Small-town America has gotten an economic jolt under Trump

Fueled largely by rising oil prices, small town and rural America enjoyed an economic jolt in 2017 that could widen t...

Posted: Mar 20, 2018 1:46 PM
Updated: Mar 20, 2018 1:46 PM

Fueled largely by rising oil prices, small town and rural America enjoyed an economic jolt in 2017 that could widen the political gap in November's midterm election between those smaller places more friendly to President Donald Trump and the big metropolitan areas sharply recoiling from him and his policies, new data shows.

The new numbers, scheduled to be released Tuesday by the Metropolitan Policy Program at the center-left Brookings Institution, show that job growth in 2017 remained heavily concentrated in the largest cities benefiting the most from the transition to the information-age digital economy.

But smaller communities, lifted by higher prices for oil, gas and other commodities and some gains in manufacturing, last year clawed back a significantly larger share of new job creation than in the final years of Barack Obama's presidency, the analysis found. This economic revival in Trump country could create another electoral obstacle for Democrats in smaller communities, where the President has also connected far better culturally and stylistically than in urbanized areas.

Yet amid all the turbulence surrounding Trump, even these economic gains offer the GOP no guarantees, as Democrat Conor Lamb demonstrated last week when he apparently won a special election in a Republican-tilting southwest Pennsylvania House district where a natural-gas revival has rejuvenated the local economy.

As the communications and computing revolution has gained momentum since the 1990s, a central story of the American economy has been the increasing concentration of opportunity into the largest cities and inner suburbs. These more urban areas are the places that have attracted the most investment capital, an increasing share of highly educated workers, and a disproportionate proportion of the new jobs created by the computer and communications revolution.

"This is a structural revaluating of large cities that has been underway for some time, " says Mark Muro, policy director for the Metropolitan Policy Program. "They are the platforms for a digitally driven service economy based on innovation, often university based, [drawing on] deep pools of digital and other talent. The digital platform is...big city at its core."

Smaller places have measurably lost ground during that transition, according to Brookings' analysis of federal Current Employment Statistics data.

In 2010, the largest metropolitan areas with populations of at least one million accounted for almost 57% of all jobs, while metro areas with between 250,000 and one million people added nearly another 20%, for a combined 76.5% of total employment. By January 2017, those numbers had increased to nearly 59% for the very largest places, while remaining just under 20% for those in the next tier, for a combined 78.5%.

Correspondingly, the combined share of total employment in smaller metropolitan areas (those with populations under 250,000) and non-metropolitan (or rural) areas fell from about 23% in 2010 to just over 21% by January 2017.

Though such shifts in the geographic distribution of jobs may seem modest, experts like Muro note they represent major changes over a short period in a number so large as total employment.

The shift reflected the dominance of the very largest places in new job creation from 2014-2016. According to the Brookings figures, the 53 largest metros of one million or more accounted for nearly 4-in-5 jobs created over that period, with the mid-sized metros accounting for about 1-in-7, and the smaller metros and rural areas combining for only about 1-in-14. Sagging oil prices and the collapse of the natural gas boom from excessive production was a major contributor to the weak small-town and rural performance over that period, Muro says.

In 2016, the sense of being left behind economically -- along with a parallel anxiety about being eclipsed culturally and demographically -- produced a stampede toward Trump in America's smaller communities and one of the starkest geographic divides in any modern presidential contest. Hillary Clinton won 87 of the nation's 100 largest counties, by a crushing combined margin of more than 15 million votes. But Trump won everything else by a margin of about 12 million votes and carried more counties than any presidential nominee in either party since Ronald Reagan in 1984. Republicans also dominate House seats outside of the major urban centers.

During Trump's first year, the new Brookings data show, the smaller places at the core of the contemporary Republican coalition showed a marked economic upturn. In 2017, non-metro areas accounted for almost 17% of new job creation -- nearly four times their share from 2014-2016. The smallest metros improved more modestly, from about 3% of new jobs in the earlier period to 4.5% in 2017. The mid-sized metros saw a small increase in their share over that period (from 13.7% to 14.7%), while the dominance of the largest metros somewhat eroded: They fell from creating about 4-in-5 jobs in the earlier period to just under 2-in-3 in 2017.

