Memo to presidential candidates: Rural Iowa is more than farm sector economics

ISU economist Dave Swenson: Iowa’s rural needs are more complicated, persistent, and acute than the current fortunes of the farm sector. -promoted by Laura Belin

Iowa currently hosts a horde of Democratic presidential candidates, but from what I can tell thus far, few have any meaningful experiences or insights dealing with rural areas or rural issues.

Historically, visiting candidates paid obligatory lip service to farm sector concerns – ethanol, commodity prices, and regulatory restrictions as examples — and assumed or pretended that took care of most rural issues.

But rural economies are more diverse than most suppose.

Farming, though important, isn’t the largest nonmetropolitan employer. By industry, 15 percent of Iowa nonmetro jobholders worked in manufacturing in 2017, followed by retail jobs (11 percent), local government (10 percent), health care and social services (10percent), and then farming (8.5 percent).

In terms of business ownerships in nonmetro areas, for every farm proprietorship, there were three nonfarm proprietorships. And while about 8.7 percent of all industrial earnings in metro economies came from nonfarm proprietorships, that fraction jumped to 13 percent in nonmetro areas.

Further, the majority of Iowa (and U.S.) farmers get most of their household incomes from the nonfarm economy. In 2017, for example, two-thirds of our farm households made less of their household total incomes from farm activities than from nonfarm sources.

To be sure, farming and those sectors that are dependent on farming are large and important fractions of the fabric of rural Iowa and always will be. Plus, our farm sector has current woes that are important and must be addressed – most acutely the ongoing economic hardships caused by the U.S.-against-the-world trade war. Nonetheless, a multitude of problems, issues, and needs exist in rural Iowa irrespective of ag sector performance.

Iowa’s rural areas have proportionately more elderly people and comparatively fewer people in the prime working ages of 25 to 54 than our metro economies. They also have less demand for college graduates, so the overall average education level is lower. These lower levels of prime workforce members and of education are not necessarily deficiencies that need to be remedied, however; they are the inevitable outcomes of rural areas’ industrial structures, which are dominated by manufacturing, trade, and farming.

While nonelderly Iowa rural residents are not more likely to live in poverty or near poverty than their metropolitan cousins, of the 21 counties with families-with-children poverty rates higher than the statewide average, only two are metropolitan counties. Rural residents afflicted with chronic conditions or disabilities must travel longer distances to receive primary health care, not to mention emergency services, and many rural households have transportation limitations and must rely on scheduled regional transit systems as their primary means of service access where a trip for a medical appointment may take most if not all of a day.

Federal payments have historically been important for stabilizing the ag economy, but government payments are proportionately more important for the average nonmetropolitan, nonfarm household as well. In 2017, 20 percent of nonmetropolitan residents’ total personal incomes came from transfer payments like Social Security, Medicare, Medicaid and SNAP (food assistance) compared to 15 percent in Iowa’s metro counties.

The local economies are insufficient in a large number of nonmetro places to adequately maintain their historic community physical footprints. Agriculture, manufacturing, trade, and service delivery require fewer workers to produce the same or even more output over time owing to technology advances. Those trends mean fewer households are supported by the existing economies over time; hence, net outmigration.

Inevitably, many of these communities suffer from blight, disinvestment, housing abandonment, and erosions in the quality and capacity of critical public and private infrastructure as a result.

Not only is labor supply constrained by the structure of rural economies, which in and of itself inhibits potential growth because these areas are dominated by slow growing or declining sectors, but a host of rural businesses ranging from mom and pop stores to professional offices like law, accounting, medical doctors struggle to find successors. Attracting business investors and young professionals to nonmetro areas grows more difficult every year.

Iowa has around 40 nonmetropolitan regional trade centers ranging in size from 5,000 to 28,000 scattered about that function as employment, service, and employment hubs. All but a few of them are declining, and some are declining sharply. Moreover, their struggles have a spatial multiplier effect on surrounding communities and counties that are dependent on them – regional health is a function of trade center city health, and stabilizing those anchoring economies needs to become a policy priority at the state and at the federal levels.

