Abysmal growth rates have reduced the appetites of some direct investors for US expansion. But, for those who seek new opportunities, location assessments need to incorporate two important trends.

First, non-metropolitan areas of the US have experienced their first period of population loss. The US Department of Agriculture says this loss is unprecedented. The only exceptions include a few counties in the south-west and the fracking meccas of the northern plains. Today, about 46 million people – 15% of the US population – live in a non-metropolitan area. 

Advertisement

Also, metro areas are attracting what few new jobs there are. During the recession of 2007 to 2009, the rates of job losses were roughly parallel between rural and urban counties. Since the end of 2009, while US job growth has been weak, it has at least averaged a rise of 1.5% annually, but all of this growth has come in metropolitan areas. In non-metropolitan regions, job growth has been near zero.

To stem the tide, some rural areas are recruiting investments. They tout a strong work ethic and low costs; some are in states offering generous incentives. The risk of course is what happens if a third or fourth new employer is similarly lured. Will the population exodus be reversed? Will yesterday’s tolerance for long commutes be challenged if tomorrow brings higher gas prices (manageable) or by changes in work/life expectations (more difficult)?

The US Federal Reserve suggests job growth will improve in 2014. Recent research (Dr Enrico Morretti at the University of California, Berkeley) argues the new brainpower jobs have a multiplier effect, with each creating five ‘support’ positions. These assertions point to eventual opportunities for all, but especially for those on the right end of the bell curve and living in or moving to where these jobs will be created. Some may see this as a retreat to trickle-down economics. But many metro areas are joining the contest for brainpower jobs and the job multiplier effect.

Daniel Malachuk works with business and government leaders on global direct investment strategies.He has advised many of the world's leading companies and served in the US public sector as director of White House operations. E-mail: daniel.malachuk@gmail.com