Rural America is Losing Young People - Consequences and Solutions
March 23, 2018
Why Young People Leave
Rural areas lack academic and economic opportunity compared to metropolises. Because of this, a large portion of migrants are talented high school graduates. This cause-effect relationship, known as “brain drain,” robs rural areas of intellectual capital.
Shifting industry characteristics explains a large part of migration. Farming, logging, and mining populate the rural employment sector. Unfortunately, the sector’s reliance on human capital shifted to automation, outsourcing, and foreign direct investment. The industry’s evolution into today’s technology dominated economy left rural inhabitants jobless.
While not an ideal outcome for rural inhabitants, the transition comes with drastic productivity gains. Today’s average American farmer provides food to about 155 people compared to 25.8 people in 1960.  The increased output per capita enables millions to work in other industries. The impact from low rural job demand is twofold. First, the industries replacing these jobs are highly specialized and required expensive human investment. Second, rural job’s low wages and physical nature labor are unattractive. These two factors contribute to a “chicken and egg cycle.” Rural inhabitants need to invest in human capital, management namely education. However, they cannot afford this development with their current wages.
The economic shift pushes young people to cities. According to the U.S. Department of Commerce’s Bureau of 2014 Economic Analysis, “Real GDP increased in 74% of cities.” Domestically, 20 cities account for over 50% of the nation’s output. Low headcounts in rural areas and the educational requirements of the new labor market leave young adults in rural areas with few employment choices. For instance, 50% of Oregon’s jobs surround its largest city, Portland.
The Negative Consequences of Rural Population Loss
Proponents argue that economic migration supports free market allocation of labor, capital, and taxes. These classical economists believe self-regulating markets creates the most value. Their points are valid. The United States has experienced dramatic economic growth, in large part because of the freedom of U.S. citizens to move to locations with economic opportunity. Although beneficial overall, the free market theory consequences of this shift are important brings a host of problems.
Rural populations governments lose their local tax base. Subsequently, local governments must cut spending. The budget cuts hurt infrastructure, community centers, and most importantly public schools. As the population drops, schools close and local businesses suffer. The cutbacks drive more people to cities.
Low population deflates property values. Many elderly American rely on their home equity as their savings. When property values drop, they cannot afford to sell their homes to move. In effect, young people leave their counterparts behind, effectively trapping them. The median age in rural communities has been rising. In Wheeler County, Oregon, the median age rose from 48 to 56 over a 13 year period. Unfortunately, , elderly populations must settle for mediocre healthcare, especially as hospitals in rural America continue to shut down, the rural elderly population left in rural areas receive mediocre medical care.
National economic growth does not signify a uniform distribution of improvement. Geographical inequality traps rural Americans as evidenced by job creation location, new business location, and employment rate. For example, the rural poverty rate is 15.1% contrasted against 12.9% for cities.
The divergent economy creates dramatic political repercussions. The rural-urban divide grows as rural Americans feel estranged from their urban counterparts. This misalignment has entrenched itself in our political environment.
There are policies that could increase rural populations and improve rural economies. These policies revolve around encouraging young people to return to rural areas. Although rural to urban migration results in an efficient economy overall, if the goal is to ensure that rural geographic areas are not left behind relative to urban areas, encouraging young people to return to them is important. Young people must be convinced to return to rural areas. Reversing migration slows population loss, generates jobs, and increases human, social, and financial capital. Data shows adult in-migration partially offsetting post high school out-migration.
Because most returnees spent time in the military or college, their education, skills, and experiences alleviate the effects of brain drain. Returners can then serve on local boards, build businesses, pay taxes, and most importantly have children.
Relocation efforts require rural policy incentivizing people to relocate to rural areas meaning that State and Federal Government would have to provide rural areas with more resources. Nationally, this type of transfer of resources already occurs through wealthier states subsidizing less wealthy states through our tax system. The following policies build upon these efforts by being more targeted towards young people who are leaving rural areas and represent an additional, needed, commitment.
Many states already implement these types of targeted policies. Because many students leave home for college, Kansas began offering state income tax breaks to out of state students if they move to a rural town in Kansas after graduation. Additionally, Nebraska is experimenting with enterprise zones, which encourage business development in locations characterized by declining population, high poverty rates, and unemployment. The states are waiting on evidence to assess the effectiveness of these programs.
As states experiment, the Federal government works to revitalize stale rural policy that is irrelevant in modern economic times. Traditionally, rural policy fell under the jurisdiction of the USDA and Congress’s agriculture committees. However, these agricultural focused committees lack the necessary holistic approach. For example, new rural policy should focus on entrepreneurship. Many young graduates migrate elsewhere because of a lack of jobs using their specific skills. Entrepreneurship requires a variety of specialized skills that align with graduates. In fact, rural agriculture communities already have relatively high rates of self-employment. Unfortunately, many of these entrepreneurs have few exit options. Federal policy should create a frictionless marketplace for ownership transfer from older to younger business people. A frictionless marketplace would provide exit opportunities and a foundation for young adults. Frictionless marketplaces have already succeeded at the University of Kansas where a program helps college graduates buy rural businesses.
Rural leaders must better understand how to incentivize returners. Most young people who move to rural areas grew up there. They return because of family ties and the desire to raise children in a small-town environment, surrounded by family. In fact, most returnees’ parents still live in the family home. The migration decision to return also hinges on school quality. Lastly, the access to outdoor recreation and tranquil rustic environments pulls young adults back to rural environments.
Knowing these trends, local governments can allocate their limited resources more efficiently. Resources should solidify education and environmental quality. If doing so is difficult for smaller municipalities, county areas can pool resources. Rural leaders and parents can formulate a better pitch to their young emigrants. Instead of preaching not leave at all, they should encourage exploration and work on attracting them back as they settle down to start careers and raise children. It is no coincidence, that “Median net migration rates in nonmetropolitan counties are highest among adults age 30-34 and children age 5-9.” That age group is most influenced by the appeal of life in rural America.
Although the U.S. economy is growing, rural Americans are not seeing this prosperity. Losing young people depresses rural economic conditions. The mass exodus from rural America contributed to a political divide.
Rural outmigration has not just affected the United States, but will grow as an underlying economic force throughout the world. According to Global Compact for Migration, as economies continue to develop, the number of people living in cities will almost double to 6.4 billion by 2050. This change will have consequences that will require future government action.
If the goal is not just economic growth but economic growth that benefits all geographies, more targeted policies towards potential returnees, and a better understanding of returnee motives will help entire countries, and not just cities, thrive.
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The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.