Special Report

Nine Cities Where Wealth Is Soaring

The United States is still slowly recovering from the recession, and incomes across the nation have declined in recent years. Nationwide, median household income was $51,771 a year during the three-year period of 2010 to 2012, a decline of 5.8% compared with the previous three-year period of 2007 to 2009, when the U.S. median household income was $54,951 a year.

The economic recovery is not uniform across the country, as some cities have weathered the financial crisis better than others. Median incomes increased by more than 15% in nine U.S. cities between the three-year periods of 2007 to 2009 and 2010 to 2012, according to the latest data from the U.S. Census Bureau. A typical New Bern, N.C., resident earned 25.3% more between 2010 and 2012 compared with the prior three-year period of between 2007 and 2009.

Click here to see the nine cities where wealth is soaring

Unsurprisingly, the poverty rates in many of these towns improved with rising median household incomes. The proportion of residents living in poverty declined by more than six percentage points in two of the cities on our list, West Lafayette, Ind., and Manhattan, Kan. The poverty rate in all but one city on our list declined, versus a nationwide increase of more than two percentage points.

One factor that may have helped median incomes in these cities grow is the fact that incomes were often low to begin with, Austin Nichols, Senior Research Associate at the Urban Institute, told 24/7 Wall St. Because of the beginning low base income, “A $1,000 change in some places is going to be effectively 0% change and in some places it’s going to be a [much] higher percentage change,” Nichols said. With the exception of Bentonville, Ark., all the cities with the largest income gains were in the bottom quartile for income nationwide between 2007 and 2009.

Still, income changes in some of these places have actually been quite large, even when measured in dollar terms. All but one of the nine cities where wealth has soared had among the 15 largest dollar changes in median income. Just three of these nine cities were still in the bottom quartile for income between 2010 and 2012.

Education is among the industries less likely to suffer from a recession, Nichols told 24/7 Wall St. Large universities tend to offer more stable employment than many other sectors. According to Nichols, “Universities and usually governments are countercyclical,” which means institutions like “public administration and education are more protected from the recession.” Manhattan, Kan., Stillwater, Okla., Nacogdoches, Texas, and West Lafayette, Ind., are all homes to large public universities. The presence of colleges in many cities may also have contributed to lower median incomes, since few students hold full-time jobs while at school.

To identify the cities with the biggest increases in wealth, 24/7 Wall St. reviewed the U.S. Census Bureau’s American Community Survey (ACS) 2012 three-year estimates. Three years’ worth of data (2010 to 2012) allow for the review of smaller cities. Checking the Census Bureau’s comparison table for statistical significance, we compared this three-year period to the 2007 to 2009 period. The cities with populations of 25,000 or more with the largest percentage increase in household median income made our list. Worth noting, Urban Institute’s Nichols said that large changes may be statistically significant “even if they are primarily due to measurement error.” To be consistent, we used three-year averages for national figures as well. In addition to income figures, we collected home values, poverty and employment by industry, all using the ACS. We reviewed annual average unemployment rate figures over the past six full years from the U.S. Bureau of Labor Statistics.

These are the cities where wealth is soaring.

9. Big Spring, Texas
> Pct. increase in income: 17.2%
> Median household income: $40,943
> Poverty rate: 20.4%
> Population: 27,763

Big Spring is less than an hour from Midland, Texas, which is widely considered the epicenter of the state’s oil boom. Mining has traditionally been a major industry in Big Spring, accounting for at least 10% of the city’s economy in recent years. The sector has not grown considerably, but the state’s energy boom across the state is still a likely factor in the city’s sharp income growth. Strong growth in the city’s housing market in recent years reflects to some extent the region’s rising incomes. While home prices have not been particularly high in Big Spring in the past five years, they had increased by nearly 25% between the three-year period starting in 2007 and the three-year period starting in 2010, among the most dramatic home value increases nationwide.

8. Manhattan, Kan.
> Pct. increase in income: 17.4%
> Median household income: $42,950
> Poverty rate: 24.8%
> Population: 54,162

Like many cities with rapidly rising incomes, the median household income of Manhattan residents remained well below the national median. Nearly 25% of residents lived below the poverty line during the three-year period ending in 2012, considerably higher than the national rate of 15.7%. The poverty rate in the city, however, decreased by 7.3 percentage points since the prior three-year period, the second-largest decline in the nation. Manhattan also has had among the nation’s lowest unemployment rates since 2007, not exceeding 5.0%, even during the peak of the recession. One explanation for the rise in income could be industry growth. Manhattan had among the smallest finance sectors during the three years ending in 2009, comprising just 3.5% of employment, half the proportion the sector represented across the nation. Over the next three years, however, the sector’s share of Manhattan’s employment grew to 5.8%, closer to the national share of 6.6%.

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7. Stillwater, Okla.
> Pct. increase in income: 17.5%
> Median household income: $32,567
> Poverty rate: 30.1%
> Population: 46,143

Stillwater residents were among the nation’s poorest during the three-year period starting in 2007, with a median income of just $27,707 per year. Over the next three years, however, median household income had increased by 17.5%, or $4,860 a year. The city’s economy also likely will benefit from Belgian aerospace supplier ASCO’s decision in 2012 to invest $100 million and move its Aerospace USA division headquarters to Stillwater. The move was expected to bring at least 600 new future jobs, and company officials hoped to benefit from the presence of Oklahoma State University, located in Stillwater. Like several other cities with the highest income growth, the unemployment rate in Stillwater has remained relatively low during the past five years, at just 4.2% as of December 2012.

