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• Center for Rural Economies

Transcript

Tim Sablik: My guest today is Daniel Davis, group vice president for regional economics at the Richmond Fed. Daniel, welcome to the show.

Daniel Davis: Thanks, Tim. It's a pleasure to spend some time with you today.

Sablik: Our topic for today is the recent launch of the Richmond Fed's Center for Rural Economies. But before we get into the details of all of that, I'd like to start with the Richmond Fed's interest in understanding small towns and rural places. Why is this a key focus for our Bank's research and engagement? It's a question we've addressed on the show before, but since you lead many of the groups at the Bank managing this work, I'd love to get your thoughts on it.

Davis: That's an important question, Tim.

Many of the listeners here are likely aware the Richmond Fed's district covers the Carolinas, Maryland, Virginia, [most of] West Virginia, and Washington, D.C. When we lean in and look at the composition of the counties across these states, more than two-thirds of the counties in this region are classified as nonmetro counties, meaning they are not associated with a larger metropolitan area. This kind of geography is what we think about when we at the Richmond Fed are having conversations about rural economies overall.

We take our mission to advance communities and the economy seriously. As a result, several years ago the Bank, under the leadership of our President Tom Barkin, launched a small town and rural initiative to uplift the economies of nonmetro places.

We're looking to understand and help others understand how the economy ticks in smaller towns, cities, and even the unincorporated areas. We work to bring folks together to foster collaboration and advance shared learning, and we regularly gather on-the-ground insights that inform our view of what's happening in the economy and how shifts in employment and the pricing of things in small towns and rural places impact the overall economic well-being of those communities.

Our focus on rural connects back to the very things we're trusted and expected to do as a regional Reserve Bank. Our aim is to be responsive to the geography we serve, which in this region includes a lot of ground defined as rural.

Sablik: You mentioned that this initiative by the Richmond Fed to better understand rural challenges and identify potential solutions has been going on for a while now. How has it evolved over time?

Davis: If you jump in a time machine and go back to around the time the Richmond Fed launched its small town and rural initiative, and perhaps even slightly earlier, you'll find the Richmond Fed has spent a considerable amount of time studying the various barriers to employment that rural communities face. Among employment barriers, rural areas contend with both skills-based barriers, including education and training, and non-skills barriers, including personal barriers like health or child care as well as infrastructure barriers like broadband and transportation.

Employment is an important ingredient for moving a rural place forward. In our early analysis, it was pretty clear pretty quickly that things like educational attainment, proximity to jobs, and overcoming obstacles to labor force participation were important for advancing worker productivity in rural places, which would contribute to economic growth since that growth is dependent on how many people are working and how productive they are.

In rural spaces where slow population growth and slow productivity growth often intersect, it's important to capitalize on opportunities to bring working-age folks off the sideline into the labor market, while also preparing youth and young adults for career and education pathways that help them into sustainable employment and the quality of life they desire. To that end, the Richmond Fed launched a survey effort with community colleges to better understand how they are meeting their intended targets for success, since these institutions tend to be a vital energy source for developing workforce pipelines. This has evolved to the collection of data from community colleges across our entire footprint, and that data is helping us understand how these anchor institutions, these community colleges, are equipping workers.

We continue to look for other ways to understand how local dynamics are influencing the preparation of individuals for labor market outcomes in small towns and rural places.

One more thing I want to mention, Tim, is that since our early days of the small town and rural initiative, the Richmond Fed has also worked to understand investment barriers in small towns and rural places. The barriers include both supply-side issues, such as fewer sources of capital and lack of coordination, and demand-side ones, such as limited staff capacity to develop investment-ready community and economic development projects.

The Richmond Fed's team found that if a community was ready for investment and funders were ready to invest in rural places, well, so-called magic could happen. That's why the Richmond Fed launched the Rural Investment Collaborative to improve economic investment in small towns and rural communities and, through that, collaborates with rural hubs and funding sources to help communities develop project proposals and make access to funding easier.

Over the last two years, the Richmond Fed has graduated over 40 community leaders through its Rural Investment Collaborative, with graduates spanning our region from Appalachia to Maryland's Eastern Shore. That work continues and a new cohort of community leaders will join the Rural Investment Collaborative in just a few months.

Sablik: You're the inaugural director of the Center for Rural Economies that the Richmond Fed just launched. Why is the Bank launching this center?

Davis: In the same way that we've been working to understand what is happening across rural geographies around our region, we've also been paying attention to economic dynamics across rural America as a whole. I mentioned earlier that over two-thirds of the counties in the geography that the Richmond Fed covers has a nonmetro status. Across the U.S., that percentage is a little smaller but still significant, with just under half of the counties classified as nonmetro. Some of these counties fall into areas where communities have achieved economic resilience by fully leveraging their community assets and investing into their future. And some of these are areas where demographic and industry shifts have contributed to decades of out-migration of the population and economic decline.

