Why the Rural South is in Economic Crisis Because of Manufacturing

The small-town South that was once heavily involved in manufacturing is in economic crisis today.

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For a brief moment in the summer of 2023, the surprise No. 1 song "Rich Men North of Richmond" focused the country's attention on a region that often gets overlooked in discussions of the U.S. economy. Although the U.S. media sometimes pays attention to the rural South β€” often concentrating on guns, religion and opioid overdoses β€” it has too often neglected the broad scope and root causes of the region's current problems.

As economic historians based in North Carolina and Tennessee, we want a fuller version of the story to be told. Various parts of the rural South are struggling, but here we want to focus on the forlorn areas that the U.S. Department of Agriculture refers to as "rural manufacturing counties" β€” places where manufacturing is, or traditionally was, the main economic activity.

You can find such counties in every Southern state, although they were historically clustered in Alabama, Georgia, North and South Carolina, and Tennessee. And they are suffering terribly.

Yes, the South is actually in crisis

First, let's back up. One might be tempted to ask: Are things really that bad? Hasn't the Sun Belt been booming? But in fact, by a range of economic indicators β€” personal income per capita and the proportion of the population living in poverty, for starters – large parts of the South, and particularly the rural South, are struggling.

Gross domestic product per capita in the region has been stuck at about 90% of the national average for decades, with average income even lower in rural areas. About 1 in 5 counties in the South is marked by "persistent poverty" β€” a poverty rate that has stayed above 20% for three decades running. Indeed, fully 80% of all persistently poor counties in the U.S. are in the South.

Persistent poverty is, of course, linked to a host of other problems. The South's rural counties are marked by low levels of educational attainment, measured both by high school and college graduation rates. Meanwhile, labor-force participation rates in the South are far lower than in the nation as a whole.

Unsurprisingly, these issues stifle economic growth.

Meanwhile, financial institutions have fled the region: The South as a whole lost 62% of its banks between 1980 and 2020, with the decline sharpest in rural areas. At the same time, local hospitals and medical facilities have been shuttering, while funding for everything from emergency services to wellness programs has been cut.

Less wealth, less health

Relatedly, the rural South is ground zero for poor health in the U.S., with life expectancy far lower than the national average. So-called "deaths of despair" such as suicides and accidental overdoses are common, and rates of obesity, diabetes, hypertension, heart disease and stroke are high – much higher than in rural areas in other parts of the U.S. and in the U.S. as a whole.

Manufacturing counties in the rural South are particularly unhealthy. Residents there die about two and a half years younger than the average American, which to demographers is a staggeringly high differential.

These things, of course, didn't happen in a vacuum. The Obama-era Affordable Care Act encouraged states to expand Medicaid coverage, but Southern states largely refused to do so. That left large portions of the low- and lower-middle-income population in the rural South uninsured. This has pushed many medical facilities in the region into a death spiral, as their business models β€” predicated on governmental insurance of one kind or another β€” became untenable.

Given all this, is it any wonder that rates of upward mobility in the rural South are among the lowest in the country? Alas, probably not β€” certainly not to residents of rural North Carolina, a state where more than half of its counties lost population between 2010 and 2020.

It wasn't always this way

Although some people think that these areas have forever been in crisis, this isn't the case. While the South's agricultural sector had fallen into long-term decline in the decades following the Civil War β€” essentially collapsing by the Great Depression β€” the onset of World War II led to an impressive economic growth spurt.

War-related jobs opening up in urban areas pulled labor out of rural areas, leading to a long-delayed push to mechanize agriculture. Workers rendered redundant by such technology came to constitute a large pool of cheap labor that industrialists seized upon to deploy in low-wage processing and assembly operations, generally in rural areas and small towns.

Such operations surged between 1945 and the early 1980s, playing a huge role in the region's economic rise. However humble they may have been, in the South β€” as in China since the late 1970s β€” the shift out of a backward agricultural sector into low-wage, low-skill manufacturing was an opportunity for significant productivity and efficiency gains.

This helped the South steadily catch up to national norms in terms of per-capita income: to 75% by 1950, 80% by the mid-1960s, over 85% by 1970, and to almost 90% by the early 1980s.

Although today the rise of the Sun Belt is often associated with, if not attributed to, climate, low housing costs and the growth of the South's booming metropolitan areas, all those rural sweatshops and humble-looking processing sheds opening up in the early postwar era mattered a lot. They elevated the living standards of countless once-desperate and impoverished farmers.

The origins of the rural crisis

By the early 1980s, however, the gains made possible by the shift out of agriculture began to play themselves out. The growth of the rural manufacturing sector slowed, and the South's convergence upon national per capita income norms stopped, remaining stuck at about 90% from then on.

Two factors were largely responsible: new technologies, which reduced the number of workers needed in manufacturing, and globalization, which greatly increased competition. This latter point became increasingly important, since the South, a low-cost manufacturing region in the U.S., is a high-cost manufacturing region when compared to, say, Mexico.

Like Mike Campbell's bankruptcy in Hemingway's "The Sun Also Rises," the rural South's collapse came gradually, then suddenly: gradually during the 1980s and 1990s, and suddenly after China's entry into the World Trade Organization in December 2001.

Between 2000 and 2010, for example, manufacturing employment in North Carolina, one of the South's leading manufacturing states, fell by about 44%. Starting a bit earlier β€” in 1998, when the Asian currency crisis squeezed Southern manufacturers β€” we find that the Tar Heel State lost 70% of its manufacturing jobs in textiles and 60% in furniture between then and 2010.

Other states in the South's "manufacturing belt," such as South Carolina and Tennessee, lost about 40% of their manufacturing jobs between 2000 and 2010. Although they have recouped some jobs since then, not one Southern state has as many manufacturing jobs as it did a generation ago. And most of the job growth in the southern manufacturing sector in recent decades has taken place in or near big cities.

The proportion of craftsmen and factory workers in the rural Southern labor force fell from 38% in 1980 to a little over 25% by 2020 β€” a trend that was particularly striking in rural manufacturing counties.

Factory jobs there increasingly gave way to low-level service-sector gigs, which generally paid less. As a result, median income per capita in rural manufacturing counties in the South has stagnated and is much lower than in rural manufacturing counties elsewhere in the U.S.

The first step is recognizing there's a problem

Those parts of the rural and small-town South that were once heavily involved in manufacturing are in economic crisis today.

One might argue that the current mess is a legacy effect of the South's historical dependence on a low-skill, low-cost growth "strategy" β€” beginning with slavery β€” that privileged short-term economic gains over patient investment in human capital and long-term development. That's a big claim about a larger, more complex story.

For now, our aim is simply to call attention to the problem. One must first acknowledge it before there can be any hope of a remedy. Until then, the inhabitants of such areas will remain feeling, as the Southern writer Linda Flowers vividly put it, "throwed away."

This article is republished from The Conversation under a Creative Commons license. Read the original article here: https://theconversation.com/poor-men-south-of-richmond-why-much-of-the-rural-south-is-in-economic-crisis-213820.


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