How Struggling Local Economies Helped Decide the 2016 Election

Tomorrow, Donald Trump will be sworn in as America’s 45th president. While there is much speculation about the coming Administration’s approach to the economy, conventional wisdom has coalesced around the idea that deep-seated economic anxiety was a driving force on election day.

Is the conventional wisdom actually correct? In many ways, the story of the U.S. economy since the Great Recession is one of resilience. We have weathered the aftermath of the economic crisis better than nearly any other developed country in the world. Job growth continues to increase — albeit slowly — and the country is experiencing one of its longest economic expansions — now at 90 straight months of positive growth.

So why would voters feel anxious? Our research over the past year has found that local economies today are more divergent in terms of jobs and business growth than at any point in modern history. The answer is a reminder that topline national statistics often hide as much as they reveal.

EIG analyzed the presidential election results through the lens of two previous economic reports, The Distressed Communities Index and The New Map of Economic Growth and Recovery. In doing so, we found considerable evidence that the ripple effects of a weak local recovery may indeed have tipped the race in the all-important swing counties.

Business Decline Plagued Swing Counties: First and foremost, it appears that business closures helped the president-elect poach counties that had voted for President Obama twice before. Of these 209 counties, roughly 75% saw more businesses close than open from 2010 to 2014. It’s important to note that these counties ran the gamut from affluent to distressed; highly educated to below average; overwhelmingly white to majority-minority. In spite of their many differences, a decline in business dynamism is where the vast majority found common ground.

Swing Counties Faced Higher than Average Rates of Unemployment, Job Losses, and Population Decline: Other notable markers of a weak recovery were present in a significant proportion of the Obama-Trump swing counties.

• As the national labor market made five years of steady progress following the Great Recession, 30% of flipped counties endured continued job losses;
• Remarkably, more than 25% lost both jobs and businesses;
• 60% had higher rates of worklessness than the national average; and
• 70% suffered population loss, and 95% saw slower population growth than the country as a whole.

Mirroring Trump’s overperformance in economically struggling counties, Secretary Clinton performed best in places that recovered strongly from the Great Recession. Clinton carried 15.7% of counties nationwide but nearly 20% of those that saw expansions in the numbers of both jobs and businesses during the first five years of the recovery. President-elect Trump, by contrast, overperformed among counties that lost both jobs and businesses over the same period.

Urban and Rural Counties were Sharply Divided: Looking more broadly than swing counties alone, we see that the urban-rural divide in this election was perhaps the starkest it has ever been. Clinton won nearly every county with over one million people — places that have become increasingly important as engines of national economic growth. Meanwhile, President-elect Trump carried 90% of those with under 100,000 people. These rural counties have undergone a rapid and stunning reversal of fortune over the past three decades as joblessness, business decline, and population losses have become pervasive in many once-stable and prosperous rural areas. Thus, the urban-rural divide implies a starker economic divide than previous election cycles.

It’s hard not to conclude that a sense of economic anxiety motivated swing county voters when they went to their polling stations. In many communities, their “recovery” years have looked more like an ongoing local recession with widespread loss of local businesses. Against this backdrop, there is now a tremendous imperative to forge a more geographically-inclusive pattern of growth and prosperity. Access to opportunity and the American dream are still all-too-often determined by zip code.

The election was a cry for place-based policies, such as the bipartisan Investing in Opportunity Act, that harness the power of the market, the energy of entrepreneurs, and the resources of investors to stitch the economic fabric of the country back together.

Washington should heed the call.