The Richmond Fed has a vision for strong and resilient small towns and rural communities that create lasting opportunities for employment and economic growth. We're dedicated to advancing economic opportunity and resilience in rural communities across the Fifth District and beyond.

The launch of the Center for Rural Economies reflects our deep commitment to understanding and supporting the communities that form the backbone of our region. Through data-driven research, collaborative programs, and strategic partnerships, the Richmond Fed is aiming to help rural leaders and organizations build stronger, more resilient futures.

Sablik: On that topic of strategic partnerships, how is the Richmond Fed collaborating with other organizations to expand our understanding of rural issues?

Davis: There are many brilliant, smart individuals working to advance rural economies in this region and around the country. Recently, Brent Orrell from the American Enterprise Institute and Tony Pipa from the Brookings Institution joined me for a conversation in our Investing in Rural America webinar series to share insights from a bipartisan commission they lead together focused on rural prosperity. Next up on the webinar series, David Lipsetz and Lance George from the Housing Assistance Council will join me to talk about how rural housing challenges and opportunities are being met. A goal of this webinar series is to bring top-notch thinking to rural leaders, without asking rural leaders themselves to step away from the diligent work they're doing on the ground to lead their communities.

We also have a clear goal to expand understanding and elevate what is working in small town and rural economies to respond to local and national dynamics and to pave a path towards the future. ... A number of the Federal Reserve Banks, in fact, are prioritizing work in rural places and collaborating together to advance a stronger understanding of the barriers to and opportunities for rural economic growth.

Among a number of projects we're pursuing together, several of the Reserve Banks have plans to partner with us on an in-person annual conference, the Investing in Rural America Conference, in 2026. Tim, that's going to mark the seventh consecutive conference that we've held to date. We're thrilled to have the thought partnership of these other Reserve Banks in bringing to the forefront promising strategies for building momentum in rural places from across the country.

Sablik: Based on our research and these conversations with rural community leaders that we've been having, what would you say are the key challenges facing rural places and small towns in our district today?

Davis: A number of communities are expressing concern about the future, Tim, and this plays out in two key ways. On one hand, it's connected to population loss. On the other, it's the loss of jobs. Anecdotally, it usually starts with stories about a grandkid or a neighbor kid who has had to pick up and move to another place, often one more populated, to find opportunity.

The data doesn't disagree that this is happening. Recent analysis from the Richmond Fed shows that more than 85 percent of the counties in our region that have experienced population loss for three decades or more are rural. As workers or potential workers depart, we hear rural community members say that employers, which are struggling to find workers, may not be far behind.

Our conversations, as well as our analysis, point to key barriers such as lack of training for jobs, lack of child care, fewer transportation options, and a limited supply of affordable housing. These are real challenges. These tend to be pressing issues in any underserved place, including urban ones, but the gaps can be more widespread in rural communities.

We hear the leaders of these places making tough decisions about how to propel their communities forward. They're asking questions like, "How does my small town balance these challenges? How do we mitigate population loss? How do we harness jobs and opportunity?"

Sablik: Have we identified any answers to those questions, those challenges?

Davis: Well, the communities having the most success tend to develop their own recipe, one that's marked by playing to their individual community strengths and tailoring solutions to meet their needs. This is often called an asset-based development approach. I will often say to community leaders, that if they're looking around and identifying assets and they've forgotten to note the very people living in their community as an asset, then they've missed the boat.

This is especially important when we think about the young people in our communities as the present and the future. The Richmond Fed recently launched a program called Invest in What's Next, and the intent of Investing in What's Next is to prepare youth and young adults with an understanding of the career and education pathways towards the future they desire for themselves. It's a beneficial resource for the individual's future, but it's also a beneficial one for the community.

We've learned a few other lessons alongside our rural communities over the years of what seems to be necessary for success. In addition to playing to community strengths and tailoring solutions, that includes supporting and fostering local leadership, taking a long-term view and working for the long haul, and embracing regional collaboration. At the Richmond Fed, we've mapped examples of communities and organizations deploying these interesting or promising strategies that they tell us they're excited about, and we share those as Rural Spotlights to help communities ideate about how to bolster their community's success.

Sablik: What are the next steps for the Center for Rural Economies? What questions or topics do you hope to dive deeper into?

Davis: We're just now developing our research agenda for the center. We're very interested in workforce pathways and how to build those pipelines for workforce development throughout rural areas, responding to a dynamic economy in which the skills necessary for employment in the future may look different than they do today in rural places, and giving individuals the tools they need to be successful and to move up the income ladder in pursuit of economic mobility. We're also curious about small business and its role in driving growth and employment in small towns and rural communities.

Tim, rural America is a big, broad place. It's going to take a lot of us working alongside and learning together to position rural economies for the future.

Sablik: Daniel, thank you so much for being here today to share all about rural and all the work that we're doing.