Beyond the Big Metros: What Three Overlooked American Cities Can Teach Urban Policy

America’s urban conversation runs almost entirely through a handful of famous zip codes — New York, Los Angeles, San Francisco, Chicago. But that conversation leaves out most of the country. According to Census Bureau data, 86 percent of Americans live in a metropolitan area, yet a Washington Post analysis found that nearly half of Americans — 47 percent — live in metro areas smaller than 1.5 million people. Tens of millions more live in “micropolitan” areas, the small cities that anchor rural regions. Only about 85 million Americans live in the ten largest metros combined, which means roughly 255 million people live somewhere else entirely.

A new booklet from the Pacific Research Institute’s Free Cities Center, written by journalist Steven Greenhut, writer Jeremy Lott, and PRI chairman Clark S. Judge, argues that this overlooked majority deserves more attention from anyone thinking seriously about how American cities function. The three authors each take a close, personal look at a mid-size or small city they know well — Stockton, California; Spokane, Washington; and Hillsdale, Michigan — treating them not as case studies chosen for statistical tidiness, but as ordinary, lived-in places that happen to illustrate very different versions of the same underlying story: how municipal decisions, decades in the making, shape whether a city thrives or merely survives.

Stockton: A Cautionary Tale of Municipal Overreach

Stockton sits in California’s San Joaquin Valley, a 300-mile agricultural belt that most Californians associate only with the drive between Los Angeles and the Bay Area. With roughly 320,000 residents, Stockton is large enough to matter but overshadowed by San Francisco to the west and Sacramento to the north — near enough to the Bay Area’s economy to draw commuters chasing cheaper housing, but with a character, and a set of problems, entirely its own.

Greenhut, who covered Stockton’s 2012 bankruptcy filing and owns a home there, traces the city’s troubles to a long run of generous, poorly funded promises to city employees. Decades of contract concessions — including lifetime retiree healthcare and pension formulas guaranteeing public-safety workers the bulk of their peak salary for life — pushed municipal pay packages to roughly a quarter above statewide averages, even in a relatively low-cost city. When the 2008 housing crash hit, Stockton’s home prices, inflated by Bay Area commuters, collapsed further and faster than in wealthier coastal communities. City revenue cratered just as those long-term obligations came due, and in 2012 Stockton became the largest U.S. city ever to file for Chapter 9 bankruptcy — a record that stood for less than a year, until Detroit filed in 2013.

The bankruptcy court ultimately ruled that Stockton could have trimmed pension promises even under California law, but city leaders chose instead to cut other benefits and stiff bondholders rather than touch pensions directly. In the years since, Stockton has raised taxes three times, restored its finances to a middling grade from fiscal watchdogs, and seen home prices roughly double — yet its infrastructure and services remain visibly strained, a gap Greenhut attributes less to money than to municipal priorities.

Alongside the pension crisis, Stockton pursued a string of taxpayer-subsidized downtown redevelopment projects — an arena, a minor-league ballpark, a marina, a downtown hotel — meant to lure visitors and Bay Area transplants. Financed through bond debt and the state’s now-abolished redevelopment agencies, the projects instead helped drive Stockton’s debt load toward nearly a billion dollars without ever sparking the promised downtown revival; the city’s historic downtown remains largely vacant, and its hotel project eventually became student housing for lack of overnight demand.

Stockton’s politics have swung unpredictably in response — from a mayor who once brandished a helmet and mace at a State of the City address, to a young progressive mayor whose experiments with a guaranteed-income pilot and a controversial anti-violence stipend program drew national media attention but, PRI’s own analysis suggests, produced little verifiable evidence of success. Voters unseated him in 2020 in favor of a Marine veteran who campaigned on more conventional crime and homelessness fixes.

Greenhut’s takeaway is pointed but not despairing: Stockton is a genuinely appealing city — leafy neighborhoods, a handsome private university, striking industrial waterfront scenery, and home prices still far below its coastal neighbors. What it needs, he argues, is unglamorous discipline: sustainable budgets that don’t buckle to public-employee unions, city services responsive enough to build public trust, and a shift away from big subsidized redevelopment bets toward the kind of small, organic private investment that has quietly kept many of the city’s neighborhood businesses alive.

Spokane: Polarization’s Local Costs

Spokane, Washington’s second city, has a very different problem: not so much fiscal collapse as ideological drift from its own priorities. Jeremy Lott, a longtime Washington-state journalist, describes a city with genuine civic charm — a beloved riverfront park, a renovated historic theater district, a famously massive 3-on-3 basketball tournament, and even a claim to being the birthplace of Father’s Day. Politically, Spokane elects its city council on a nonpartisan basis and sits at some distance, geographically and culturally, from Seattle’s dominant coastal politics; it functions, in effect, as the de facto capital of a much more conservative inland region spanning north Idaho and western Montana.

