Desperate Entrepreneurs: Rural Ohio's Changing Economy

Peru, Indiana: "The business is no more, but the window survives," writes Kay Westhues
Photo: Kay Westhues [1]

Entrepreneurship and non-farm self-employment have accounted for most of the job growth in rural Ohio, where manufacturing jobs have dried up or moved overseas. That development sounds promising, as it suggests a blossoming of local talent, investment, and long-range economic verve. But a recent study led by Mark Partridge of Ohio State University discloses that rural entrepreneurship has not been the economic engine it's often cracked up to be.

Partridge and colleagues at OSU's Swank Program in Rural-Urban Policy found that in 1969 the self-employed in rural Ohio were doing slightly better than rural wage and salary earners, making 4% more money. But by 2005 rural entrepreneurs' fortunes had sharply fallen; the rural self-employed were making 49% less than rural Ohio's wage and salaried workers, about half as much.

Changes in the Great Lakes region were even more dramatic. In 1969 the rural self-employed there earned 17% more than salaried workers; by 2005, they were earning 52% less.

"In communities facing economic decline, individuals often feel compelled to start their own business as more of an act of desperation rather than as part of a well defined plan developed in response to an opportunity. It is not clear that this latter type of start-up stimulates local economic growth and innovation," the researchers wrote. (See the full study here [3].) Many of the rural self-employed, they concluded, turn to "casual work" -- for example, cottage industries or part-time consulting. Paula Schleis of the Akron Beacon Journal, following up on the study, wrote, "It's more than Avon is calling [4], as there is a proliferation of home party products from toys to candles to gourmet food."

Source: ''Does Enhancing Ohio's Small Businesses [3] and Entrepreneurs Provide the Key to Growth?''

Rising rural self-employment is compensatory -- the outcome of declining manufacturing and salaried employment. There are about as many rural manufacturing jobs in rural Ohio now as there were nearly 40 years ago; meanwhile, rural self-employment had steadily increased. "At this rate, the number of non-farm self-employed workers will be expected to soon exceed" the number of non-farm workers earning wages and salaries.

"This illustrates why developing small businesses is one possible pillar in producing future economic growth in rural Ohio," Partridge and his team write. But the OSU researchers advocate questioning much more closely which kinds of entreprenurial enterprise can both sustain the self-employed and best benefit their rural communities.

They write that Ohio lags behind other states its size in terms of venture capital, patents, and other indicators of innovation, and recommend that these dimensions of the state's economy be fortified. They discourage tax breaks to businesses, which "tend to benefit the grantee" while leaving local residents to bear bigger financial burdens. And they conclude that the assumptions about entrepreneurship must take geography into account.

"Successful business start-ups in rural areas will likely differ from urban areas. Should Ohio encourage incubators in smaller urban areas and rural communities to provide support to local entrepreneurs? Alternatively, should Ohio provide additional support and training of new businesses?" The OSU scholars prove that entrepreneurship can and does takes many forms -- not all of them lucrative. But with the decline of manufacturing, learning how rural self-employment can be profitable should be the urgent business of states like Ohio.

Note: Photographer Kay Westhues of Walkerton, indiana, featured here, is among the artists whose work will be on exhibit Mar. 7-29 in Focus: Midwest [6], organized by the Midwest Museum of Contemporary Art. The opening is Friday March 7, 6-10 pm, Murphy Art Center, 1043 Virginia Ave. Indianapolis, IN. Call (317) 504-8219 for more informaton.