A Rural Case for Government
After a brief COVID blip, a new report by the US Census Bureau this week shows that the 235-year winning streak of American cities over rural areas is back on track. Since 1790, more and more and more Americans have been moving from farms to cities.
The first US census in 1790 found 5% of the population in the 13 colonies living in cities (0% in my home state of North Carolina). By 1870 that number was up to 25%; by 1920 it was 50%. Today, after a two-year hiccough during the pandemic, cities are growing again – 96% of the growth between 2023 and 2024 came to metro areas; currently 86.4% of the US population lives in metro areas, with percentages ranging from 35.1% in Vermont to 94.2% in California (North Carolina is 66.7%).
A nice map from Axios based on the new US Census data. 90% of metro areas in the US grew over the past 5 years, with higher rates of both domestic and international immigrants. People are still moving to cities.
What we refer to as the “rural-urban divide” is a series of differences in outcomes between those who live in “urban” areas and those who live in “rural.” Broadly speaking, rural residents are older and sicker and more likely to be addicted than people in urban areas. They are less educated, poorer, more conservative and more likely to be unemployed.
We’ve seen the divide growing for decades. Globalization is part of the problem: rural places used to be able to make the same product for less than other parts of the US, but once markets went global, there was always some place where people would work even cheaper. Technology also took huge numbers of jobs. Farms produce 5x more per acre than they did in 1950, but have reduced their workforce by 2/3. Coal production has doubled while the number of people working in coal mines has declined by 80%. The biggest source of income in many rural places is “transfer payments” — Medicaid, Medicare, Social Security.
Technologists and some economists celebrate increased efficiency in making stuff and delivering products with an innocuous term: creative destruction. Then they talk about how it is good for our economy in a macro sense. But in a micro sense, every new efficiency takes an old job, and for years, millions of people in rural areas have been losing their good old jobs, and haven’t been finding good new jobs.
The economics of rural areas aren’t working. That raises a couple of questions: Do these places matter? And if so, what can we do to change the trajectory?
Why Rural America Matters
I’ve been on the side of thinking our rural people and places matter for a while now. In 1999, I quit my job to staff a new task force in North Carolina working to identify how to improve conditions in the rural parts of our state. We formed a bipartisan group of city and country folks (the “Rural Prosperity Task Force”) and barnstormed the state for six months looking for ideas: from farmers, factory workers, factory owners; from church members, university and community college and public school teachers; from government employees and the unemployed. Then, 25 years ago this month, we presented our findings for what we might do to slow the decline of rural areas.
These days the notion that government, using money it takes in from other wealthy people or healthy zip codes, has an obligation to help support those who are struggling -- in finding jobs, getting education, locating health care, recovering from disaster, and in sending transfer payments -- is under fire. “Pull yourself up by your own bootstraps” is the argument of the moment. Fired for no reason as a government employee? Suck it up. Laid off or addicted to pills? Stop nursing on the public teat and get a job. Accustomed to selling your wheat to Ethiopia through USAID or your corn to your local school through the Department of Education? Get off the dole. If your rural town isn’t functional, why don’t you just move to a city? Why should government intervene to prop up struggling areas? Why not just let the market work?
I think there are at least three versions of a case for rural America. First is a corollary to what I call the Stephen Wright rule (“You can’t have everything: Where would you put it?”). Cities can’t handle everybody: Where would you put them? It certainly costs less to build a home in a rural area than in an urban area.
The road ahead for rural America isn’t clear, but it almost certainly will require an active role for government.
Second, there are problems if you ignore the challenges rural places face. Put aside the risk of ruin to the sonic silence or scenic beauty that a rural river or road or forest or mountaintop or beach can offer to anxious city dwellers.
Cities depend on a lot of folks commuting in to staff their businesses – if the rural commuters are not qualified, city businesses have a workforce problem.
You can’t grow acres of corn (or soybeans, or cotton or yams) or raise dairy cows (or beef cows, or pigs or chickens) in cities.
It’s really hard to build prisons or food processing plants in cities.
