Saturday, November 7, 2009

Finding Why Some Rural Places Remain Poor

08/21/2008

Is a place better off with a bowling center, like this one in Muskegon, Michigan, or a pile of federal grants?
Photo: docksidepress

There were 566 counties that had more than 15 percent of their families in poverty in 1999. Most of these — 510 counties — were in rural America, and many had been persistently poor since the 1960s. Despite almost a decade of rapid economic growth nationally, one out of five U.S. counties still had a large number of its families living in poverty.

What was it about these places that kept them poor?

There are tons of theories about why some communities remain poor while others grow more economically vibrant. Two economists, Stephan Goetz and Anil Rupasingha, set out to find which social or political factors seem to have real effects on poverty and development in rural counties. They piled reams of data into their computers and began to sort out which seemed to matter. (Goetz heads the Northeast Regional Center for Rural Development at Penn State University.)

If anyone would like a copy of their results, you can either look for their paper in the Journal of Socio-Economics (Number 36, 2007, pages 650-671) or email me and I'll send you a copy. (bill.bishop@dailyyonder.com) But all readers may want to see the factors they tested and consisder how those factors tended to affect family poverty rates in rural communities:

Education. Education lowered poverty rates. However, education mattered more in cities than in rural areas. Having a high school degree or more schooling reduced family poverty rates to a greater degree in urban areas than in rural communities.

Inequality. Income inequality tended to make places poorer. Places with larger gaps between very rich and very poor had higher percentages of families living in poverty.

Big Box Stores. The more big box retailers like Wal-Mart there are in a community, the higher the family poverty rate. Many rural communities try to attract big box retailers. The two researchers conclude this strategy may be self-defeating.

A new Wal-Mart in Alabaster, Alabama. Not necessarily a good thing for the local economy.
Photo: dystopos

Social Capital. The researchers counted the places people might gather, socialize and work together (golf courses, bowling centers, civic associations, political organizations and clubs). They found that rural places with more of these meeting places and organizations had lower levels of family poverty. Social capital seemed to reduce poverty in rural America. This wasn't true in the cities, where social capital had little effect on family poverty rates.

Foreign Born Residents. Here there is a mixed record. In the South, more foreign born residents are associated with higher rates of family poverty in rural areas. Outside the South, that is not true.

Race. The more racially mixed a county, the more likely it is to be poor.

Political Competition. Counties that are politically lopsided (where one party dominates) have higher rates of family poverty than those counties where the parties are in close competition.

Age. Counties with more children and a higher proportion of young adults had higher rates of family poverty.

Mobility. Counties with lots of "stayers" (long-term residents) have higher rates of poverty. Out-migration "is one path to reducing poverty," according to the researchers.

Federal Grants. This one is interesting, given the contortions local governments go through to obtain federal grants. Higher levels of federal grant funding tend to make poverty worse. This surprised the researchers. They thought, perhaps, that grants were given to poorer counties, accounting for the associaton. But the effect remained no matter how they juggled the data and controlled for prior poverty.

Goetz and Rupasingha summarized their findings, writing that "counties with proportionately more high school graduates, higher employment rates and female labor force participation rates, more employment in manufacturing sector, more college graduates, and higher levels of social capital, had lower levels of poverty rates in 1999. On the other hand counties with more children, a higher number of permanent residents, higher income inequality, higher proportion of non-black minorities, greater ethnic diversity, higher proportion of young adults, and lower levels of political competition had higher levels of poverty in 1999."

Comments

Thinking this through

I read this article several times and kept coming up with questions. It's clear that the "factors" listed are characteristics of poor communities as determined by the research. Where my mind started to get twisted was in thinking about whether they were part of the cause, or just the result of poverty that had already been determined through whatever series of economic, political, and demographic events. That places with these characteristics tend to stay poor is the point, I know, but if they are not part of what caused the situation, does focusing on or correcting these characteristics have meaning or lead to any benefit. Does the issue really go back to what caused it all, the economic events, and working backward from there. I'm still thinking this through, going in circles doing so. I do have one suggested answer, however, and that's on federal grants. One could make the easy assumption that federal grants sap local initiative and come with enough bureaucratic requirements that creativity becomes a dirty word. Maybe that's part of it, but my guess is that unless an area has been under the aegis of an especially progressive and powerful politician or corporation that can identify and get funding for future needs, by the time the money comes to a needy area from our Federal government the area is already so inextricably locked in a downward spiral of economic decline that help is just too late, methadone but not a cure. As some say, the horse is already out of the barn.

Correlation v. causation

Please take my comments with an enormous grain of salt (e.g., a salt lick), as I haven't read the article yet. But my guess is that the economists looked at the relationships--the associations or correlations--between various indicators (education, social capital) and poverty. However, a strong correlation between two things doesn't say anything about whether one CAUSED the other. Height and weight tend to be highly correlated, but one doesn't cause the other (and correlations don't give us enough information to ferret out whether one caused the other, even if it were the case). To find out about causation you'd have to do different, more rigorous kinds of studies. Another issue is that correlation doesn't tell you anything about other potentially meaningful and related variables. John suggests a variable that might mediate between federal grants and community poverty in his comment above--existing economic trouble. That is, maybe communities receiving federal grants are more likely to be impoverished because they're already past help. So the study that Bill describes suggests some further areas for investigation--but we can't draw any conclusions about whether the various indicators cause community poverty. My favorite quip about statistics kind of applies here: "Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital." The study above isn't concealing anything from us on purpose, but because of its structure, neither does it unpack causation and mediating variables.

