CITY/STATE: Providence By The Numbers--The Good + The Bad

CITY/STATE: Providence By The Numbers--The Good + The Bad

Clearly everyone knows at some level that Providence and Rhode Island have their fair share of troubles. But the reality of the numbers paints a worse picture than is commonly understood in some areas.

The good news

For example, Providence doesn’t look too bad on poverty numbers alone. Metropolitan Providence – the best way to analyze data where possible, and which includes the entire state of Rhode Island plus one county in Massachusetts – has a poverty rate of 13.7%. That ranks 35th out of the 52 metro areas with more than a million people, which is pretty good. Its median household income is $53,553 per year, above the US average and about in the middle of the pack for those big cities.

The bad news

But this misses the story because Providence has a very high cost of living. If you take the average pay per job and adjust it for cost of living, Providence actually ranks 48th out of the 49 metro areas for which we have data. That’s worse than Memphis, New Orleans, and even Detroit. This is why Providence feels poor despite relatively healthy headline incomes.

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Why is the cost of living so high? A key driver is housing costs. A rule of thumb is that a family should spend no more than about three times its annual income on a home. But in greater Providence the so-called median multiple, that is the multiple of the average (median) family’s income that is required to buy the average (median) home in the area, is four. This puts housing out of reach for in a difficult to afford zone for many.

This isn’t an easy problem to solve. As in most places, the culprit is likely regulatory. It’s very hard to build in Rhode Island. But changing this is not a simple matter. The fact is that everyone who owns a home is invested in high home prices. Many people invested their life savings in a down payment, and a decline in prices towards a more affordable level would wipe them out. The affect of the recent housing crash and the large number of underwater mortgages in Rhode Island attests to this. As we’ve discovered in recent years, deleveraging or coming down from prices that are too high is a painful process.

Demographics--trending the wrong way

The demographics are also poor. Rhode Island is one of only two states that lost population last year. It has one of the lowest birth rates in America. Greater Providence is in the bottom five large metros for the percentage of its population that are children, but in the top five for the percentage that is over 85. However, Providence is in good regional company here. Most New England cities and states have similar trends. That means that whatever is affecting this area is not likely the result of local problems specifically. I take that as positive news. I might suggest that if housing were more affordable, it would be easier for people to have children.

Employment

Unemployment is something that is well known. Metro Providence has been tracking in the top five large cities in America. This is something we will struggle with until we discover a recipe for overcoming deindustrialization. However, at 29.4% our college degree attainment, which is in the bottom half of large cities a rank of #32, will limit our ability to attract knowledge economy jobs in the short term.

The numbers are stark and the problems are structural. In coming weeks I will look at some of what can be done to start putting a dent in the statistics.

Aaron M. Renn an opinion-leading urban affairs analyst, entrepreneur, speaker, and writer on a mission to help America’s cities thrive in the 21st century. In his blog, The Urbanophile, he has created America’s premier destination for serious, in depth, non-partisan, and non-dogmatic analysis and discussion of the issues facing America’s cities and regions in the 21st century. Renn’s writings have also appeared in publications such as Forbes, the New York Times, and City Journal. Renn is also the founder and CEO of Telestrian, a data analysis platform that provides powerful data mining and visualization capabilities previously only available in very expensive, difficult to use tools at a fraction of the cost and with far superior ease of use.