A Demographic and Economic Overview of Rural America:

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A Demographic and Economic Overview of Rural
America
The Opportunities and Challenges Ahead

• Bo Beaulieu
• Southern Rural Development Center
• Mississippi State University
• Council of State Community Development Agencies
  Rural Symposium
• September 17, 2005, San Antonio, TX

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Outline of Todays Presentation

• Characteristics of Rural America
• Population Features
• Educational Status
• Poverty Rates
• The Economic Shifts in Rural America
• Important Community/Economic Development Options
  for Rural America
• Concluding Thoughts

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Key Rural Population Highlights (ERS Report). . .

• Grew by 2.2 between 2000-2005
• Increase of 1.1 million persons
• Total nonmetro residents now approaching 50
  million
• Lions share of growth found in nonmetro areas
  located near metro counties
• Since 2000, nonmetro growth due largely to
  natural increase and net in-migration
• Three-fifths of the in-migration linked to
  immigrants, the rest from influx of metro
  residents

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Diversity on the rise . . .

• Age
• Overall, those under 20 declined by 5.3 (but
  grew among Hispanics and Asians)
• Highest growth among those 40-59 years old
• Race/Ethnicity
• Growth highest among Hispanics (497,000)
• Asian expansion rapid as well (60,000)
• Both will be major contributors to future
  population growth in nonmetro America

Source Economic Research Service Rural America
at a Glance 2006
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Immigrants turn Utah into mini-melting pot
September 15, 2006
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Educational Credentials of the Rural Americans
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The Education Status of Adult Rural Americans
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Educational Status Lower Among Rural Minorities
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Poverty in Rural America
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Where You Live Matters . . .
Poverty Rates, 1967-2005
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Poverty Status Among Minorities
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Composition of theRural Poor, 2005
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The Economic Restructuring

• How Rural America is Faring

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Type of Industries Classified by Each Sector

• Goods Producing
• Farm
• Agricultural Services
• Mining
• Manufacturing
• Construction

• Service Producing
• Transportation and Public Utilities
• Wholesale Trade
• Retail Trade
• Finance, Insurance and Real Estate
• Services
• Government and Government Enterprises

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Employment Composition in the Nonmetro
U.S., 1969-2004
(in percent)
Source Bureau of Economic Analysis, Regional
Economic Information Systems
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Percent of Net New Jobs Generated by Each Sector
in the Nonmetro U.S.,1990-2000
10.1
89.9
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Nonmetro Job Growth in the U.S. Between 2001-2004
. . .

• Net employment up by 440,825
  (full and part-time)
• The goods producing sector lost 358,389 jobs,
  most in the manufacturing sector
• The service producing sector created 799,214 jobs
• Thus, over this period of time, virtually every
  net job gain in rural America was linked to the
  service producing sector

Note These numbers do not include farm and
nonfarm proprietors
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Average Compensation Received by Workers (Full
Part Time)
2005 Dollars
Metro Goods
Metro Service
NM Goods
NM Service
Source Regional Economic Information System and
Stratamodel
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Exploring New Ways to Build the Rural Economy
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Old Habits are Hard to Break . . .

• Our nation continues with policies,
  organizational structures, and investment
  strategies built for a past era.
• Report of the Strengthening Americas Communities
  Advisory Committee, July 2005

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Changing our Economic Development Orientation
TODAY
Recruitment, Attraction
Retention
Entrepreneurship
THE FUTURE
Source Brian Dabson, RUPRI
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Keys to Rural Economic Development Success

• Building and strengthening regional
  capacity and competitiveness
• Promoting and harnessing innovation
• Expanding the knowledge/creative economies
• Fueling the engines of entrepreneurship
• Enhancing e-commerce capacity

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Building Regional Competitiveness

• Regions must determine their unique regional
  assets
• Must figure out ways to strengthen and expand on
  these assets
• Work to remove barriers that limit multi-county,
  or multi-community cooperation

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Important elements of regional success

• Regional partnerships involving
• Private sector
• Public sector
• Philanthropic organizations
• Higher education institutions
• Non-government organizations
• Bottom line . . . Multiple voices
• Two key reports called for such a focus
• Strengthening Americas Rural Communities
  Advisory Committee Report (July 2005)
• SGPBs The New Architecture of Rural Prosperity
  Report (June 2005)

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Expanding theKnowledge/Creative Economy
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Knowledge/Creative Activities

• Theyre intangible resources that allow
  individuals to use existing facts,
  understandings, and experiences to generate ideas
  and innovations
• They are vital to the creation of new products
  and services that boosts productivity and promote
  economic advances.
• Important assets needed to support such
  activities
• Access to technology
• Well-educated workers
• Quality training programs for workers

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Can Rural America Be Part of the
Knowledge/Creative Economy?
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Not sure . . .

