SEIZING HIGH-SKILL SERVICES IN RURAL AMERICA

Rural America is becoming more service oriented with advances in technology and increasing recreational demand. Coupled with a shrinking manufacturing base, service-producing industries are emerging as the cornerstone of many rural communities. Despite the trends, many rural communities are struggling to capture high-skilled high-wage service jobs.

Jason Henderson, an economist at the Center for the Study of Rural America at the Federal Reserve Bank of Kansas City, examines the issue of high-skilled service jobs in the August edition of The Main Street Economist. The Main Street is published by the Center, which is based at the Federal Reserve Bank of Kansas City.

Service-producing industries now account for the large share of rural jobs and earnings and continue to pace rural job growth. Despite the rise in service industries, rural areas continue to lag behind their metropolitan counterparts in capturing the high-skill high-wage jobs. During the 1990s, rural earnings from service-producing industries rose 3.5 percent per year, but still trailed growth in metro areas.

Although rural areas may have recreational and consumer services, Henderson notes that rural areas often lack high-skilled and high-paying producer services, such as communications, financial, insurance and business activities that are located in urban areas.

Rural communities with scenic and quality of life amenities have been able to leverage those features, in some cases, to attract these high-paying producer services. But that is not possible for all communities. In some areas without mountains or other scenic amenities, Henderson writes that efforts are now focused on improving the skills of the local labor force. Henderson notes that in many instances, community colleges and regional universities are the primary catalysts for improving labor force skills and moving rural businesses up the technology ladder.

This article is available on the Bank’s Web site at www.kansascityfed.org.

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