Inclusive Economy | July 9, 2024

Left-behind communities ride bipartisan policies, if not politics, to prosper at last

Dennis Price
ImpactAlpha Editor

Dennis Price

Many of the angry rural voters powering a populist revolt did pretty well under a US administration they often openly loathe.

So-called “left behind” communities, marked by decades of lagging population and income growth, just notched their “strongest three-year period of job creation and business growth since the turn of the 21st century,” according to the bipartisan policy incubator Economic Innovation Group.

The impetus: The early and aggressive response to the economic disruption of COVID-19, marshaled over two US administrations. The bold and broad stimulus programs were a departure from responses to past recessions, which saw industry specific bailouts and limited fiscal stimulus.

This time, the participation of economically stagnating communities in the national economic recovery has helped reduce income inequality for the first time in decades. Jobs in 1,000 left behind counties, home to about a fifth the population, grew four times faster between 2020 and 2023 then in the previous four years, according to an EIG analysis.

Latent potential

The aggressive pandemic-era policy response and raft of recent place-based policy commitments mean, “Left behind communities have exited the recession and entered the recovery with real momentum,” EIG’s Kenan Fikri tells ImpactAlpha. That result shows that distressed communities can participate in post-recession national economic growth, says Fikri.

Entrepreneurs in these counties are now starting businesses on par with the broader population, a striking upswing after years of disinvestment and stagnant new business establishments. “We see now that communities that have been written off as ‘left behind’ and the people in them actually had considerable latent potential that’s just beginning to be tapped,” he says.

“Strengthening the safety net for the people on the margins of the labor market means that you’re supporting places that have been on the periphery of the US economy as well.”

Election backdrop

Left behind communities are situated in every state, and are rural, urban and suburban. Some 13 million people live in left-behind counties in swing states, like Michigan, Wisconsin and Pennsylvania, which could determine the coming election. Even in blue states, left-behind counties mostly lean Republican,  according to EIG.

“The reverberating impacts of their economic struggles could have an outsized effect on the nation’s political trajectory as a whole,” notes EIG’s August Benzow. Adds Fikri, “The tailwind in forging deeper and more inclusive recoveries in communities is an asset that we hope no one squanders.”

Broad + local

From Trump-era Opportunity Zones to Biden-administration climate, infrastructure and semiconductor investments, economic policies emphasizing marginalized communities represent “real down payments on the continued, broad geographic growth that we’re seeing today,” says Fikri.

Low-income regions of the South and Midwest have been big winners under the Biden administration’s Inflation Reduction Act, which has created more than 300,000 clean energy jobs since it was signed into law in August 2022.

Says Fikri, “The breadth and diversity of growth engines that the country is enjoying coming out of the pandemic has given more and more place inroads to participate.”