(Almost) Random Economic Observations from the Road

Roadtrips that stay off of the interstate highways provide a window into the current and past state of the economy — industrial and agricultural shifts, labor, market failures, and inequality. This post reflects on a set of economic observations from our most recent trip though the heartland and the northeast.

The Imprint of Economic History: The cartography of so many communities illustrates the long lines of their economic history. The physical locations of manufacturing along rivers, the placement of agricultural storage along rail lines, and more recently the construction of vast fulfilment centers at trucking and logistical nodes reveal the natural economic advantages of certain places.

The legacies of the 2009 recession and the COVID pandemic are directly observable in communities. Like the striations of geological time, communities show the historical time path of these economic shocks. Public infrastructure and parks that were started in the mid 2000s stopped suddenly with the 2009 recession and were never restarted. The obvious victims of COVID – restaurants, retail, tourist venues – are often shuttered and many will not come back. The empty shells of former large malls in many suburban and exurban areas are reminders of economic activity gone away, or in some measure replaced by online logistics. Where malls have been repurposed, it is often for health care or social service delivery, but more often they are vacant. Social scientists have a concept of economic “scarring;” and it is clearly observable in the streetscapes and economies of many communities in America.

Supply Chain: OMG. If you need parts — especially specialty van parts — on a short turn-around forget about it. Repair shops are backed up waiting for parts, and delays to get service appointments are compounded by labor shortages (see below). Grocery stores and drugs stores have whole aisles empty, even for “necessary” supplies like paper goods, COVID tests, and dairy products. On the road, you often depend on drop-ships, Amazon deliveries, or other online orders, and even from these suppliers shortages and delays of basic products are significant.

Traveling down the length of the St. Lawrence River the intricate workings of logistics and this supply chain are on display as huge cargo ships navigate through islands and shipping lanes.

The Labor Market – It is well-known that labor shortages are handcuffing so many industries, from restaurants to hospitals. Observing this from the road, it is striking how many small towns are advertising for essential workers along the roadside. Many towns have signs in front of their fire stations recruiting EMTs and ambulance drivers. Schools are openly advertising for teachers and school bus drivers. In addition to compensation, many ads are emphasizing benefits, flexibility of hours, and quality of worklife.

The Have-Nots: Many communities have dramatically lost industry or other core sources of economic activity in the last 50 years and recently, especially in rural areas. We observed dire poverty in rural, suburban, and urban areas. Whole communities are without an economic engine and have no obvious prospects for change. Housing and building stocks are rapidly deteriorating.

Seemingly lost in the public image of substandard housing and poverty are the vast number of households living in mobile homes, trailers, or “manufactured housing.” Estimates of the U.S. population living in mobile homes ranges from 5 to 7 percent, roughly 20 million residents. Approximately one-quarter of all households living in mobile homes are in poverty. Outside of mobile home “parks” many of these homes are isolated and dilapidated.

 Many communities appear to be caught in the cycle of declining public revenues, inadequate infrastructure, and the out-migration of younger residents. In their recent book, Tightrope, Nicholas Kristof and Sheryl WuDunn reflect on the persistence of Michael Harrington’s Other America more than 60 years later, and it is certainly on display across the country in rural, urban, and exurban areas. It is not a phenomenon of just Appalachia, as Harrington emphasized. Betsy and I — veterans of urban challenges on the South Side of Chicago and the North Side of St. Louis —were shocked at the conditions we observed in East Cleveland.

Community Legacy and Innovation: At the same time, a number of small cities are leveraging their natural economic advantages to grow businesses and attract in-migrants. What do Plattsburgh, New York; Paducah, Kentucky; Savannah Georgia; Omaha, Nebraska; Sandusky, Ohio; Muskegon, Michigan; and Leadville, Colorado; and Chico, California (all communities we have visited) have in common? All are relatively small, relatively economically challenged, historically significant communities with visible evidence of innovation, progress, and strategy — at least as observable from van visits and conversations with residents.

Historically, each of these communities had their days of prosperity, architecture, and culture. By virtue of geography — proximity to rivers, connection to rail or shipping, or adjacency to natural resources — these small cities developed vital economies with all of the attendant benefits of local infrastructure, housing stock, and amenities. Yet, in the past half-century they have all lost industry and suffered population decline. In several cases, these cities or regions lost military installations that were large employers in their own right but also produced a large multiplier of other economic activity.

Visiting, you can see the legacies of their previous success — beautiful large houses, legacy institutions like museums and banks, and visible references to their history (in plaques and monuments). Whatever the economic class level, there is observable pride, care, and economic progress.

The deck is stacked against many of these communities in the modern economy. In most cases they lack connection to the computer tech, fintech, healthtech, academic, and “coastal” movements of venture capital and investment that are the playbook of modern regional development.

But there is inspiration, innovation, and progress going on here. Like Deborah and James Fallows’ observations about Our Towns from their airborne visits to communities across the country, there is an amazing laboratory of experimentation and renewal in many communities and small cities.

The Health Care Industrial Complex: Across urban and rural centers, the continued march of health care expansion and competition is everywhere visible. Health care systems are consolidating and reaching out to new markets even in rural areas. The University of Vermont Health Network, for example, was visible aggressively advertising, expanding, acquiring, and otherwise dominating health care in Vermont and northern rural New York State. In addition to the established health care players, models of urgent care and specialty care are proliferating, especially in urban centers and small cities. (In Portland, Maine, we took advantage of ConvenientMD, a rapidly expanding New England company that has 26 locations, walk-in services, and an aggressive growth plan.)

But expansion of health care does not guarantee access, equity, or positive health outcomes. Driving through Cleveland, Ohio, the contrast in observable services and data for East Cleveland (where the median household income is $22,400) and the affluent suburbs west of the City was striking. In the middle was the huge and gleaming medical-industrial complex of Case Western University and the Cleveland Clinic, one of the largest assemblies of health care resources in the nation.  

Climate Migrants: We heard about our first examples of climate migration in Vermont. In addition to COVID migrants, moving from the cities and taking advantage of remote work opportunities, Upstate New York, Vermont, and Maine are all experiencing the first wave of transplants who are locating to be in cooler climates and have access to water. Many seek to be off the grid and go local for food and supplies. In Southern Vermont the migration has been so extensive that contractors for renovations and home building have waiting lists of three years or more. Resentment about the migrants is palpable – especially towards the New York and New Jersey movers known as the “flatlanders.”

Idle Capacity: By chance and design we have stopped by many colleges and universities on our roadtrip – Union College, Cazenovia College, Cornell, RPI, Bowdoin, Boston College, Colby, Wellesley College, Kent State University at Ashtabula, Case Western, Cleveland State, SUNY Plattsburg, and Paul Smith’s College. While campus summer schedules are historic and traditional — and COVID has discouraged in-person work — it is still astonishing to see how vacant and underutilized these magnificent institutions are during the summer. Some had literally no cars in the parking lots, buildings were locked up, and (other than campus tours) there were no visible signs of activity. For an economist, this amount of world-class physical capital sitting idle for, say, a quarter of the year is a head-scratcher. To make it even more concerning, in almost every case there were impressive new building construction projects underway. Hmm….