POVERTY – a view taken from Social and political forces as de

POVERTY – a view taken from Social and political forces as determinants of poverty: A spatial analysis By Anil Rupasingha and Stephan J. Goetz Northeast Regional Center for Rural Development at Penn State University. By Jim Miller “Recent case study research suggests that some community leaders may deliberately retard local economic development to maintain their position of power, and promote only the well-being of those who are aligned with them politically or otherwise (Duncan, 1999). 1 “Duncan (1999) demonstrated using rural case studies that subtle factors and processes are at work within communities according to which individuals in positions of power can deliberately hold back other members of their communities. The fact that economic development can hurt existing businesses by driving up local wages or reducing prices has long been recognized, but has for the most part not been confirmed by careful and rigorous study. At first glance the subtle forces identified by Duncan may appear to be impossible to measure empirically at the county level. However, it is clear that the social capital network in place in a community and the relative power of local governments are critical in determining whether these 'political' factors are able to come into play.” These and other studies show that the social/economic/political networks of the enterprise owners and their government allies, exercise critical control over the local economy. Governments do little or nothing to empower wage earners to take home a larger share of the available cash flow. Employers hire the most needy folks at the lowest wages, with no benefits, and short hours. A family of four needs 2.5 jobs to break even. If you are in the ownership class – this setting is great; if not, life sucks. Sure, some of the professionals on the fringe do OK, since they have economic privileges granted by the State - such as licenses. The persons who own the only hardware store, gas station, or market in town do OK because of the monopoly. Unions use to (and some still do) restrict entry to family members in order to keep wages high. Shipping jobs off-shore increases the rolls of unemployed which causes wage rates and hours worked to fall. “Free enterprise” is not so free for most folks; in fact it is downright costly. We need a system of “fair” enterprise. Guess what? There is one, and its called the Cooperative. Both the worker and the consumer are members and both benefit because they own the store or service. One could expand this idea to include several cooperatives in a community which create their own social/economic network. A “service level of experts” could be made a part of this network to provide expert services in fields which require State licenses. At the production level, one firm could grow algae and provides the other members of the network with food and fuel at non-monopoly prices. We would create our own credit union and our own currency using the debit card. We would no longer be held captive by the “top-down capitalists” but become “bottom-up capitalists.” We would need to create our own schools as Mondragon did/does and our own land use and environmental policies. 2. In short, we need to practice holistic thought and management. 3. It might surprise you that this collection of cooperatives exists. Mondragon Cooperative Corporation started over 50 years ago, has grown to 230 networking cooperatives in 20 plus countries and in 2004 grossed over fourteen billion dollars. We can start our own Mondragon. See: http://masallp.wetpaint.com/page/HOLISTIC+GOVERANCE+OF+INTENTIONAL+COMMU... For a more in depth study of a possible clone of Mondragon, see: http://masallp.wetpaint.com/page/Mutual+Aid+Society,+Mondragon+and+More If you are already into intentional communities, you might want to visit the MUTUAL AID SOCIETY OF AMERICA wikiwebsite: http://masallp.wetpaint.com/ If you are interested in affordable housing you might want to learn about straw bale buildings: http://strawbalebuilders.wetpaint.com/ If you are interested in production of food and fuel from algae, please wander around http://algaloildiesel.wetpaint.com/?t=anon If you are interested in using discussion groups in your networking in both realspace and cyberspace, visit: http://worldcybercafe.wetpaint.com/ Jim Miller jimmilller5417@Yahoo.com 541-757-9797; Skype jimmiller5417 ================================================ 1 Duncan, C.M., 1999. Worlds Apart–Why Poverty Persists in Rural America. Yale University Press, New Haven. 2. Regulatory Barriers Clearing House: http://www.huduser.org/rbc/search/number.asp 3. Holistic management International; http://www.holisticmanagement.org/

Finding Why Some Places Remain Poor

Highly interesting post, Bill. I need to pull the full article for more details, but if the authors used all federal grants as their set, then the comments above by Caitlin are worth paying attention to. The largest single federal "grant" program - as defined by the Census Bureau, is, surprising to many, Medicaid - medical assistance for low wealth individuals. Now perhaps the author took a far smaller set of grants as their benchmark, but if not, this is a grant indicator that follows not poverty - more specifically the treatment of symptoms not causes. Nutrition programs (though not Food Stamps, which gets classified as a direct payment) would also fall into this category. I've spent much of the past 3 years of my life looking hard at federal allocations to rural, low wealth places. It is a messy, complex set of data to work with, with imprecision in its tracking and categorization. Still, it is a good exercise from which much can be learned. I look forward to reading the article in more detail - thanks for the heads up!