Peppered across the western U.S. are a number of forgotten towns that are now home to little more than tumbleweeds. These ghost towns are an iconic reminder of the Gold Rush that sent thousands hurrying west, only to abandon the towns they’d built when the gold dried up.
Although it’s hard to imagine a modern American city going the path of a 19th-century boomtown, our history is full of proof that there is no such thing as “too big to fail.” And, as the U.S. of A. itself struggles with a massive debt burden and fluctuating economy, so, too, do many of its cities.
We looked at the American cities struggling the most to keep their debt and poverty levels in check and found 15 U.S. cities currently facing financial distress. These cities have high poverty rates, low incomes, lots of debt — and a rocky financial path ahead.
Summary of Key Findings
Representing cities of multiple sizes, regions, and histories, our list shows that there is no one cause of financial distress in American cities. However, some trends have certainly become clear, including a clear pattern of once-robust port cities facing hard times after declines in the local manufacturing and transportation industries.
Our research found a surprising number of major metropolitan areas facing financial distress, particularly in the central and eastern states. At the same time, while Fresno alone represents the western part of the country, a number of other California cities managed to avoid making the list thanks to their population, indicating the Golden State may not be in much better shape than the rest of the country.
Poverty levels were the first thing we considered when compiling our list, and each city that made the final cut has a poverty level above the national average. In several of these cities, more than a third of the residents live below the poverty line, and the top 15 cities have a 28% average poverty rate — twice the national average.
Low and stagnant wages are a big source of concern for all of the cities on our list, with higher-than-average unemployment rates in most of the cities and all but one reporting a median income well below the national average. Workers in some of the 15 cities earn less than half the U.S. annual median of $57,617, and most of the 15 are at least $10,000 below the national annual median.
The only exception to below-average wages on our list? New York City, which has a median annual income about $130 higher than the national level — and where the cost of living is more than 100% higher than the national average — meaning that money has to go twice as far as in other cities.
In fact, many of the 15 cities have a high cost of living that, when considered along with substandard income levels and unemployment, is cause for concern. It also explains why more than half of the cities have seen a negative population change over the last few years.
Educational gaps may be at the heart of the problem for many of these cities, as each has a lower-than-average percentage of residents with high school degrees, as well as low percentages of people with bachelor’s degrees or higher. This can be a challenge in the modern economy where major companies prefer in-places pools of educated talent.
The Full Results
To determine the cities on our list, we looked at a huge range of factors that contribute to a city’s financial state, including poverty, income, and unemployment levels, local debt burdens, and even municipal bond credit scores. We limited our list to cities with populations of 150,000 or more to ensure consistent data.
1. Newark, New Jersey
Located a hop, skip, and jump away from New York City (number six on our list), Newark, New Jersey is both an origin and destination for thousands of commuters each day. Home to the Port of Newark, the city was once a major manufacturing center, but these days its largest employer is the healthcare industry, with transportation and retail also big employers.
Newark has a current population of around 285,000 people, its highest level in the last 30 years. However, the city has had a nearly stagnant population over the last several decades, with less than 5% growth since 1990. This is unsurprising, given Newark’s 28.3% poverty rate, a figure that means more than 80,000 residents are living below the poverty line.
Even the Newark residents lucky enough to be over the poverty line are likely struggling, as the city’s median income is just $34,826, a figure only 60% of the national median income. And Newark residents must stretch that income farther than most, as the cost of living in the city is a whopping 22% higher than average, with a homeownership rate of just 20.9%.
Before income even becomes an issue, however, Newark residents must find a job, a task made more difficult by one of the highest unemployment rates on our list. As is the story in many cities around the country, part of the problem may be education and training; less than three-quarters of Newark residents hold a high school diploma, and only 13.8% have a bachelor’s degree or higher.
The combination of low wages, high employment, and limited education seems to have made a perfect storm of financial issues for Newark residents, leading to a median credit score of 574, the second-lowest score on our list and well into the subprime range.
And the city itself isn’t doing much better. The average Moody’s rating for a Newark municipal bond is a poor BAA3. What’s more, the city is carrying a substantial amount of long-term outstanding debt, to the tune of a $2,229 per capita debt burden on its residents.
2. Cleveland, Ohio
Built on the shores of Lake Erie, Cleveland, Ohio, was once a bustling center of manufacturing and transportation. Cleveland’s modern economy is still strongly dependent on the manufacturing industry, but the national drop in manufacturing has resulted in healthcare becoming the city’s largest industry.
As a result of dwindling manufacturing and a poor economy, the city’s population has seen a steady decline for decades, with a population decrease of nearly 25% since 1990. Cleveland has the second-highest poverty rate of all the cities on our list, with 35% of the city’s population living below the poverty line, a figure 60% higher than the national average.
