The Changing Economy of the Rural Heartland

Mark Drabenstott and Tim Smith

The Heartland of the United States consists of twelve (12) states:Colorado, Iowa, Kansas, Minnesota, Missouri,

Montana, Nebraska, New Mexico, North Dakota,Oklahoma, South Dakota, and Wyoming

Trends in the Heartland’s Rural Economy

Trends in the Heartland’s Rural Economy

• Some rural economies are recovering better than others

Trends in the Heartland’s 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

Trends in the Heartland’s 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

Trends in the Heartland’s 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

A Rural Recovery in the 1990’s

A Rural Recovery in the 1990’s

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

A Rural Recovery in the 1990’s

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

• 1980’s recessions in agriculture and energy severly affected the Heartland which was abundant in both resources.

A Rural Recovery in the 1990’s

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

• 1980’s 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.

A Rural Recovery in the 1990’s

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

• 1980’s 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)

A Rural Recovery in the 1990’s

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

• 1980’s 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%

A Rural Recovery in the 1990’s

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

• 1980’s 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:

1. Consolidation of Retailing

1. Consolidation of Retailing

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

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

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.

2. Consolidation in Agriculture

2. Consolidation in Agriculture

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

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.

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.

3. Remoteness an Economic Liability

3. Remoteness an Economic Liability

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

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.

Tale of Two Heartlands

Tale of Two Heartlands

• The “Winners”

Tale of Two Heartlands

• The “Winners”

• The “Losers”

The “Winners”

The “Winners”

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

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.

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.

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.

The “Losers”

The “Losers”

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

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.

Conclusions

Conclusions

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

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.

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.