Rural Counties Are Booming, But Can It Last? --- The pandemic and working from home sparked a rare economic resurgence

"WINSTED, Conn. -- Even in the face of inflation and the risk of recession, the broad economic prospects for rural America may be looking up for the first time in years.

Small communities have long lagged far behind big cities in job creation and income growth. But since the pandemic, many are seeing an infusion of remote workers drawn by lower costs, laid-back lifestyles and natural beauty -- and worn down by crime and other urban challenges. Their presence has helped spur hiring, income gains and home-price growth in rural towns.

The question now is whether these transplants are there to stay.

After years of losing residents, Litchfield County in the northwest corner of Connecticut drew in workers after the Covid-19 pandemic hit. In Winsted, a small town in the county overlooking a large lake, commercial real-estate sales used to be fairly weak, said Gary Giordano, a Realtor and economic-development commissioner in the area. The pandemic helped change that, he said.

"There's an economic turnaround, for sure," Mr. Giordano said. "More and more people wanted to leave the city, came up here, bought houses, realized that this might not be a bad place to work."

Those newcomers are sipping drinks at the craft brewery downtown, which opened in the year before the pandemic and serves beers on tap. They are placing orders at the new cafe on Main Street whose menu includes an extensive list of sweetened cold brews, fruity ice teas and spritzers.

Such rural gains are in their early stages and could be vulnerable to a national economic downturn. They also depend on how far the back-to-the-office movement goes. In recent months, office reopenings and waning pandemic disruptions have drawn some workers back to urban life, a trend that is manifested in the rising rental prices of places such as New York City.

David Sartirana, a real-estate broker in the Winsted area, said he was inundated with business in 2020 and 2021 as more people moved to Litchfield County. Interest from city dwellers has recently cooled, he said.

"Up until this January, February the phone was [going] absolutely nuts," Mr. Sartirana said. "There's definitely been a slowing down."

Even so, recent trends reflect the impact that remote work has had on rural and urban geography. Rural counties saw a net gain in population from mid-2020 through mid-2021, a sharp shift from the decade preceding the pandemic, when they lost residents, a Wall Street Journal analysis of U.S. Census Bureau data found. Big cities, which were already losing residents, saw an accelerated exodus once Covid-19 struck.

Regionally, residents left the Northeast and West Coast, which have a relatively high concentration of big cities, at a faster pace once the pandemic hit. The more-rural South was the only region to gain population.

Remote work was a greater driver of worker relocation during the pandemic than the risk of Covid-19 or government restrictions, according to an analysis of moving-company survey data by Peter Haslag, a finance professor at Vanderbilt University.

Big, dense cities are particularly susceptible to losing residents because they are expensive and employ the largest share of workers in jobs that can be done remotely in sectors such as finance, management and publishing, according to Princeton University economist Lukas Althoff and co-researchers.

And migration to less-populated areas appears to be continuing. The number of migrants from high-cost large metro areas to small cities, towns and rural areas was about 15% higher during the four quarters ending in March compared with the average for the three-year period preceding the pandemic, according to Stephan Whitaker, an economist at the Federal Reserve Bank of Cleveland.

Job postings in rural areas increased 52% from 2019 through 2021, compared with 11% growth in big cities, data from labor-analytics firm Lightcast show.

By the end of last year, employment in rural areas was slightly closer to prepandemic levels than it was in urban areas, according to the Economic Innovation Group. Wages grew an average 6.3%, annualized, in rural areas from the end of 2019 through the end of 2021, compared with 5.7% annualized growth in urban areas, the nonpartisan Congressional Budget Office estimated.

Many of Winsted's new arrivals appear to be putting down roots. About 95 students are enrolled in kindergarten at Winsted's Batcheller Elementary for the coming school year, compared with roughly 70 to 75 before the pandemic, said Melony Brady-Shanley, superintendent of Winchester Public Schools.

Rebecca Corcoran just opened a health store in Winsted. She blends up protein shakes and provides nutrition counseling and yoga classes at her new business, which she expects will benefit from the growing population.

"There's a lot more foot traffic," she said.

Rising housing costs, in part tied to higher interest rates, could make more-affordable regions increasingly attractive, said Lawrence Yun, chief economist at the National Association of Realtors.

Kevin Steck, age 37, had worked in New York City for nearly eight years as a software engineer at blogging site Tumblr when Covid-19 hit. The appeal of the city waned as sidewalks emptied and many businesses shut down, he said. His job had become fully remote, freeing him to relocate to Winsted, near where he grew up.

Even as New York City companies call many white-collar employees back to the office, Mr. Steck remains in the northwest corner of rural Connecticut. He recently started working a fully remote job for a fintech company.