And if rural areas have to turn to high-polluting industries that dump waste in rivers? Well, there are downstream consequences. Literally: cities depend on that water supply for drinking water. As Tom Lambeth, one of the members of our task force 25 years ago, put it:
“If there’s a leak in one end of the boat, it doesn’t matter what end you are sitting in.”
Then there’s the moral part. Americans have this ingrained well-articulated (if inconsistent) sense that people should have an equal shot at success, regardless of race or gender or point of origin, and you simply don’t have the same chance to succeed if your school can’t afford to keep good teachers, if your hospital can’t keep good doctors or nurses, or if your community can’t manage to keep good jobs.
In North Carolina our state motto says that we are a place “where the weak grow strong and the strong grow great.” Underinvesting in people just because of where they live endangers the chances of that.
What Can We Do About It?
But if we actually care anymore, for any of those reasons, about improving opportunity for rural people and rural places, how would be go about doing that?
· Overcome barriers of space and time: One of the reasons rural places struggle is that their companies operate at some distance from highways, airports and large numbers of customers. One of the reasons rural people struggle is that they don’t have as many opportunities to find good jobs. Back in 2000, our task force made one especially big recommendation: we recommended extending broadband to every rural community. Broadband connects rural companies to global markets and rural people to remote work opportunities. We proposed the idea be paid for with an 8 cent a month surcharge on every phone in the state. The phone companies put that idea to death quickly and painfully, but we began the work with a $10 million contribution in private funds that enabled us to begin slowly building out the network.
· Re-think business plans: As rural places have lost their traditional high employment manufacturing businesses. Small farms have been taken over by bigger corporations. Populations have gotten older they’ve lost some of their core institutions and leadership. With plants closing, Main Street struggling, churches shuttering and tax bases shrinking, our 2000 report urged communities to recruit different kinds of businesses, focus on small business development and find a new generation of leadership. I worked with a nonprofit on a six-year project funded by a private foundation to build new coalitions in 26 rural places across two states.
· Find new capital to support future-facing businesses: There’s no lack of good business ideas in rural places, but there is a lack of investment capital to get the ideas off the ground. In 2000, we formed a new equity firm that combined federal money with private capital to invest in high-growth companies originating in rural areas. The banks that invested in the company basically wrote off the investment. A few years later when it made a profit they were stunned.
Looking back on the ideas from the Task Force a quarter century later, I feel good about all those ideas. But for the most part they proved the limits of what private investment can do.
· The initial private donation got rural broadband started, but private providers didn’t really start investing in rural broadband until the federal government created enough cost share to convince them they would make their money back and the pandemic showed them how big the demand could be.
· Raising up new leadership can make a difference in helping small towns reimagine themselves but government economic development experts and incentives programs are what companies look at when they decide to relocate to or expand in a community.
· Banks put some money in that private equity firm investing in rural companies, but mostly for good pr and a tax write-off, and it was government money that was first in and “derisked” the private money. On the back end, both the government and the banks made money when portfolio companies exited.
“The market” has its limits. It doesn’t serve people and places it can’t make profit from. And it doesn’t especially care who gets left behind in the process. But Americans traditionally have cared and we’ve shown that care through the work we support our government doing. No matter which end of the boat we are sitting in.
-Leslie
Notes:
Latest US Census bureau report: https://www.census.gov/newsroom/press-releases/2025/population-estimates-counties-metro-micro.html#:~:text=2023%20to%202024.-,Metropolitan%20and%20Micropolitan%20Statistical%20Areas,the%20nation's%20total%20population%20growth.
Increased efficiency in farming and coal mining: https://www.nytimes.com/2024/02/26/opinion/white-rural-voters.html
US megaregions: https://en.wikipedia.org/wiki/Megaregions_of_the_United_States
Older, sicker, poorer: https://nihcm.org/publications/rural-health-in-america-how-shifting-populations-leave-people-behind
US farmers selling through USAID: https://betterworldcampaign.org/blog/what-us-farmers-get-from-americas-engagement-in-the-un