Nearly two-thirds of rural counties lost businesses, on net, from 2010 to 2014. That is up from just over 2 in 5 counties in the early 2000s and just under 1 in 5 in the '90s. The counties shedding establishments span the country and include almost every variety of rural areas, from farming and manufacturing communities in Missouri to coal-reliant swatches of Appalachia to coastal counties in the Pacific Northwest where the timber and fishing industries have dwindled.
Those findings confirm the deep geographic divisions in this recovery that other data have revealed.
Through the second quarter of this year, according to a Brookings Institution analysis of Moody's Analytics data, America's 100 largest metro areas had recovered all of the jobs they lost in the recession and added nearly 6 million additional jobs. The rest of the country, combined, was barely 300,000 jobs over its pre-recession peak.
What the innovation group's analysis reveals is how concentrated business activity has become, even within metro areas. In many mid-size urban areas, such as the counties that include Tucson and Spokane, Washington, business formation rates have slowed in this recovery. The counties including two major Rust Belt cities, Cleveland and Detroit, have lost businesses, on net.
The concentration in part reflects the differences in the brand of entrepreneurship historically practiced in rural areas, compared with the higher-tech start-ups that have risen in recent decades. Recent research suggests there has been no decline in the formation rate for the Silicon Valley-style start-ups that economists generally consider to be "high growth," which means the sort of companies that could sprout to employ hundreds or thousands of Americans.
The drop has come in the formation rate for other types of businesses, such as small manufacturers, construction firms and service establishments, such as restaurants. Those small businesses have traditionally served as critical vehicles for wealth-building and economic mobility in much of America. The sandwich shops of that world, as Adelino puts it, are struggling; Google-type start-ups are not.
Not surprisingly, then, the 20 counties that combined for half the country's new business formation are almost entirely pillars of the innovation economy. They include the counties surrounding San Francisco, Los Angeles, New York, Miami, Austin, Dallas and Chicago.
Those areas contain higher-income, more highly educated workers who appear to have had a much easier time accessing capital -- the infusion of money you need to start a business - in this recovery than have workers in the rest of the country.
After the Great Recession, lower-income borrowers were effectively shut out of credit markets, Adelino's research shows, a finding supported by data from the Federal Reserve Bank of New York. Industry groups and many economists have warned that the Dodd-Frank financial regulation bill, passed in 2010, has forced smaller banks that often serve rural communities to tighten their lending.
Jason Furman, who chairs President Obama's Council of Economic Advisers, says his research rejects that view. "There's very little evidence that Dodd-Frank has reduced lending by community banks," he said.
Previous economic transformations, such as the shift from farms to factories, have drawn Americans from rural areas into cities. Economists worry this case may prove more damaging, though, for workers, rural America and the country's overall economic performance.
"New businesses are key to innovation, growth and jobs," said Kenneth Rogoff, a Harvard University economist who advises the Economic Innovation Group. An increase in monopoly power from reduced competition, post-recession, he said, "is widely regarded as one of the major factors slowing innovation and weakening the quality of job growth."
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