The presidential election has brought a new focus on economic development in the nation’s rural areas. As is often the case, the debate has focused on two extremes.
One side contends that rural stagnation is largely the result of bad trade deals. Ripping up and renegotiating those deals and punishing the U.S. companies that exploited them to move jobs overseas, supporters contend, will bring those jobs and prosperity back to the regions devastated by globalization.
The strategy’s opponents counter that it will simply bring on a trade war, hurting everyone. The idea of bringing back lost jobs, they argue, is a naïve pipe dream. Rather than fighting the inevitability of globalization, they say, we should improve our mechanisms for adjusting to and further advancing our own competitive advantages by instituting programs of wage insurance for trade disruptions, vastly expanded, easily accessible and cost-subsidized training and relocation assistance.
Between these extremes lies a series of questions: Must globalization inevitably mean increased urbanization? Are the rural areas slow to recover from the Great Recession of 2008-09 uniformly stagnant? Or are there areas where growth is evident? Are there seeds of a new prosperity that might be nurtured into growing enterprises that might, over time, come to fulfill the economic function once provided by the lost manufacturing jobs?
It is interesting in this regard to look at the data from Employment Dynamics, a joint program of the Labor Department and Census Bureau.
From my initial examination, several conclusions can be drawn.
• First, with regard to total employment, the division is clear. Employment in Maine’s metro areas (Cumberland, York, Sagadahoc, Androscoggin, Kennebec and Penobscot counties) increased nearly 4.8 percent between 2010 and 2015 (an addition of nearly 23,000 jobs). Employment in the state’s non-metro areas (all remaining counties) grew only 1.5 percent (an increase of just over 2,500 jobs).
• Second, employment in government agencies was a damper in both areas, dropping by more than 3,600 jobs in the metro areas and by nearly 1,000 jobs in the non-metro areas. In short, by far the major impact of job growth, whether rapid or slow, lies in the prospects of private businesses.
• Third, the employment picture in our non-metro areas was not uniformly gloomy. It is best characterized as ragged, with lots of ups and downs. The net gain of about 3,500 jobs with private employers in the region was the net result of some sectors declining while others grew. Paper manufacturing and logging lost nearly 1,500 jobs, but wood product manufacturing gained just over 500. Agriculture, fishing, aquaculture and their support services gained just over 500 jobs, and food and beverage manufacturing added over 400.
Computer and electronics manufacturing lost just over 250 jobs, but fabricated metal, machinery and transportation equipment manufacturing gained over 750 jobs. Health care and social assistance lost nearly 700 jobs, but professional, technical, managerial and administrative services gained nearly 1,400 jobs. Entertainment and gambling added over 700 jobs.
In short, the apparent stagnation of the overall employment number in Maine’s non-metro areas masks a far more dynamic internal economic structure. Yes, lots of companies (and many of our most iconic) are declining. But at the same time, many others (often largely unknown) are struggling to grow.
This more nuanced view is reinforced by an examination of the breakdown of non-metro businesses by size and age. The Employment Dynamics program divides private businesses into five size categories, ranging from 0 to 19 employees to 500-plus employees. It is fascinating to see that even in Maine’s slow-growing non-metro areas, companies of almost all sizes showed a net employment increase between 2010 and 2015. The laggard? Businesses with between 20 and 49 employees.
In a similar way, the Labor-Census program divides businesses into five categories of longevity, ranging from less than 2 years of age to 11-plus years of age. Only the youngest and the oldest non-metro area businesses showed growth over the 2010-15 period.
Combining these two findings leads me to think that Maine’s rural areas have more to gain by helping small, young businesses get over the size and age barriers to continued growth today than by hoping for renegotiated trade deals that might bring old jobs back tomorrow.
Consulting economist Charles Lawton, Ph.D., can be contacted at:
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