EDITOR’S NOTE: This article is excerpted from a report recently published by the ranking member of the U.S. Congress Joint Economic Committee, Senator Martin Heinrich (D-New Mexico). The charge of the committee, composed of members from both houses of Congress, is to review economic conditions and make recommendations on policy. The complete report may be found online.
Addressing the challenges facing rural communities requires a comprehensive strategy that takes stock of the existing assets and needs in rural America. Congress’s work on economic development, infrastructure, and education must tailor approaches to meet the unique challenges facing rural communities.
On their own, any one of the factors described below would present a major problem for economic recovery in rural America. Taken together, they present serious constraints on economic growth in rural America.
Little to no population growth
Rural America’s population has been declining since 2011 (see the lefthand graph at the top of the page), both an effect and cause of the lack of employment opportunities in rural communities. America’s population in rural counties stood at 46.1 million in 2016, a reduction of 0.4 percent since 2010. In contrast, metropolitan counties experienced a 5 percent population increase over the same period.
Catastrophic job losses for those at the lower end of the pay scale
The recession hit rural workers particularly hard. Not only did the recession hit nonmetro counties harder than their metropolitan counterparts, with rural employment falling a whole percentage point more than urban employment, but employment growth since 2010 has also remained weak (righthand graph, top of page). Moreover, nominal weekly wage growth in rural communities has been sluggish, at only 3.8 percent over the past year, compared to growth of up to 5.5 percent in metropolitan communities (see “Weekly Wage Growth by Residence” above). Seven years out from the Great Recession, rural areas still have not benefited from the recovery in the same way as their urban counterparts.
A growing education gap
In the 21st century economy, a college education is increasingly necessary for achieving economic prosperity. Rural America consistently lags behind urban communities in educational attainment, and this gap has increased in the new century. Even while the share of individuals with a bachelor’s degree or higher has increased in both rural and urban communities, the gap between the two has increased by 25 percent from 2000 to 2016 (Figure 4). In an environment where there exists a growing higher education gap between rural and urban populations, Congress should support policies that ensure rural populations receive preparation and have equal access to opportunities for post-secondary education.
Rural America’s economic difficulties in the new century are rooted in the role that rural communities have traditionally played in the broader economy. In order for Congress to adequately address the issues that rural America faces, it must understand how many of rural America’s problems differ from those of urban America.
By definition, rural communities are located far from, and are not closely connected with, dense population centers. Routine economic interactions are more frequent, carry lower costs, and leads to more economic activity when individuals live closer together. Rural communities are disadvantaged in this regard. Currently 39 percent of Americans in rural areas lack access to broadband, compared to just 4 percent of urban Americans. Technological innovations that promise increased information and communications have the potential to bridge this divide. Efforts are underway to help rural communities take advantage of the instant communications facilitated by the internet, including through the use of telehealth programs, which bring patients and doctors together through smart phones and computers to provide immediate access to medical advice and care.
Limited economic diversification
Some rural economies were built around one or a few industries, often reflecting the wealth of natural resources or agricultural potential in a given area. This limited economic diversification makes these communities especially vulnerable when economic shocks adversely affect specific industries. Across the United States, once vibrant rural communities are now struggling to survive because an anchor employer left town or are facing structural change in the industry forcing a dramatic reorganization of business practices.
While additional entrepreneurship can help bring economic diversity to rural communities, in many of these places entrepreneurship alone can’t solve the problem. Rather, limited opportunity brought on by a lack of competitive or financially viable economic options present a larger hurdle for economic development in rural communities. Congress has the ability to utilize direct investment to match private industry with specific communities through the use of tax credits, training programs, and grant funding designed for rural economic development.
Underinvestment in rural infrastructure
Rural America is in need of infrastructure investment and development in other critical areas. Small rural communities desperately need money to fund wastewater projects, new roads, and other infrastructure needs. Specifically, rural leaders, in testimony before Congress, identified the following areas as their areas of greatest need for infrastructure investment:
While there are often numerous federal grant opportunities aimed at spurring rural economic development, many small rural communities do not have staff on hand that can draft and submit competitive applications. As a result, leadership in small rural communities may find difficulty meeting the requirements for proposals due to a lack of time, resources, and expertise.
Many complicated forces are weighing down on the economy in rural America. Congress has the opportunity to play the defining role in how rural communities develop and thrive. In order to help rural communities become stronger players in the economy, Congress must continue to support efforts to ensure that every rural community has the ability to access the internet and the opportunities interconnectivity creates. Likewise, Congress should support programs that direct workforce development to rural communities that are still struggling to recover from the Great Recession.
Infrastructure renewal in small rural communities is must be a top priority for Congress. Public-private partnerships—focused on generating a significant profit for their private investors—will not deliver the infrastructure so urgently needed by sparsely populated rural areas. Small rural communities must be able to compete on a level playing field for federal grant opportunities, particularly for programs specifically designed to generate economic activity in rural America. To do that, Congress must promote measures to allow the smallest rural communities to compete for competitive grants. Further, Congress must invest in developing the next generation of grant writers and civil servants to serve in small rural communities.
How This Article Defines “Rural”
For the purposes of this report, we use metropolitan and nonmetropolitan breakdowns in the data to refer to rural and urban trends. Metropolitan counties are defined by the U.S. Department of Agriculture as counties with one or more urbanized areas (densely settled areas with 50,000 or more people) and outlying counties that are economically tied to counties with urbanized areas. Nonmetropolitan areas are defined as all other counties. For more information, see https://www.ers.usda.gov/topics/rural-economy-population/rural-classifications/what-isrural/.