Chapter 3 Urbanization and Economic Growth in the United States
Growth Pole Theory: http://amos.bus.okstate.edu/pole/GPCCH09.html

1. Until modern times the rural sector had to produce not only a surplus of food but also a surplus of people.

2. Urban death rates were sufficiently high until the advent of modern sanitation that cities were not able to sustain themselves demographically.

3. In some parts of the world (South Africa tropics) rural areas were too disease ridden to produce a surplus of food or people, and, hence, urbanization depended upon migration.

4. Europe was disease free until smallpox in about 165 A.D., probably carried by Roman troups, usured in an era of European population decline and deurbanization that lasted 500 years.

5. Thus, the modern era of urbanization has resulted, in part, from the ability to accommodate and to limit killer diseases of the past.

1. During a period of less than 2 centuries the United States was transformed from a rural to an urban and industrial society.

2. Table 3.1 shows the growth in urban versus rural population since 1790, the first census. (Urban includes all people living in urban places-2,500 persons or more.)

3. Note that some MSA population in a county is rural and some urban place population in non-MSA counties is urban. The two pretty much offset each other, so comparisons of MSA versus non-MSA population can be used to measure the relative importance of urbanization.

4. Today over 75 percent of the population is urban. The number of rural residents has increased but the percentage of rural residents has decreased in every census.

5. Table 3.1 shows the correlation between industrialization that began about 1840 with the pace of urbanization in this country. The rate of urbanization has decelerated since about 1930.

6. A major contributor to the decelerated pace of urbanization is the number of nonagricultural households living in rural areas. About 92 percent of rural population is nonfarm.

7. Although historical employment data is fragmented, Table 3.2 shows the distribution of workers between agriculture and manufacturing from 1820 to 1989.

8. The number of agricultural workers peaked in 1920 and the percentage has steadily declined. The number of industrial workers peaked in 1980 and the percentage has declined since 1960.

1. Table 3.3 shows the regional distribution of manufacturing versus service workers in the U.S. economy.

2. Growth in service employment has outstripped manufacturing employment in every region of the country.

3. Manufacturing based regional economies have fared well since the 1990-91 recesssion, althought the key to industrial development is diversification. (See Texas performance in 1993-94).

1. Since 1940 the Census has provided more accurate data for MSAs.

2. Table 3.4 shows that the US has over 77 percent of their population in MSAs according to the 1990 Census. But, of course the rate of urbanization may be reaching a saturation point.

1. MSAs are considered to be labor market areas. There is relatively little home-to-work commuting among MSAs as opposed to within MSAs, and what commuting that does occur is almost exclusively within a CMSA. (Dallas/Ft. Worth-Arlington CMSA).

2. Table 3.5 shows employment within MSAs (1980 is expanded to include small MSAs that have between 50,000 and 100,000 people, rather than only above 100,000 --about 5 % increase due to additions as opposed to growth.)

3. The percentage of total employment in MSAs has increased each decade.

4. The percentage of MSA employment in each industry also has changed significantly.

a. The "urbanization" of agriculture is due to the number of nurseries locating in urban areas, and as a result of relatively small numbers.

b. Manufacturing remains highly urbanized, but it is slightly less urbanized

than total employment.

c. Wholesale and retail trade favors MSAs.

d. Professions and related services and public administration are highly urbanized.

5. Lessons to be learned:

a. Manufacturing, transportation, communication, and utilities are no longer the major sources of MSA employment growth.

b. Service sectors are not only the major sources of employment growth, but they are becoming increasingly urbanized. (Location near hospitals, medical laboratories, law courts, financial markets are important for many specialized services located in urban areas.)

1. Table 3.6 shows the reduction in urbanization of manufacturing from 1947-87 among the various two digit SIC industries in the United States.

2. Materials oriented industries are less urbanized than market oriented industries. Tobacco oriented industries employed 6.1 percent while printing employed 70.7 percent of total employment in MSAs.

3. In general, employment shifted to latter stages of processing, with most declines at the early stages and gains at the latter stages of production.

4. Hence, total manufacturing employment has remained the same but large declines in textiles, apparel, leather, and primary metals have been offset by gains in lumber products, furniture, printing, rubber products, fabricated metals, transportation equipment, and instruments.

5. There has been a dramatic shift in manufacturing employment from large to smaller MSAs. (Firms can be viewed as having a "packet of functions" with manufacturing and distribution shifted to land extensive areas while central office functions concentrate in larger urban areas.)