The Game-Changer for Rural America

March 19, 2019

 

There really is a “new world order” in the making. I’m not talking about an emerging clandestine totalitarian world government. Those conspiracy theorists who promulgate that kind of talk are, well, kooks.

 

No, I’m referring to something else, something that is creating a dramatic shift in the worldwide economic landscape. Certainly, it has become apparent in this country.

 

Mind you, we’ve been undergoing economic/technical change in the United States since its inception. But it’s been by and large rather gradual. It took us about 100 years to go from being an agrarian society to becoming an industrial society. The advent of the threshing machine alone replaced 30 percent of the agricultural labor force.

 

As I mentioned in a post last week on LinkedIn, we’re now in the early stages of a digital/tech revolution, a new machine age in which artificial intelligence and robotics will become the norm. Unlike previous industrial revolutions, digitalization has come on us fast and furious.

 

"The speed at which this change is happening is blowing people's minds. And the leaders — political leaders, business leaders — are having a hard time getting their heads wrapped around it,” said Brian Gallagher, CEO of United Way Worldwide, while attending the World Economic Forum in Davos, Switzerland.

 

This digitalization is creating a new world order, separating places where tech and innovation thrives from where it is largely absent. Here in this country, this digital divide is creating a "Tale of Two Americas."

 

One, based in large, diverse, metro areas, is generally doing quite well. I live in Dallas, which would fall in that category. The other, where I do most of my economic development consulting work, is based in more homogeneous small towns and rural areas, and many of these communities are struggling to just to hold their own.

 

According to Brookings, the big, techy metro areas with populations over 1 million have scooped up 72 percent of new jobs since 2010, whereas smaller cities with populations of 50,000-250,000 have contributed less than 6 percent of the nation's employment growth.

 

In many ‘micro’ towns and rural communities, employment remains below pre-recession levels. A Wall Street Journal report in 2017 said sparsely populated counties have replaced large cities as America’s most troubled places. The newspaper’s headline: “Rural America Is the New ‘Inner City’.”

 

There are 37 million working-age adults and 18 million households in the rural U.S. These rural residents account for about 15 percent of the adult population and live in about 75 percent of the country’s land mass. Annual revenues of rural businesses represent only 3.7 percent of total gross revenues in the U.S. economy.

 

In essence, we are seeing large segments of our society being denied economic growth. Much of rural America has, in fact, become excluded America.

 

Unlocking the Digital Potential

 

So what is the answer? How do we create business opportunities and jobs in rural areas?

 

There’s no one answer to that, but I have to think that Tim Cook, the CEO of Apple, was onto something big when he said that every kid in the U.S. should be fairly proficient at coding before they graduate from K-12. Cook was sitting next to President Donald Trump when he made his remarks at the White House during a meeting of the American Workforce Policy Advisory Board.

 

It’s true that we may not have a full grasp on the jobs of the future, but it’s probably a safe bet that many if not most will be based on digital technologies. If rural America is to compete for future capital investment and jobs, rural communities and businesses must embrace and adopt the digital tools. It’s the closest thing that I can think of as a magic button to economic development in rural America.

 

A new report released last week by the U.S. Chamber of Commerce, “Unlocking the Digital Potential of Rural America, says as much. The report, commissioned by Amazon, states that greater adoption of digital technology could add more than $140 billion to the U.S. economy over the next three years and create an additional 360,000 full-time jobs in rural communities.

 

The report, based on a survey of 5,300 businesses in rural America, says that southern states would benefit the most from increased adoption of online tools and digital services, with rural businesses in West Virginia (+57.6 percent), Alabama (+32.9 percent), Mississippi (+32.8 percent), and Georgia (+31.5 percent) experiencing the largest revenue growths over the next three years.

 

Texas, Ohio, and Mississippi would gain the most new jobs, with the Lone Star state adding an average of 23,400 new jobs per year over the next three years.

 

The Dearth of Broadband

 

But there looms a big problem -- high-speed internet has not yet reached huge swaths of rural America. This dearth of broadband internet connectivity has, in fact, marginalized people and communities in an information-rich economy.

 

About 39 percent of rural Americans lack access to high-speed broadband, compared with just 4 percent of urban Americans, according to a report from the Federal Communications Commission using 2016 figures.

 

What’s more, for those rural Americans who can access the internet, they pay higher prices for lower quality service, despite earning less than their urban counterparts. Two-thirds of rural small businesses in America say slow internet or cell phone connectivity has a negative impact on their business.

 

Providing broadband to rural areas will boost economic development. FCC Chairman Ajit Pai has called it a “game-changer for rural Americans.” But the installation of high-speed fiber-optic networks across rural America will in and of itself not be enough.

 

Increasing Digital Skills Pipeline

 

As Tim Cook stated, there is a human resources component that must be addressed. It means we must increase the talent pipeline of candidates trained in digital skills. The U.S. Chamber study reported that 38 percent of rural small businesses say they can’t hire the talent with the right digital skills in their area.

 

Coding should the equivalent to the shop class that I was required to take in seventh and eighth grade in a rural school so many years ago. Both girls and boys need to have a level of programming proficiency before they graduate from K-12. No ifs, ands or buts about it.

 

This will require a partnership effort by the public and private sectors, and thankfully, we are seeing some hopeful signs that is happening. I hope to write about that in future blogs, so stay tuned.

 

Not So Wild a Dream

 

In a 1962 speech that is still resonates, President John F. Kennedy characterized space as a new, beckoning frontier. He emphasized the freedom enjoyed by Americans to choose their destiny rather than have it chosen for them.

 

“We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win, and the others, too.”

 

Just as going to the Moon was a dream that became a mission, so too can we make it our mission today to end digital exclusion in rural America. Like the moonshot, this is in our national interest.

 

It is not so wild a dream that we can create digital literacy and tech talent hot spots in rural communities that will generate higher paying jobs and attract businesses seeking lower costs.

 

Doing so will not be easy, but that which brings meaningful, long-term change seldom is.

 

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