New report says rural Indiana needs more investment
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Rural Hoosiers “desperately” need state leaders and lawmakers to make greater investments in Indiana’s lesser-populated regions, especially as the younger and more educated workforce moves to more urban areas of the state.
That’s according to a new report released Wednesday by the Indiana Community Action Poverty Institute, an Indianapolis-based advocacy group that seeks to prevent and end poverty in the state.
The 38-page report is based on surveys of more than 1,000 Hoosiers, including business leaders, elected officials, economic developers and financially vulnerable residents. Rural researchers were also interviewed. In-depth data analyses and policy reports specific to 40 rural Indiana counties helped inform the briefing, too.
At the heart of the report is a message to policymakers and other stakeholders that — in order to boost the rural Hoosier economy and make rural businesses profitable — “rural people need to thrive.”
That isn’t the case currently, however. Rural Indiana’s economy is increasingly vulnerable to job loss, population decline, and shrinking prosperity, as educated young people leave for more opportunities in urban areas and low-paying service jobs replace good-paying manufacturing jobs, according to the report.
According to a Kelley School of Business report, census data shows the 44 Indiana counties that are part of a metropolitan statistical area combined to grow by 6.3 percent over the past decade. Meanwhile, the state’s 48 non-metro counties as a group declined by -0.9 percent over the same period.
As the rural economy struggles, business vulnerability is also rising — automation, offshoring and low educational attainment in the workforce threaten business competitiveness. That challenge is heightened by a lack of critical industrial infrastructure, including broadband and insufficient quality housing stock to attract workers of all incomes.
The Hoosiers who rely on those struggling employers for their financial well-being are also increasingly vulnerable, the report notes. It’s becoming harder to find good jobs that pay enough to support their families. Even when those jobs are available, a lack of affordable childcare and unreliable transportation make it even harder to commute to work and stay employed.
“Tragically, hard work just isn’t enough to get ahead anymore for too many struggling Hoosiers in rural communities,” the report said.
A window into ‘rural’ Indiana
The 40 counties classified in the report as “rural” each have a total population of less than 40,000 and density that is below 100 people per square mile. The largest city in each county additionally has a population that is less than 10,000 residents.
Collectively, the counties are home to nearly 900,000 Hoosiers, accounting for 13% of the state’s residents.
By most high-level economic measures, “rural Indiana performs quite well,” according to the policy institute. In rural Indiana counties:
- Median household income ($52,237) is only slightly lower than in urban/non-rural Indiana ($56,491)
- The unemployment rate (2.3%) is slightly lower than in the state as a whole (2.5%), as of May 2022
- A rural poverty rate for Black, Indigenous and other non-white families is lower than in urban areas — although the poverty rate is still twice as high as the poverty rate for white families in rural Indiana.
The report attributes much of this success to the abundant assets in rural Hoosier communities — like natural resources, a strong base of experienced manufacturing workers, and “a great quality of life,” emphasizing that “rural Hoosiers love their communities.”
Moreover, rural Hoosiers interviewed for the report expressed a strong satisfaction for the “quality of place” in their communities. More than two thirds of financially well-off rural Hoosiers reported being satisfied with the safety, schools and overall quality of their neighborhoods. More than half of financially vulnerable Hoosiers said they feel the same, according to survey results.
“This reinforces the message we heard over and over again — rural Hoosiers love their communities and want to stay there,” the report’s authors wrote.
Rural Indiana’s economy is ‘increasingly vulnerable’
But rural Indiana’s economy continues to be vulnerable to job loss and shrinking prosperity.
Manufacturing jobs are particularly at risk, largely due to increased automation. Estimates from Ball State University’s Center for Business and Economic Research and Rural Policy Research Institute shows that 11 of the 17 Indiana counties most at risk of automation are in rural Indiana. Only 4 of the 19 counties with the lowest automation risk are in rural Indiana.
As a result of that transformation, the second and third largest employment sectors in rural Indiana are now retail trade (equal to 10% of all rural jobs) and accommodations and food service (6% of rural jobs) — sectors that the Indiana Community Action Poverty Institute says are “dominated by ultra-low-wage jobs.”
“Thanks to these changes in the rural economy, hard work isn’t always enough anymore to provide people with middle class financial security,” the report notes. “To be clear, this growth in poor people didn’t happen because more rural people got lazy or stopped working, it’s the result of a massive economic transformation affecting the entire American economy that eliminated the kinds of jobs that working families depended on to earn a living and replaced them with jobs that paid significantly less.”
In other words, rural Hoosiers didn’t stop working hard, “hard work stopped paying off,” the report’s authors continued.
Manufacturing remains the largest source of jobs in rural Indiana, employing almost a third of the rural workforce. While the report’s authors say this is “good news” in the short term for rural workers, since manufacturing tends to pay better wages than jobs in other sectors, the long-term trends are “more concerning.”