But Lott argues Spokane has struggled with a homelessness crisis shaped in part by federal “Housing First” policy, which since 2013 has barred participation requirements — like sobriety or treatment engagement — from federally funded homelessness programs. A 2025 survey commissioned by the Spokane Business Association found most of the city’s homeless population has no prior connection to Spokane and has been on the streets for an average of nearly nine years, more than double the average in Seattle. That dynamic came to a head at a large, multi-year homeless encampment in East Central Spokane — known locally as Camp Hope — where conditions deteriorated into serious violence and crime before a 2023 explosion finally prompted a federal judge to order it cleared.

Lott attributes much of the dysfunction to what he calls polarization: a nonpartisan council majority that, in his telling, prioritized symbolic fights — over electric police vehicles, mask mandates, and personnel disputes conducted partly in secret — over basic budget management, contributing to a roughly $13 million shortfall. Yet he also documents a more hopeful turn. Relatively affordable home prices compared to western Washington have helped keep Spokane accessible to younger buyers, and the city has loosened zoning and parking requirements to encourage denser housing. In October 2025, the city council passed a public-camping and obstruction ordinance unanimously — a rare display of consensus that city officials themselves called historic.

Lott’s broader lesson for other “second cities” overshadowed by a state’s dominant metro: don’t try to become a smaller copy of the big city next door. Instead, lean into local advantages — affordability, geography, civic identity — and resist letting a distant capital’s political fashions dictate local policy.

Hillsdale: Reinvention After Deindustrialization

Hillsdale, Michigan, a rural town of about 8,000 people (plus students at Hillsdale College), tells a story closer to the classic Rust Belt arc. Clark Judge, who recently relocated there from Washington, D.C., recounts how a wave of auto-parts plant closures between 2004 and 2008 eliminated roughly a third of the city’s adult working population’s jobs, pushing local unemployment as high as 17.5 percent by 2009 — a Depression-level figure that has since fallen back to a more typical 2.4 percent.

Judge’s central argument is that Hillsdale’s recovery has come not from trying to rebuild manufacturing employment, which has kept shrinking even at firms that survived and grew, but from a set of newer forces reshaping small towns nationally: an aging, increasingly mobile population of retirees who want to live near grandchildren in intellectually lively college towns rather than conventional retirement communities; broadband technology that lets remote professionals and small firms operate from anywhere; and a steady flow of entrepreneurs and families leaving higher-cost, higher-regulation, higher-crime states like California and Illinois.

He credits much of Hillsdale’s physical revival to private “transformative investors” rather than government redevelopment money — pointing to a family that relocated from California and began restoring historic downtown buildings including a 19th-century railroad hotel, and to a Hillsdale College graduate who has redeveloped much of the town square with restaurants, shops, and office space, and is now planning a trade school dedicated to preserving craft skills like stone masonry and stained glass work. Judge notes that the one redevelopment project involving state grant money got tangled in restrictive rules and repeated delays — an illustration, he argues, of why private capital, moving without government strings, has produced better and faster results.

Judge’s more skeptical finding involves Michigan’s regulatory reputation. National indices from libertarian- and conservative-leaning think tanks rank Michigan’s business climate as middling, but a 2021 survey of small-business owners by the company Thumbtack, in partnership with the Kauffman Foundation, gave the state’s regulatory enforcement an outright failing grade — a gap Judge attributes to fragmented, slow-moving bureaucratic administration rather than the underlying rules themselves. He closes by urging Hillsdale to professionalize its own municipal management — pointing to a city-run airport that reached financial breakeven within months once it was handed to a manager who understood its numbers — and to build on its identity as an education town by attracting new trade schools alongside the college it already has.

A Common Thread

Read together, the three dispatches resist a single tidy formula. Stockton’s problem is decades of unsustainable public-sector promises and failed subsidy-driven redevelopment; Spokane’s is a homelessness policy shaped by federal mandates and a council that, in the authors’ view, lost sight of basic governance amid ideological battles; Hillsdale’s is a manufacturing town reinventing itself through demographic shifts, remote work, and private philanthropy rather than government programs. But the authors argue a few themes recur across all three: sustainable budgeting beats one-time subsidy chasing, private investment tends to outperform government-directed redevelopment, and civic identity — leaning into what actually makes a place distinctive — matters more than imitating whichever big city happens to be nearby.

Whether or not one agrees with the free-market prescriptions favored by the Pacific Research Institute, a think tank that advocates for limited government and market-based policy solutions, the underlying observation is hard to dispute: with roughly 255 million Americans living outside the country’s ten largest metro areas, what happens in places like Stockton, Spokane, and Hillsdale is not a footnote to American urban policy. For most Americans, it is American urban policy.

This essay draws on reporting and analysis from “Urban Policy Beyond the Nation’s Big Metros: Smaller-City Case Studies from California, Washington and Michigan,” Volume Nine of the Pacific Research Institute’s Free Cities Center series, published April 2026.