Economist: Improving ‘quality of life’ can drive population, job and business growth in rural places

Dr. Amanda Weinstein, an economist at the Center on Rural Innovation, told the Senate Finance Committee that higher local quality of life — measured using housing price premiums and lower wage requirements to attract workers — is now a stronger driver of population and job growth in many rural places than traditional tax incentives aimed at attracting firms.

Weinstein said the finding holds in both pre-pandemic and post-pandemic data and that the post-pandemic effect is larger in the Southwest, where quality-of-life measures appear four times more influential for population growth than they were before COVID-19. “We find that quality of life actually matters more now for both population growth and job growth,” Weinstein said.

Weinstein summarized research by the Center on Rural Innovation and coauthors at Ball State that estimates a location premium from housing markets and a compensation premium from labor markets to identify places where people prefer to live. The research groups counties and small metropolitan areas into quadrants — places that are “great to live,” “great to work,” both, or neither — and shows amenity-rich counties such as parts of Hawaii, Teton County (Wyo.) and Taos (N.M.) scoring in the top tier for quality of life.

The work challenges the long-standing emphasis on large fiscal incentives, Weinstein said. She told legislators that while states have tripled the size of fiscal incentives between 1990 and 2015, those incentives often fail to create net new jobs and can crowd out local business startups. Instead, she argued, policies that strengthen local amenities and the small-business ecosystem can produce more durable growth.

Weinstein listed specific elements that raise measured quality of life: recreation businesses that capitalize on natural amenities (for example, rafting or ski operations), arts and culture enterprises, grocery and personal-care services, accessible health care, strong K–12 spending per student and broadband that enables remote work. For natural amenities, she said the amenity itself only raises quality of life if it is accessible and tied to businesses or services people use. “Having natural amenities helps, but only if you capitalize on them,” she said.

She described Taos as an example in New Mexico where local investments — including fiber broadband from Kit Carson Electric Cooperative, a coworking space and programs for tribal residents to obtain tech training and remote jobs — aim to convert local amenities into wider economic opportunity. Weinstein said higher quality of life is associated with higher rates of business formation, including both tourism-related small businesses and more technology-oriented startups in some communities.

Weinstein emphasized that many of the local businesses that support quality of life (restaurants, grocery stores, salons, recreation firms) provide lower-paid jobs but are important to retaining and attracting residents and enabling other economic opportunities. She urged policymakers to focus first on foundational investments — housing, public safety, health care, childcare, K–12 and broadband — and then on business supports and workforce training.

Weinstein closed by urging local leaders to treat community members as the essential “superheroes” who build and sustain places, rather than depending on large outside firms to “save” local economies.

Dr. Weinstein’s slide presentation and spoken remarks were followed by brief committee comments and no further questions from senators.