Shuttered Heartland Factory

The Heartland’s Future Is Upon Us

If the broad middle of our nation focuses on its traditional strengths in manufacturing, agriculture and energy, it can usher in new prosperity for more Americans — and shift the dominant knowledge-and-technology hub narrative that drives economic growth, and urbanism discussion, on the east and west coasts.

That was the dominant theme in a speaking and panel discussion event I was privileged to participate in last week. The event was about the “New American Heartland”, or the wide swath of the nation located roughly between the Appalachians and the Rockies, and the Great Lakes and the Gulf of Mexico. This was done in conjunction with a report recently released on the super-region, entitled The New American Heartland: Renewing The Middle Class And Revitalizing Middle America, authored by Michael Lind of New America Foundation and Joel Kotkin of the Center for Opportunity Urbanism. The event was hosted by the City Club of Cleveland, and featured a keynote speech by J.D. Vance, bestselling author of Hillbilly Elegy, a memoir of his youth and young adulthood in Appalachian and Rust Belt America.

Perhaps the key aspect of the New American Heartland report is its uniting of regions long thought to be economically distinct — the manufacturing-centered Great Lakes “Rust Belt”, the agriculture-dominant Great Plains (recently joined by energy production), and the energy-focused Gulf Coast. True, each region found its own way to economic success, or at least sustainability. However, one thing each region has historically been able to do, especially relative to the knowledge-and-technology coasts, is produce decent, middle wage jobs for mid-skilled persons, with fewer educational requirements and lower barriers to entry than on the coasts. It can be argued that the very notion of an American middle class was formed in the New American Heartland.

The report implies that the knowledge-and-technology economy has been a boon to economic production and generated significant prosperity, but that its benefits are concentrated among the select few with the education and networks to benefit. This results in an ever-increasing agglomeration of knowledge and tech firms in key areas, developing clusters of educated talent, dramatically higher costs of living on the coasts, greater economic and social inequality, and fewer opportunities for mid-skilled and low-skilled residents of coastal metros to flourish.

The future of middle income America resides in Middle America. Manufacturing and energy, the authors note, have been “prolific drivers of upward mobility and prosperity,” largely for one key reason. Manufacturing and energy have benefited from significant innovation throughout much of the twentieth century, which increased production and led to broadly spread economic growth. Over the last third of the twentieth century until now, however, the authors argue that innovation has been concentrated in the non-tradable economy — services, information, government, health care, for example — making those industries more efficient at the expense of tradable sector manufacturing and energy. Much of the same applies to agriculture, whose innovation period began even earlier.

The report ultimately recommends a stronger focus on manufacturing, energy and agriculture, and calls for the kind of innovation that stirs the knowledge-and-technology economy to more broadly enter these sectors. The report also urges stronger international ties to facilitate reaching more markets — particularly as Asia’s middle class grows in numbers and in wealth.

The New American Heartland report makes some good recommendations regarding our nation’s vast middle, a part of the nation I’ve focused my career on. However, I’d add more to their approach.

Doubling down on the strengths of the Heartland — manufacturing, agriculture and energy — can produce some additional growth, particularly of new innovations lead the resurgence. Surely the shale oil boom of the last decade is an example of this. ;But the Heartland has cycled into and out of periods of prosperity by relying on these very strengths, and it could be argued that the ceiling is low for future growth if they continue to do what they’ve always been doing.

But greater innovation could produce uneven results, even in the Heartland. Consider this example. The loss of manufacturing and agricultural jobs that hit the Heartland hardest were spurred by automation, much more than by offshoring. Farms and factories have become more efficient, producing more while employing fewer. Manufacturing-driven Rust Belt economies endured the bulk of such automation and has largely restructured its economy as a result. But it’s possible that a new round of automation looms in our future, in which office and administrative jobs, food service, personal service and even sales jobs are more vulnerable to automation. If so, that’s a round of automation that could more adversely impact Sun Belt metros that have become dependent on tourism, real estate and back-office and personal services, including those in the Gulf Coast portion of the Heartland.

If we examine the facets that have driven the knowledge-and-technology economy — highly educated talent in strongly urban areas — and the challenges that threaten them — a lack of affordability that has the potential to drive firms and talent away — then it’s conceivable that at least one part of the Heartland is well positioned to benefit from a portion of the coast’s success. Many of the Heartland’s Rust Belt cities, by virtue of their manufacturing legacy, have the institutional structure, the access to quality universities, the strongly urban built environment and low costs that might make coastal firms consider them. Admittedly, this cannot be a singular strategy to revitalize the Rust Belt. However, it could be a strategy that provides the initial catalyst — and capital — that allows further revitalization of long-struggling but still viable cities.

The same may not be true of the Sun Belt portion of the Heartland. In addition to being potentially more vulnerable to future automation, these cities have fewer top universities and little of the institutional structure and strongly urban environment that’s driven coastal economic growth. These exist to some extent in the Rust Belt cities, but may be more difficult to replicate in the Sun Belt.

The New American Heartland would do well to focus on its strengths. Goods must still be built, energy must still be produced, food must still be grown. But the fact is, the Heartland has never stopped focusing on its strengths; the rest of the nation has stopped focusing on its reason for being. The challenges experienced by the coastal cities represent an opportunity to bring the industries, the talent, and the capital, to alter the Heartland’s future.

This article first appeared in Forbes