The Rural South Wins Together, or Not at All

March 15, 2018

photograph of brickfront buildings on a small town street

Editor's note: To distinguish between rural and metropolitan areas, this story defines metropolitan using the U.S. Census Bureau's definition of a metropolitan statistical area, or MSA: a county or counties associated with a core urbanized area of at least 50,000 people.

In August came a momentous announcement for Escambia County, Alabama. A software development firm called Provalus revealed plans to hire 300 people in the hamlet of Brewton to write code and handle help desk calls.

photograph of Will Ruzic, Executive Director of the Coastal Gateway Regional Economic Development Alliance
Will Ruzic

The company's model is to set up shop in rural U.S. locales rather than send work to lower-wage overseas locations. Although the firm's expansion doesn’t carry the same impact on rural south Alabama as landing Amazon's second headquarters, it nevertheless represents an economic development bonanza for a county with about 14,000 jobs. In terms of the percentage of the area's overall employment, 300 new jobs in Escambia County is akin to a single project bringing about 60,000 jobs to metropolitan Atlanta.

Among the groups instrumental in bringing Provalus to Brewton was a collaborative economic development alliance among five southwest Alabama counties: Choctaw, Clarke, Conecuh, Escambia, and Monroe. The Coastal Gateway Regional Economic Development Alliance represents counties that individually lack the resources to mount strategic development efforts.

"If we're going to win big, we can only win big together," explains Will Ruzic, executive director of the alliance.

Seeking the rising tide

Even when areas work together, economic development wins don't come easily in the rural Southeast. Like nearly half of the nonmetro counties in the region, four of five in the Coastal Gateway lost jobs between 1990 and 2017, even as employment grew roughly 20 percent across Alabama and 30 percent nationally, according to the U.S. Bureau of Labor Statistics (BLS). Close to half of the lost employment in the Coastal Gateway counties were manufacturing jobs, BLS data show.

map showing the location of Brewton, Alabama

For rural counties to expand their economies, collaboration is essential, according to economic development practitioners and researchers. Yet old suspicions and turf wars have traditionally thwarted cooperation among rural counties in the Southeast, according to development professionals and elected officials.

"There's more collaboration than there used to be, but not as much as there should be," said Joe Sumners, director of the Economic Development Institute at Auburn University. "These places have limited resources and capital, whether it's financial, human, or otherwise. Unless they work with their neighbors, they're generally not going to be successful."

Jim Searcy, executive director of the Economic Developers Association of Alabama, states the case bluntly: "You either learn to be creative and collaborative, or you just perish."

Rural areas need more groups like the Appalachian Regional Commission to foster collaboration among businesses, communities, counties, nonprofits, and state and federal agencies, according to November 2017 congressional testimony by Mark Partridge, an economist and professor of rural and urban policy at the Ohio State University. Such collaborations can help rural counties share people and resources for economic development as well as services such as mental health, Partridge points out.

Elusive strength in numbers

Much of the case for collaborative rural economic development comes down to numbers. Merely getting a look from corporate site selectors requires an attractive package of incentives—usually starting with a workforce and a package of land and tax credits—that most rural counties simply cannot assemble alone, said Matt Hatchett, a member of the Georgia House of Representatives from rural Laurens County.

Take the Coastal Gateway counties. Among the five, only Escambia has more than 30,000 residents, according to 2016 census estimates. Combined, however, the counties boast more than 100,000 people and a labor force of roughly 40,000—the type of numbers that get the attention of prospective employers, said Searcy.

Hard data about how much collaboration happens among rural counties are scarce. But the Coastal Gateway is not the only collaborative economic development effort in the Southeast.

Examples are scattered about the region. The Tennessee Valley Authority's economic development arm operates across numerous rural counties in northern Mississippi and Alabama and throughout Tennessee. Three rural counties in 2010 formed the Northwest Alabama Economic Development Alliance, or C3. And four counties along Interstate 20 east of Birmingham in 2014 incorporated the Core4 economic development alliance.

Kevin Shea, president of the Georgia Economic Developers Association, ticks off a few examples that are mostly informal, project-based collaborations. Last year, the Georgia Chamber of Commerce established a Rural Prosperity Council and opened a Center for Rural Prosperity in the south Georgia town of Tifton.

