Tuesday, May 02, 2017

Writer says low jobless rates are good for rural Americans but bad for places they live and leave

Conor Sen
While low unemployment rates could be good for rural Americans, they could be bad for rural America, Conor Sen opines for Bloomberg. He explains the apparent contradiction: A low jobless rate "puts local employers in a bind. Rural economies tend to be poorer, with lower average incomes than the country as a whole. In a tight labor market, many businesses simply don't have the profit margin cushion necessary to raise wages to attract or retain talent. And if they're unable to get the workers they need, their choices are shutting down or leaving for another place with deeper labor pools."

From employees' point of view, he writes, "Rural workers are subject to their own dynamics in a tight labor market. In high demand, they have the bargaining power to ask for raises. More importantly, they have an easier time of doing something that's difficult in a bad labor market—leaving for another job or another locale."

For example, unemployment rates in Maine, New Hampshire and Vermont are all 3 percent or lower, compared with 4.5 percent nationwide, he writes. "The populations of all three states skew older, and they have very low population growth. For the economy to grow at all, these states are relying on an increase in the labor force participation rate or workers to move in from elsewhere. But you can only coax so much labor force growth out of a rapidly graying population, and rural New England is not attracting significant domestic or international migration."

Lower immigration numbers under President Trump could mean that fewer people will migrate to urban areas. Sen notes that there is pent-up demand for migration among the two largest generations in America: "millennials, who are getting to an age where they're looking to settle down or move to start their families; and baby boomers, who are ready to retire, which frees them up to move away from wherever they made their careers."

"There are many benefits to this new environment," he writes. "Rural workers who have previously felt trapped are now able to move somewhere else for opportunity and a better life. Low-productivity businesses will die, replaced by higher-productivity ones as workers shift from less productive rural employment to more productive urban employment."

"Perhaps some of the populist angst in the country will dissipate, if large swaths of people who feel left behind by the modern economy are able to move toward cities and share in its wealth," he writes. "But the rural communities, with even fewer working-age residents, will be even worse off than they are now. It will still be a tale of two Americas, but more and more people will be able to move from the withering America to the thriving America."

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