High-paying jobs seem to be few and far between in Cleveland, where the median income is 52% below the national rate. While the cost of living isn’t as high in Cleveland as in other major cities, low incomes and high poverty mean residents are struggling, as evidenced by the fact that the homeownership rate is a mere 41.8% despite a median home price less than $70,000.
Despite the fact that residents are leaving the city in droves, fewer workers isn’t making for more jobs; Cleveland’s unemployment rate is the highest on our list at 6.4%, almost 40% higher than the national rate. Given that only 16.3% of the population has a bachelor’s degree or better, part of the problem may be a lack of trained workers to draw in new business.
Residents in Cleveland aren’t doing so great in the credit department, either, likely due to their other financial stresses. The median credit score is just 619, which indicates borderline bad credit.
The city government is doing better with credit with an average Moody’s credit rating of A1, but it still has a per capita debt burden of $5,700, including general municipal debt as well as millions in unfunded pension and retiree healthcare benefits.
3. Detroit, Michigan
Located on the Detroit River, Detroit, Michigan, is a port city perhaps best known as the center of American automobile manufacturing. As purchasing and manufacturing alike moved abroad, however, Detroit’s economy declined. Healthcare is now its leading industry in terms of employment, with manufacturing and hospitality coming in behind.
As jobs left the city, so, too, did the workers, and Detroit’s population has decreased steadily since the mid-20th century. Since 1990 alone, Detroit’s population has dropped by 34%, decreasing from over 1 million to less than 675,000. Despite less job competition, the employment rate has stayed well above the national average.
And, those who have jobs are facing a high rate of underemployment; the median household income for Detroit residents is a low $27,838 — less than half the national rate. In fact, more than a third of Detroit’s remaining residents — or more than 240,000 people — are living below the poverty line.
Perhaps the only saving grace for low income levels is that Detroit’s cost of living has dropped to 11% below the national average, with a median housing price a startlingly low $43,500. Even so, less than half of residents own their own home.
Of course, residents who can save up the money to purchase property in Detroit face another obstacle: credit. The median credit score in the city is the lowest on our list at 552, a bad credit score that would making obtaining a mortgage all but impossible.
Detroit has a per capita debt burden of $8,000, a figure that is likely to increase as it struggles to right its economy. One of the city’s current hurdles is bringing in new businesses; despite being near several major universities, Detroit has a small pool of residents with degrees — less than 15% have a bachelor’s degree — making it less desirable to major tech companies.
4. Jackson, Mississippi
Founded as a hub of transport and trade, Jackson, Mississippi, saw its most recent population boom after natural gas was found in the area in the early 20th century. And while the mining industry makes up just 0.1% of the local jobs now, it remains one of the highest paid industries in the city.
However, most jobs are found in the healthcare, retail, and hospitality industries — many of the least well-paid industries — leading to a city-wide median annual income of just over $35,000, a level 39% below the national annual median. A below-average cost of living helps Jackson residents, but unemployment is still an issue.
Limited jobs and a distressed economy have meant a consistent emigration from the city. From a population of nearly 200,000 in 1990, the city now counts just 166,965 residents, a decrease of more than 25%. Despite less competition, however, unemployment remains above the national average.
Although still below the national averages, Jackson has a more educated population than some of our other 15 cities, with 88% of residents earning a high school diploma and just under 29% earning bachelor’s degrees. Education may not be enough to overpower a stressed economy, however; the median consumer credit score is 590, which indicated bad credit on most scales.
Jackson’s own credit rating isn’t exactly stellar, either; it’s average Moody’s rating is a poor BAA3, meaning you face some risk by investing in the city’s bonds. And the city’s budget could use some work, as it has a per capita debt burden of just under $2,000.
5. Philadelphia, Pennsylvania
The city of Philadelphia, Pennsylvania has been a center for trade and industry for over 100 years as the economic anchor of the Delaware Valley. While still a bustling metropolis, Philadelphia has been consistently ranked as one of the poorest cities in the nation, and the city’s unemployment rate has remained well above the national average.
Home to a number of large universities and major companies, Philly isn’t without high-paying jobs; the 28.6% of the city’s population with a bachelor’s degree or higher reportedly fare the best and can find good jobs in technology and science. For the large portion of under-educated residents, however, the primary options are low-paying healthcare, education, or retail positions.
Indeed, the median income in Philadelphia is just $40,649, more than $17,000 below the national median. As a result of the income gap, more than a quarter of Philadelphia residents live under the poverty line, almost 16% more than the national average.
