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Rural entrepreneurship is on the decline

October 6, 2017 / Carolina Small Business / Economic inequality, Economy, Rural, Small Business

The Small Business Administration (SBA) Office Of Advocacy is publishing a series of reports on trends in entrepreneurship. It has already published reports on millennial entrepreneurs, seniors, and immigrant entrepreneurs. Last week, the series focused on rural entrepreneurship, which shed some more light on the challenges facing America’s rural communities.

In the past few months, we have published a few blog posts looking at the economic trends in the rural areas of NC. Data show that job growth is concentrated in and around urban areas, with our eastern region in particular facing job losses over the past year. Other research has shown that many of our state’s counties have seen population loss and economic decline, again with a concentration in eastern North Carolina.

The SBA’s recent report shows one of the consequences of population loss in rural areas: a decline in entrepreneurship. The SBA examined rates of self-employment in rural, urban and suburban areas between 1988 and 2016. It found that while there is still a higher rate of self-employment in rural areas, it has declined significantly over that time period.

There are a few ways that the SBA described rural self-employment:

Overall, self-employment saw a decline from 6.7 percent to 6.0 percent, which accounts for some of the decrease in rural areas.

But that does not account for all of the decline. The other major factor contributing to the decrease in rural entrepreneurship is the population loss that rural areas have experienced over the past few decades.

And, as our previous blog posts have discussed, rural population loss is due to a host of factors. These communities have experienced a loss in major industries, lagging economies, high poverty, and an overall lack of economic opportunity. Starting and growing a business in these areas is much more challenging than in areas experiencing growth.

As the SBA notes in its report, “Migration to urban areas by those seeking to advance their careers would benefit urban areas at the expense of rural areas. Policy options that increase the attractiveness of careers in rural areas could alter patterns of migration and mitigate negative effects on rural areas.”

Too often we look at our economy in aggregate, celebrating the declines in our state unemployment rate, poverty rate, and other measures. But when we dig a little deeper, we can see that some of our communities have in fact grown at the expense of their neighbors. This not only is unfair, it also creates an unstable foundation for all communities.

As our economic development policies seek to bring in new companies to our state, and to help catalyze high-growth industries,  at the same time we should make investments in areas that have long suffered from this inequality. By making rural places more attractive to both live and work, and by leveling the playing field, we can help to stem the migration and generate the activity needed to uphold strong economies in all of our regions.