He usually works part of the week from his Winsted house, with views overlooking a 445-acre lake. The other part of the week he sets up his laptop in places such as Brinx, a coffee shop in nearby Torrington. The owners there know that he likes his coffee black.

"It feels good; it feels like you're part of a tightknit community," he said.

Remote work severed one thing that small-town connections cannot replace: in-person time with colleagues, Mr. Steck said. The desire to spend at least some days in an office with colleagues explains why the rural town revival has disproportionately benefited places within commuting distance -- or 150 miles -- of big cities, census data show.

Many in-person services in Winsted are growing thanks in part to the influx of remote workers. Jackie McNamara, owner of women's boutique clothing store LIVE. Be You., relocated her shop to Winsted's Main Street in early 2021 after Covid-19 temporarily shut her store operations in a nearby Connecticut town.

"I've talked to a lot of my customers that come in and say, 'This was going to be our second home, but we just decided to have this be our permanent location of residence,'" Ms. McNamara said. "I think a lot of that has to do with the fact that people are working from home."

A recent customer, Patricia Reilly, age 84, who has lived in Winsted almost her entire life, said she is heartened by the rise in business activity after decades of economic decline. "A lot of times the children, when they grew up, would leave and go somewhere else because there was nothing here for them to do," she said.

During her youth, Winsted was a prosperous factory town, churning out socks, clocks and small appliances, Ms. Reilly said. In 1955, a flood ravaged the town, destroying businesses and factories, Ms. Reilly said. Winsted struggled to rebuild from the flood and also suffered industrial decline.

Signs of economic challenges remain. Today, some empty storefronts and blighted industrial buildings are scattered along Main Street between restaurants and antique stores. But new businesses are starting up and existing ones expanding.

George Noujaim set up his Lebanese restaurant along Winsted's downtown strip in 2016. The inflow of new residents during the pandemic is a key factor propelling his business, Mr. Noujaim said. "Every week I meet somebody who just moved to town, and they work out of their home for companies in New York or across the U.S.," he said.

This spring he opened a new production facility with large cylindrical machines to pump out hummus for distribution to Connecticut supermarkets, delis and restaurants. He's targeting businesses in many Litchfield County towns.

The rural revival has produced a jobs and wages windfall -- and labor shortages. Unemployment rates were slightly higher in rural areas than in large cities before the pandemic.

But over the 12 months through April, rural areas logged an average unemployment rate of 4.2%, below the 5.2% jobless rate of big cities.

Mr. Noujaim said he is looking to hire a sous chef, cooks and food-truck staff, but it is hard to find workers. He recently had to raise his pay offer to fill a chef position after the candidate received a counteroffer from his employer.

Online postings for jobs located in Litchfield County fell 20% in the two years before the pandemic, then leapt 164% from 2019 through 2021, Lightcast data show. In Manhattan, postings rose strongly before the pandemic but fell 13% from 2019 to 2021.

Remote work also reshuffled housing markets. The increase in migrants to sparsely populated areas contributed to a rise in home values in rural areas of about 20% in February from a year earlier, nearly matching gains in suburban areas and exceeding 13.5% growth in urban areas, according to real-estate brokerage Redfin.

After years of stagnation, home prices across Litchfield County soared during Covid-19 as city dwellers such as Stacia Newcomb and her husband Nathan Manley bought single-family homes. Ms. Newcomb, age 44, and Mr. Manley, 43, had lived in a Harlem, N.Y., apartment for nearly two decades; Ms. Newcomb, an actress, needed to be in the city for auditions and Mr. Manley for documentary work. The pandemic gave them more flexibility to work from home.

Drawn to rural Connecticut's woods and hiking trails, the couple bought a home for $250,000 in late 2020 in Colebrook, a rural town about 10 minutes from downtown Winsted. Though it is a longer drive to find a good sandwich than they are accustomed to, Ms. Newcomb said they are enjoying life in their new rural home on more than 4 acres of land, with woods and a small pond. Mr. Manley has learned woodworking and built benches, Adirondack chairs and a firewood shed.

Mr. Manley works a hybrid schedule, commuting from Connecticut into his New York office for about half the workweek and staying in the Harlem apartment they still rent. Ms. Newcomb works a fully remote job from their rural Connecticut home, recording voice-overs for radio and TV commercials in a sauna they converted into a studio with blue curtains.

"Soundwise, it is kind of incredible," Ms. Newcomb said. "Why would I go back to the city to record in a little closet that doesn't sound as amazing as this if I could just be here?"" [1]

1. Rural Counties Are Booming, But Can It Last? --- The pandemic and working from home sparked a rare economic resurgence
Sarah Chaney Cambon; Mollica, Andrew. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 29 June 2022: A.1.