Commentary: We’re Not in Kansas Anymore

US News & World Report
April 2018

“The Divide Between America’s Prosperous Cities and Struggling Small Towns in 20 Charts” illustrates the growing crisis of rural poverty with grim findings about income, male employment, education, diversity and mortality rates in 1,800 U.S. counties that are home to one in seven Americans. What’s more, every graphic showed this trend is getting worse.

As a former vice chairman of global investment banking at Citigroup, I view income inequality in our country as a trend that has negative repercussions for all Americans. But over the past 40 years, several social, political and economic forces have hit America’s heartland especially hard, and their effect has been akin to an assortment of plagues ganging up to wipe out a family farm’s annual crop.

The rise of globalization has been a boon for urban businesses, whereas rural-based industries such as manufacturing and farming have been mostly left out of the loop – especially mom and pop businesses. Rural towns also tend to lack modern technological infrastructures, which make them less able to compete for business. How can they expect to woo companies to relocate if they don’t have the bandwidth to fuel these operations? 

Industrialization of the agricultural industry has led to the death of the family farm, which has been a steady trade for so many of this country’s workers since its inception. The U.S. population has growth by more than 100 million people – from 218 million in 1976 to 323 million in 2016 – according to the World Bank, and this has put a strain on social services. Rural populations are actually aging and dying out, but as people living in these areas try to adapt to this “new normal,” they will need more help, on average, with food, education and health care.

I’ve had a bird’s-eye view of what it means to aspire to the American Dream, and – to some extent – live it. I grew up in a poor, rural Kansas family and went on to have a rewarding, 30-year career in the upper echelons of Wall Street. When I was growing up in the 1960s and early ’70s, I never questioned the idea that a hard-working poor boy like me could transition from Point A to Point B in America, a country that isn’t bound by class or corruption. But recently, I’ve become a bit more cynical. Income inequality is having such a devastating impact on rural Americans that I seriously doubt a young Kansan – or Missourian or Nebraskan – would have a sliver of the opportunities to succeed in 2018 that I did as a young man. I can’t help but wonder whether the hero of a Horatio Alger novel could actually climb that ladder today.

A generation ago, many rural American communities had working economies, but… we’re not in Kansas anymore. Today our rural counties are in crisis mode. Their populations are disproportionately older because young adults who are able to go away to college aren’t likely to return to invest back in the community. Business startups are not as successful, so bank loans aren’t as easy to procure. Rural towns have higher levels of teen pregnancy and divorce, and more adults collect disability because the jobs tend to be more physical in nature than those in metropolitan areas. 

From 1999 to 2015, opioid death rates in rural areas quadrupled among people 18 to 25 and tripled among women, according to the Centers for Disease Control and Prevention. Death rates for unintentional injuries, such as falls, car crashes and drug overdoses, were about 50 percent greater in rural areas than cities. The homogenous (e.g., older and whiter) demographics of rural America tend to repel new cultures. And just to put icing on the cake, bucolic regions also report more suicide deaths.

I attended Tonganoxie High School in rural Kansas in the early ’70s, then found my way to the University of Kansas, which was close to my hometown. Financing my college tuition was a real struggle, but I’d soon learn that things could be much worse: In my third semester, my father died. I probably would have quit school if a friend’s father hadn’t paid for my following semester. School was financed thereafter by a combination of part-time jobs, small scholarships and a monthly VA check (my father was a WWII veteran). I graduated with a Bachelor of Science in Business Administration.

We had trouble paying the bills each month. Tuition ($350 per semester) was an insurmountable sum for my family in the 1970s. Adjusting for inflation, the fee would be equal to $1,200 today, but University of Kansas students now pay $5,000 per semester, or nearly 15 times what I did. And many government aid programs have since been cut, a variable that has contributed to the perfect storm of student debt. After graduation, I was about $5,000 in the red – a lot of money for me, but pocket change when compared with the $37,172 in college debt the average grad carries today. Add all those grads and you’re looking at a $1.3 trillion crisis affecting 44.2 million students, according to a study by Make Lemonade, as reported in Forbes.

After school, I took a job with the Federal Reserve Bank of Kansas City, and four years later I ended up in New York to make my mark on Wall Street. Why wouldn’t I? No one was crushing my dreams and saying it was “impossible in this economy.”

People tend to think of Wall Street as an old boys’ club, but I found it to be quite the opposite. As in any industry, you can find racists and misogynists, but deep down, it’s a meritocracy. A lot of the biggest stars were nerds, geniuses or foreigners. As a gay man from a small town in Kansas, I didn’t feel culturally inept at a top firm. And this was during a period when people were much less likely to “know” gay people aside from wacky sitcom characters or stars of “The Hollywood Squares.” But I think it is much easier for an outsider to get in during a turbo-charged era. From a competitive point of view, when jobs are scarce, the top Wall Street firms go with safer choices.

I grew up thinking that I received a really good education. The career opportunities that offer growth today, however, require a knowledge of engineering, math, physics and technology, generally in industries that few rural American primary or secondary schools prepare their students for. I wonder whether today’s rural students are prepared to compete for the best 21st century jobs. Then again, young adults (age 18 to 24) who reside in rural areas are much less likely to attend college than their counterparts in cities and the suburbs (29.3 percent vs. 47.7 percent and 42.3 percent, respectively), according to the National Center for Education Statistics.

And then there’s the issue of mobility. While the digital age makes it much easier to connect to anyone, anywhere in the world, it doesn’t level the playing field, technically. High-speed internet infrastructure is still lacking in rural regions of America in 2018! According to Pew Research Center, these Americans are about 10 percentage points less likely to own smartphones (67 percent) or have broadband connections at home (63 percent) than people who live in cities or suburbs, and one in five rural Americans said they “never” go online. A recent story in Recode noted as tech giants dream about driverless cars and VR headsets, parents in some rural parts of this country have to drive their kids 15 to 20 minutes to a McDonald’s parking lot or hospital to get a high-speed connection. Roughly 34 million Americans still lack the broadband access to browse the web on their laptops.

There is a bit good news in all of this: Some rural and Rust Belt towns that were considered down and out are redefining themselves through revitalization. Pittsburghtorched its way out of post-Rust Belt irrelevancy to become an arty, eco-friendly technology hub. According to a 2014 Harvard/Berkeley study cited in the New York Times, the city ranks second in intergenerational upward mobility. By the sheer will of the people, Water Valley, Mississippi, has changed its grim fate by rebuilding Main Street to meet modern needs. Those are just a few examples, but they are exceptions, not rules.

We can’t undo these social changes and technological advancements to recreate the conditions that produced the agrarian economies of the past. It doesn’t make sense to rebuild your house on the same piece of land if you know another monsoon is headed your way, and people who live in rural communities must find ways to prepare so they can participate – and ideally thrive – in America’s global economy. They need to adapt, and in some cases, move. This is hard to hear, and it is something we must handle together. Because personally, I think these communities are too big to fail.

I often contemplate how we can remedy this problem rural towns are facing, and I arrive at roughly the same conclusion. It always involves education.

But education doesn’t have to be defined as a four-year degree that comes with five digits of debt. Why can’t it be a Chinese menu of options that includes, say, apprenticeships and recruiting programs with companies and the government? We could create supply for the demand with these programs like Germany does, and let the marketplace direct the jobs.

I realize that there are no short-term solutions. Many factors – intelligence, skill, diligence, luck, personality, timing, nepotism, training, even looks – can affect an individual’s degree of success. But the more we do to ensure students from all parts of our country have an equal opportunity to pursue their educational dreams, however we define them, the richer we’ll be in terms of our innovation, output and culture.