Sunday, October 19, 2014

Rural population decline will exacerbate rural economic problems.

In 2012, I spent six months working in rural Iowa. During my time there, I had the chance to speak with numerous native Iowans about everything from college football to immigration reform. To my surprise, a recurring topic of conversation was regarding the increase of out-migration of rural youth to urban areas and the population of the town I was living in had decreased in recent years.

Iowa is like many other rural states, which have seen a slow or decline in population growth. Iowa’s population is projected to only 1% between 2000 and 2030. By 2030, 22% of Iowa’s population will be over the age of 64 years. The US Department of Agriculture’s Economic Research Service has found that, across the United States, rural counties have been experiencing an overall decline in population. In-migration to rural areas and natural growth has not been able to keep pace with out-migration and natural death. Approximately 60% of rural counties shrank in population in 2013, up from 50% in 2009.

Loss in population naturally leads to a loss in tax revenue. A loss in population and tax base has prompted Greenwood County, Kansas to raise taxes primarily on agricultural businesses in the county. Population declines will likely force local governments to explore new ways to recover loss tax revenue. However, it remains unclear as to whether new taxing schemes will recover the loss of resulting from the drops in population (I am unsure of the specific fiscal impact the trending rural population declines has had on municipal coffers).

Also, in states, like Iowa, where the average age of the population is increasing due to out-migration and low natural birth rates, there will not be substantial increases in income tax revenue. However, the amount spent on senior programs like Medicaid will consume a larger portion of the state’s budget, leaving less revenue for other programs.

Another problem that rural communities may face with population declines is trouble in attracting businesses to rural areas. Cole Conrad, a businessman and one of Greenwood County’s Commissioners, has stressed,
You can’t draw businesses in because we don’t have people.
Capturing Greenwood County’s overall decline is the decline in the student population in the area's school district. The county's school district once enrolled 1,050 students in 1970. That same district, in 2014, now, enrolls less than 400 students. Businesses need a stable and reliable workforce. It is unlikely that businesses will look to America’s countryside to set up shop, if rural populations decline and work-aged rural people continue to head to urban areas.

Overall, it appears that the decline in rural populations will not favor the livelihoods of rural Americans. If the decline in rural populations continue, it is not only likely that rural tax bases will diminish and that rural economies will struggle to attract businesses, but it is, also, likely that the plights and issues of rural Americans will be subject to even greater neglect and ignorance from mainstream America.

1 comment:

Juliana said...

I would be interested to know what the unemployment rates look like in rural communities over time. This post pointed out that a problem faced by rural communities is the trouble attracting business -- the idea that you can't attract business if you don't have people. This could potentially play out paradoxically, in that on the one hand, people are leaving because there are much fewer job opportunities in rural communities. Yet on the other hand, as people leave, there economy dwindles and fewer job opportunities are able to sustain themselves over time.