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BBA Economic Digest: Population Loss


When Population Loss Occurs

It's no great surprise to most economic developers that businesses growth has largely been concentrated in big metro areas since the Great Recession, while many rural areas have experienced a substantial loss of businesses in the past decade.

A study by the Economic Innovation Group (EIG) found that in the four-year periods after the 1991 recession and 2001 recession, the number of total new business establishments nationwide averaged more than 400,000

But during the four-year period after the Great Recession, only about 166,000 total new establishments came into being, with most concentrated in 20 counties in larger metro areas.

Southern rural, predominately black communities have seen the highest levels of business closures. But a common denominator for small business decline has been population loss, according to a separate report by the Center for American Progress.

I heard a small town mayor in rural Alabama say just that last month while attending the Economic Development Association of Alabama's Rural Conference.

Demopolis Mayor John Laney hit the nail on the head, but curiously none of the professional economic developers who were featured as speakers even mentioned population decline as a barometer to economic health.

The simple truth is that population loss and firm deaths are absolutely related as a decrease in the demand for goods and services assures as much. There's little point in setting up shop or continuing business in a place with fewer and fewer customers.

Some communities, however, have opened their doors to immigrants, a practice that I favor, in an attempt to generate more small business demand and stem population loss. But there is frequently a "trust gap" to be overcome.

Of course, not all of rural America is in decline. Some pocket are seeing business growth. Graying America communities in Florida, Texas, and California are generally recreation-dependent.

Many Hispanic centers are mining-dependent, especially in the oil and gas industry. Mormon enclaves in Utah have large youth populations and less population loss.

Major takeaways from recent U.S. Census Bureau data.

  • Population growth in rural counties accounts for 0.1 percent of the nation’s growth since 2010.

  • Of the nation’s 327 million people, 46.1 million live in rural counties.

  • One-third of rural counties are gaining population, one-third have a stable population and one-third are depopulating.

What Community Colleges Can Do

I'm a big fan of community colleges, and often view them as the greatest single asset of a community. It's there where students can actually learn vocational skills so as to make a living.

But I've been to some where vocational training is so limited that it is literally a joke. Students at America’s community colleges too often get little or no guidance about what the labor market rewards.

Too many students take liberal arts classes in the hope of transferring to four-year schools, while not completing a meaningful credential there.

Many community colleges cannot or do not provide more support for their occupational programs, as they are expensive to establish and maintain and college funding is rarely tied to better future employment outcomes of students.

Employers engage too little with these institutions, thus making it hard to develop partnerships in high-demand economic sectors that provide classroom training or work-based learning (like apprenticeships).

So while a community college can be a huge asset to a community (and I love it when I see it), many times it's just there and not being the great pipeline of talent that it could be. And talent is where it's at these days in economic development.

Defense Power

The Department of Defense contributes billions of dollars each year to state and local economies through the operation of more than 420 military installations.

States and communities also benefit from defense contracts with private companies for equipment, supplies, construction and various services such as health care and information technology.

All this spending creates jobs across a wide range of sectors, both directly and indirectly. Active duty and civilian employees spend their military wages on goods and services produced locally, while pensions and other benefits provide retirees and dependents a reliable source of income.

A newly released 2018 Defense Spending report from DoD ranks states by defense spending. California ranked No. 1 at $57.7 billion, followed by Virginia at $56.2; Texas, $50.8 billion; Maryland, $25.2 billion, and Florida, $24.16 billion.

In many communities that I have visited, the prime impetus for economic growth is the presence of a military installation and/or a cluster of defense contractors. I've seen it in Huntsville, Ala., Columbus, Ga., Augusta, Ga., Killeen, Tex., Fort Worth, Tex., Clarksville, Tenn., Norfolk, Va., Pensacola, Fla., and Panama City, Fla. and Fayetteville, NC., to name a few.

A Perfect Storm

It's really quite amazing when you think about it. In the span of just 10 years, the US economy has gone from having the weakest labor market since the Great Depression to having one of the tightest in history.

A new report by The Conference Board Labor says that 85 percent of companies in “mostly blue-collar industries” reported recruiting difficulties versus 64 percent among companies in “mostly white-collar industries."

"If left unchecked, today’s conditions could easily develop into one of the worst labor shortages of the last 50 years," the report said. This is happening as the result of a perfect storm, of multiple long-term trends converging at once. They include:

• The retirement of baby boomers, which is bringing growth in the working-age population to a halt.

• The shrinking number of working-age population of non-college graduates.

• A labor force participation which has increased but not enough to prevent the labor market from tightening.

• A large increase in the number of people not working due to a disability, almost all of whom lack a college degree.

• Young men without a college degrees living with their parents, and have less of a need to earn income.

• And a decline in the number of young people (aged 16 to 24) workers, which reduces the labor pool that employers can pull from.

A Sometimes Painful Requirement

All places are different. And I can truthfully say that I've been surprised in every community that I have visited.

But I learned a long time ago that the path to prosperity is neither obvious nor uniform.

Ideally, economic developers strive for growing their communities in a way that benefits all. That means the creation of good jobs, which results in population growth.

Determining what a community is capable of realistically achieving is a first step to starting a process of continuous improvement. It is the basis for our BBA Community Review/Asset Mapping in which we examine infrastructure, talent and institutions via a SWOT analysis.

Typically, innovation -- the inventing new products and services -- happens in big metros. But I've seen plenty of examples where it has happened in small town America, leading to the creation of good paying jobs.

The key is unleashing the inherent talent that exists in any given place. A talent-centric approach to economic development is that which can differentiate a community, big or small.

Population and economic decline in rural communities is not inevitable. But to turn things around, an honest self-assessment is absolutely necessary. Note that it can be painful at times. Strike that. There will be pain. Let us help you with that.

The Passing of a Pathbreaker

When Katherine Johnson began working at the National Advisory Committee for Aeronautics in 1953, she was classified as “subprofessional,” not far outranking a secretary or janitor.

Her title, poached by the technology that would soon make the services of many of her colleagues obsolete, was “computer.” Her job was to check the work of her superiors — engineers who, unlike her, were white and male. She did it with a slide rule and a mechanical calculator.

Mrs. Johnson, who died Feb. 24 at 101, developed equations that helped the NACA and its successor, NASA, send astronauts into orbit and, later, to the moon. In 26 signed reports for the space agency, and in many more papers that bore others’ signatures on her work, she codified mathematical principles that remain at the core of human space travel.

She was not the first black woman to work as a NASA mathematician, nor the first to write a research report for the agency, but Mrs. Johnson was eventually recognized as a pathbreaker for women and African Americans in the newly created field of spaceflight.

What We're Reading

The Virus is Coming The Economist

Why Black Businesses and Home Ownership Won’t Close the Wealth Gap

CityLab

How National 5G Policy Became Chaotic Politico

How a Hacker's Mom Broke Into a Prison—and the Warden's Computer Wired

Laptops Killed Work-Life Balance The Atlantic

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