Although many Philadelphia residents may earn a little more than in other cities on our list, the cost of living is 17% higher than the U.S. average, and the median housing price is over $150,000, with only around half of residents owning homes.
As we’ve seen in other distressed cities, Philadelphia residents don’t have the best credit, and the median score for the city’s residents is 642. While not a subprime score, residents with scores at or below the median rate will still struggle to find affordable credit.
When you look beyond the residents themselves, the city doesn’t seem to be much better at budgeting than its citizens. Philadelphia’s debt burden is reported to be over $16 billion, with a taxpayer burden of more than $30,000 per capita.
6. New York City, New York
As the most populous city in the U.S., it may surprise some people to see New York City on our list of cities facing financial distress — but, in New York City’s case, that huge population seems to actually work against it, rather than for it. Especially since that population keeps growing, coming in at over 8.6 million, an increase of around 15% since 1990.
One of the most pressing financial issues for many New York City residents is the cost of living; the average cost of living in the city is 128% higher than the national average — and that includes a median housing cost of $569,700, nearly triple the national median price.
With prices stacked against them, an about-average median annual income rate of $57,782 doesn’t go nearly as far as it would in other cities. Similarly, the poverty rate of 19.6% is also skewed by the city’s remarkably high cost of living, and the adjusted effective poverty rate is likely much higher.
In addition to an unemployment rate above the national average, underemployment is also a major hurdle for New York City residents, especially with the cost of living so high. The homeownership rate is only 32%, and many who work in the city can’t actually afford to live within it.
Moreover, despite having the largest population, NYC’s per capita debt burden is the highest on the list. The city reportedly carries well over $170 billion in debt, including both long-term debt and entitlement obligations, which amounts to a per capita debt burden of more than $62,000.
7. Providence, Rhode Island
One of the oldest cities in the U.S., Providence, Rhode Island, is a port city and one of the first industrialized cities of the fledgling U.S. thanks to a variety of manufacturing industries. Similar to other cities on our list, however, Providence’s economy declined alongside many industrial sectors.
Despite a troubled economy, Providence’s population has seen fairly decent growth over the last few decades, with a particularly large increase reported in 2000. That increase hasn’t helped the city’s financial state, however, as the unemployment rate remains above the national average.
Additionally, residents who do find a job often face underemployment and low wages, leading to a median income of $40,366, more than $17,000 below the national rate. The poverty level is also a sign of distress, leaving 28% of the city’s residents below the poverty line.
Low incomes aren’t the only problem residents must navigate, however; the cost of living in Rhode Island’s largest city is 22% more expensive than the national average, and purchasing a house comes with a median price tag of more than $170,000, resulting in only a third of the city’s residents owning a home.
Providence’s residents aren’t without hope; around 31% have at least a bachelor’s degree, which can help them find better jobs. However, low-paying industries like healthcare, education, and retail are the major sources of employment for most residents.
8. Chicago, Illinois
As a longstanding hub of finance and commerce, Chicago has no shortage of city income — unfortunately, that income doesn’t seem to translate into better financial health for the city or its residents. You only need to look at the city’s reported $40 billion debt, a combination of long-term debt and untenable entitlement obligations that creates a per capita debt burden just north of $45,000.
On paper, Chicago’s citizens are faring better than the city itself; the poverty rate is relatively low for this list, coming in at 20.6%, and the median annual household income of $52,497 is about $5,000 short of the national median. But, residents still struggle with an inflated cost of living that’s 23% higher than the average, and less than 44% own their own home.
And, while the city’s unemployment rate has dipped below the national average, underemployment is still a serious issue for many residents. The healthcare industry — not exactly known for its high-wage jobs — is the main source of employment, along with other low-paying fields, like retail and food service.
Given Chicago’s nonexistent population growth — the city has actually lost about 3% of its population since 1990 — burgeoning population can’t be blamed for Chicago’s financial troubles as it may be in other large cities.
Nor can a lack of education; Chicago has a higher-than-average percentage of residents with a bachelor’s degree or better — 38.5%, in fact — and more than 84% of residents have at least a high school diploma. As a result, the city has strong technology and science industries, but education and pay gaps still persist.
9. Hialeah, Florida
Located in Southeast Florida, Hialeah is adjacent to the city of Miami and is considered to be a part of the larger Miami metropolitan area. Unfortunately, that proximity does Hialeah limited good, as both Hialeah and Miami could use some help in the finance department.
For Hialeah, the economic decline came as the manufacturing and textile industries floundered. While manufacturing still makes up a good portion of the city’s industry, low-paying industries like retail, healthcare, and construction provide the bulk of the jobs for local residents.
