The Changing Economy of the Rural Heartland

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The Changing Economy of the Rural Heartland

• Mark Drabenstott and Tim Smith

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The Heartland of the United States consists of
twelve (12) statesColorado, Iowa, Kansas,
Minnesota, Missouri,Montana, Nebraska, New
Mexico, North Dakota,Oklahoma, South Dakota, and
Wyoming
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Trends in the Heartlands Rural Economy
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Trends in the Heartlands Rural Economy

• Some rural economies are recovering better than
  others

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Trends in the Heartlands Rural Economy

• Some rural economies are recovering better than
  others
• Consolidation in retailing has led a decline in
  number of trade centers, while the remaining are
  serving larger areas

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Trends in the Heartlands Rural Economy

• Some rural economies are recovering better than
  others
• Consolidation in retailing has led a decline in
  number of trade centers, while the remaining are
  serving larger areas
• Formation of larger corporate farms is weakening
  the linkages between farming and local rural
  economies

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Trends in the Heartlands Rural Economy

• Some rural economies are recovering better than
  others
• Consolidation in retailing has led a decline in
  number of trade centers, while the remaining are
  serving larger areas
• Formation of larger corporate farms is weakening
  the linkages between farming and local rural
  economies
• Remoteness has become a liability for some rural
  areas

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A Rural Recovery in the 1990s
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A Rural Recovery in the 1990s

• Heartland growth has tripled in the 1990s from
  levels in the 1980s, but is still below those
  from the 1970s.

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A Rural Recovery in the 1990s

• Heartland growth has tripled in the 1990s from
  levels in the 1980s, but is still below those
  from the 1970s
• 1980s recessions in agriculture and energy
  severly affected the Heartland which was abundant
  in both resources.

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A Rural Recovery in the 1990s

• Heartland growth has tripled in the 1990s from
  levels in the 1980s, but is still below those
  from the 1970s
• 1980s recessions in agriculture and energy
  severly affected the Heartland which was abundant
  in both resources
• Growth has returned, but has mostly been
  concentrated in the mountainous states of
  Colorado, Montana, and New Mexico.

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A Rural Recovery in the 1990s

• Heartland growth has tripled in the 1990s from
  levels in the 1980s, but is still below those
  from the 1970s
• 1980s recessions in agriculture and energy
  severly affected the Heartland which was abundant
  in both resources
• Growth has returned, but has mostly been
  concentrated in the mountainous states of
  Colorado, Montana, and New Mexico
• While the region has grown economically, the job
  growth has been concentrated in only 1/3 (279) of
  all the rural counties (779)

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A Rural Recovery in the 1990s

• Heartland growth has tripled in the 1990s from
  levels in the 1980s, but is still below those
  from the 1970s
• 1980s recessions in agriculture and energy
  severly affected the Heartland which was abundant
  in both resources
• Growth has returned, but has mostly been
  concentrated in the mountainous states of
  Colorado, Montana, and New Mexico
• While the region has grown economically, the job
  growth has been concentrated in only 1/3 (279) of
  all the rural counties (779)
• As a group, the growing counties experienced 3.3
  job growth, while the remaining 500 counties job
  growth was 0.5

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A Rural Recovery in the 1990s

• Heartland growth has tripled in the 1990s from
  levels in the 1980s, but is still below those
  from the 1970s
• 1980s recessions in agriculture and energy
  severly affected the Heartland which was abundant
  in both resources
• Growth has returned, but has mostly been
  concentrated in the mountainous states of
  Colorado, Montana, and New Mexico
• While the region has grown economically, the job
  growth has been concentrated in only 1/3 (279) of
  all the rural counties (779)
• As a group, the growing counties experienced 3.3
  job growth, while the remaining 500 counties job
  growth was 0.5
• The gap is widening due to three factors

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1. Consolidation of Retailing
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1. Consolidation of Retailing

• Commerce and finance have consolidated, resulting
  in larger trade centers that service larger
  regions.

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1. Consolidation of Retailing

• Commerce and finance have consolidated, resulting
  in larger trade centers that service larger
  regions.
• The growth of the national retailer (read
  Wal-Mart) have forced smaller local rural
  businesses out of business

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1. Consolidation of Retailing

• Commerce and finance have consolidated, resulting
  in larger trade centers that service larger
  regions.
• The growth of the national retailer (read
  Wal-Mart) have forced smaller local rural
  businesses out of business.
• A similar effect has occured in rural health care
  and financial services.

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2. Consolidation in Agriculture
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2. Consolidation in Agriculture

• Large corporate farms make-up 2.5 of all farms,
  but account for 40 of all farm output.

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2. Consolidation in Agriculture

• Large corporate farms make-up 2.5 of all farms,
  but account for 40 of all farm output.
• More corporate farms lessen the economic profit
  of the smaller farmer, decreasing economic growth.

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2. Consolidation in Agriculture

• Large corporate farms make-up 2.5 of all farms,
  but account for 40 of all farm output.
• More corporate farms lessen the economic profit
  of the smaller farmer, decreasing economic
  growth.
• More corporate farms means less use of local
  resources, lessening the economic impact farming
  has on a rural community, by receiving more
  resources from farther away, for less cost.

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3. Remoteness an Economic Liability
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3. Remoteness an Economic Liability

• The farther away from a metro area, generally the
  less growth the county experienced.

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3. Remoteness an Economic Liability

• The farther away from a metro area, generally the
  less growth the county experienced.
• Exceptions being those counties that have scenic
  amenities, such as the Rocky Mountains or the
  Ozarks in Missouri.

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Tale of Two Heartlands
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Tale of Two Heartlands

• The Winners

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Tale of Two Heartlands

• The Winners
• The Losers

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The Winners
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The Winners

• Those counties that experienced both
  above-average job growth and per capita real
  income.

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The Winners

• Those counties that experienced both
  above-average job growth and per capita real
  income.
• 148 of 779 counties experienced such growth, less
  than one-fifth.

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The Winners

• Those counties that experienced both
  above-average job growth and per capita real
  income.
• 148 of 779 counties experienced such growth, less
  than one-fifth.
• Generally located where scenic amenties are
  abundant and attractive.

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The Winners

• Those counties that experienced both
  above-average job growth and per capita real
  income.
• 148 of 779 counties experienced such growth, less
  than one-fifth.
• Generally located where scenic amenties are
  abundant and attractive.
• Winning counties had lower transportation costs,
  more potential employees, and more support
  services.

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The Losers
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The Losers

• Generally high labor and other business costs,
  less extensive transportation networks, and fewer
  support services.

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The Losers

• Generally high labor and other business costs,
  less extensive transportation networks, and fewer
  support services.
• Counties lacked amenities that attract visitors
  and retirees.

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Conclusions
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Conclusions

• Rural economies based only on farming and mining
  will continue to have a difficult time in
  experiencing significant growth.

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Conclusions

• Rural economies based only on farming and mining
  will continue to have a difficult time in
  experiencing significant growth.
• Rural economies converting to tourism and the
  retirement market will start or continue to
  experience significant growth.

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Conclusions

• Rural economies based only on farming and mining
  will continue to have a difficult time in
  experiencing significant growth.
• Rural economies converting to tourism and the
  retirement market will start or continue to
  experience significant growth.
• Administrators and policy-makers will have to
  decide on whether or not resources should be
  spent on counties and rural areas that show
  little promise for the future.