across distressed communities, the number of jobs fell by 5.7 percent, and the number of business establishments fell by a similar 5.8 percent). Both measures slightly outpaced the population loss that occurred in distressed zip codes over that time period. Overall, only 30.3 percent of distressed zip codes experienced an increase in jobs, and just 22.8 percent saw a greater number of businesses open than close.
Prosperous communities, meanwhile, continued to reap an outsized share of the country’s economic success. More than 83 percent of prosperous zip codes experienced job growth from 2016 to 2020, and 79.3 percent saw rising numbers of business establishments. These zip codes also hold an increasingly large share of total employment and business establishments, growing from 25.9 to 27.5 percent of the country’s employment and from 27.5 to 28.6 percent of U.S. establishments between 2016 and 2020. Prosperous zip codes added more jobs on net than the next three tiers combined, taking home nearly 57 percent of net employment growth. As a result, employment in prosperous zip codes over that time period grew by 11.8 percent while the number of establishments in the top tier grew by 7.5 percent—both of which were more than double the gains of zip codes in the comfortable tier.
Because employment and establishment growth are two components of the index itself, some gaps are to be expected among quintiles. However, the extent and magnitude of losses for bottom-ranking communities and gains for top-ranking communities reinforce just how unevenly the fruits of national economic growth flow across the map.
Black, Hispanic, and Native American residents are overrepresented in communities on the lower rungs of economic well-being.
Racial inequality remains entrenched at every tier of well-being but is especially pronounced within distressed communities. Altogether, 56 percent of the nearly 48 million Americans living in distressed communities are people of color, compared to only about 28 percent of the population in prosperous ones (nationally, about four in ten Americans identify as something other than non-Hispanic white). The share of the population who identify as Black, Hispanic, and/or Native American steadily grows across each DCI quintile as economic well-being declines, whereas the white and Asian shares of each quintile’s population increase along with economic success. Asians and whites are more likely to live in a prosperous zip code than any other type of community. Blacks and Native Americans, by contrast, are more likely to live in a distressed zip code than any other type of community, while Hispanics are most likely to reside in an at-risk one.
These disparities also extend to the earnings of racial minorities, as evidenced by differences in the average median household income (MHI) of white, Hispanic, and Black residents living in communities of the same DCI quintile. This is particularly true in distressed communities, where the MHI for the typical Black household stands at $31.6K, or only about two-thirds that of the typical white household in the same tier. Even in prosperous zip codes, the average Black household still earned about seven percent less than their white peers.
Conclusion
The DCI sheds new light on the geographic inequalities that persisted under the surface of the longest economic expansion in U.S. history, which the pandemic brought to an abrupt end in 2020. The findings demonstrate how usual patterns of growth tend to reinforce gaps in economic well-being, with strong job and business growth accruing to highly-educated, high-income areas, and weak growth weighing down the prospects of communities struggling across multiple measures of well-being. The DCI also underscores the sheer geographic, demographic, and economic diversity of communities across the United States—and how that diversity contributes to vulnerability and resilience in the face of shocks such as the pandemic. Ultimately, the DCI contains ground for both optimism and pessimism: Optimism in that more than 87 million Americans live in thriving, prosperous areas at the highest echelons of well-being, and pessimism in that tens of millions still reside in economically struggling communities that barely participated in last decade’s economic growth.