In places where the unemployment rate is well below the national average — states such as Iowa, Nebraska, and Colorado — one would think it would be easier for communities to recruit new residents to fill open jobs. But that's not always the case.
The housing market works against rural towns and cities where jobs often stay open because there are too few affordable homes and apartments to buy or rent, or the ones that are affordable need lots of TLC. It’s a situation that threatens to turn low unemployment from an advantage into a liability.
“What we don’t want to see happen is employers in those rural communities say, ‘You know, I can’t find labor. I’m going to shut down and move on’,” said Richard Baier, president of the Nebraska Bankers Association and former head of the state Department of Economic Development. “The challenge now is to build enough units to catch up with that pent up demand, and do it economically.”
Housing shortages are a familiar story in tech hubs like Seattle, where rent is notoriously expensive, or Bakken oil-boom towns in the northern Plains, where the population spiked seemingly overnight.
The housing crunch also has come to Holdrege, Nebraska, population 5,500.
This farm town in the south-central part of the state has two manufacturing plants: Allmand Brothers, which makes portable lighting systems, and Becton Dickinson, which HR manager Brian Deakin says is the “world’s largest manufacturer of insulin syringes.”
About 675 people make up to 9 million syringes per day. And the company is hiring for about 30 positions, including technicians to program industrial robots and mechanics to keep the robots up and running.
Those are jobs that can be hard to fill, both for the skills and because there’s just not that many places to live in Holdrege. Phelps County as a whole needs more than 200 homes to catch up with demand.
“Sometimes we run into that barrier where we just can’t encourage folks to come here because housing can be a struggle,” Deakin said. “During the recession, we had folks from out of state who would get in their cars and just drive out here. We had a job for them. Now they had to find a place to live.”
Experts say there are different reasons behind shortages: an aging population that prefers to stay at home longer, stagnant wages and less buying power due to student debt.
A common thread, though, is that rural communities tend to have a disproportionate number of older homes. In Phelps County, for example, two-thirds of the homes were built before 1970.
Houses are like roads and bridges, if they aren’t fixed up, they will wear out. And as homes wear out, they go off the market.
“The housing stock is aging. It’s lower quality,” according to Mark Skidmore, an economist at Michigan State University who studies rural economic development. “So then, you’re trying to think about, how we can get the kind of housing we may need, and at the same time you’ve got housing that is becoming dilapidated.”
Several states are trying to spur home construction. Nebraska recently created a $7 million fund to match housing investments, and Kansas and Iowa are using tax credits to lure investors to rural communities. The U.S. Department of Agriculture even offers loan guarantees for some rural mortgages and apartment projects.
The lack of comprehensive data on rural housing needs makes it hard to compare how much those programs accomplish.
In Holdrege, a local nonprofit is stepping in, having purchased the site of a demolished school and attracting a developer to build 18 apartments.
“We probably have a need for five times as many as we’re building right now,” Phelps County Development Corporation executive director Ron Tillery said.
The development group also is looking to buy rundown homes, and will tear them down to make way for new ones.
“It’s kind of like CPR,” Tillery said. “A house is the heartbeat of the community.”
Contractors are the key cog in the operation, but are concentrated in cities where they can work at a larger scale. When they come out to rural areas, the costs go up.
Consider this: Constructing a new three-bedroom home can be $30,000 more in central Nebraska vs. in Omaha or Lincoln, developer Cliff Mesner said, due to the added cost of transporting workers and shipping supplies.
“So you end up with more expensive homes than a lot of employees want to go out and buy,” Mesner said, adding that while $15-$17 an hour is a decent wage in rural Nebraska, “it won’t cover that new construction cost.”
That leaves an affordability gap, one that Mesner says rural communities must decide how much they can fill, because surviving and thriving will rely on giving people a place to work and call home.
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