(Jon Margolis writes political columns for VTDigger.)
Vermonters: Do you want your state to be more prosperous?
Simple. Just create metropolitan areas.
How about quintupling (at least) the population of Bennington and its county? Then persuade 200,000 or so folks from other states or countries to move into the Northeast Kingdom.
Presto! Instead of having one metropolitan area, Vermont would have three. Then it would be richer, because that’s where the money is. The biggest cities and their suburbs are booming while small towns and rural areas get smaller and poorer.
A small sample:
• Between 2010 and 2014, there was as much business growth in five metropolitan areas as in the rest of the country combined.
• In those same years, half of all new businesses started in just 20 populous counties.
• In the recovery from the Great Recession, counties with fewer than 100,000 people accounted for less than 9 percent of new net job creation.
• The population of rural counties is going down.
That last item comes from the Census Bureau. The first three are from a report called the “New Map of Economic Growth and Recovery” published last year by the Economic Innovation Group, a business-oriented research and advocacy organization based in Washington.
The connection between prosperity and the metropolis seems almost a law of nature, not even limited to the United States.
“That’s what you see in a lot of countries,” said Christian Ketels, a student of regional economic development who is on the faculty of the Harvard Business School. “There’s a lot of concentration of economic activity in urban centers.”
All in all, he said, “it’s a challenge for a state like Vermont.”
A mere challenge, or a portent of doom? In nine of Vermont’s 14 counties, there were fewer jobs in the summer of 2016 than a year earlier. In many of them, there were fewer people. Only in Vermont’s own version of a metropolitan area – in and around Burlington – is there any measurable economic vigor.
So the remedy is clear. Transform those rural counties into metropolitan areas.
Uhhh, that can’t be done. If that report from the EIG is telling the right story, Vermont is going to have to do something else.
The good news is that the guy in charge of economic development seems to know this.
“I am very aware,” said Michael Schirling, the secretary of the Agency of Commerce and Community Development.
Not specifically aware of the EIG study on growth and recovery, he said. But generally of the economic dominance of large metro areas. “We talk about it in terms of, Boston has its own gravity field and the rest of us are these asteroids flailing through the system,” he said.
As is true of all economic studies, the conclusions of the one by the Economic Innovation Group can be questioned. Tom Kavet, the Legislature’s chief economic consultant, noted that the EIG’s most recent data were from 2014. Kavet also wondered whether the study understated “how incredibly severe this recession was,” with lingering impacts on Vermont.
“Vermont has relied on net domestic in-migration for the bulk of our population growth,” he said. That’s slow right now because in nearby states housing prices have not recovered their pre-recession levels, and people are reluctant to sell until they do.
But Kavet did not dispute the basic finding of the EIG report that big metropolitan areas have a decided advantage in today’s economy, and that to prosper Vermont has to “do something different.”
Ketel agreed. “There is no reason to despair,” he said. There is reason to plan “what type of economic activity (Vermont) can do better than these metropolitan centers, what can you do to attract people who want to live in a state like Vermont.”
That’s niche marketing, which is harder to do than mass marketing and probably requires new ideas, which in turn may require junking some of the old ideas. Increasingly, it seems the standard solutions of the left (raise the minimum wage) and the right (cut taxes) are irrelevant.
Consider, in this context, Gov. Phil Scott’s often-repeated lament that every day there are “six fewer Vermonters in the workforce,” that the state has “lost” an average of 2,300 working-age people a year over the last several years.
The governor has the right numbers but the wrong word. These workers are not “lost.” They’re just older and no longer in the labor force. The question is why young people have not replaced them.
Finding the answer has to start by realizing that they’re not replacing their elders in rural Alabama or Nebraska, either. Rural and small-town America are in decline no matter the state minimum wage or tax rates.
In fact, people are not moving much of anywhere. Perhaps for the home-price reason Kavet suggests, Americans are less mobile than ever. They are also less fertile. The birth rate is at an all-time low, especially among American-born non-Hispanic white people. Vermonters may not be having many babies, but neither are people like Vermonters elsewhere.
So Vermont’s problems seem to stem less from what it does than from what it is. Measured by actual data – about income, poverty, unemployment, health, drug addiction and more – Vermont is perhaps the most prosperous, least troubled rural state in the country.
This doesn’t mean Vermont couldn’t do some things better, and – who knows? – maybe raising the minimum wage or cutting taxes would be good ideas. But neither confronts the basic problem of being a largely rural, small-town state when the economy is “more reliant than ever on a few high-performing geographies,” in the words of the EIG report.
To become a “high-performing geography” Vermont may have to “think the way a niche marketer would think in a private-sector business,” Kavet said. “What’s different about us?”
Or as Ketel put it, Vermont should try to find “people who don’t want to live in a big metropolitan area.”
It’s not clear how many people fit that description. But it’s also not certain that Vermont really needs more people. Most economists agree a state can be more prosperous without becoming more populous.
Scott points with alarm to Vermont’s diminishing labor force. It is diminishing, but maybe that’s not alarming. More Vermonters are actually employed than ever before, earning more money. A smaller population has its advantages: fewer traffic jams, less pollution, more room at the beach.
Schirling wants to apply niche marketing to Vermont’s localities. “Let’s look at all 251 towns in Vermont to figure out what their identities should be,” he said. “How do we help individual communities plan well for what their place in the regional ecosystem looks like – their access to education, health care, culture, all the things people want?”
Schirling said he is developing a strategy based on promoting the state’s current business successes (tourism, microbreweries, etc.), easing the way toward more housing in “walkable” downtown and village center locations, and “creating vibrant regional economies.”
Some of that, he acknowledged, will cost some money. He thinks the money will be available. He called himself “cautiously optimistic.”
Under the circumstances, that’s about as optimistic as is warranted. At least he didn’t say he wanted to create another metropolitan area somewhere in Vermont.