That’s because manufacturing jobs have declined steadily throughout the entire state for decades, a trend that shows no sign of improvement in rural communities. This means rural workers are forced to depend on a sector that is “steadily vanishing.”
Of the rural residents surveyed, 62% of those who are low-income said that good jobs were needed “very much” in their rural community, and that without them, too many people’s lives are dominated by significant economic hardship and financial vulnerability
Just over half of respondents working full-time and 62% of respondents working part-time indicated that they wouldn’t be able to pay for an emergency expense, if one were to occur.
Other survey data revealed that:
- 58% of respondents working full-time and 63.1% working part-time do not have a savings account
- 70% of respondents working full-time and 87.9% working part-time do not have a retirement account
- 31% of those employed part-time and 36.7% employed full-time are behind on medical debt
Transportation is an additional challenge for those living in rural Indiana. One out of every three rural Hoosiers travel outside of their communities to urban centers to find work, suggesting that rural workers can’t find jobs that pay enough or that they’re qualified for within rural places, according to the report.
It also suggests that the low unemployment rates and competitive household income levels in rural counties may be due in large part to the strong job markets in the state’s urban areas, meaning urban Indiana may be propping up the economy in rural Indiana.
Making matters more complicated, the report points out that while Indiana’s urban cities have experienced robust population growth of about half a million people from 2000 to 2020, rural population has remained stagnant or, in many counties, actually declined.
“The numbers reinforce the story we heard repeatedly in interviews — many rural areas are experiencing significant ‘brain drain,’ as the next generation of rural Hoosiers leave their rural places to find better-paying work in the suburbs and cities,” the report says.
Recommendations for a more “prosperous” rural Indiana
The Indiana Community Action Poverty Institute recommends seven specific priorities for achieving what it calls “rural prosperity.”
Priority 1: Provide residents with access to reliable, affordable transportation that connects them to essential goods, services, and jobs
The institute called on policymakers in Indiana to invest in expanded transportation options for rural Hoosiers, including ridesharing approaches like carpooling or vanpooling, as well as vouchers that low-income riders can exchange for rides.
Lawmakers are additionally encouraged to enact policy that enables more electric vehicle usage, mostly through investments in public charging stations, and rebates for the sale or lease of electric vehicles.
Priority 2: Ensure all Hoosiers have access to high-quality, affordable housing
The report says policymakers can increase the supply of high-quality, affordable housing by enforcing habitability standards, increasing investments in the state’s Housing Trust Fund, providing funds for appraisal gap financing, and making regulatory changes that spur housing development or increase the appraised value of existing housing, especially manufactured homes.
Priority 3: All businesses in rural Indiana have an adequate supply of appropriately skilled workers
Despite recent efforts to get Hoosiers better educated, Indiana still lacks the skilled workforce needed to grow our economy, the report says.
Among the policy institute’s recommendations to help increase the skills or educational attainment of adults already in the workforce is a call for a pilot program that would allow Indiana to provide supportive and wrap-around services to help financially vulnerable Hoosiers attain more skills and education. The state should also put greater emphasis on increasing education and training options available to Hoosiers participating in Indiana’s Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP).
Priority 4: Rural areas fully integrate immigrant residents into their communities
Supporting immigrant participation in existing small business development programs is critical at the statewide level, according to the policy institute. Policymakers and state economic development leaders should additionally encourage local economic development strategies and systems to explicitly include immigrants.
Priority 5: — Businesses and their employees have access to high-quality and affordable broadband services in all rural communities
To boost broadband access in rural Indiana, policymakers in Indiana should consider investments that build on existing state efforts to support internet providers in providing access to fast and reliable internet services in their service areas. Indiana should also leverage federal resources to boost broadband access in rural parts of the state, and invest in nonprofits that deploy free Wi-Fi networks in low-income apartment buildings.
Priority 6: Provide workers in rural Indiana with access to good jobs with living wages
The primary recommendation is for lawmakers and local governments to raise the minimum wage for public employees and workers, although the policy institute did not give specific numbers for such increases. Policymakers can also enact family-friendly workplace policies, including those pertaining to paid family medical leave insurance programs. State lawmakers can further mandate that all private and public sector employers provide paid sick days to their employees.
Priority 7: Ensure rural Hoosier families have adequate access to high-quality and affordable childcare
Quality, affordable childcare is critical for helping Hoosiers in rural communities go to work, according to the report. Lawmakers in Indiana should increase state funding to expand access to childcare, like additional investments in On My Way Pre-K, as well as childcare subsidies for children aged 0-3. The policy institute additionally called on the state to invest in the childcare industry, including both high-quality early childhood training programs, and paying reimbursement rates that support and reward providers who pay higher wages and provide benefits.