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Why ‘micropolitan’ cities may be the key to rural resurgence

(Source: curbed.com)

While the nation’s diverse rural areas, which cover roughly 90 percent of the U.S. and provide a home for about 60 million Americans, are often dynamic and inviting, many have recently faced economic headwinds. Huge social shifts, like aging populations, declining manufacturing activity, and the clustering of tech and service jobs in cities, have left less-dense parts of the United States struggling to keep up, contributing to a negative, pernicious, and overblown narrative that some areas are “beyond hope.”

That’s not the story of Findlay, Ohio, which offers a counterpoint to this narrative. The small city of 41,000 has not only seen manufacturing remain part of the local employment picture—it accounts for roughly 22 percent of jobs for the last three decades—but manufacturing employment in 2016 was actually higher than the pre-recession peak in 2007. Economic development officials proudly talk about the success of the “Findlay Formula”: getting private, public, and nonprofit partners working together to create jobs and opportunities.

Mayor Lydia Mihalik, in this year’s State of the City address, praised 2017’s record-setting year of economic development, and noted that Findlay was “small enough” to come together and solve big problems.

Findlay represents a little-studied, but potentially important part of the puzzle of increasing rural prosperity: so-called micropolitan areas. Defined as geographic areas with one city of more than 10,000, but fewer than 50,000 people, it’s a smaller-scale version of the city/region scenario. According to the U.S. Census Bureau, which introduced the concept in 2003, the nation has 550 micropolitan areas, and combined, they are home to roughly one in 10 Americans.

Ross DeVol, a fellow at the Walton Family Foundation in Bentonville, Arkansas, who has studied the impact of micropolitan areas, believes that their economic success can revive rural economies and be a catalyst for the surrounding region. Much has been made of the increasing fortunes of midsize U.S. cities, or plans to invest in tech businesses outside of established innovation enters in coastal cities. But significant investment in these smaller cities can, as DeVol told Curbed, be a more direct engine for rural growth.

“Micropolitan [areas] are are doing better than truly rural areas,” he says. “And many [are] doing much better than those on the coasts may believe.”

Many micropolitan regions are seeing outsized success

DeVol, who plans to release a wider-ranging report on micropolitan areas early next year, believes successful stories like Findlay’s should receive greater attention—and be mined for good ideas that can be replicated elsewhere. In his recent work, including the just-released State of the Heartland: Factbook 2018 report and “Micropolitan Success Stories from the Heartland,” which profiles Findlay and four other successful cities, he found examples of the spillover effect of micropolitan regions. Many have not only shown strong economic performance, as noted in “State of the Heartland,” but have also outperformed more populous parts of the country.

As in cities, the reasons for this success vary. Oxford, Mississippi, which DeVol profiled, has benefited from startup and entrepreneurship opportunities taking root at the University of Mississippi. This bastion of Southern architecture, and home to author William Faulkner, punches above its weight when it comes to new-business formation.

FNC, a company that streamlines mortgage approvals, was launched in 1995 by a group of four University of Mississippi business professors before being sold to CoreLogic in 2016 for $475 million. Instead of relocating, the new owners turned the office into a corporate innovation center. Next Gear Solutions, another local success that creates custom software for the restoration industry, was founded in 2008 and now employs more than 100 people.

The growth and magnetism of these new ventures helps explain why Oxford and the surrounding county has seen its population balloon nearly 40 percent between 2000 and 2016, hitting just over 53,000. More than 3 in 4 of those new residents moved their for new jobs.

Findlay also stands out, due in large part to its loyal local firms. Longtime manufacturing companies, including Cooper Tire and Whirlpool, whose appliance assembly plant ships out 12,500 dishwashers a day, have been central to the city’s consistent economic fortunes. Located in northern Ohio, with easy access to a number of nearby big cities, the city has convinced 15 different Fortune 500 companies to locate offices in town. BizJournals.com even named Findlay one of the country’s “Dream Towns” due to an enviable quality of life at a relatively low cost of living.

Future formulas for success

DeVol believes that micropolitan cities can only prosper with diversified economies. “Smokestack chasing,” the pejorative term used to refer to an era when local leaders would try and woo factories and manufacturing plants, was too one-dimensional, especially after decades of plant closings and overseas relocation.

Some of the solutions DeVol proposes sound sensible for cities of any size: work on creating partnerships with local universities to help create new businesses, increase startup activity, and bolster job creation. In Brookings, South Dakota (population 23,938), graduates of South Dakota State University have gone on to build some of the area’s biggest employers, including Daktronics, a global manufacturer of scoreboards and video displays that employs over 1,000 people.

But DeVol also says smaller cities, especially those without big schools or universities, should also hone in on simpler solutions that take advantage of the lower cost of business outside of a big metro area. The seemingly endless need for warehouses and distribution-center space can add local jobs. And positioning towns as retirement destinations for baby boomers can attract new residents and taxpayers, as Bozeman, Montana, and towns across New England have discovered.

But DeVol says the real long-term play for micro metros is investing in business development.

“Too many communities focus on trying to provide incentives for large manufacturing or mining jobs,” he says. “It’s easy to say, ‘We brought in 100 or 200 new jobs,’ but in many cases, if a city focused on providing entrepreneurship training and business skills instead of paying to lure companies, they might have had a greater return.”

DeVol doesn’t ask small towns to try to compete with Silicon Valley. They simply need to build better job pipelines, coordinating educational and vocational training, so that skills taught at high school and community colleges fit what local industries need

For all the negative stats one can find about struggling rural areas, says DeVol, the one that really tells the story of economic growth or decline is the percentage of new jobs created by new firms. Jobs are one thing; giving Americans the chance to build their own companies can be the true community catalyst.

“If you’re not creating new firms, you simply can’t grow jobs in the same ways as other places,” he says. “If more government dollars were focused on building entrepreneurship and job skills, these areas would be doing much better than they are now.”

More Info: curbed.com

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