An interesting article by the Economic Innovation Group (EIG) documents an economic rebound in left-behind counties. Economists, researchers, and politicians have used the term left-behind counties to denote the parts of the country that have experienced economic stagnation or decline compared to the national average. Left-behind refers to places with long-term lagging growth and not places with temporary setbacks that might come with an event like losing a major employer. The EIG analysis defined left-behind counties to be those that have had less than half the national population and median household income growth as the rest of the county between 2000 and 2016.

There are over 1,000 counties categorized as left-behind out of 3,142 total counties and equivalents in the country. These counties represent 18% of the U.S. population. EIG says these counties averaged 0.4% growth between 2016 and 2019, which is one-third the average rate for the rest of the country. By the start of the pandemic in 2020, only one-third of the left-behind counties had had recovered the jobs lost in the 2009 recession.

However, between 2020 and 2023, left-behind counties have seen a turnaround and collectively grew four times faster than the four previous years. Most of these counties are still way behind where they were twenty-five years ago.

Left-behind counties are not all the same and include rural, suburban, and urban counties, and can have a wide number of causes for lagging the rest of the economy. Left-behind counties had 21% of all national jobs in 2000, which has dropped to 18% by 2016 and 17% by the end of 2023.

But there is good news in a lot of left-behind counties. They are seeing a surge in the establishment of new businesses, which indicates optimism and economic health. Since 2020, the rate of new business start-ups in left-behind counties is almost the same as the rest of the country. Interestingly, the rural left-behind counties are growing faster than suburban and urban counties.

The analysis doesn’t speculate on the reasons for the rebound in many left-behind counties. I have nothing but anecdotal evidence, but I think some of this rebound is related to broadband. I work with a lot of rural counties across the country where we conduct surveys and have interviewed thousands of folks.

By far the biggest change we’ve seen over twenty years of doing surveys and interviews is the giant surge of people who work at home or want to work from home. Before the pandemic, we rarely found more than 10% of homes in a community where somebody worked from home even just a few days per week. There was typically only a tiny percentage of folks who worked at home full time.

That changed and went much higher during the pandemic but it has stayed high since then. We routinely survey counties now where 30% to 60% of households have somebody working at home at least part-time, with a third or more of such folks working from home full-time.

This ongoing phenomenon doesn’t seem to be fueled by people who were sent home to work during the pandemic and decided to keep doing so. It seems to be coming more from people in areas like the left-behind counties who realized that there are jobs available that don’t rely on the local economy. I have also heard a lot of stories from folks who used working from home as a way to justify moving to rural areas where they prefer to live. I speculate that it’s the extra incomes generated by people working from home in many rural economies that is raising household incomes.

This is pure speculation on my part, and it would be an interesting thing for economists to investigate. Left-behind counties, by definition, have fewer job opportunities than more affluent counties. But I think folks are no longer being held captive by a poor local economy and are finding ways to make a living online.