So, while jobs are available — the unemployment rate in both Hialeah and Miami are somewhat on par with the national average — underemployment is big problem, particularly in Hialeah, where the median income is just $31,012, a little more than half the national median.
Low wages mean high poverty rates; more than a quarter of Hialeah’s residents live below the poverty line, an issue exacerbated by the higher-than-average cost of living in the city. Fewer than half of residents own a home.
Unfortunately, education and job training may be huge hurdles for most Hialeah residents when it comes to finding better-paying jobs, and for the city itself as it tries to bring in more businesses. In the city, a staggeringly low 69.1% of residents have a high school diploma, and only 13.2% of residents have a bachelor’s degree or better.
10. Fresno, California
Found almost smack-dab in the middle of California, Fresno has been an economic hub for the large-scale agricultural community of the greater Fresno metropolitan area. The city is one of the state’s five most populous, with a current population of over half a million people, an increase of more than 35% since 1990.
As with a few of our 15 cities, some of Fresno’s financial difficulties may be attributed to the sharp population increase over the last 30 years. However, the state’s long drought, as well as issues from climate change and declining manufacturing, have likely had impacts on the region’s economy due to its reliance on local agriculture.
Whatever the reason, residents are struggling financially, and Fresno has a poverty rate that is double the national average. The median annual household income is less than 80% of the national annual median, a problem made worse by the city’s high cost of living and higher-than-average housing prices.
For residents working in the city, the largest employers are several local medical centers, the City of Fresno government, and the local universities. The larger portion of the population without degrees — roughly 79% of residents don’t have a bachelor’s degree — are generally stuck with low-paying jobs in retail and hospitality, though some manufacturing jobs are available.
Both Fresno and its residents seem to struggle with credit; the median credit score for residents is just 651, meaning a large portion of the population likely has a subprime credit score. Fresno’s average Moody’s bond rating of BAA1 isn’t very brag-worthy, either.
11. Memphis, Tennessee
The city of Memphis, Tennessee, is situated on the banks of the Mississippi River, where its central location has long made it a hub for commerce, transport, and shipping. Today, a large part of the city’s economy still relies on both its location and the resulting transportation industry it avails.
However, while shipping and industry were enough to help the city grow to over 650,000 residents, it simply isn’t cutting it anymore. Additionally, more than one-third of the jobs available to Memphis workers are in the typically low-paying healthcare, retail, and hospitality industries.
Overall, the city’s median income is a low $38,230, less than 70% of the national median. So, while the city’s cost of living is below average, it’s simply not enough for many residents; in fact, 26.9% of people in Memphis are living below the poverty line. And, despite relatively low housing prices, the majority of residents don’t own a home.
The city’s own finances are also feeling the stress of unfunded pension and retiree healthcare benefit obligations, resulting in a potential $7,800 per capita burden on taxpayers. Memphis has a mid-tier average Moody’s rating of AA2 — which gives the city a better rating than its residents, whose median credit score is a subprime 586.
As a centrally located and accessible city, Memphis should have the potential to boost its economy by bringing in new businesses, but the city seems to be somewhat hampered by a lack of trained workers. Only 25.6% of the population has a bachelor’s degree or better, and less than 5% of graduates choose a technical major.
12. Springfield, Massachusetts
With a prime location on the Connecticut River and roughly halfway between Boston and New York, the city of Springfield, Massachusetts, once had a bustling manufacturing industry that included everything from bread and rolls to military firearms.
Unfortunately, the 1968 closure of the Springfield Armory, a federal armory and major firearms factory, paired with a general decline in manufacturing across the region caused significant harm to Springfield’s economy. Today, less than 8% of the jobs in the city are in the manufacturing industry, while a quarter of positions are found in the low-wage hospitality and retail industries.
Moreover, despite a slight decrease in the population over the last several decades, unemployment remains an issue, and the city of Springfield faces a 6.3% unemployment rate, more than 2% higher than the national average. The median income is only $37,118, around 35% lower than the national rate.
Both the city and its residents seem to have mid-range credit, with the median resident credit score coming in at just 623, within the nonprime category, and Springfield’s average Moody’s rating a less-than-ideal AA2.
Although Springfield’s central location has helped it boost its economy in times past, it’s unlikely to lure in new businesses due to a limited pool of available talent. Despite being in the “Knowledge Corridor” and within 15 miles of 25 universities and colleges, the city itself seems to have trouble retaining graduates, and only 18% of city residents have a bachelor’s degree or better.
13. St. Louis, Missouri
Built on the banks of the Mississippi River, the port city of St. Louis, Missouri, has been an important center of trade for over 150 years. Despite still being an important transportation hub, however, declining industry has led to a shift in the city’s economy.
