The Poorest Part of America

The Poorest Part of America
Not here, surely?
Dec 8th 2005
JUDITH BASIN, MONTANA
From The Economist
Want to see America's new ghetto? Follow the Rockies northwards towards the Great Plains

In 1859, a young schoolteacher in Illinois who would later become a famous explorer, John Wesley Powell, used to make his students sing: "Our lands are broad enough. Have no alarm. For Uncle Sam is rich enough to give us all a farm."

Uncle Sam indeed obliged. In a series of Homestead Acts, pioneers staked 270m acres (110m hectares) of land. Even after the fertile ground had been snapped up, the settlers still kept coming. In the first two decades of the 20th century, they poured into the less productive areas - eastern Montana, the western Dakotas and western Nebraska. They endured the hardships of Job. Most were driven away, but the obstinate stayed. And, alas, they have struggled ever since.

No place so demonstrates the shaky economic state of rural America as the northern Rockies and western Great Plains. Virtually all of the 20 poorest counties in America, in terms of wages, are on the eastern flank of the Rockies or on the western Great Plains (see map and table below). Not one of the ten poorest counties in this region issued a housing permit in 2002. A couple of years ago, Lester Thurow, a Montana-born economist at the Massachusetts Institute of Technology, observed that when he got his doctorate in the mid-1960s, he associated regional poverty with the South. But he was now certain that, before he retired, "regional poverty will be a phenomenon of the northern Great Plains."

There are two unusual things about the deprivation in this region. First, it is largely white. The area does include several pockets of wretched Native American poverty, but in most areas the poor are as white as a prairie snowstorm.

Second, most people do not think of themselves as poor. The landscape certainly does not cry scarcity. Judith Basin, for instance, is a county of tidy ranches and vast vistas. Cumulus clouds project great shadows that sweep over patchwork fields planted with alfalfa and wheat. To the west, the Little Belt Mountains glow blueish-green. It might almost be paradise for those who want no hills to climb.

It is only when you turn off the main road and come upon a pattern of deserted homesteads that the reality sinks in. In 2003 nearly a sixth of Judith Basin's residents lived below the federal poverty level for a family of four of $18,400. The median household income was $26,900 (against $43,300 nationally). Crime is low (meth, the scourge of many rural counties, has made only minimal incursions here), but it is still a community in decline.

Judith Basin County has lost about 6% of its population in the past four years. Around ten pupils graduate from its three high schools each year. The population of the county seat, Stanford, reached its zenith of 615 in 1960. Now it is 430 and "that's if everyone is home", as one county commissioner puts it. Larry Swanson, a University of Montana economist who has spent years studying Great Plains and Northern Rockies demography, says the picture is dire. "We are seeing a re-accelerating of the population decline. After the kids left in the 1980s and 1990s, things sort of levelled off. Now it's just plain attrition. People are dying."

It is fairly common nowadays for rural counties across America to lose people: roughly one in four did in the 1990s. What is unusual about this region is that the downturn has not inspired much zeal for invention. Granted, this region suffers from "the curse of flat counties". It lacks the mountains, rivers or dramatic geography that attract wealthy retirees or budding software entrepreneurs. Not having a vital urban area also hurts. The northern Great Plains, which covers roughly 280,000 square miles, includes only one decent-sized city—Billings (whose population is 97,000), though Lincoln, Omaha and Sioux Falls are on its eastern edge.

Yet even if you look only at agriculture, the region has plainly failed to adapt to a world in which grain and cattle are cheap. Pioneer mythology has a good deal to do with this. The walls of the Museum of the Northern Great Plains in Fort Benton, Montana, carry biblical phrases ("They shall beat their swords into ploughshares") or Thomas Jefferson's maxim of divine preference ("Those who labour in the earth are the chosen people of God"). But this mythology has led to a paralysing respect for antiquity.

There are a few signs of innovation. Montana and North Dakota are both trying to grow more organic crops, for which margins are higher, and state coffers are swelling because of the energy boom. But little effort has been made to process foods rather than just grow them. For instance, both North and South Dakota are leading producers of wheat and soyabeans. Yet according to the Bureau of Labour Statistics, the two states have less than 1% of their population employed in the food-processing industry. The crops go out by the truckload to provide jobs elsewhere.

How does the region survive? For all the brouhaha about independence, it leans heavily on the federal government. In 2003, the government spent an average of $10,200 per person in Judith Basin. North Dakota counties averaged $9,000. Most of this comes in the form of farm subsidies. In 2003, the ten poorest counties in the United States each received an average of $5.5m in federal price supports and disaster payments, according to the Environmental Working Group, which tracks federal farm payments.

Are these subsidies a curse? Certainly not in the eyes of the area's politicians, who are elected to preserve them. The figures for some states have tripled since 1995. These hand-outs certainly help to keep many farms alive (and they mean that the counties do not do quite as badly when you look at their overall incomes, as they do for wages and salaries). But they are hardly spawning a healthy economy. A report by the Federal Reserve Bank of Kansas City in March pointed out that the counties most dependent on farm payments were mostly those with the weakest job figures and the weakest population growth.

Moreover, the cash is being distributed in an increasingly unequal way. In 2004, 405 farmers in Judith Basin County received $4m in farm subsidies. That would imply an annual hand-out of $9,900 each, but the average for the top 20 recipients was $55,850 apiece. More of the money is being grabbed by big farmers. In one way such consolidation is welcome, but it hardly squares with the egalitarian ambitions of the Homestead Acts.

This dynamic of more money going to fewer people is not new, but, until recently, few have had the nerve to point it out. Four years ago, however, in a now famous study called "Why Invest In Rural America?", Karl Stauber of the Northwest Area Foundation claimed that farm subsidies had done nothing to improve the economic viability of America's rural communities. Of the 145 counties in the region, 123 had lost population or had grown at below 1% a year since 2000.

The primary difference between this region and other bits of rural America is perhaps denial. Just as rain never did follow the plough, modern jobs do not follow high-cost subsidised food production. The era of the small arable farmer and even of the modest-sized rancher is over. Indeed, it has been for at least half a century (though if you say that in a bar in the Dakotas or Nebraska, be prepared to duck).

As for the idea that rural America feeds the world, the truth is that it no longer even feeds America. Americans buy ever more of their food from more fertile and cheaper places like Brazil (though they have to pay more for it than they should, thanks to America's high tariffs). Meanwhile, providing this huge, sparsely populated area with services such as health care, schools and transport looks an increasingly expensive proposition for an ever more urban and suburban country. The years when Uncle Sam "is rich enough to give us all a farm" are drawing to an end.