Brookings' calculations show that rising energy prices and production account for about half of this small-town and rural improvement. The rest, Muro says, was driven by rising demand and/or prices for other commodities (from coal for export to China to lumber for construction) and some improvement in manufacturing.

Because so much of the rural recovery is based on commodity prices that fluctuate with global demand, Muro says he sees no sign that the 2017 uptick will reverse the longer-term, digitally based trend toward increasing concentration of employment in the largest cities. Indeed, even after the rural gains during 2017, the two largest categories of metropolitan areas still accounted for 78.5% of all jobs as of last December, essentially unchanged from when the year began. (That shows how difficult it is for these numbers to change as much as they did in the first years of this decade.) "You can have cyclical upticks within a long term decline, and I would theorize that's what we are seeing now," Muro says.

Yet for 2018, there's no question these economic gains give Republicans another argument to make in smaller places where Trump's blustery personal style and polarizing cultural agenda has maintained much more support than in the largest metro areas. And while Muro says the small-town revival so far owes more to short-term economic cycles than to policy changes, Trump can plausibly argue that his agenda of promoting domestic energy production, loosening environmental regulation and protecting manufacturing with tariffs against foreign competitors, can help extend the gains in those places.

That policy connection creates a key contrast with white-collar information-age suburbs that are also booming. Those places, as Muro notes, are more likely to believe their prosperity is threatened by key elements of Trump's agenda, such as trade barriers, limits on legal immigration, and cuts to federal investments in education and scientific research. Those policy concerns are reinforcing the cultural and stylistic suburban recoil from Trump visible in both polls and the 2017 election results from Virginia to Alabama.

"I think a lot of the suburban revolt against Trump is stylistic," says Tom Davis, a former Republican congressman from suburban northern Virginia and a former chair of the National Republican Congressional Committee. "This is a guy who doesn't talk their language, he is guttural, he is embarrassing. These are voters who have a level of education and they expect their presidents to behave differently."

That resistance was visible again in last week's Pennsylvania special election, when Lamb, the Democrat, ran up big margins in affluent, white-collar Pittsburgh suburbs. But Lamb also provided Democrats a model for how to compete in the smaller places that feel more cultural and economic connection to Trump.

Lamb won even though the ordinarily Republican-leaning district has been benefiting from the energy-powered, small-town revival evident in the Brookings data. Total natural gas production has soared in Pennsylvania in recent years, and the four counties in the district account for fully 30% of the state's active wells; unemployment has fallen steadily since 2016 not only in heavily white-collar Allegheny County around Pittsburgh, but also in mostly blue-collar (and heavily Republican-leaning) Washington and Westmoreland counties. "If you talk to some of the building trades, like the operating engineers and the laborers, they are almost at full employment among their members because of the energy comeback," says Mike Mikus, a Democratic consultant who works in the region.

Yet, as Mikus notes, Lamb not only posted big gains in suburban areas but also suppressed the Republican advantage in blue-collar communities. He did that by neutralizing cultural issues such as guns and abortion; short-circuiting any debate about energy policy by signaling clear support for expanded natural gas production; criticizing the national GOP agenda as tilted toward the rich, particularly on taxes and the attempt to repeal the Affordable Care Act; and unambiguously defending unions.

In ordinary times, Mikus notes, some of those positions might have ruffled some white-collar suburbanites. But, he says, their antipathy toward Trump eclipsed any other concern with enough of them. "It may only be temporary as long as Trump is in office," says Mikus, "but for the time being you can build a unique coalition of white-collar educated voters and blue-collar union voters."

It's an open question, though, whether Democrats can find many candidates who can strike that balance as effectively as the unflappable Lamb did. It's more likely that Democrats will continue to enjoy bigger opportunities this fall in white- than blue-collar communities.

The job gains in small places reinforce the signal evident in polls tracking the broader public reaction to the president: whichever party controls Congress after November, the election seems virtually guaranteed to extend the trench between the biggest urban centers largely rejecting Trump and the smaller places that mostly believe he is advancing not only their cultural priorities but also their economic interests.

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