Related Links

• Barkin's profile, speeches, and travels #AroundOurDistrict
• Rural America Week
• Rural Spotlight series

Transcript

Jessie Romero: Hi, I'm Jessie Romero, director of research publications at the Richmond Fed. Thanks for listening to "Speaking of the Economy." You can find us and subscribe in all your favorite podcast platforms. And, if you like what you hear, please leave a review and tell your friends about us. You'll find links to the research we talk about during each episode on the show pages.

Today, it's my honor to be joined by Tom Barkin, president of the Richmond Fed. Since coming to Richmond, Tom has made it a priority to be on the ground — both literally and, more recently, virtually — in communities throughout the Richmond Fed's [Fifth] District, learning from the people who live and work here. He's been especially attuned to the challenges and opportunities facing rural communities and smaller towns, which will be the subject of our conversation today.

I'll note that we're recording on January 11, before the start of a quiet period when Federal Reserve officials refrain from public commentary leading up to monetary policy discussions. I'll also note that the views and opinions President Barkin expresses today are his own and not necessarily shared by his colleagues on the Federal Open Market Committee.

But with all that out of the way, Tom, thank you so much for being here.

Tom Barkin: Glad to do that.

Romero: Let me start with a basic question some people might have. You're a monetary policy maker, so why do you care about what's happening in rural areas?

Barkin: Well, I'm not a small-town guy by birth. I grew up in Tampa and lived 30 years in Atlanta before moving to Richmond. But when I took this job I said, let's look at our mandate, which includes maximum employment. And I said, where in the district are we succeeding and where we succeeding less in terms of maximum employment?

The thing that just screamed from the data is that the small towns in our District have 10 points worse labor market performance than the bigger cities, and by labor market performance [I mean] the percent of people employed. That was a pretty significant gap it seemed to me. And so, I started to research it. I spoke about it.

I was struck when I started speaking about it, frankly, by how emotional the response was in the audiences that I was speaking to. I think the market felt that nobody was paying attention to the smaller town. It felt like a place that had been under-thought, it felt like a place where our Bank had a natural position and a place I really wanted to invest more [time in] to learn [about] and share [that] knowledge.

Romero: You mentioned that there are these issues that just become so apparent when you look at the data. In addition to employment outcomes that you mentioned, we also see lower educational attainment, worse health outcomes, a whole host of interrelated things. Why do we see these kinds of issues in smaller towns and rural communities?

Barkin: Well, there's some systemic challenges that are just obvious when you start thinking about small towns.

You're more isolated. You're further away from jobs, potentially. You're further away from role models. You're further away, sometimes, from quality transportation or childcare. These are all issues that inhibit people getting connected to the workforce.

There's also a big difference in educational outcomes, as I think you mentioned. If you've got lower educational outcomes, it's harder to find a job.

All of these have been exacerbated by COVID — if you're isolated physically, if you're trying to do stuff virtually [and] you don't have broadband and the ability to connect, which a lot of these smaller towns don't have. I'll just say there's something fundamental about the dynamic of a more isolated, smaller place that makes it harder to achieve some of the stuff you want to do in the labor market.

Maybe this is a plug, but we do a conference every year on rural America. We're doing our next one on March 30. For those who are interested, we'll be talking a lot more about the challenges, but more importantly, how we might actually get on to address some of them. For people who are interested, I'd recommend that.

Romero: Great. Well, thank you. Yeah, folks can register via our website beginning the first week of February.

You mentioned that at that conference, we're not just going to be talking about the challenges but also talking about what people can do. Obviously, there isn't an easy solution, right, or people would have done it already. But what are some of the things we'll be talking about? What can communities do to try to turn things around?

Barkin: One of the things I try to do is, in every FOMC cycle, I try to go to some set of smaller towns and dig into what's working, what's not working and what people need. A few of the things I reflect on having been to now dozens of them — towns really need a story.

There was this whole story that we put out at the beginning of COVID that everyone would leave the bigger cities and go to the smaller towns, but the truth is smaller towns are competing with one another. If you're a beach town or a college town, that's easy. But if you're not one of those places, what is the reason people are going to go there?

I think [of] this notion of a sense of place, whether it be history or a town square or the natural environment, the scenery, an art scene, festivals. You see a lot of investments made in a sense of place. I grew up in Tampa [and] most everybody I grew up with stayed in Tampa because we all told each other our whole lives, "Why would you ever leave a place with this good weather and this beach?" You almost have to think about it that way. What do your kids say if you're in a smaller town? Why would you stay? And I think those investments are really important. So, a sense of place.

The second thing is working regionally. No one place in a small community is going to have everything. But I think, frankly, jurisdictionally most people think they've got to put everything in just one place. So, thinking about these guys have an airport, we've got a hospital, this is where the banking center is, here's the shopping, here's where the housing is. Trying to think across the region is really important and, also, really difficult for people to do, as I said, because of these jurisdictional things.

And then, obviously, you need funding. But I think what's interesting is the folks who are making this work are pretty scrappy in terms of getting the funding, whether that be from government sources, from philanthropic sources. I've seen several people who sell their hospital system and use the money to create a foundation. Whatever it is, there's a determination, a creativity I think that sets people apart.

So you gotta have a sense of place, you got to work regionally, and I think you just got to be scrappy.

Romero: Folks who would like to learn more about what you're calling scrappiness can check out our Rural Spotlight series on our website, which highlights some of the communities in our District that have really had some great success stories.

You mentioned funding. The pandemic has spurred a huge amount of government spending and investment. We've got money out there for broadband education, childcare, agriculture, infrastructure, to name just a few things. Is there enough money out there now to really solve some of these problems for good?

Barkin: Well, I think this is really a unique moment.

Let's just talk about broadband for a second. We've done some analysis of how much money it would take to provide broadband everywhere in the country. I think you could fairly argue that there is now enough money allocated to get broadband everywhere.

But the issue isn't now the funding, it's the deployment. It is really hard to get money that has been funded deployed in all the ways that it has to happen. Small towns, in particular, really struggled to get access to the money that's been passed. I should say there's been so much stimulus passed that would fund things that are critical to small towns. The infrastructure bill, [for example] there's so many things in there that could have impact.

But the challenge is it's complicated. These grant applications are not easy. The requirements are not easy. It takes money to get money. A lot of them have matched funding requirements that smaller towns struggle to get to. There's a bias toward experience — no one wants to allocate money to someone who doesn't know how to deploy it [and] who's going to fail. So, having institutions that have track records [and] that are credible — local capacity that is credible, that has some funding, that has grant writing capabilities, they can get access to the money and get it deployed in a good way — that's really critical.

A great example just to reflect on is the rental assistance that was in the original CARES Act, tons and tons of money for renters who are struggling to meet their payments. It was brutal to get that money deployed because cities around the country just didn't have the capacity to structure the model to get it deployed.

I think the good news is we're not arguing about funding anymore. That's great news. But we are now in a situation where the funding is out there, but people are going to have to — I'll use "scrappy" again — get scrappy to get access to that, which is the potential for the markets. If they can, I think this is really a unique opportunity for smaller towns.

Romero: Well, yes, it definitely is a unique and exciting moment, and it's one that we'll be talking about a lot more in March.

Thank you so much for being here. I'm very excited to learn more at the conference and beyond.

Barkin: Thanks, Jessie.