Self-Employment a Major Rural Economic Driver
According to new national research, self-employment in rural areas has exploded in recent decades and is poised to become a major economic driver in all rural communities. Yet public policy has lagged behind the challenges that accompany this new reality.
Self-Employment in Rural America: The New Economic Reality by Stephan Goetz, shows that self-employment is becoming increasingly important in rural areas where natural resource-based economies (such as agriculture, mining, and forestry) are facing challenges and where local economies are facing globalization pressures.
These same forces are providing new and growing opportunities for small firms and entrepreneurs. However, evidence shows there are economic challenges to the new found dependence on self-employment and small businesses, and public policy is only now catching up.
Dr. Goetz’ report makes the following findings; all of these apply to non-farm businesses or workers:
- Since 1969, the number of self-employed workers in rural areas has grown by over 240 percent. By comparison, rural wage and salary workers witnessed only a 61 percent growth over the same period. This confirms the findings in our Trampled Dreams and Swept Away reports for the Midwest and Great Plains during the 1980s and 1990s.
- Highest self-employment rates are in the Midwest and Plains, with lower rates generally in the South and East.
- Despite the growth of rural self-employment, earnings for self-employment lag behind. According to the report, in recent years self-employment earnings relative to wage and salary earnings reached historic lows.
- Several individual and community factors affect both the rates of self-employment and earnings. Among the factors that positively influence both rates and earnings are: age or experience, the existence of temporary help services, the availability of daycare services, and the proximity of technical and trade schools.
Public Policy Options
These findings suggest numerous public policy options and responses; among them are:
- Inclusion of specific programs and resources in legislation such as the farm bill to assist the self-employed and small businesses. An example is the Rural Microenterprise Assistance Program contained in both the House and Senate versions of the farm bill.
- Communities should make strategic investments in support services and supporting businesses needed to promote self-employment and entrepreneurship. The Senate version of the farm bill recognizes this connection by containing a program for grants and loans for child daycare facilities in rural areas. This and the rural microenterprise program provide an excellent link that recognizes rural economic reality and the needs of many rural entrepreneurs.
- The report suggests that rural self-employed workers need better access to higher education institutions for entrepreneurship and business training. Public policy should help devise new ways and provide resources to deliver such programs and assistance.
Dr. Goetz is professor of agricultural and regional economics at Penn State University and director of the Northeast Regional Center for Rural Development. The report is at http://ruralsociology.org/pubs/RuralRealities/Volume2Issue3.html .
Contact: Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 for more information on our rural research and analysis program.
Self-Employment in Rural America: The New Economic Reality by Stephan Goetz, shows that self-employment is becoming increasingly important in rural areas where natural resource-based economies (such as agriculture, mining, and forestry) are facing challenges and where local economies are facing globalization pressures.
These same forces are providing new and growing opportunities for small firms and entrepreneurs. However, evidence shows there are economic challenges to the new found dependence on self-employment and small businesses, and public policy is only now catching up.
Dr. Goetz’ report makes the following findings; all of these apply to non-farm businesses or workers:
- Since 1969, the number of self-employed workers in rural areas has grown by over 240 percent. By comparison, rural wage and salary workers witnessed only a 61 percent growth over the same period. This confirms the findings in our Trampled Dreams and Swept Away reports for the Midwest and Great Plains during the 1980s and 1990s.
- Highest self-employment rates are in the Midwest and Plains, with lower rates generally in the South and East.
- Despite the growth of rural self-employment, earnings for self-employment lag behind. According to the report, in recent years self-employment earnings relative to wage and salary earnings reached historic lows.
- Several individual and community factors affect both the rates of self-employment and earnings. Among the factors that positively influence both rates and earnings are: age or experience, the existence of temporary help services, the availability of daycare services, and the proximity of technical and trade schools.
Public Policy Options
These findings suggest numerous public policy options and responses; among them are:
- Inclusion of specific programs and resources in legislation such as the farm bill to assist the self-employed and small businesses. An example is the Rural Microenterprise Assistance Program contained in both the House and Senate versions of the farm bill.
- Communities should make strategic investments in support services and supporting businesses needed to promote self-employment and entrepreneurship. The Senate version of the farm bill recognizes this connection by containing a program for grants and loans for child daycare facilities in rural areas. This and the rural microenterprise program provide an excellent link that recognizes rural economic reality and the needs of many rural entrepreneurs.
- The report suggests that rural self-employed workers need better access to higher education institutions for entrepreneurship and business training. Public policy should help devise new ways and provide resources to deliver such programs and assistance.
Dr. Goetz is professor of agricultural and regional economics at Penn State University and director of the Northeast Regional Center for Rural Development. The report is at http://ruralsociology.org/pubs/RuralRealities/Volume2Issue3.html .
Contact: Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 for more information on our rural research and analysis program.
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