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Local Economies Strengthen During COVID-19 Recovery

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By David Hamilton
October 1, 2021

We didn’t know what to expect. After spending most of 2020 and half of 2021 within relative self-isolation we decided it was time to experience the open roads of America once again. Dire predictions clouded our expectations as we prepared for our drive through the heartland of America. We welcomed the respite and an opportunity to re-experience our nation at the local level. Our travels would take us through Minnesota, Wisconsin, Illinois, Kentucky, Tennessee, Alabama and Florida.

Our first impressions were startling. Within all of the cities we encountered, the local economies appeared vibrant and robust. Our eyes were first opened in Duluth, Minnesota where several large construction cranes lined the downtown harbor front, actively engaged in constructing new condominiums. In Eau Claire, Wisconsin, our hotel parking lot was packed with worker trucks and trailers, some from as far away as Texas. As our journey continued southward a similar theme continued within places such as Mount Vernon, Illinois and Hartselle, Alabama, all connected to the interstate filled with freight trucks hauling loads from around the nation. Throughout our journey, empirical observation contrasted with earlier predictions of doom and gloom, including our own. The enlightening experience reinforced the resilience of our nation based on local economies and entrepreneurial vitality. America was back!

Many of the recommendations made at the start of the pandemic seemed to have been applied quickly at the local level. In 2019, writing in restoreyoureconomy.org, Richard Florida and Steven Pedigo offered a ten point plan based on conversations with, “City leaders, healthcare officials and economic developers across the country.” Their themes included recommendations such as, “Prepare for remote work, ensure that main street survives and protect the arts and creative economy.” But while these and other strategies appear to have had a positive effect, others warned of uneven recoveries within sectors of the economy and within different localities.

Writing for the Brookings Institute in March of 2021, Mark Muro and Yang You predicted that, “In some cities, the pandemic’s economic pain may continue for a decade.” First by sector, they presented a 10 year scenario based on Bureau of Labor Statistics that projected patterns of moderate to strong impact on employment. Within 20 economic categories, only two were shown to experience positive impacts. How realistic these predictions turn out to be are subject to ongoing debate and how these national trends will affect localities will vary by city, county and region. But still, their overall concern was clear— caution should modify optimism; employment growth in every sector should not be assumed.

The same article presented a map showing regional change projections applying the Bureau of Labor projections. Significant negative impacts on employment were predicted within the South East and Southwest parts of the nation. Once again, unevenness at the local and regional level was suggested. As the recovery from the impacts of COVID-19 continues, cities and counties within these areas will need to consider their long-term economic viability and develop realistic strategies that help their localities to adapt to change.

But aside from predictions and projections, it is apparent that the current economy has rebounded with unemployment numbers dramatically decreasing in localities throughout the nation. The resurgent economic vibrancy is validated by the latest bls.gov statistics found in Table 1, Civilian labor force and unemployment by state and metropolitan area. Examples include the cities we traveled through where the unemployed percent of labor force in Duluth, Minnesota, has dropped from 8.9 in July 2020 to 3.8 in July 2021. Eau Claire, Wisconsin, during the same time period dropped from 6.8 to 3.5. Mount Vernon, located within the Carbondale-Marion region, fell from 10.7 to 5.6 while Hartselle, Alabama, within the greater Huntsville area, dropped from 6.0 to 2.5. Thus, what we casually observed during our travels was statistically verified.

In retrospect, this dramatic economic recovery should not be surprising. America has always been a nation of achievers, especially for those that rise to the middle class. This has traditionally been the creators and operators of small businesses within each locality throughout the nation. According to smallbiztrends.com there are 31.7 million small businesses in America and the number continues to grow. As NPR.org confirmed, “People started over 440 thousand small businesses in June 2021. The sixteen month period from March 2020 to June 2021 marks a record high for business startups.” Although the pandemic created great obstacles to starting and maintaining small businesses, there appears to have been a minimal impact on their viability as they quickly adapted to significantly changing circumstances. In particular, it was women who led the way in starting new businesses, as confirmed by prnewswire.com. “Women were more than twice as likely to start a business during 2020 as men, which is noteworthy in a year when new business applications reached an all-time high of 4.35 million according to Census.gov.”

But observations, employment numbers and small business statistics only tell part of the story of the long-term implications for the middle class. Between the raw data lie a host of unanswered questions to be addressed in future articles.

Author: Dr. David Hamilton is a strategic leader experienced in managing county and city governments. He holds a Doctorate in Public Administration degree from Hamline University focused on the administrative challenges created by rapid-growth in Edge Counties and metropolitan areas. He heads his own consulting firm guiding governments and organizations in community visioning, strategic planning and capacity building and serves on the Executive Council of the Suncoast Chapter of ASPA, based in the Tampa Bay region of Florida. Contact: [email protected]

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