The gap between America’s vibrant cities and its struggling rural regions is growing, said writer Alana Semuels. A close look at two Indiana communities explains why cities are flourishing, and small towns are hurting.
A tale of two countries
ASHLEY GABBERT AND Dan Dark are both white Indiana residents in their early 30s, but their lives look nothing alike. Gabbert, 32, lives in Connersville, a town in one of the state’s poorest counties, where she works the night shift—10 p.m. to 6:30 a.m.—for an automotive parts manufacturer. Her life now is a step up from the decade she spent working in fast food, which wasn’t “much of a career,” she told me. Working in fast food, she’d frequently encounter drug users as they pulled up to the drive-in window, needles alongside babies in the backseat of their cars. Like 80 percent of people in rural America, Gabbert doesn’t have a bachelor’s degree.
Dark, 33, lives in the increasingly metropolitan city of Indianapolis, where he runs a creative consultancy doing videos and marketing work for a variety of clients. Dark, a college graduate, works when he chooses, often from his downtown home or from the coffee shops and bars springing up downtown. He loves to travel—he recently returned from Iceland—and goes out to meet friends almost every night of the week. The same night Gabbert was prepping for the night shift by dropping her 11-year-old daughter off with her mother, Dark was cooking a venison stew for a meat-and-bourbon potluck dinner thrown by a friend. “I’ve built my life around flexibility,” he told me.
In some ways, the lives of Gabbert and Dark represent the diverging fates of two parts of America in the past two decades. Half a century ago, economic opportunity and upward mobility were available to many white Americans, regardless of where they lived and what kind of education they had. They could graduate from high school and find a job in a factory and make a good wage, or graduate from college and sit behind a desk and make a slightly better wage.
About 90 percent of kids born in the 1940s earned more than their parents did. But beginning in the ’80s, the returns on a college education started growing, and more of the benefits of economic growth started accruing only to those with an education, as those without an education saw their opportunities shrink. People with a college degree or better now earn 50 percent of aggregate U.S. household income, up from 37 percent in 1991, while people with less than a high school degree earn 5 percent, down from 12 percent in 1991, according to census data.
This divergence in fortunes for those with and without higher education has coincided with another divergence— that between America’s growing cities and its struggling rural regions. For a century leading up to 1980, poorer regions of the U.S. were catching up to richer regions in terms of wages, as an oversupply of workers in richer regions drove wages down, while an undersupply in poorer regions drove wages up. But this convergence petered out with the rise of computers. Beginning in the 1980s, as computers made certain people more productive and valuable in the labor market and made other people obsolete, wealthy regions with educated workers began to do better and better.
Today, people with a college degree are more likely than they used to be to move to metropolitan regions with good jobs and other people like them, and this means both that those regions do better over time and that the return on that education is even greater. Almost half of college graduates move out of their birth states by age 30, according to Enrico Moretti, an economist at the University of California, Berkeley. Only 27 percent of high school graduates do. As booming cities draw in new college-educated workers, employers seeking these workers follow, and cities continue to gain strength like magnets. This improves the prospects of everyone in the region, including those without college degrees.
The working-class strongholds that once prospered, meanwhile, are doing worse and worse, as computers and robots replace the workers whose jobs haven’t been sent overseas, and as a result, an oversupply of labor brings down wages for everyone still there.
What this means is that people like Dark and Gabbert are having increasingly different experiences of America. “What has been striking over the past two decades is how different the winners are becoming from the losers,” said Moretti, who has studied this phenomenon. “The wage gap, the human capital gap, the gap in type of employers have been growing at a fast pace.”
A FEW DECADES ago, Connersville was a manufacturing powerhouse. Known as “Little Detroit” for the volume of cars and auto parts it produced, it was a key link in the Midwest’s auto supply chain, and was at one time the world’s top producer of dishwashers. At its peak in 1980, Fayette County, of which Connersville is the county seat, had around 28,000 people and 12,000 manufacturing jobs.
Connersville today is a small hamlet of single-family homes interspersed with boarded-up buildings, fast-food restaurants, and low-cost chains like Family Dollar. Fayette County’s population is now 18 percent smaller than it was in 1980. Its unemployment rate is 6.1 percent, one of the highest in Indiana. Its residents report higher numbers of poor mental health days than residents in other parts of the state, and they have among the shortest life expectancies. Like many of Indiana’s more rural regions, Fayette County is facing a growing opioid epidemic. “What’s happened to Connersville is that the jobs came out and heroin came in,” said Ron Corbin, a former resident.
This decline began in the 1980s, Dan Parker, executive director of the Economic Development Group of Connersville and Fayette County, told me, as big manufacturers started to downsize or move overseas. The last big employer, the auto parts supplier Visteon, laid off its remaining 890 employees in 2007. That closure and the ones before it had a ripple effect on other businesses, like gas stations and dry cleaners, as people in the community were thrust out of work. “A lot of the momand- pop shops just evaporated when those corporations folded,” Parker said.
