The Changing Economy of the Rural Heartland

1. The Changing Economy of the Rural Heartland Mark Drabenstott and Tim Smith

2. 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

3. Trends in the Heartland’s Rural Economy

4. Trends in the Heartland’s Rural Economy • Some rural economies are recovering better than others

5. 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

6. 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

7. 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

8. A Rural Recovery in the 1990’s

9. 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.

10. 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.

11. 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.

12. 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)

13. 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%

14. 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:

15. 1. Consolidation of Retailing

16. 1. Consolidation of Retailing • Commerce and finance have consolidated, resulting in larger trade centers that service larger regions.

17. 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

18. 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.

19. 2. Consolidation in Agriculture

20. 2. Consolidation in Agriculture • Large corporate farms make-up 2.5% of all farms, but account for 40% of all farm output.

21. 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.

22. 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.

23. 3. Remoteness an Economic Liability

24. 3. Remoteness an Economic Liability • The farther away from a metro area, generally the less growth the county experienced.

25. 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.

26. Tale of Two Heartlands

27. Tale of Two Heartlands • The “Winners”

28. Tale of Two Heartlands • The “Winners” • The “Losers”

30. The “Winners”

31. The “Winners” • Those counties that experienced both above-average job growth and per capitareal income.

32. The “Winners” • Those counties that experienced both above-average job growth and per capitareal income. • 148 of 779 counties experienced such growth, less than one-fifth.

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

34. The “Winners” • Those counties that experienced both above-average job growth and per capitareal 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.

35. The “Losers”

36. The “Losers” • Generally high labor and other business costs, less extensive transportation networks, and fewer support services.

37. 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.

38. Conclusions

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

40. 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.

41. 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.