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Adding colour to greying US workers

Published on Friday, 03 Jan 2014
Photo: Bloomberg

Paul Eurek left his rural home in the US state of Nebraska after college for a career in technology. Now he’s creating software jobs in small towns so future Midwesterners don’t face the same choice.

Among his targets are “the best and the brightest, the youngest, the ones who have the acumen for technology”, said Eurek, 53, who moved back to Nebraska in 2007 after opening his first rural office there. “We’re offering students an opportunity to stay here.”

His Atlanta, Georgia-based company, Xpanxion, now has five centres in the states of Nebraska, Iowa and Kansas which employ 165 of its 500 employees. It is pairing with the University of Nebraska to expand the rural model, while creating a roadmap for other companies, such as engineering and accounting firms. The project is researching best practices for so-called “rural sourcing” and will match state university alumni with companies that are looking for skilled employees to fill job openings in small towns.

The project is one instance of a push for youth that’s rippling through America’s heartland and northeast. Decades of out-migration have left farming and manufacturing communities with fast-ageing populations and depleted talent pipelines, spurring efforts to lure new workers. From offering student-loan repayments in Kansas to selling houses for as little as US$3,000 in Niagara Falls, New York, shrinking and ageing communities are trying to secure a future workforce.

“They get caught in a downward spiral, because businesses move away because there aren’t enough people,” said Mark Mather, who studies US demographics at the Population Reference Bureau, a Washington-based non-profit. “In the long term, you’re talking about economic decline.”

America is ageing in patches. The nine-state northeast has the nation’s highest share of people older than 65, US Census data shows, after decades of people moving to the southern Sun Belt region.

Nationwide, counties outside of metropolitan areas lost 44,000 people between April 2010 and July 2012, according to a 2013 Department of Agriculture analysis. It is the first net decline for the areas that cover about 72 per cent of America’s land area and have about 15 per cent of its residents.

Rural states, including Nebraska and former manufacturing towns such as Niagara Falls, are trying to turn the tide. In Niagara Falls, which borders the national park that is home to the waterfalls straddling the US-Canada border, the population dropped to 50,000 people as of July 2011 from more than 102,000 in 1960, according to Census data and estimates. New student-loan repayment and house-auction programmes are aimed at reversing the outflow.

Led by community development director Seth Piccirillo, 31, the town is trying a programme that reimburses college graduates US$7,000 in student loans over two years for residing in town. This is available to both new residents and natives who choose to stay.

The first seven recipients were selected in April, Piccirillo said, and the programme is budgeted to expand to 20 recipients within two years. The town also began auctioning vacant, city-owned houses – in some cases for less than US$3,000, starting with the first three this September.

“We are trying to find any way to make living here, staying here, and buying and renovating a home as financially feasible as possible,” Piccirillo said. “As the baby boom generation gets older, we need more people to be the next generation of families, and employees and business owners.”

Niagara Falls’ loan programme is similar to one in Kansas, which faces a declining population in rural counties. Kansas is courting out-of-staters and city dwellers with student loan reimbursements of up to US$15,000 and income tax breaks.

Kansas recipients must move to counties dubbed “rural opportunity zones,” which have shrinking or stagnant populations. Full state income-tax credits are available in 73 of the state’s 105 counties, and last up to five years. In 64 counties – up from 44 last year – new entrants can receive student-loan payment reimbursements if they hold associate’s, bachelor’s or post-graduate degrees, said programme manager Chris Harris.

Patrick Patterson and his wife, Amber, both 25, said that they thought that student loan debt would prevent them from returning to small-town Kansas after they graduated from Fort Hays State University in Hays, Kansas in May 2012.

“The income you get in urban areas is higher,” Patrick Patterson said. “We didn’t think that we were able to take the pay cut to move back.”

The Kansas programme gave them the boost needed to make Phillipsburg, where both grew up, their home, he said. He now works at a credit union and his wife is training to be a pharmacy technician. The town is good for the couple’s two young children, he said.

“When it comes to day care, that is cheaper, and we know a lot of people around the town if we need a babysitter,” he said. “You’re more comfortable.”

Vying for young workers makes economic sense, because population gains can create a virtuous cycle. Businesses want to set up shop where workers and consumers are plentiful, and as they create jobs, talented workers migrate in.

“It’s difficult to recruit firms if you don’t have a strong labour market,” said John Cromartie, a geographer from the US Department of Agriculture. “Stores can no longer stay open. You lose your department stores, you lose your movie theatres. It’s difficult for retail.”

The reverse is also true. It could be difficult to attract skilled residents without vibrant economies, said Richard Florida, a professor at the University of Toronto’s Rotman School of Management who studies talent migration.

“People want to be in a place with a strong or thick labour market and a strong friendship or mating market,” Florida said, adding that efforts to emphasise cheap housing are probably ineffective. “It has to be a great life, not just a low cost of living.”

If states and municipalities fail to attract workers, it may be a struggle to provide services for people “ageing in place”, Mather said. Infrastructure goes unused with a smaller population. Ageing populations also reduce state government revenue, because people tend to earn and spend less when they retire.

Research from the Federal Reserve Bank of Kansas City released in December found that an ageing US population could reduce income tax revenue per capita by 2.4 per cent across all 50 states and the District of Columbia by 2030 compared with 2011, holding constant other elements such as income growth.

Eurek, the Xpanxion chief in Nebraska, says that while his rural sourcing model can’t turn back the clock on an ageing population, it can open a door for talented people to stay – people like Wallace Harwood.

Harwood, 34, has lived in Kearney, Nebraska, since high school. He liked that his wife is near generations of family and that his kids can safely ride bikes in front of the house. Yet he considered moving away to advance professionally.

That changed in April 2012, when he landed an automation engineer job at Xpanxion. “It completely changed the game for me,” Harwood said. “I’m bringing in a good salary, without the two-hour commute, and with all of the benefits that you get from rural Nebraska.” Bloomberg

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