Rural participation in the digital economy will strengthen America
The Great Recession hit rural communities hard and they have yet to recover. While technology and innovation are driving economic growth in cities, these forces have actually contributed to economic decline in rural areas. Workers without technology skills have been left behind, as industries like farming, low-cost manufacturing, and mining, are increasingly automated, eliminating thousands of middle class jobs. Combined with the rapid decline of rural entrepreneurship, this means rural places are now facing a dramatic opportunity gap.
To thrive, rural Americans need to become active players in the tech economy, driving innovation rather than being at the mercy of automation as the pace of change accelerates. Strong digital economies will allow rural communities to chart their own courses toward prosperity.
What is a digital economy job?
Digital economy jobs are innovation-based or tech-enabled, in fields that drive automation and change. These jobs usually pay well, have good potential for advancement, and can be done from any place that has reliable high-speed internet. To succeed in these jobs, workers need to have strong digital skills, as well as opportunities for continuous learning as technologies shift. In strong digital economies, workers drive innovation and become entrepreneurs, creating local wealth and future-proof jobs.Examples of digital jobs:
- Software engineering
- Web development
- Data science
- Growth-oriented, internet-enabled businesses
Rural communities have many of the building blocks of strong digital economies
Places like Red Wing, Minnesota, Traverse City, Michigan and the other communities in our Rural Innovation Network, are proving that you don’t need huge populations to support entrepreneurs with global ambitions, you just need a strong internet connection and the opportunity for innovative people to work together to solve problems.
Many rural places already have key “ingredients” in place that can be used to build digital economies, including gigabit-speed broadband, available space, low cost of living, attractive downtowns, outdoor amenities, colleges and universities, and strong community connections. Rural communities can use these assets to build inclusive digital economy ecosystems.
What is a digital economy ecosystem?
Digital economy ecosystems combine the programs and structures needed to allow technology-based entrepreneurs, businesses, and workers to thrive, generating good jobs and building wealth in the local community.
To build an inclusive rural digital economy, you need an ecosystem strategy
Through our work with communities across the country, we have learned that it is essential to work on multiple fronts at the same time: if you train workers to code, but they can’t find local or remote coding jobs, these newly-skilled workers will leave the area. And if you help people find remote work or start digital businesses but you don’t have spaces for these digital workers to connect and cross-pollinate, they may leave or lose momentum.
To build a strong digital economy ecosystem, a community needs certain foundational elements, like local infrastructure, systems, and leadership, as well as direct drivers of the digital economy, like jobs, capital, and support for entrepreneurs.
When foundational elements and direct drivers are in place and working well, we look for success in two key areas:
- The number of people working in digital economy jobs, earning salaries that are higher than the average income for the area
- The amount of wealth being created and reinvested in the community
We have found that for a community to maximize the impact of their digital economy ecosystem, they must ultimately develop all of the identified foundational elements and direct drivers (shown below).
Example: An innovation hub that combines an entrepreneurship center, co-work space for remote workers, and loft apartments in a walkable downtown creates an energized space where digital workers can connect, collaborate, and build momentum toward a vibrant digital economy ecosystem.
Core elements of a rural digital economy ecosystem
Key elements within the community that enable a thriving economic ecosystem, which in turn creates a foundation to support Direct Drivers.
Digital employment and/or entrepreneurship occurs when, with support of Foundational Elements, communities can provide access to digital jobs, capital, and workforce development and support.
A successful digital economy is defined by the creation of quality digital employment leading to wealth creation through local entrepreneurship.
Foundational Elements of the Digital Economy Ecosystem
The success of any digital economy ecosystem rests on the economic and social foundation of the local community. Digital economy jobs and businesses can develop almost anywhere, but without a solid foundation, they will not grow into a thriving ecosystem. For example, a rural community may produce, by chance, one or two successful startups without any ecosystem support; but without attractive living situations or a talent pipeline, these organizations will fail to scale (being unable to attract skilled employees) or will leave, preventing the community from seeing additional entrepreneurship and growth.
This does not mean that the worst-off communities should not pursue digital jobs and businesses—the impact of a few success stories of digital entrepreneurs can be quite powerful, even in dire circumstances. But it does mean that communities that lack enough of these basic preconditions for economic growth will see more limited benefits from digital jobs and startups. To see the full benefits of digital work, struggling rural areas should take a holistic approach to digital ecosystem building, making training and entrepreneur support part of a larger revitalization effort that builds the foundational elements of a digital economy.
Digital workers display strong preferences for having affordable, attractive housing, quality workspaces, and retail close together in a downtown core. A consolidated downtown district combining residential, commercial, and entertainment options is crucial to attract and retain digital workers. It also allows communities to leverage the presence of these workers to drive the growth of other businesses in town.
Direct Drivers of the Digital Economy Ecosystem
Elements that we call “direct drivers” match supply with demand by pairing people with job opportunities, or pairing startups with investors and markets. This means making sure that workers and startups are competitive for and have access to jobs and capital. Direct drivers support and build capabilities on the demand side—making workers and startups attractive to employers and investors—and create pipelines to supply of jobs and capital.
Living and working together is another crucial piece of this puzzle. Innovative urban digital economies thrive on shared space and density. We believe this is equally crucial in rural areas. When people interact in person, they share knowledge, develop relationships and networks, and build community. Direct drivers of interaction, like social and coworking spaces, build energy and momentum, facilitate idea-sharing and innovation, and create an environment where people want to live and work.
Communities need training, education, and skilling programs that provide workers with digital skills that are attractive to employers (e.g., coding, computer assisted drafting, graphic design). Support services like apprenticeship programs, soft-skills training, and shared work spaces are also important to smooth the transition to digital work, particularly in low-income communities.
Success with digital jobs can also have important cultural effects, creating stories that inspire students and other members of the labor force to pursue digital-economy opportunities, and building confidence that inspires more companies to hire in the area.
Outcomes of a successful digital economy
Digital employment: Workers are successfully matched with quality digital jobs that can be done from small towns, either through remote work or homegrown digital roles.
Wealth creation: Local entrepreneurs build digital-related businesses and bring wealth back to the community, supporting other local businesses, stabilizing the community’s tax base, and growing the local economy.