Recession: the 50 Cities Feeling the Economic Squeeze

As the economy sputters, Americans are feeling the pain most in regions where incomes have dropped while costs remain high. The Daily Beast ranks the regions feeling the squeeze.

The United States remains the richest country in the world, but with the official unemployment rate flat-lining near 10 percent, it doesn’t feel like it right now. Nearly 40 million people, more than a tenth of the country’s population, live below the federal income threshold for determining poverty, according to the most recent statistics from the U.S. Census Bureau.

Gallery: The 50 Cities Most Squeezed by the Recession

And those figures may undercount the problem. Researchers have long debated whether the 45-year-old federal methodology for determining poverty is too simplistic, and potentially inaccurate. Rather than just earnings, shouldn’t the cost of certain necessities be factored into the equation? After all, a good salary in Atlanta isn’t necessarily the same as a good salary in Fairbanks, Alaska, where a 20-ounce bag of potato chips runs nearly $5.

So The Daily Beast inspected just-released economic data to get a glimpse of America’s metropolitan areas where the average worker’s income is decimated by low earnings or high cost of living. Basic necessities may be met, but at the cost of savings, furthering education, and expendable income. These statistics do not indicate that these metropolitan areas are necessarily impoverished—one of the best ways to tell that is through direct observation—but they do show that upward economic mobility can be handicapped not just by low wages and uncompetitive education, but by a high cost of living.

New personal income data from the U.S. Department of Commerce's Bureau of Economic Analysis was the starting point for our methodology, developed with assistance from Christopher Leake, research analyst at MDRC. Personal income was then adjusted by the widely used ACCRA Cost of Living Index, which takes into account the average prices reported by survey participants of a large basket of grocery items, utility and housing payments, and transportation and health care. An ACCRA COLI score of 100 is average, with scores below 100 indicating a relatively low cost of living, and scores above 100 indicating a relatively high cost of living. Each score was divided by the average and then divided into personal income to achieve the adjusted personal income numbers. Several cities do not overlap both data sets, but there were 219 cities for which personal income and cost of living data were available. From there, the list was narrowed down to 50, with several metropolitan areas with an otherwise high average personal income making an appearance.

Ranking by Clark Merrefield.