• As noted earlier, nearly 60 of nonmetro adults
  (25 years of age and older) have a high school
  education or less
• Less then 16 have a college education (versus
  27 among metro residents)
• Some 42 of rural jobs are low-skill (according
  to the ERS)
• Historic loss of their best and brightest to
  metro areas continues
• Returns to education remains lower in rural areas

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How to measure the knowledge/creative class

• Henderson and Abraham (2004)
• Those engaged in management, business,
  financial, professional and related occupations
• Florida (2002)
• Virtually identical to Henderson and Abraham with
  the exception of Floridas inclusion of high-end
  sales and sales management
• McGranahan and Wojan (2006)
• Recast the Florida creative class measurement to
  include nonmetro areas
• We adopt the McGranahan and Wojan measurement

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Persons employed in knowledge/creative occupations
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Percent of Workers Employed in Creative
Occupations in 2000
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Fueling the Engines of Entrepreneurship
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Entrepreneurship

• Expanding chorus of people see entrepreneurship
  as an important economic engine for communities
• Goetz mapped the growth of entrepreneurs since
  the late 1960s
• How defined? Persons who are self-employed in a
  nonfarm related business (aka nonfarm
  proprietors)

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Nonfarm Proprietor Jobs and Income as a Percent
of All Jobs and Income in Nonmetro Areas,
1969-2000
Source Goetz, 2005
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Growth of Nonfarm Proprietors Over the 1990-2000
Period
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Percent of Persons Employed as Non-Farm
Proprietors in 2000
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E-Commerce A New Piece of the Rural Economic
Development Puzzle
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Business e-Stats for 2004

• e-Commerce grew faster than total economic
  activity in 3 of the 4 sectors covered in the
  e-Stats report
• Biggest users are manufacturing and merchant
  wholesale trade sectors
• Retail sector, however, experienced the fastest
  pace of growth in e-commerce sales in 2004 (up
  25.2, but still only 2 of all sales)
• Most e-commerce activities involve B2B
  transactions (93 percent)
• Only 7 percent involve B2C activities

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The e-Commerce Dilemma in Rural America

• Study by the Small Business Administration in
  2005 notes
• Rural small businesses dont subscribe to
  broadband services as the same level as urban
  firms
• Why? Rural businesses are less likely to see the
  benefit of broadband services
• But, research makes clear that investment in
  broadband stimulates economic productivity and
  output.
• Reasons for not adopting
• Rural firms are smaller in terms of employees
• Have to pay higher prices for broadband
• Broadband availability is more limited

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The SRDC e-Commerce National Demonstration
Project

• Invested in SIX curricula thus far
• Electronic Retailing Selling on the Internet
• Connecting Rural Communities
• An e-Commerce Niche for Artisan Businesses
• Strengthening Competitive Advantage of Rural
  Businesses with e-commerce and Experience Economy
  Strategies.
• e-Commerce for Farm Businesses
• Rural Food Retailing Is the Internet a Silver
  Bullet?

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An Example . . .

• http//www.connectingcommunities.info/index.cfm

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Concluding CommentsWhat are the implications
for rural America?

• Address in a positive, proactive way population
  diversity
• Invest in education and workforce training
• Develop and implement a strategic blueprint for
  IT use (business, government, schools, etc.)
• Embrace economic strategies that are better
  aligned with rural places
• Build on people, community, and regional assets
• Develop strong entrepreneurship programs (youth
  and adult)
• Strengthen IT use by local firms
• Explore ways to expand/attract creative workers

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An Example . . .

• The immigration issue with Mexico An example of
  the challenges associated with our nations
  increasing diversity.

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Thank You ! !
Website http//www.srdc.msstate.edu