An Urban's Rural View

USDA's 2016 farm-income forecast for 2016 displayed an interesting contradiction. While income from farming was projected to fall 3%, farm household income was expected to rise 5%.

The explanation? Off-farm income. For some farmers, off-farm income is literally a life-support system. Their revenue from farming may cover farm expenses, but it isn't enough to feed, clothe and educate their families. For that, they or their spouses or both work in town.

"Nearly all U.S. farm households have some income from off-farm sources," USDA said. And because it's on the rise, "...median farm household income has grown more rapidly than U.S. median household income since the recession (http://tiny.cc/…) ..."

Which raises a question: How will farm families cope if off-farm jobs become scarcer? That could happen, a report in the Washington Post suggests, because new business-formation in lightly populated areas is cratering.

"From 2010 through 2014, U.S. counties with 100,000 or fewer residents combined to lose more businesses than they created, despite a growing national economy and a falling unemployment rate," the Post reported (http://tiny.cc/…).

New businesses have traditionally been an outsized source of new jobs. It's not surprising, then, that with nearly two-thirds of the rural counties having fewer businesses in 2014 than in 2010, job-creation rates have fallen, as well. These counties accounted for less than a 10th of the nation's new jobs from 2010-2014. In the 1990s, they had accounted for as much as a quarter of the new jobs.

The Post attributes these trends to "the rise of big-box retailers such as Walmart, the loss of millions of manufacturing and construction jobs across the country and a pullback in business lending that appears to have stung small-town and rural borrowers particularly hard."

It isn't just smaller counties that are stagnating, to be sure. Some cities -- Detroit, Cleveland, Tucson, and Spokane, for instance -- have experienced it as well. Indeed, the phenomenon is almost nationwide.

"What growth has occurred," the Post notes, "has been largely confined to a handful of large and innovative areas, including Silicon Valley, New York City and parts of Texas."

The problem, the Post says, is that while most of the country has been treading water, "Rural areas have seen their business formation fall off a cliff."

What I wondered reading this story was how off-farm income has managed to continue rising in the face of these depressing trends. Not just rising: rising faster than household income nationally.

The best theory I could come up with is that farmers these days tend to be well-educated people with strong work ethics, the kind employers like. What jobs there are, farmers have been more likely to get.

But even if my theory explains the past, what about the future? Will off-farm income continue strong if rural new-business formation continues to plummet?

Because, make no mistake, the experts interviewed by the Post think the situation in smaller counties could easily get worse. The head of the Economic Innovation Group, a bipartisan research organization in Silicon Valley, warns the Post: "As bleak as these numbers are now, these may be the good years."

Urban Lehner can be reached at urbanity@hotmail.com

(CZ)