It is clearly evident that most new investment in Iowa will not occur in rural areas, and even when it does, that investment will usually not bring many area jobs. The celebrated ethanol boom of the last decade increased employment in that sector by about 1,400 jobs statewide, but nearly all of the counties that hosted new plants have declined in population this decade. The recent addition of a pork processing facility near Eagle Grove doesn’t begin to offset the losses in much better paying jobs a few miles to the southeast when Electrolux closed in Webster City a decade before.

What to do? Iowa political leadership believes targeted investments in industries, housing, and broadband are keys rural revitalization. The assumption is that we’ll grow rural areas out of their problems. That may be a partial solution for a selected subset of rural areas, especially among the regional trade centers, but Iowa’s nonmetropolitan areas have a wide range of issues needing attention that are disconnected from raw job and population growth.

Politicians and policy makers must shift away from the improbable yet politically irresistible promise of future growth to one of helping manage and attend to the myriad issues that rural residents face:

  • quality education for their children;
  • affordable and accessible health care;
  • community day care;
  • policies that address housing needs of existing residents (in contrast to imaginary future residents); and
  • transportation and communication accesses that mitigate isolation and allow rural residents to participate as meaningfully as possible in the economy and in society.
  • Rural communities will also need state and federal resources for fresh water delivery and for waste water treatment. They will need assistance and resources dealing with antiquated bridges and crumbling community infrastructure. They will need assistance restoring or replacing their boarded up Main Streets. They will need leadership development, planning, and problem solving assistance to enable and sustain community cohesion and functioning.

    Importantly, they will require advocates who understand that rural needs are more complicated, persistent, and acute than the current fortunes of the farm sector.

    Top photo by Dave Swenson of a small Midwestern town, published with permission.

    • Good article

      I would note when I compared 2008 and 2012 to 2016 I found Trump did best in counties with stagnant or declining population.

    • Thank you, Dave Swenson

      While some economists in the Midwest promote fantasies, you are once again describing realities. Iowa is lucky to have you.

    • This depopulation of rural areas has been going on for decades

      After poking around on the web for Iowa Population demographics, I was able to verify my longstanding belief that 1/3 of all Iowa cities have fewer than 300 people. Turns out I was wrong; that as of the 2010 census it was 38%. These are just the incorporated ones. That is 361 cities out of 947 total are really small . The total population of these towns is 54,349, about the same as Dubuque. If you look at peak population for most Iowa cities (especially county seats) declines started anywhere from 1920 to 1950. Cities have had to provide many public services, infrastructure like streets and water at a relatively high cost. Bond issues get voted down, and quality of life goes down, one vacant storefront after another. Consolidation is the natural outcome in a competitive environment. Living in a small town is tough stuff. Especially if you have to travel to the next county seat over to get basic services like health care, food, etc.

      I find it amazing how every few years people act with amazement to the plight of fewer people trying to scrape by a living in small town America. Increased overhead from Federal and state mandates for mitigating pollution is barely affordable for the towns over 10k., let alone Beaver, Iowa population 48 (Boone, county.)

      I suspect that this trend will continue. Cost per mile of paved 2 lane highways often exceeds 500k/mile. There was a report (Purdue School of Engineering) a few years ago how other rural states strapped for cash are beginning to turn paved roads back to gravel to save on Road funds. Abandoning entire swaths of counties will be the outcome. I think some of is is due the corporatization of farming with distant owners caring less about what is happening on the ground. Caring about your neighbors is not profitable.

      On a more positive note: There is an organization called the Institute for Local Self Reliance that is trying to make people aware that there are some solutions that could positively impact rural towns today. https://ilsr.org/about-the-institute-for-local-self-reliance/ Advocating for cooperatives, Land Trusts, and humane economic policy is not sexy and not even on the radar of Wall Street. But it needs to be for all the Iowans living in their suburban world.

      The ugly side will be the necessary political triage to determine where the money/efforts will be best spent. However in this privatization,self centered world we seem to be devolving into, issues like the common good will be drowned out in favor of profitability and ownership.

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