Richmond Fed hosts Investing in Rural America conference
Published
In his first 18 months as president of the Federal Reserve Bank of Richmond, Thomas I. Barkin has learned that there are two economies in the Fed’s Fifth District — “one in bigger cities and one in smaller towns.”
That led the Richmond Fed to host its inaugural Investing in Rural America conference, held Wednesday at the Hotel Madison & Shenandoah Convention Center in Harrisonburg. The conference focused on better outcomes for rural America, examining issues ranging from education and workforce development to community investment opportunities and broadband expansion.
“I’ve encountered arguments that the challenges of distressed rural communities are too difficult to solve. They’re not,” Barkin said, speaking to an audience of about 100 attendees, including local economic development officials. “From my perspective, the first step in thinking about the problems of these areas is to approach them as solvable — by good policymaking, by markets, by local leaders and by small-town residents themselves.”
In his opening address, Barkin said there are four major issues that need to be addressed to overcome the disparities between urban and rural communities: education, workforce development, geographic and informational isolation, and labor force participation.
From a macro view, the Fed’s Fifth District, which includes Virginia, Maryland, West Virginia and the Carolinas, is in good economic shape, with steady sustained job growth and low unemployment overall, said Kartik Athreya, the Richmond Fed’s director of research.
“The average person is doing fine,” Athreya said, but when one looks at various metrics, there is a distinct gap between urban and rural communities. For instance, while North Carolina and South Carolina are exceeding the national average for job growth, rural West Virginia is well below the national average.
Rural population growth has been stagnant for decades while urban growth has been skyrocketing. However, the Fed researcher pointed out, rural people account for about 60 million people in United States, or one in five Americans, a significant percentage.
Yet, while some cities have experienced rapid economic growth in recent years, rural areas haven’t. “Cities are important. They’re major drivers of regional economic growth,” Athreya said, noting that cities with 150,000 or more people generate 85% of the national gross domestic product.
While cautioning that “there are no silver bullets,” Athreya said, rural areas do have some advantages over cities that can be leveraged. For example, rural localities “can expand more easily into surrounding areas,” with greater room for geographic growth and expansion. And unlike cities, rural areas offer a lower cost of living and affordable housing.
Discussing closing the rural gap, Barkin talked about the need for universal pre-K education, which research demonstrates will increase reading levels, raise high school graduation rates and grow workforce participation among mothers.
The Richmond Fed president also praised community college workforce training partnerships and certificate programs, noting that “a four-year college isn’t necessarily the right path for everyone, and there are well-paying jobs that don’t require a four-year degree.” In particular, he singled out the Virginia Community College System’s Fast Forward fast-track adult workforce training program. Fast forward program students can receive affordable credentials for in-demand jobs in the streamlined program. Students who complete the program pay only one-third tuition, with the state funding the rest.
“We’re determined to reach this population,” said VCCS Chancellor Glenn DuBois, speaking during a panel discussion about connecting workers to jobs. “This is the working poor; this is six out of 10 households in rural Virginia. … They are one emergency away from being busted.” Preventing that from happening, he said, is the purpose of Fast Forward.
Rural areas are drawing and retaining fewer college grads, according to Fed research, a phenomenon most evident in the Old Dominion across South Side and Southwest Virginia. Recognizing that only about 50% of college enrollees earn a bachelor degree, Athreya said, the Fed has evolved into taking a “no judgment” stance about alternatives to college and has a launched a website, investinwhatsnext.org, to help graduating high school students consider a raft of career and educational pathways.
Barkin also spoke about how the closures of rural banks, hospitals and colleges are contributing to the rural economic gap and community isolation, noting that 11 rural hospitals have closed in the Fed’s Fifth District since 2010, and 21 hospitals — or about 20% of the remaining facilities — are financially endangered.
“The loss of these institutions creates direct costs in terms of residents’ access to financial services, health care and education. But there are also large indirect costs,” Barkin said. “Anchor institutions provide civic leaders and high-skilled workers who can raise the aspirations of those around them. They invest in their communities and educate residents about health, careers or finances. They supply amenities that attract talent. They create incentives for other businesses and signal a community’s vibrancy.”
Expanding affordable broadband availability is also a vital issue, Barkin and conference speakers said, as it expands opportunities for remote work and online education, as well as decreasing a rural community’s information isolation. Yet, not every household can afford broadband, even where it’s available, Barkin observed.
Only 49% of households in Virginia making less than $20,000 per year have a broadband subscription, Barkin said. And in some areas of South Side and Southwest Virginia and the Shenandoah Valley, for example, as many as 60% of households have no internet subscription. But increasing its usage and availability is critically important, he said: “Like rural electrification 80 years ago, the benefits — in terms of opportunity identification, skill-building, telemedicine and the like — are too big to pass up.”
Fixing rural challenges such as these will require focus, persistence and a concerted effort led by regional cooperation, Barkin said.
Communities also need to learn to tell their stories well, he urged, not just to market their amenities to outsiders, but to retain the people who live there.
“Changing the prospects of a town, it seems to me, starts with aligning the mindsets of the people in that town,” Barkin said. “And a great metric is whether the kids who grow up and go to school there choose to come back.”