The Call Of The Country

Rural America could use more skilled entrepreneurs. A Federal Reserve Bank of Kansas City study shows that while more rural residents are self-employed than urban dwellers, their businesses are less profitable.

About 22.4% of workers in counties in which no town has more than 10,000 residents are self-employed. That rate drops to 17.6% in counties with a town of up to 50,000 residents and to 15.4% in metropolitan areas, according to 2004 Census Dept. data and proprietor income figures from the Bureau of Economic Analysis. The data were complied by economists Jason Henderson and Stephan Weiler and research associate Sarah Low.

But entrepreneurs in urban areas create more income for each dollar of revenue. While many rural businesses provide community services, such as grocery stores and bakeries, big-city entrepreneurs are more likely to run companies that generate high profits. About 25% of rural entrepreneurs had high-margin financial services companies, for instance, compared with 45% in urban areas. Rural entrepreneurs were more likely to be in construction, retail, and manufacturing.

The good news for rural areas, says Weiler, is that attracting "a few key people can make a big difference." Governments can appeal to skilled entrepreneurs by extolling a region's quality of life and outdoor recreation amenities. Programs to develop entrepreneurial skills and a positive environment for immigrants can partly offset the brain drain that rural areas experience, providing high-income businesses with the skilled workers they need to grow.

By James Mehring

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