When moving to a new area or city, many Americans will choose based on their financial needs, taking into consideration cost of living and employment opportunities. In 20 of the 25 fastest growing cities, the January 2018 unemployment rate was below the U.S. jobless rate that month of 4.1%. Meanwhile, in each of the fastest shrinking cities, the unemployment rate exceeds the national average.
Job markets in the fastest growing cities also differ from those in the fastest shrinking cities in compensation levels. The median household income in over half of the fastest growing cities exceeds the national median of $57,617 a year. Only two of the fastest shrinking cities have a higher median household income than the U.S. as a whole.
In the fastest growing cities, not only are incomes generally higher, but also the state government takes less of it. Nationwide, states levy an average of $967 in personal income tax per person per year. Just five of the 25 fastest growing cities are in states with higher than average per-capita personal income tax collections. Of the 25 fastest shrinking cities, 14 are in states with higher than average personal income tax collections.
For many Americans, moving to a new city involves buying a home — and property taxes can be a considerable expense for homeowners. Nationwide, homeowners pay the equivalent of about 1.1% of their property value in state and local taxes annually. In the fastest growing cities, lower than average property tax rates may act as magnet for new residents. All but six of the fastest growing cities are in states where homeowners pay a smaller share of their home value on average in state and local property taxes than is typical nationwide.
Meanwhile, high property taxes may partially explain dwindling populations in some American cities. The majority of the fastest shrinking cities are in states where homeowners pay as much or more in state and local property taxes as a share of their home value than is typical nationwide.
Climate may also partially explain why some cities are growing faster than others. Fourteen of the 25 fastest shrinking cities are in the Midwest or Northeast — regions that can experience long and harsh winters. Meanwhile, 18 of the fastest growing cities are in Southern states that tend to have warmer winters and milder climates overall.
To identify America’s 25 fastest growing and 25 fastest shrinking cities, 24/7 Wall St. reviewed population percentage changes from July 2010 to July 2017 in U.S. metropolitan statistical areas from the U.S. Census Bureau. Median household income figures for each city are for 2016 and come from the U.S. Census Bureau’s American Community Survey. We also looked at the seasonally adjusted January 2018 unemployment rate from the Bureau of Labor Statistics. Personal income tax collections per capita and property taxes paid as a percentage of home value by state are from the Tax Foundation and are for fiscal 2015.
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