This Economic Policy Institute briefing paper, “The Myth of the Coming Labor Shortage in Rural Areas,” by Ruy A. Teixeira and Lawrence Mishel (March 1992), challenges the conventional wisdom that a “skills mismatch” and a “service economy” will lead to a surge in demand for highly skilled workers, particularly in rural areas. The authors argue that focusing solely on increasing education levels in rural areas (a “supply-push” theory) is unlikely to be effective for economic development. Their analysis of Bureau of Labor Statistics employment projections (1970-2000) reveals:
- Slowing Skill Demand: The growth in job-skill and education requirements nationally and in rural areas has decelerated significantly since the 1970s and is projected to continue at a much slower rate in the 1990s.
- Weakening Rural Demand: Rural areas experienced a dramatic slowdown in job-skill growth in the 1980s compared to urban areas, a trend expected to persist.
- Negative Pay Trends: Structural employment shifts in rural areas, especially for production workers (the majority of the rural workforce), have led to a decline in wages and compensation in the 1980s, a trend projected to continue.
- Limited “Best Practice” Firms: While some jobs in “best practice” firms are being upgraded, these firms are not the norm, and there’s little evidence of a widespread, significant increase in job skill requirements.
The paper concludes that the primary obstacle to rural economic progress is a lack of growth in high-skill jobs (demand-side problem), not a shortage of skilled workers (supply-side problem). It suggests that educational upgrading in rural areas will only be effective if coordinated with policies aimed at boosting the demand for high-skill workers, such as improving information infrastructure.
