City Dividends

City Dividends: Gains from Improving Metropolitan Performance

Joe Cortright, for CEOs for Cities
September 2008

Overview

What are the benefits of improving how well cities work? Mayors and other civic leaders know that improving a cities education, quality of life and urban vitality is important to regional success and economic prosperity. We know this strategy contribute to the general good, but often times the payback from investments in these areas seems distant and uncertain. But, looking at the track record of actual urban performance across the nation, it is apparent that stronger metro areas reap real and tangible benefits.

The objective of this report is to provide quantitative estimates of the economic gains that metropolitan areas and cities could achieve by improving their performance in talent, sustainability, and opportunity. There are three components of the city dividend:

• The Talent Dividend: improving education and increasing per capita income. In the aggregate, increasing the four-year college attainment rate in each of the nation’s fifty largest metropolitan areas by one percentage point would be associated with a $124 billion increase in annual personal income.

• The Green Dividend: reducing automobile travel and saving households money. Reducing vehicle miles traveled per person by one mile per day (from about 25 to about 24 miles) in each of the fifty largest metro areas would produce an aggregate annual savings of $29 billion annually.

• The Opportunity Dividend: lowering poverty rates in metropolitan areas and reducing the cost of assisting the poor with food, medical care and living assistance. Simply reducing poverty rates in metropolitan areas by one percentage point would increase public sector outlays for family assistance, Medicaid and food stamps by about $13 billion annually.