Challenges in the Rural Economy

In its 2018 report to the Governor and General Assembly, the Illinois Institute for Rural Affairs addressed two central themes that are shaping rural Illinois: population decline and the need for a diversified economy. These issues are not isolated, but well intertwined: “the more economically diversified a rural economy is, the more likely it is to have retained its population, or at least slowed decline,” the report states. Both must be addressed by policymakers to ensure future prosperity.

Rural Outmigration 
The number of people living in rural Illinois declined by over 150,000 between 1980 and 2010, according to the report. The implications of this long-term trend include “a declining workforce, a smaller economy and a shrinking tax base”—which threatens the quality of life for those who remain. 

Perhaps most vexing is the dramatic loss of young people. In Illinois, the population under 20 years of age is the fastest-declining cohort of all—and it’s shrinking most quickly in rural areas. Therefore, retaining and recruiting young people must be an emphasis. The report suggests that policymakers encourage entrepreneurship among young people: either starting new businesses or taking over established businesses as current owners retire. But this strategy alone, it adds, is unlikely to halt population decline. Additional funding for higher education would help, but the university pension burden makes this strategy challenging.

Economic Diversification
The rural economy still has not recovered from the Great Recession, while the two-year state budget impasse disproportionately impacted rural communities. While studies predict 58,000 job openings over the next five years in ag-related fields, only 35,000 individuals are being trained to fill those jobs.

While agriculture plays a central economic role, rural communities also need jobs in manufacturing, retail, education, healthcare and other sectors in order to thrive, the report stresses. “Many farmers and their families depend on the rural non-farm economy for off-farm employment. These jobs often provide health insurance, retirement benefits and income when commodity prices drop. In short, the rural non-farm economy sustains the farm sector.” 

Rural tourism should also receive more support, the report suggests, citing the Route 66 Program as “a good example of using a local attraction to attract people from all over the world.” 

Reliance on Small Business
According to the U.S. Small Business Administration, the more rural the community, the more it relies on small business for jobs. But just as the average age of the general population is increasing, so is the average age of business owners. If they do not find successors, those businesses may close down, laying off employees and creating additional vacant storefronts. The report suggests that linking business succession planning to youth entrepreneurship could provide a strategy for youth retention, bolstered by high school and college entrepreneurship training.

Working groups have been formed under the Governor’s Rural Affairs Council to  address these issues, but success will require active involvement and collaboration among various governmental agencies. iBi

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