CORONAVIRUS

Rural pockets less vulnerable to economic fallout

Iowa and some predominantly rural states seeing fewer coronavirus cases

A normally busy Main Street in Rockton, in northern Illinois, is deserted as the small businesses that line the business
A normally busy Main Street in Rockton, in northern Illinois, is deserted as the small businesses that line the business district remain closed after the governor instituted a shelter-at-home order. (Getty Images/TNS)

Every part of the country will feel the economic fallout from the coronavirus crisis.

But the small and isolated rural areas that lagged during the economic boom may fare better, relatively speaking, in the aftermath of the pandemic.

Those places tend to be less tied to global and financial markets. With little population density, they are less conducive to virus transmission.

So far, states such as Iowa as well as Wyoming, the Dakotas and Nebraska have reported far fewer COVID-19 cases than New York and other states with large cities.

“If you are a somewhat more isolated economy that does not attract as much visitation from either outside the U.S. or even domestically, you are less vulnerable,” said Adam Kamins, an economist and director at Moody’s Analytics, in a webinar last month.

The states least affected by the huge spike in unemployment claims are largely rural. Those include West Virginia, Arkansas and Georgia.

In part, that’s because those states have taken less dramatic steps to slow the spread of the virus. Among them, only West Virginia issued a stay-at-home order before the end of March.

Nevertheless, “the industries that have been hard hit are just not as prevalent in rural areas,” said Ernie Goss, economics professor at Creighton University in Omaha, Neb. He cited the relative lack of retail and hospitality businesses in Corn Belt states. (Read more about Goss’s and other economists’ views on how the pandemic is affecting Iowa and the Midwest in this Sunday’s Business 380 section.)

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Economists rank regions as economically vulnerable to coronavirus fallout based on demographic and economic factors, including their number of COVID-19 cases, connection to international travelers, reliance on tourism, population density and reliance on global trade, according to a Moody’s Analytics analysis.

Relatively smaller metropolitan areas in the South and Midwest, such as Birmingham, Ala., Memphis, Indianapolis and Columbus, Ohio, will experience a low average impact relative to the very largest U.S. cities, Kamins said, such as New York City.

But the slower pace of the outbreak in rural areas may be breeding complacency. Rural residents consider the coronavirus to be less of a threat to community life than urban people do, according to a survey conducted by the Pew Research Center’s Election News Pathways project. The Pew Charitable Trusts funds the research center and Stateline.

Some people in rural areas reportedly are taking protective measures, such as social distancing, less seriously. Rural places have a higher share of seniors and a shortage of hospitals and doctors.

Non-metropolitan counties are reporting a growing number of cases as testing ramps up, and the pandemic may just hit rural America later.

“As with the Great Recession, the economic impact could be delayed in rural areas,” said Shannon Monnat, director of the Lerner Center for Public Health Promotion at Syracuse University.

“Rural areas recovered more slowly and some never recovered at all.”

Monnat said it’s important to consider whether a rural area is reliant on one industry whose closure would have devastating effects. She also highlighted the significance of local commuting patterns.

“The state is the bottom line here because if people feel they can travel all over the state the virus can spread really quickly,” said Monnat, a rural demographer and sociologist.

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Once strict mitigation strategies such as social distancing are put in place, rural economies may even be more economically vulnerable because fewer people have jobs that allow them to telework, said Angela Rachidi, who studies poverty at the American Enterprise Institute, a right-leaning think tank in Washington, D.C.

Rural residents who live far from metropolitan areas also tend to have lower incomes, Rachidi said.

“The mitigation strategies might have more of an effect on them even if the spread of the disease makes them less vulnerable,” Rachidi said.

Furthermore, rural places with commodity-based economies, such as oil or agriculture, will be buffeted by a global slump.

“Having international trade be disrupted is going to have a bigger impact on them than the contagion itself because of the way they’re located,” said Doug Farquhar, a former rural development expert at the National Conference of State Legislatures.

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Support our coverage

Our most important Coronavirus coverage is free to the public.

If you believe local news is essential, especially during this crisis, please donate. Your contribution will support news resources to cover the impact of the pandemic on our local communities.

All donations are tax-deductible.