Rural America is getting old. The median age is
43, seven years older than city dwellers. Its productivity, defined as
output per worker, is lower than urban America’s. Its families have
lower incomes. And its share of the population is shrinking: the United
States has grown by 75 million people since 1990, but this has mostly
occurred in cities and suburbs. Rural areas have lost some 3 million
people. Since the 1990s, problems such as crime and opioid abuse, once
associated with urban areas, are increasingly rural phenomena.
Rural communities once captured a greater share
of the nation’s prosperity. Jobs and wages in small town America played
catch-up with big cities until the mid 1980s. During the economic
recovery of 1992 to 1996, 135,000 new businesses were started in small counties,
a third of the nation’s total. Employment in small counties shot up by
2.5 million, or 16 percent, twice the pace experienced in counties with
million-plus populations.
These days, economic growth bypasses rural
economies. In the first four years of the recovery after the 2008
recession, counties with fewer than 100,000 people lost 17,500
businesses, according to the Economic Innovation Group. By contrast,
counties with more than 1 million residents added, altogether, 99,000
firms. By 2017, the largest metropolitan areas had almost 10 percent
more jobs than they did at the start of the financial crisis. Rural
areas still had fewer.
The Economic Innovation Group measures “distress”
as a combination of data ranging from joblessness and poverty to
abandoned homes and educational attainment. Since the 1990s, there has
been an “intensifying ruralization of distress,” said John Lettieri, the
group’s president.
I’ve lived most of my life in big cities. I
don’t pretend to understand what it’s like to live in a small town or on
a family farm, or how it feels when all the jobs in a community seem to
be fading away. I do spend a lot of time thinking about how the
economic changes of the last several decades have undercut many American
workers. One thing seems clear to me: nobody — not experts or
policymakers or people in these communities — seems to know quite how to
pick rural America up.
States, municipalities and the federal
government have spent billions to draw jobs and prosperity to stagnant
rural areas. But they haven’t yet figured out how to hitch this vast
swath of the country to the tech-heavy economy that is flourishing in America’s cities.
There are 1,888 counties in America in which
more than half the population is rural, according to the Census Bureau,
and they stretch from coast to coast.
In Comanche County, a land of cattle, farming,
oil and gas on the plains of southwestern Kansas, 1,790 people live in a
sparsely settled area of nearly 800 square miles. In Perry County —
home to some 26,500 people in the Appalachian Mountains of Eastern
Kentucky — so far no other industry has replaced once-mighty coal. Essex
County in New York’s Adirondacks is three-quarters rural, by the census
definition. So is Calaveras County in California.
After World War II, small town prosperity relied
on its contribution to the industrial economy. The census considers
Price County, Wis., to be 100 percent rural. Still, over a third of the
jobs there are in manufacturing, from building industrial machines to
assembling trucks. Auto parts manufacturers in West Point, Ga., draw
workers from all over Troup County. Overall, manufacturing employs about
one in eight workers in the country’s 704 entirely rural counties.
That’s more than agriculture, forestry, fishing and mining combined and
second only to education, health care and social assistance, which
includes teachers, doctors, nurses and social service counselors. Most
of those jobs are government funded.
But factory jobs can no longer keep small-town
America afloat. Even after a robust eight-year growth spell, there are
fewer than 13 million workers in manufacturing across the entire
economy. Robots and workers in China put together most of the
manufactured goods that Americans buy, and the high-tech industries
powering the economy today don’t have much need for the cheap labor that
rural communities contributed to America’s industrial past. They mostly
need highly educated workers. They find those most easily in big
cities, not in small towns.
What to do? Since the presidential election in
2016, when small town voters enthusiastically endorsed the populist
campaign of President Trump, policymakers and academics have thrown
themselves at understanding the economic backdrop to their frustrations.
They have come up with no shortage of proposals for how to turn rural
America around, from offering a tax credit for employers that hire
workers in distressed communities to designing investment funds to draw
venture capital into rural areas.
In a report published in November,
Mark Muro, William Galston and Clara Hendrickson of the Brookings
Institution laid out a portfolio of ideas to rescue the substantial
swath of the country that they identify as “left behind.” They identify
critical shortages bedeviling declining communities: workers with
digital skills, broadband connections, capital. And they have plans to
address them: I.T. training and education initiatives, regulatory changes to boost lending to small businesses, incentives to invest in broadband.
Wisely, they suggest that any federal government
effort must choose its targets carefully. Better to focus on
middle-sized places that are near big tech hubs and have some critical
infrastructure, rather than scatter assistance all over the landscape.
