MuniNet Guide Talks with National League of Cities’ Christiana McFarland to Discuss Going Beyond Urban vs. Rural in Understanding the Economic Characteristics of America’s Localities
The National League of Cities released the findings of their biennial survey on local economic conditions, The Untold Story of the Varied Middle: Local Economic Conditions 2017. The primary purpose of this research effort is to gauge the performance of key economic indicators, by surveying the chief elected officials of various cities. Urban vs. rural is a common, beneficial way of analyzing and discussing cultural, political and economic demographics in the United States. However, the results of this survey show that, upon deeper investigation by going beyond urban vs. rural, a much more nuanced clustering of local economic profiles emerges.
There are five archetypes of local economies that come forth from the data; Major Job Centers, which are mostly large central cities like Austin and San Francisco; Rural Brain Drains, smaller cities disconnected from larger metropolitan areas like Chardon, Ohio and Rison, Arkansas; Cities on Par, mostly small-to-medium sized cores of smaller metropolitan areas, and sometimes with major universities like Chapel Hill, North Carolina; Room to Grow, cities that are largely older, inner-ring suburbs of major metropolitan areas like Plano, Texas and Scottsdale, Arizona; and Mid-Sized Business Boomers, mostly cores of medium-sized metropolitan areas such as Ann Arbor, Michigan and Longmont, Colorado.
MuniNet Guide spoke with Christiana McFarland, Research Director for the National League of Cities’ Center for City Solutions and lead author of the study, to talk about its findings, where trends are leading, and what policymakers can do to steer their local economies in favorable directions.
MuniNet Guide: One of the things that stood out to me was the types of local economies you identified. Some were not surprising, like Major Job Centers and Rural Brain Drains; these sort of embody the typical Urban vs. Rural comparisons made in the mainstream. The other three groupings were very revealing; I can’t say I can recall seeing a discussion of these types of local economies outside government and research circles. My question is, was conducting a cluster analysis to identify different types of local economies the research design from the outset, or did it develop upon studying the data? Did the clusters form in any major way that differed from expectations?
McFarland:
We sought to cluster the results into patterns of local economies, based on what the intersection of outcomes were, but we were led by data in what specific city types would emerge. You can see a lot of resonance in the various city types with trends that are happening in the broader economy.
For example, Room to Grow economies emerged. These local economies have suffered from shifts in business relocations to more central city locales and from change in the retail sector to ecommerce. The types of facilities they offer, big malls, office parks, that isn’t where the economy is headed. So, if you were to just look at averages and the overall results of the survey without parsing out the different types of localities through the cluster analysis, you could miss those Room to Grow economies.
MuniNet Guide: The overall percentage of cities reporting improved year-over-year economic conditions was higher in 2017 than in 2013, but lower than in 2015. Is this a sign that the current economic expansion is losing steam?
McFarland:
We can think of it that way, but more broadly, I think slow and uneven economic outloooks are the result of cities still struggling to get a handle on the structural changes in the economy. Retail trends, technology, inequality. This recovery after the Great Recession is very different than previous recoveries. The same solutions won’t work.
MuniNet Guide: Are you saying we haven’t gotten a handle on the structural changes from a policy perspective, a market perspective, or both?
McFarland:
Both. The market is going to do what it is going to do, to a certain extent. It is adjusting and readjusting constantly. But the policy mix has adjusted more slowly, with severe affordability and equity challenges bearing that out.
MuniNet Guide: Four out of five types of local economies in this study list ‘new business starts’ as a ‘top positive’, and those same four list ‘affordable housing’, or lack of supply thereof to meet demand, as a ‘top negative’. Room to Grow localities stand out as having neither as key drivers. What types of opportunities does this present to inner-ring suburbs to differentiate themselves positively from other types of local economies?
McFarland:
These suburbs appear to be key exhaust valves for otherwise tight regional housing markets, reaping the benefits of affordability challenges in core cities that are forcing people out. However, it is likely that these changes are widening the disconnect between where people live and where jobs are located throughout regions. A key economic opportunity for these communities is to ensure efficient and reliable transit systems between people and jobs, and to think differently about their economic base to create new jobs locally.
MuniNet Guide: As a part of redevelopment, do you see a repurposing of some of these larger struggling properties, malls and office parks, being converted into small-businesses/residential developments, like so many old industrial factories and warehouses have been in core cities, particularly in the Midwest?
McFarland:
MuniNet Guide: One of the most significant and widespread negative impacts on local economic growth is misalignment between workforce skills and employer needs. Did the research identify any through lines in the types of skills needed and lacking? What steps can local policymakers take to address this gap?
McFarland:
Generally, those local economies are also communities whose economies benefited from new business attraction. From that perspective, there is a real opportunity for local policymakers to look at new businesses and growing businesses. Ensuring economic development officials and elected officials are communicating with local businesses about their needs, then investing in things like community colleges, K-12 education, and other training tools. Tennessee’s offering free community college for all adults is a really good example. It takes a whole systemic approach, and the results are not necessarily felt immediately.
Given that this challenge is pervasive, it lends itself to policy and funding solutions as well from the state and federal government partners. Local leadership is crucial for that on-the-ground communication between businesses and policymakers, but local governments generally just cannot leverage the funding that will be required to really develop the policies and infrastructure needed to fill these skills/needs gaps. Each local economy is going to have their own specific needs, but the skills/needs gap exists in some form across the board. That’s why local engagement, and governmental coordination between local, state, and federal policy solutions are crucial.
MuniNet Guide: Rural Brain Drains have a lot of challenges, including population decline and increases in high-poverty neighborhoods. Despite all this, one of the top positive factors for these cities was general fund revenue. What kinds of investments should local governments of Rural Brain Drain economies be exploring?
McFarland:
Workforce development is part of the mix, but just as important to these types of local economies is investment in infrastructure. There is limited and uneven broadband access. The workforce in some of these areas cannot engage in the broader economy even if they have needed skills. Economic relationship opportunities, like supplier relationships, and other partnerships with other local economies are good things to explore.
MuniNet Guide: Finally, how would you like to see your findings impact the way local and the overall national economies are discussed in public discourse? What other takeaways are most important to you?
McFarland:
The point that we try to drive home is that even though the ‘rural vs. urban’ conversation can be useful, strictly labeling communities in that way doesn’t really reveal the capacity that they have to determine their own future. Piggybacking off of that, there are factors that are driving local economies, they can be better understood, and we need to understand them to empower local economies to improve themselves. From our perspective at the National League of Cities, the best outcome is when state and federal policymakers and elected officials give cities the tools to localize their solutions, not provide cookie cutter state and federal structures. Recognizing the purpose of cities within the macro-economy, as engines of growth, will strengthen the national economy overall.
Read the report of this study, Local Economic Conditions 2017.