This blog post is the second in a weekly series throughout July examining opportunities in different sectors of America’s diverse economy.  

Farms, small factories and other buildings often sit abandoned in America’s many rural communities. Image from Pixabay.

Nearly one in five Americans live in rural areas, which still comprise the majority of the country’s land area. Yet many communities are facing demographic challenges as young people relocate to urban areas. Diversification is important to the revitalization of the nation’s heartland.

From California’s Central Valley to the Great Plains states, some 62 million Americans live in rural or frontier areas, defined as areas outside of urban centers with no more than 2,500 residents. Though about 80% of U.S. land is rural, rural America is losing population for the first time ever, as interest in retirement in rural areas wanes among baby boomers and younger people continue to relocate to the cities in search of jobs and education.

While most states are gaining population overall, rural counties in much of the nation are in such decline that governments are considering student loans and tax incentives to prevent the depopulation of some areas.

The State of American Agriculture

The population decline in rural America obscures the fact that American agriculture is generally doing well, despite a smaller number of farmers than ever before, due to mechanization. U.S. agriculture exports totaled $115 billion at the beginning of the decade, creating a positive trade balance for this sector of the American economy. Agriculture still accounts for slightly more than half of the nation’s total land area, with California, Iowa, Texas, Nebraska and Minnesota making up the top five states by agricultural output, according to the 2012 Census of Agriculture, which is issued every five years.

A number of issues will determine the future of the nation’s agriculture sector, including immigration policy (an estimated 77% of American agricultural workers are born abroad), trade policy, commodity prices and climate changes.

While drought is a serious concern in California and much of the west, many scientists believe that warming temperatures will open northern areas to unprecedented agricultural opportunities.

Disappearing Small Towns

The percentage of Americans living in middle income households has been declining for decades. In 2015, the Pew Research Center reported that less than 50% of Americans are in the middle class, down from 61% in 1971. Both the upper and lower classes have seen increases.

While a major economic shift impacting all U.S. communities, the decline of the middle class has been particularly hard on rural areas, where some towns have become low-income backwaters rife with crime and poverty.

Revitalizing the Heartland

Development economist Albert Hirschman noted that residents of underdeveloped economies, such as rural areas, have three choices: exit, or look for opportunities elsewhere; loyalty, accepting poor economic conditions as they are; and voice, staying and trying to effect positive change.

Throughout the country, rural development agencies are working to improve the lives of residents and help communities prepare for this century’s realities. Among these efforts are strategies to link economic activity with nearby urban areas, such as growing and selling local crops.

In California, the USDA Single Family Housing Guaranteed Loan Program makes living in rural areas easier by supporting the financing of renovation, restoration or building projects for low-to moderate-income residents. Funding for rural small businesses is available through loan and grant programs covering a wide range of industries.

One such program is the Rural Business Investment Program, which provides license to newly formed venture capital organizations to meet the economic needs of rural areas. A minimum of 75% of the funds must be used in areas with a population of 50,000 people or less.

Rural America is also benefiting from interest in tourism, including outdoor recreation and history-based excursions. The USDA provides a number of links on tourism-based improvement strategies.