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6. Bentonville, Ark.
> Pct. increase in income: 17.9%
> Median household income: $64,695
> Poverty rate: 8.5%
> Population: 37,033

Median annual household income in Bentonville grew by nearly $10,000 between the two three-year periods beginning in 2007 and in 2010. This was a higher nominal increase than in every city reviewed except for Saratoga, Calif. The retail trade sector made up a larger portion of Bentonville’s economy than it did in any other city between 2007 and 2009. Since 2007, the sector grew by nearly 20%, compared with just 11.6% in the sector nationwide. Walmart, which reported strong growth over the past five years and is headquartered in the city, may account for much of the sector’s growth. The world’s largest retailer employs tens of thousands in northwest Arkansas.

5. Del Rio, Texas
> Pct. increase in income: 19.9%
> Median household income: $40,307
> Poverty rate: 21.2%
> Population: 35,612

Del Rio benefits from the presence of Laughlin Air Force Base, which provides massive economic benefits to the local economy. Del Rio’s economy also benefits from its proximity to far-larger Ciudad Acuna, Mexico. Also, the city’s total labor force grew by more than 10% between the two three-year periods beginning in 2007 and in 2010. Unlike other parts of Texas, Del Rio’s economy has not traditionally been a stronghold for oil and gas. Agriculture and mining accounted for just 3.2% of total civilian employment between 2010 and 2012, although the sector grew by 146% between the three-year periods starting in 2007 and 2010. While some areas of the city’s economy are growing, others are in decline. Construction dropped to just 3.6% of employment during the period of 2010 to 2012, down from 7.3% during the period of 2007 to 2009. Additionally, the city’s unemployment rate was 7.4% in 2012, still above pre-recession rates.

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4. Bridgeton, N.J.
> Pct. increase in income: 21.6%
> Median household income: $39,890
> Poverty rate: 34.0%
> Population: 25,298

The agricultural industry has always been strong in Bridgeton, accounting for more than 5% of the region’s employment between 2007 and 2009, compared with less than 2% of employment nationwide. By the three-year period ending in 2012, the agricultural, forestry and mining sector’s share of employment in the city had more than doubled, making up 11.8% of the workforce. Despite the rise in agricultural employment and the increase in incomes, Bridgeton residents are still some of the poorest in the country. Unlike the other cities with rising incomes, poverty in Bridgeton worsened in the years under review. The poverty rate increased by 8.8 percentage points from the 2007 to 2009 period to the 2010 to 2012 period, among the worst nationwide.

3. West Lafayette, Ind.
> Pct. increase in income: 22.2%
> Median household income: $30,498
> Poverty rate: 36.4%
> Population: 30,238

Between 2007 and 2009, 10.4% of the population earned less than $10,000 a year, among the worst nationwide and roughly double the national rate of 5.7%. Extreme poverty had improved dramatically by the end of the three-year period ending in 2012, when just 0.2% of residents earned less than $10,000 a year. While the city’s median household income of slightly more than $30,000 was still considerably lower than the national median over that time, the city’s labor market was relatively healthy. In every year between 2007 and 2012, the unemployment rate remained far lower than the national rate. The sorts of jobs offered by Purdue University, located in West Lafayette, may account in part for the region’s stable labor force, since university jobs tend to be less volatile compared with those in other industries.

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2. Nacogdoches, Texas
> Pct. increase in income: 23.7%
> Median household income: $30,059
> Poverty rate: 32.0%
> Population: 33,604

Between the two three-year periods starting in 2007 and 2010, home values in Nacogdoches increased by 29.8%, more than any U.S. city except for Clovis City, N.M. This may be a reflection of rising incomes in the region, which increased by 23.7%, from $24,310 a year to more than $30,000 a year between the 2007 to 2009 and 2010 to 2012 periods. Despite rising incomes, the area’s labor force did not grow considerably during the period. From 2007 to 2009, the percentage of people in the civilian labor force did not change meaningfully, while the area’s population rose by just 2.6%, from roughly 32,700 to 33,600. Nacogdoches County is home to large education and agriculture sectors. Stephen F. Austin State University is located in the city proper, where more than 33.3% of all employees in the city worked in education, health care and social assistance — more than most other cities in the United States.

1. New Bern, N.C.
> Pct. increase in income: 25.3%
> Median household income: $40,707
> Poverty rate: 22.8%
> Population: 30,074

Located less than two hours from Raleigh, New Bern’s median annual income rose from $32,476 in the three years ending in 2010 to $40,707 in the three years ending in 2012. No other city in America had such a considerable income growth. Additionally, during that time, the city’s civilian labor force participation rate jumped from 53% to nearly 62%. According to the New Bern Chamber of Commerce, the area’s “fast-growing population of highly skilled, active retirees has found employment in the small business and professional sectors.”

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