One collaboration among small Georgia counties has been a notable success. The Joint Development Authority of Jasper, Morgan, Newton, and Walton Counties helped attract Baxter International's $1 billion pharmaceutical plant, slated to open this year in Covington. The four counties lie within the Atlanta MSA, but on the outer eastern edge. And they are still partially rural in nature; none reports employment of more than 25,000 jobs, according to the BLS.

Clearly, Covington's proximity to Atlanta's international airport was a factor in Baxter International's site selection. Nonetheless, the cooperative model can be replicated, in the view of Bruce Williamson, a member of Georgia's House of Representatives from Walton County who was involved in the effort to lure Baxter, which said it plans to employ more than 1,500 people at the plant.

"I could see how our more rural communities and specifically counties could band together," Williamson said, "and maybe have a 10-county region and bring in economic opportunities to make the entire area more prosperous."

Rural areas are not monolithic

The challenges confronting rural economic developers are steep. Their populations are generally poorer, older, and less educated than residents of metro areas. At the same time, researchers stress that rural America is diverse and not uniformly facing desperate straits. Areas with lakes, mountains, and other outdoor amenities tend to prosper, as do rural counties adjacent to metropolitan areas, for example.

In fact, some observers argue that some problems plaguing rural areas are actually the vestiges of economic progress. Prosperous, faster-growing rural counties have achieved metropolitan status (just since 2000, the Office of Management and Budget has designated 100 new MSAs), while others have been swallowed by expanding metro areas. That dynamic stranded slower-growing counties among the rural ranks.

"A lot of what's happened in rural America is actually a success story," Partridge said at a November 2017 forum discussing the rural-urban relationship. "The challenge is what's left in more remote areas that face more economic challenges."

Taken as a whole, the labor market fortunes of metro and rural residents are more similar than different, noted James Ziliak, an economist and director of the University of Kentucky Center for Poverty Research. For example, the declines in labor force participation and sluggish wage growth seen in the last decade and a half are common across rural and metro areas.

Still, most of the nation's persistently poor counties—85 percent—are rural, according to the U.S. Department of Agriculture's (USDA) Economic Research Service. The agency defines counties as "persistently poor" if 20 percent or more of the population has lived in poverty in the past 30 years. (The U.S. poverty rate is 12.7 percent.) And nearly 84 percent of persistent-poverty counties are in the South, which the Census Bureau defines as the six states in the Atlanta Fed's district, plus 10 contiguous states stretching from Delaware to Texas.

Among 295 non-metro counties in the Southeast, one, Monroe County, Fla. (Florida Keys) equals U.S. median household income of $55,322. 14, or 4.7%, equal of exceed their state median household income.
Source: U.S. Census Bureau

Rural America losing population for first time

More than two-thirds of the rural counties in the Atlanta Fed's district lost population between 2010 and 2016. This population decline happened even as the region added 3 million people. Nationally, the nonmetro population is shrinking for the first time since such record-keeping began, based on 2010–16 data, according to the USDA.

Rural areas' out-migration of younger people leaves those areas older. But even among prime-age adults—those between 25 and 54—labor force participation is significantly lower in nonmetro areas than in metro areas in all six states of the Atlanta Fed's district. That decline is in part because of poor health in nonmetro areas, according to Atlanta Fed research analyst Ellyn Terry's reading of census data.

When labor force participation moves lower, as it has in some counties, incomes are correspondingly lower. Median household incomes in fewer than 5 percent of the region's nonmetro counties match their state norms, census data show. The postrecession rebound in the labor market has also been "much slower" in rural areas than in metros, the USDA's research service finds. From 2010 through 2015, annual employment growth in rural areas averaged 0.8 percent, less than half the rate of growth in metro areas.

But in the long run, nurturing homegrown success and focusing on elements such as public schools and infrastructure are preferable and more prudent than expecting outside corporations to swoop in and reverse an area's fortunes, according to rural economy policy researchers. Whatever form it takes, though, success comes only gradually.

photo of Charles Davidson
Charles Davidson

Staff writer for Economy Matters

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