Is trend destiny?

These headlines proclaim a population turnaround for many rural communities, just years after some predicted that parts of the Ninth District would return to buffalo grazing lands. For example, the population of Butte County, in South Dakota's Black Hills, rose at a 2.4 percent annual rate between 1990 and 1995 after declining at a 0.6 percent annual rate in the 1980s. The growth in the state's northern Black Hills is largely due to the success of casino gambling in Deadwood that has spawned new development, including a $100 million resort. In addition, new metal mining and expanding forest products production have drawn more residents to the region.

Population growth also has rebounded in many of the Ninth Federal Reserve District's other 269 rural counties, those not designated part of a metropolitan statistical area (MSA). Between 1990 and 1995, overall Ninth District rural population rose at 0.7 percent annual rate, with 146 of the district's rural counties gaining population. (see map). In contrast, in the 1980s, district rural population declined at a 0.2 percent annual rate, and only 67 of the district's rural counties gained population. These recent population gains are good news for many district rural communities, because expanding population reflects economic vitality.

Media headlines may herald rebounding rural population growth, and examples are plentiful in the Ninth District, but they do not tell the whole story. The long-term trends that have reshaped the region's economic landscape for most of this century continue to affect many district rural counties.

Since the 1920s the region's population has been consolidating, and ...

The 1920s was a pivotal decade for the district. Around 1870 the railroads began expanding into the region and by 1920 the rail system was complete. With the railroads came a large influx of population: Between 1870 and 1920 the district's population rose from 615,000 to 5.025 million.

The railroads also strongly influenced the location and number of the region's cities and towns. About 1,000 trade centers were thriving in 1870, and by 1920 more than 3,000 were "seeded among the region's half-million farms, ranches, mines and logging camps. The centers ranged in size from Minneapolis-St. Paul to crossroads general stores and post offices," writes geographer John Borchert in America's Northern Heartland.

As soon as this settlement system was completed, however, obsolescence began. The district was already experiencing depletion of some of its key natural resources. Lumber production in the eastern portion of the region was declining, having peaked around the beginning of the century. In 1916 copper production reached its zenith in both the Upper Peninsula of Michigan and Montana.

Moreover, the automobile and truck enabled farmers to travel beyond their local town or village to the region's large communities. And the tractor expanded the number of acres a farmer could plant and harvest. Thus, the number of district farms began declining and their size increasing. Technology continues to impact farm productivity: Between 1987 and 1992 farm numbers shrank and farm size rose (see table).

Just as technology enhanced farm size, businesses used new technologies and management techniques to increase the size of their operations, and by clustering in the region's large communities, they also reduced costs. Businesses found that by concentrating firms geographically they had a larger worker pool to choose from, and greater access to business services and inputs for their products or services. Finally, cities provided business operators more opportunity to exchange ideas with each other, leading to cost-saving and product-enhancing innovations.

... this trend continues

The trend toward farm consolidation and concentration of businesses in urban areas that began in the 1920s persists today, despite the much publicized rural population rebound. When district counties are classified according to their degree of urbanization, population increases coincide with growth in urbanization both between 1920 and 1995 and from 1990 to 1995. Furthermore, recent increases may mask the problems many rural counties continue to have in expanding or even retaining their population (see chart).

Sparsely populated counties still lag (fewer than 2,500)

The most rural Ninth District counties—that is, those without a community of more than 2,500 residents—remain the slowest growing. Their population, however, did increase at a 0.3 percent annual rate between 1990 and 1995 after declining steadily since the 1920s. Of the region's 149 counties in this category, 61 gained population (see map). Moreover, this growth was quite concentrated: The nine counties with the largest absolute growth more than accounted for the 14,261 net population growth in rural counties.

The Rocky Mountains in Montana, the forests and lakes in Minnesota and Wisconsin, and the Missouri River in South Dakota attracted tourists, second-home buyers and retirees. Manufacturing jobs in rural communities also account for population growth. In Roseau County, Minn., Marvin Windows' expanded output contributed to the population growing at a 1.3 percent annual rate in the 1990s. And in North Dakota, expanding industrial development on the Turtle Mountain Indian Reservation resulted in a 1.5 percent gain in Rolette County, while Gateway 2000 Inc., a computer manufacturer in North Sioux City, contributed to a 2 percent gain in Union County, S.D.

The 92 counties in this category that continued to lose population in the 1990s are largely dependent on agriculture and are located in western Minnesota, North Dakota, South Dakota and eastern Montana.

As urbanization increases, growth picks up (2,500 to 19,999)

Moving up the urban hierarchy to the district's 109 counties with urban communities of between 2,500 and 19,999, population rose at a 0.7 percent annual rate between 1990 and 1995, as contrasted with a 0.2 percent advance between 1920 and 1995.

But not all of these counties experienced gains: 75 counties grew in the 1990s, but 34 much smaller, chiefly agricultural counties, lost population. Many of the counties that recorded growth are their region's service and retail centers, 17 are highly dependent on government installations, and 13 have a strong orientation toward manufacturing. In 1995 their average population was 22,018, while the shrinking counties averaged 13,556 residents.

Expanding small cities contribute to county growth (20,000 or more)

Advancing up the urban hierarchy another notch to rural counties with an urban population of 20,000 or more, population growth again advances relative to the less populous counties. These 12 counties' population grew at a 1 percent annual rate between 1990 and 1995, as contrasted with a 0.8 percent rate between 1920 and 1995.

Four western Montana counties, containing the cities of Bozeman, Helena, Kalispell and Missoula, accounted for 86 percent of net growth in counties of this size between 1990 and 1995, and 28 percent of the total net growth in Ninth District rural counties. Rice County, south of the Minneapolis/St. Paul metropolitan area, also experienced strong growth. Most of the other counties in this category experienced little or no growth.

Metropolitan area counties grew the fastest (more than 20,000)

At the top of the population pyramid are the district's metropolitan counties, which remain the strongest growing both since 1920 and in the 1990s. Those counties on the periphery of the Minneapolis/St. Paul MSA experienced a 3.1 percent annual growth rate between 1990 and 1995.

Therefore, even though rural population growth has improved thus far in the 1990s, Ninth District population continues to concentrate in larger urban areas. Thus, population growth continues to rise as urbanization increases. Moreover, while population growth recently has rebounded in many rural counties, much of that growth is concentrated in a few counties.

Trend toward consolidation raises questions

The persistence of the continued trend toward consolidation raises questions. Can the innovations in telecommunications, which reduce the remoteness of many rural communities, dampen or reverse these trends? While telecommunications is the basis for many new district jobs, that and other economic development initiatives "can't make up for all the jobs lost by farm consolidation and labor-saving technology," writes Jon Margolis in a recent The New York Times Magazine article on North Dakota.

What about the efficacy of federal programs to help rural areas? Multibillion dollar farm programs and efforts to revitalize rural areas have halted neither the decline in farms nor the exodus from rural counties.

Trend, however, is not necessarily destiny. "Past performance indicated that in the average Upper Midwest county, in any given decade, the actual non-farm population change would be nearly 50 percent more or less than the long-term projection," writes John Borchert. Thus, these trends can't be used to predict an individual county's fate. In some Ninth District counties human ingenuity has confounded the trend toward population consolidation, and these counties are prospering.