As big employers left, it became increasingly difficult for people to do better than their parents did—economists’ go-to measure of economic mobility. Ashley Gabbert’s mother worked at the Visteon plant, making radiators, until she got laid off when the plant closed. Gabbert has fewer options than her mother did: There are only two manufacturing firms left in Connersville, and because there are so many more workers available relative to the number of jobs, they can pay less than the big companies once did. Gabbert was lucky to find a job in manufacturing at all; Justin Williams, 24, is working at a bar where he depends on tips. He’s also had stints at a call center in town, which paid $9 an hour, and at a restaurant that closed down for lack of business. His mother worked for the Visteon plant, where she made $25 an hour. “The money is different nowadays,” he said.
People who have the resources to leave depressed American towns tend to do so. Corbin, 39, wanted to stay in Connersville, where he was born and raised. He has taken a handful of college classes, though he does not have a degree, and for a few years lived in Connersville and did freelance video production from there. But as the town got more depressed, he decided he didn’t want to raise his children there. “Once-nice neighborhoods have turned into Section 8 hubs,” Corbin told me. “People are just stuck in despair.” Recently, when he was taking his 8-year-old son to school, Corbin saw an addict overdose. It was the last straw; he decided to leave Connersville and move to a suburb of Indianapolis.
Many of the jobs being created in Indianapolis are high-paying ones in sectors like tech or medicine. The biggest employment sector is professional and technical services, in which employees make an average of $73,000. It includes firms like SalesForce, as well as pharmaceutical giant Eli Lilly and the online consumer-ratings company Angie’s List, both of which employ large numbers of college-educated people.
These companies are an example of the growing piece of the U.S. economy that is focused on innovation and knowledge, rather than on producing physical goods. After all, firms that produce only physical goods can send those jobs overseas or automate them. But that’s harder to do for companies that rely on highly skilled workers to create new ideas and customized goods.
In some ways, the divergence between places like Connersville and Indianapolis is a tale of the Americans who are benefiting from globalization and those getting crushed by it. Educated workers in cities produce work that requires innovation and new ideas, work that isn’t easily replicated and can’t be outsourced. Less educated workers in struggling regions are competing with people and machines around the globe, and their wages are the worse for it.
But the divergence is more than just between workers who benefit from globalization and those who don’t. It’s also between the places those two groups tend to live. That’s because of something that economists refer to as the agglomeration economy. Companies want to locate near other innovative companies so that they can find skilled workers, which in turn makes those companies even more productive. They want to be near specialized services, like venture capital firms or banks, that can help provide funding.
This concentration of good jobs in a few hubs creates more opportunity for everyone there, not just people with college degrees. With their higher salaries they eat out more, go shopping, spend on entertainment, and pay for services like dry cleaning, house cleaning, and child care. All of this spending creates more jobs. “A city that has a lot of college grads also tends to have a different economic ecosystem,” Moretti said.
ONE WORRYING ASPECT of this trend is how the divergence will grow over time. Cities with strong industries and good jobs will attract more of the same kind of companies and a growing share of workers. Places with manufacturing jobs and other work that doesn’t require a college education will continue to struggle. “It’s a process where the winners get stronger with time,” Moretti said, “and the losers get relatively weaker.”
There are not very many solutions to closing the gap between the two Americas. Although some onetime manufacturing hubs have been able to recruit new companies or find a new industry, they’re in the minority. After all, there are lots of Connersvilles out there, and they’re essentially competing with one another in their efforts to boost their economies.
Focusing on one type of industry could be a successful strategy. Warsaw, Ind., a relatively small town in the northern part of the state, is the orthopedic capital of America, with dozens of orthopedic device companies located there and a bustling economy as a result. Elkhart, Ind., is the epicenter of the recreational vehicle industry, creating good jobs when the economy is doing well. “Every place has to look at its comparative advantage, and find a niche,” said Ross DeVol, chief research officer at the Milken Institute, an economic think tank.
Still, it’s going to be much more difficult for the Connersvilles of the world to find a path forward than it will be for cities like Indianapolis. That’s partly because in today’s economy, people like Dan Dark have many more options than people like Ashley Gabbert do. The president has pledged to bring jobs back to our nation’s Connersvilles. He may manage in a few lucky areas, but it’s unrealistic to think he can pull this off across the country. That doesn’t mean anyone should give up on America’s struggling regions, whose residents are going to have a harder time succeeding in today’s economy. But what will help them is far from clear.
Excerpted from an article that originally appeared inTheAtlantic.com. Reprinted with permission.