As Rural America Slips, Governors Look for Ways to Help

Rural America lags behind metro areas in terms of population growth, business creation and workforce participation.
by | July 29, 2019 AT 6:00 AM
State leaders gathered in Salt Lake City last week for the annual meeting of the National Governors Association. (AP/Rick Egan/The Salt Lake Tribune)

Cognizant is a technology company with offices in big cities all over the world. That’s not a coincidence.

When it comes to generating jobs in the digital economy, “urban revitalization” ranks right up there with a strong educational system, Cognizant President Malcolm Frank told governors attending the annual meeting of the National Governors Association in Salt Lake City last week.

He cited repurposed industrial sites that are now tech hubs, such as Bakers Square in Pittsburgh and Kings Cross in London. “There’s this view that a party’s going on in San Francisco and Boston and Seattle, and nobody else was invited,” Frank said.

Governors immediately challenged this idea, pointing to strengths in rural areas. “You can replicate the elements of entrepreneurship and innovation, I believe, in any size community,” said Doug Burgum, who built a billion-dollar software company in North Dakota before being elected the state’s governor in 2016.

Still, governors recognize there’s a huge disconnect between the nation’s superstar cities and rural areas left wondering when the recession’s going to end. Governors of states including Iowa, Kansas, North Carolina and Pennsylvania have started programs to bolster rural economies, while Burgum has launched an initiative called “Reimagining the Rural West” as chair of the Western Governors Association.

 

Where Rural Is Slipping

Rural America is too vast and varied to paint with a single brush. Many rural areas are thriving. Still, it’s clear that overall, the rural economy is falling far behind major metropolitan counties.

Urban areas enjoy an outsized share of the nation’s economic growth, while 30 percent of rural ZIP codes have experienced downward mobility over the past decade. Only one in five small counties has added businesses, on net, since the Great Recession.

The population of metropolitan areas is growing, while rural counties have been flat or even shrinking during the 2010s. Rural areas lag well behind cities in terms of educational attainment. They have a lower level of workforce participation, with fewer people per capita in the prime working ages of 25 to 54, due largely to outmigration.

"We educate a lot of these students and then they leave to take jobs," says South Dakota Gov. Kristi Noem. "That's probably been our biggest challenge."

Most of the governors' initiatives embrace similar themes: expanding broadband, building workforce housing and, in states that haven’t done so, expanding Medicaid to support rural hospitals.

A cookie-cutter approach won’t cut it, says Val Hale, economic development director for Utah Gov. Gary Herbert, who in 2017 set a goal of creating 25,000 rural jobs by the end of next year.

“Every county has its own needs and they’re all different,” Hale says. “People want to make one-size-fits-all rural programs, yet you have one rural community that’s heavily tourism-related, another that’s heavily extraction, then another county that’s heavily agriculture.”

Scraping together a few million dollars for rural broadband or housing may be helpful, but governors should concentrate on how they spend much larger funds on education and health care in rural areas, suggests Brian Depew, executive director of the Center for Rural Affairs, an advocacy and development organization in Nebraska.

“These are challenges that are decades in the making and there’s not going to be any quick fix,” he says. “If these efforts are just a flash in the pan, I wouldn’t see any meaningful results from that.”

Too often, rural officials focus on putting together an incentive package to attract a single company, rather than figuring out ways to adapt to a changing economy. That local leadership, in turn, is often stretched thin, due to the fact that educated and talented young people are seeking greener pastures.

All these factors mean that spreading prosperity to more rural areas remains a thorny challenge that will take a considerable amount of time to work through. Scott Hamilton, executive director of the Appalachian Regional Commission, told governors the job was like building a cathedral in Europe, with the person laying down the cornerstone perhaps not living to see the end result.

“It’s going to come down to local leadership,” says Lynn Rogers, the lieutenant governor of Kansas. “How do we develop local leadership to keep after the goal?”

 

Letting Locals Lead

Flying down to a meeting of rural officials a couple of years ago, Utah Gov. Herbert decided to tear up his prepared remarks. He decided it was time to tell them something they might not want to hear – that it was up to them to solve their own problems. The state was all out of magic wands.

"He said, 'You guys need to take ownership of this,'" Hale recalls. "'I want every county in the state to come up with your own rural economic development plan. We’re here to help you, but this isn’t the state’s problem to solve.'"

Herbert subsequently met with commissioners and economic development directors from nearly every county in the state. The governor tries to find ways to help them with their plans, but doesn’t have a set of prefab grants or programs for rural Utah as a whole to chase after.

The governor is, however, looking to shift more of the state’s economy out of the Salt Lake area. Eighty percent of the state’s population lives along the Wasatch Front. Many employers in the area are unable to find all the workers they need, even as smaller counties around the state are starving for jobs.

The state is offering incentives to companies that move jobs to rural counties. HealthEquity, which manages health savings accounts, is headquartered just outside Salt Lake City, but has moved 100 jobs to Price, a town of about 8,000 people that's 100 miles to the south.

Like other mining towns, Price has shed jobs, particularly since the 2015 closure of a neighboring coal-fired power plant. The HealthEquity jobs have come as "a blessing,” says Deserae Stevenson, executive director of the Carbon County Chamber of Commerce.

“It does give different opportunities to people if hardship comes," she says. “I have a couple of family members that work there, and they enjoy everything about it.”

Herbert has not only issued an appeal for more companies to follow HealthEquity’s lead, but also started shifting state workers out of the capitol. Earlier this month, Lt. Gov. Spencer Cox announced the state will allow 2,500 state workers to telecommute, following completion of a pilot program that showed a boost in productivity.

“Employees win, managers win, our air wins, rural wins,” Cox said.

 

Building Up Leadership

In Kansas, Gov. Laura Kelly has created an Office of Rural Prosperity. The effort is beginning with a listening tour of rural areas, led by Lt. Gov. Rogers and featuring several cabinet officials. The tour has already hit 28 cities in eight regions, with two more stops planned this week.

Rogers says that broadband and housing always come up, along with complaints about cuts to state services. “We closed a lot of agencies in rural Kansas, so they have to call Topeka,” he says. “Rural Kansas probably got hit harder than our urban areas did for the last eight years.”

But Rogers says his tour focuses not on what the state can do for rural areas, but what they can achieve for themselves. He tries to find out how the state can get out of their way and what they’re doing right already. “There are some neat innovative things going on in rural communities,” he says. “Sometimes they don’t like to talk about them, but there are some great opportunities.”

If local innovations and leadership are key, sometimes the capacity is just not there. Lots of little towns rely on the same few individuals to handle practically everything. “Capacity is the number one issue for rural communities,” says Nathan Ohle, executive director of the Rural Community Assistance Partnership, a network of nonprofits that provide technical assistance and training to rural communities. “You often have a local mayor who’s a pig farmer and a fireman.”

Ohle says California, Montana and Utah are all running rural leadership programs. The six-month programs not only bring together everyone from economic development directors and community college presidents to grocery store owners for training, but naturally build up connections among them, so they learn to work and plan collaboratively back home.

Leadership on the ground is key, says Burgum.

“Whether you’re reimagining communities around the arts or tech or innovation, all of those require leadership,” the governor says. “The differences you see among areas are less about macroeconomics and more about leadership.”