The New York Times ran a very disturbing story recently that ought to be required reading for every state and local official concerned about the economic fate of rural Virginia.
In “The Hard Truths of Trying to ‘Save’ the Rural Economy,” economics writer Eduardo Porter musters the usual statistics laying out the growing divide between super-charged growth in a handful of high-tech “superstar cities” and rural America. He then poses a question that we wish he hadn’t: What if there’s nothing that can be done to save rural America?
That’s not a thesis we agree with, mind you, but that doesn’t mean he’s wrong.
The basic facts the Times article deals with are undeniable: “Factory jobs can no longer keep small-town America afloat. Even after a robust eight-year growth spell, there are fewer than 13 million workers in manufacturing across the entire economy. Robots and workers in China put together most of the manufactured goods that Americans buy, and the high-tech industries powering the economy today don’t have much need for the cheap labor that rural communities contributed to America’s industrial past. They mostly need highly-educated workers. They find those most easily in big cities, not in small towns.”
We’ve seen plenty of examples of this: Advance Auto recently added 435 software jobs in Raleigh, North Carolina — and not Roanoke — because it’s easier to find software workers there than here. Meanwhile, Apple passed over Raleigh for its new campus because the company can find more tech workers in Austin, Texas. And then there’s Amazon, which turned down much bigger incentive packages in less expensive cities and decided to split its new headquarters between Northern Virginia and New York because that’s where the workers are. (OK, maybe not New York anymore.)
“In hindsight,” Porter writes, “no amount of tax incentives would have convinced Amazon to expand in a medium-sized city such as Columbus, Ohio, rather than Northern Virginia and Queens, which sit in some of the largest pools of talent in the country. If even medium-sized cities find it difficult to compete, what are the odds that, say, a small town like Amory, Miss., where 14 percent of adults have a bachelor’s degree and a quarter of its 2,500 workers work in small-scale manufacturing, have a chance to attract well-paid tech jobs?”
His example was Mississippi, but it could well have been Virginia. There are 19 counties in Southwest and Southside where the percentage of adults with a bachelor’s degree is even lower. In Buchanan County and Covington, it’s 8.3 percent. In Greensville County, it’s 7.2 percent. By contrast, in Arlington, where Amazon is going, it’s 71.7 percent. In Falls Church, it’s 74.4 percent. We often make a moral case for why technology companies should look at rural Virginia in general and the coal counties in particular: Tech companies pride themselves on demanding clean energy, which is a fine thing, except that it’s putting coal miners out of work. Don’t they have a moral obligation to those communities? We think so, but it’s hard to make the business case when the talent pool there is so thin.
The New York Times article addresses this: “As Enrico Moretti of the University of California, Berkeley, points out, a successful strategy to draw innovative firms away from mega-clusters to small-town America would reduce overall innovation. ‘If you put a tech company in a place like rural Indiana, it will be vastly less productive than if you put it in a tech cluster,’ Mr. Moretti said. ‘The effect is quite large.’”
That economic argument doesn’t even address the cultural issues, either. One of Amazon’s requirements was “the presence and support of a diverse population.” Most of Southwest Virginia is overwhelmingly white. Even Richmond — which has a more diverse population — has trouble on the “cultural community fit” front. In 2017, the GO Virginia economic council interviewed human resource directors and found that it was hard to hard to get some potential applicants interested in the state capital simply because it’s so identified with the Civil War: “The HR directors felt that they had to overcome a sense from people outside the area that Richmond was still the Capital of the Confederacy and not the ideal place for professionals who wanted to live in a vibrant, culturally diverse location.”
Suppose Amazon or some other tech company could be persuaded to locate even a data center in, say, Buchanan County? Company executives touring the community might pass by Hurley High School — and see a Confederate battle flag painted on the front door of the school. What kind of signal does that send?
Of course, Hurley High School could paint the Amazon smile logo on its front door and that wouldn’t change the basic economic realities: The new economy simply is creating jobs that don’t fit naturally in rural America. That brings us back to the central question the New York Times article poses: What if there’s simply no place for rural America in the new economy?
Porter goes on to write: “States, municipalities and the federal government have spent billions to draw jobs and prosperity to stagnant rural areas. But they haven’t yet figured out how to hitch this vast swath of the country to the tech-heavy economy that is flourishing in America’s cities.”
He cites a recent report by the Brookings Institution that laid out five possible solutions, starting with “Boost the digital skills of left behind places.” That’s pretty obvious. But given the figures we cited above, that requires a Herculean effort. In Buchanan County and Covington, you’d have to triple the percentage of adults with a college degree just to get even with Roanoke. You’d have to increase it eightfold to get it close to Arlington. Buchanan County and Covington may be extreme examples, but let’s take a more representative county. In Pulaski County, the percentage of adults with a bachelor’s degree is 16.2 percent. You’d have to quadruple that to get it in the same range as Northern Virginia.
Granted, a college degree isn’t the sole requirement for success in the new economy. Indeed, the big push now is for community colleges to issue more industry-certified credentials, because there’s a growing demand for workers with more than a high school diploma but less than a college degree. Regardless, the point remains: Rural Virginia doesn’t have what it takes to participate in the new economy. But is there really no hope? Tomorrow, we’ll look more at this question.