Sound as these ideas may be, however, even the
authors concede that they may not be up to the task. “I don’t know if
these ideas are going to work,” Mr. Galston acknowledged when I pressed
him on the issue. “But it is worth making the effort.”
This is the inescapable reality of
agglomeration, one of the most powerful forces shaping the American
economy over the last three decades. Innovative companies choose to
locate where other successful, innovative companies are. That’s where
they can find lots of highly skilled workers. The more densely packed
these pools of talent are, the more workers can learn from each other
and the more productive they become. This dynamic feeds on itself,
drawing more high-tech firms and highly skilled workers to where they
already are.
“We have a spatial reorganization of the
economy,” said Mr. Muro. “We have an archipelago of superstars in an
ocean of low-productivity sectors.”
In hindsight, no amount of tax incentives would have convinced Amazon to expand in a medium-sized city such as Columbus, Ohio, rather than Northern Virginia and Queens,which
sit in some of the largest pools of talent in the country. If even
medium-sized cities find it difficult to compete, what are the odds
that, say, a small town like Amory, Miss., where 14 percent of adults
have a bachelor’s degree and a quarter of its 2,500 workers work in
small-scale manufacturing, have a chance to attract well-paid tech jobs?
Consider a recent Brookings Institution study
by Benjamin Austin, Edward Glaeser and Lawrence Summers. They focus on
the alarming rate of joblessness in what they call the Eastern
Heartland, the region roughly between the Mississippi River and the
states on the Atlantic coast, where rural communities are doing
particularly poorly.
After examining a range of potential policy
interventions, they conclude that a targeted employment subsidy, such as
the earned-income tax credit, is probably the most powerful tool
available to revive employment. But they, too, are not sure it will
work. “Our call for a wage subsidy is us saying, ‘We can’t figure this
out, and we hope the private sector will,’ ” Mr. Glaeser told me.
There are, to be sure, some rural communities
with productivity as high as some big cities. But they rely on heavily
mechanized and automated industries that support few jobs: oil
extraction or large-scale agriculture, in which tractors talk to
satellites and no drivers are involved. The livestock business on the
vast pastures of Sioux County, Neb., for example, supports an economy
worth $306,000 per worker, according to data from Mr. Muro and Jacob
Whiton of Brookings. But only 1,200 people live there.
In the Southeast Fairbanks area of Alaska, it is
all about oil and gas. Output per worker is $203,000. But its
population doesn’t quite reach 7,000.
Excluding these places, the United States is
still left with 50 to 55 million people living in rural communities that
no longer have much to offer them economically.
What if nothing really works? Is there really no
option but to do nothing and, as some have suggested, return
depopulated parts of rural America to the bison?
Instead of so-called place-based policies to
revitalize small towns, why not help their residents take advantage of
opportunities where the opportunities are? Geographic mobility hit a
historical low in 2017, when only 11 percent of Americans picked up shop
and moved — half the rate of 1951. One of the key reasons is that
housing in the prosperous cities that offer the most opportunities has
become too expensive.
The most helpful policy for people in small
towns could be to relax zoning rules in dense cities like New York and
San Francisco, so that more affordable housing could be built to receive
newcomers from rural Wisconsin or Kentucky, and they wouldn’t need the
income of an investment banker or a computer scientist to afford to live
there.
Policymakers might not want to push too hard
against agglomeration. It adds to American prosperity. As Enrico Moretti
of the University of California, Berkeley, points out,
a successful strategy to draw innovative firms away from mega-clusters
to small-town America would reduce overall innovation. “If you put a
tech company in a place like rural Indiana, it will be vastly less
productive than if you put it in a tech cluster,” Mr. Moretti said. “The
effect is quite large.”
Still, there are compelling reasons to try to
help rural economies rebound. Even if moving people might prove more
efficient on paper than restoring places, many people — especially older
people and the family members who care for them — may choose to remain
in rural areas. What’s more, the costs of rural poverty are looming over
American society. Think of the opioid addiction taking over rural
America, of the spike in crime, of the wasted human resources in places
where only a third of adults hold a job.
And if today’s polarized politics are noxious,
what might they look like in a country perpetually divided between
diverse, prosperous liberal cities and a largely white rural America in
decline? As Mr. Galston warned: “Think through the political
consequences of saying to a substantial portion of Americans, which is
even more substantial in political terms, ‘We think you’re toast.’ ”
The distress of 50 million Americans should
concern everyone. Powerful economic forces are arrayed against rural
America and, so far, efforts to turn it around have failed. Not every
small town can be a tech hub, nor should it be. But that can’t be the
only answer.
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