Income Creation

This map shows the top ten percent of the nation’s more than 3100 counties in income creation. Rural counties are in red.

Rural communities that remain isolated will suffer in today’s economy, economist Mark Drabenstott told a meeting of rural Texans on Friday. Rural Americans will prosper when they learn to “get beyond the petty jealousies of Friday night football,�? said Drabenstott, who works now with the Rural Policy Research Institute.

Drabenstott told a meeting of the Texas Rural Innovators Forum that today’s economy was increasing regional inequality — and that most rural areas were falling behind income and job growth in many cities. “A whole lot of regions are losing ground,�? Drabenstott said. They lack the critical mass of employers, educated workers and amenities found in cities, and many rural areas have become too dependent on the production of commodities.

As a result, income and job creation has lagged in rural America. Only four rural counties were among the top ten percent in income creation between 1995 and 2005.

Job Creation 95-05
These are the top ten percent of the nation’s more than 3100 counties in creating new jobs. Rural counties are in red.

Traditional styles of rural development depended on industrial recruiting, and Drabenstott said that method of building local economies had all but disappeared in a more global economy. New rote manufacturing will locate in the lowest cost nation, Drabenstott said, not in rural American communities. Drabenstott said he had recently heard from the publisher of a newspaper in Iowa, where an appliance manufacturing plant had recently closed. The publisher asked Drabenstott how the town could recruit a Fortune 200 manufacturer. “What an absurd question,�? Drabenstott said.

For the past 30 years, economic growth has been increasingly tied to the levels of education. During that time, people with university diplomas have clustered in a particular set of cities —not in rural areas. The percentage of adults with a college degree in rural America is roughly half that of the country’s cities.

Mark Drabenstott

Economist Mark Drabenstott

Drabenstott told the Texas audience that young people are attracted to the diversity of cities — draining talent out of rural communities. The economist said that rural communities could no longer count on lower crime rates to attract young people, that rural areas had to provide both opportunity for entrepreneurs and a higher quality of life in order to be economically successful. (See audio excerpt below.)

Businesses have found it increasingly efficient to locate in urban areas where they can find workers and remain in touch with the latest research and market trends. Instead of dispersing, firms are clustering.

To counteract the accumulation of talent and businesses found in the cities, the former Kansas City Federal Reserve Bank economist said rural counties must cooperate. “You just can’t get there one county at a time,�? Drabenstott said. It’s only by gathering together the talent and resources of a region, the economist said, that rural areas can begin to match the efficiencies of city economies.

Regional cooperation in rural America is rare, however. In most successful regional collaborations, Drabenstott said, there is an organization that brings the community together — a “King Arthur�? who creates the regional roundtable. In many cases, the catalyst of regional cooperation is either a non-profit group or a university or community college.

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