US economists wrestle with how to help 'left behind' areas
Boston Federal Reserve officials have a pretty good idea what helped the ailing industrial town of Lawrence, Massachusetts, start to make a turnaround, including a state takeover of the public school system and a focused effort to lift job options for working parents. Would the same strategies apply in Smith County, Kansas, where the population has been declining since 1900 and now includes twice the proportion of senior citizens as the United States as a whole?
That's the dilemma economists have begun wrestling with as they debate whether "place based" economic strategies, often seen as a path to pork barrel spending under the good intent of creating local jobs, may now be the only way to reverse the separation of the country into areas that are doing well and those that are treading water or slipping behind.
The short answer: It won't be easy, and after decades of decline in some places it may require a fairly tough set of decisions about which ones have a credible chance to rebound.
"You can't do this for every community," Boston Fed president Eric Rosengren said after a two-day conference the bank sponsored here on the geographic divisions that have split the United States into largely coastal boomtowns that are increasing their share of national jobs and wealth, and evidence of stagnation in many other places.
"Not every community has social cohesion. Not every community has a good leader," Rosengren said as he outlined the qualities the Boston Fed used in a competition to select towns for economic development grants, one of which helped Lawrence move 200 working parents into new or better jobs, and set up a system for more to follow.
"We were looking for communities that had the highest probability of success," he said. It is not a new idea that geography shapes a country's economy. Natural features such as rivers and the Great Lakes helped the U.S. industrial heartland thrive in its heyday. But until recently "place" was not seen as a constraint on individual success: if jobs and opportunity were inadequate in one town, it was assumed people would move, providing a built-in source of adjustment across the American economy.
A growing body of research, however, shows that is no longer the case. People are moving less, incomes across regions are no longer growing closer, and the opportunities in the "superstar" places may be growing out of reach for the less educated. Places that lag in job growth are less likely to catch up; kids born in poor neighborhoods are more likely to be poor as adults.
While chronic joblessness is a wellrecognized problem in ailing cities such as Baltimore and Cleveland, and in some of the country's remote rural corners, the election of Donald Trump in 2016 focused attention on the fact that it existed across a broad swath of small town America - and was hardening attitudes among parts of the white working class. The unemployment rate among job seekers may be low, but larger numbers of working age men in particular have simply stopped looking for work at all.
"There is a plausible view that in the long run all local low skilled employment will be in services," said Edward Glaeser, a Harvard University economics professor. New technologies such as ridesharing platforms "will be able to generate jobs for less skilled people in Boston. What are they going to do in eastern Tennessee? That seems the central question...for American employment policy in the 21st century."
Over two days of discussion there was no clear answer.
Trump's election drew attention to the problems of working age men displaced from blue collar jobs. But should they be encouraged to move, retrain as computer coders, or make what may require a cultural leap and join the boom in jobs caring for the elderly?
What about a separate suite of longer standing issues, such as the state of urban school systems still lagging under the legacy of segregation? Beyond Medicaid, food stamps and other programs that funnel tax dollars to individuals, should national policy be used more aggressively to subsidize education, services or jobs in low income areas?
"There is strong consensus there is a problem...We don't know quite what to do about it," said David Autor, a Massachusetts Institute of Technology labor economist whose research on the "China shock" helped frame debate about the disproportionate impact China's rise had on U.S. manufacturing hubs.