In modern St. Louis, the majority of jobs are found in the healthcare, education, hospitality, and retail industries — sectors not known for their high pay. Manufacturing and transportation make up less than 15% of all jobs in the city.
While the city’s unemployment rate is a hair below the national average, low-paying jobs create underemployment issues, including a low median annual income of $38,664 that is 33% below the national annual median. The result is a high poverty rate of 25% that leaves more than 77,000 of St. Louis residents living under the poverty line.
Residents in St. Louis seem to be better with their credit than their city leaders, though neither has a rating to write home about; the average Moody’s credit rating is a low BAA1, while the median resident credit score is 668. The City of St. Louis also has a hefty pile of debt, including long-term debt and entitlement obligations, equal to around $16,500 per capita.
St. Louis does have a fairly well-educated population which it can tap to lure in new businesses, with 34.1% of residents holding a bachelor’s degree or higher, a figure on-par with the national average. However, the most prevalent majors focus on healthcare or business, which, while appropriate for the city’s burgeoning healthcare industry, may do little to appeal to profitable tech-based companies.
14. Buffalo, New York
Located on the shores of Lake Erie, Buffalo, New York, saw heavy growth through much of the 19th and 20th centuries as a center of transport and industry. However, a deep economic reliance on manufacturing led to a steady decline in the city in the late 20th century that continues today.
These days, Buffalo residents are nearly three times more likely to work in the healthcare, retail, or hospitality industries over manufacturing or transportation. And, despite a consistent decline in the city’s population, jobs remain hard to find for many, and the city posts an unemployment rate 1.6% higher than the national average.
Those who do land employment frequently find jobs in low-paying positions, and the median annual income in Buffalo is just $34,268, only 59% of the national rate. Unemployment and low pay mean more than 30% of the city lives under the poverty level, and there is a homeownership rate of just 39.4%.
What the city of Buffalo has going for it is a low cost of living, both relative to the national average and what’s typical for the state, and both housing prices and the cost of operating a business are fairly low. But, unfavorable winter weather and a location more than three hours from the next major city may limit its appeal.
Additionally, the city has a modest number of college-educated residents — only 26.7% have a bachelor’s degree — which may be a hurdle to drawing in new businesses, especially considering healthcare and social services are among the most popular majors, degrees of limited use to many modern tech-centered companies.
15. Laredo, Texas
Laredo, Texas, is situated on the northern coast of the Rio Grande River, on the U.S. border between Texas and Mexico. Due to its location, the bulk of Laredo’s economy has been dependent upon trade with Mexico, and several major transportation companies have built facilities in the city.
Even today, the transportation industry provides around 15% of the jobs in Laredo, with the majority of other jobs coming from the healthcare, education, retail, and food service industries. However, while jobs are available — the city’s unemployment rate is below the national average — they are not often high-paying positions.
In fact, the median income for Laredo residents is just $41,302, more than $15,000 below the national median. And, while the cost of living is slightly below average, nearly a third of Laredo’s 260,654 residents live below the poverty line.
Given that most of the city’s jobs come from fields like transportation and retail — industries that typically don’t require advanced degrees — it’s little surprise that residents don’t seem to pursue higher education. Less than 70% of residents have a high school diploma, and a remarkably low 17.5% have bachelor’s degrees or better.
Unfortunately, boosting the economy in Laredo seems to be a big challenge, as the city’s major issues with debt and poverty are largely based on the nature of its economy. While boosting education in tech-related fields can help individual residents find better jobs, the city needs to find a way to boost its overall economic health.
Our initial pool of cities included all major U.S. cities with populations of at least 150,000. While a number of smaller cities could have easily made the list, limiting the list to larger cities both provided more data and allowed for a more even comparison between cities.
We then researched the U.S. cities with the highest poverty rates, highest unemployment rates, and the lowest median annual incomes. Other factors we considered to be a good indicator of a city’s financial health included median housing prices, cost of living, recent population changes, and average resident credit scores.
To get a broader picture, we also factored in each city’s per capita debt burden — how much debt the city has per person — as well as its average Moody credit rating, which is a measure of how risky it is to invest in the city’s municipal bonds.
Cities were scored in each category of consideration, then ranked based on their final scores. The city’s poverty rate was used to break any ties in the rankings for the purpose of this list, with the higher rank going to the city with the higher rate of poverty.
Data sources used to research the cities on our list included the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, TransUnion, DataUSA.io, City-Data.com, Moodys.com, BestPlaces.net, Payscale.com, ClearGov.com, Truth in Accounting, and various city government pages.