Years ago Aaron Renn coined an urban paradigm that he labeled “the new donut.” The old donut, of course, is one that many of you will know well: poor downtown (hole in the donut) and wealthy suburbs (ring around the hole in the donut). This is a well documented phenomenon in many American cities.

The new donut reflects today’s return to city centers. It is the filling in – albeit only partially – of the middle of the donut. The reason I say only partially is because the data clearly suggests that, in many cases, there’s now a trough between the immediate core and the outer suburbs. 

In 2015, the University of Virginia published a study called The Changing Shape of American Cities. It looked at things like educational attainment and per capita income in 1990 and then compared it to more recent 2012-2015 data. But most significantly, it plotted this data against “miles from city center.” (I discovered this study via City Observatory.)

Here are educational attainment and per capita income for the 50 largest metro areas in the US. The orange line is 1990 data. The brown line is 2012 data. And the blue line is 2015 data. The x-axis is “miles from city center.”

Compared to 1990, it is clear that there has been noticeable spike in education and income in city centers. For the above composite index, more than 50% of adults over 25 now have a bachelor’s degree. But it has also accentuated the trough that appears to sit, on average, about 5 miles out from the center. 

In some metro areas, such as Charlotte (shown below), there has almost been a complete inversion. Education and income were highest 5 to 10 miles out from the center, but that has since flipped, along with a dramatic spike right in the center.

This is the new donut. If you’d like to see the graphs for all 66 American cities that form part of the study, you can do that here. 

There’s an argument going around these days that rural America is the new inner city. That is, rural America has replaced inner cities as the geographies facing the greatest socioeconomic challenges. 

In fact, it’s time for the stigma associated with the term “inner city” to disappear – if it hasn’t already. Blight no longer seems to be the concern. Instead, the concern is that our inner cities are becoming exclusive enclaves for the rich.

The United States Department of Agriculture recently published data on educational attainment within rural areas. And since education is one of the biggest drivers of economic prosperity, it’s valuable to look at this data. 

The first thing to note is that while educational attainment within rural areas is increasing, it still lags urban areas:

The second thing to note is that even with the same level of higher education, the labor market will generally pay you more if you live in an urban area:

However, the spread between rural-urban increases as you move up the education ladder. With less than a school diploma, there isn’t much difference. But with a graduate or professional degree, there’s about a ~35% increase in earnings, on average, according to the above chart.

So it should come as no surprise that many smart and educated people are choosing to live in urban areas. They should make more money.

All charts from the U.S. Department of Agriculture.

The following chart is from City Observatory. It compares per capita income against the college attainment rate for the largest US metropolitan areas. If you hover over a circle it’ll tell you the metro area and what the precise numbers are. If you can’t see the chart below, click here.

https://public.tableausoftware.com/javascripts/api/viz_v1.js

What they found from this data set is that educational attainment – the percentage of the population with a 4-year college degree – is the single most important factor when it comes to urban economic success. In fact, according to City Observatory, it accounts for 60% of the variation in per capita income across the metro areas listed above. That’s huge.

So even though people like Peter Thiel might be encouraging kids to drop out of College and start a company, having a well-educated population is a really important thing for cities. Actually, it’s the most important thing.