For years, leaders in rural Minnesota have argued that a paycheck goes further in rural areas. But so far most of the evidence has been anecdotal. Not any longer.
Thanks to the Center for Rural Policy and Development (CRPD), we now have a study that backs up our educated guess. The study, released in June and available on the center's website, compares the cost of living across Minnesota against wage data to see how far wages go in rural and urban settings.
Wages are a major talking point when discussing the economic competitiveness of Minnesota's regions. It's no secret that wages for nearly all occupations are lower in greater Minnesota compared with the seven-county metro area. But the CRPD study stresses that looking at cost of living and wages in isolation of each other paints only a partial picture.
If we factor in the cost of living, greater Minnesota's lower wages can go significantly further than the higher wages in the seven-county metro.
The data for the center's study was drawn from public sources — but has not previously been compiled in this "cost of living" format. One calculation demonstrates that a representative household in the urban area would need work paying $20 an hour — as opposed to $14 an hour in southwestern Minnesota — to cover the cost of living. This example assumes a family structure of two adults (one working full-time, one part-time) with one child, and is meant to represent an aggregate average.
But while circumstances vary, the rural cost of living advantage largely holds true for a variety of job types and professions. The center's study — accompanied by a tool that allows a search by occupation, family size and county — provides more detailed analysis, but the fundamental story remains that your dollars do go further in rural areas (and you do not have to fight time-wasting traffic to get to work).
The main costs that produce the "rural advantage" are housing, taxes and child care. All these costs are notably lower in rural regions as compared with the metro area. Full-time child-care costs approach $1,300 per month in the Twin Cities as compared with roughly $450 per month in greater Minnesota. Metropolitan housing costs average about $1,200 a month while in rural areas those costs are closer to $800 per month. Urban and suburban taxes deduct approximately $600 per month from take-home pay, and in rural areas that monthly cost is around $400.
Health care costs are about the only category where the average metro cost may be lower. Estimated health insurance costs range between $600 and $650 in rural areas— but in the seven-county metro area that cost is about $550.
The CRPD study highlights that, essentially, wages in greater Minnesota are competitive with the Twin Cities or better, in many occupations, relative to the cost of living, particularly in southern and western Minnesota.
Let's look at an example. The median hourly wage for health care jobs is $19.50 in the Twin Cities compared with $14.50 in southwestern Minnesota. However, when measured beside the cost of living, the lower wage in southwestern Minnesota makes up 120% of the cost of living, as compared with only 100% in the metro. That means you are money ahead in rural.
For my part, I relish the rural way of life. I love the open space and lack of congestion. I appreciate the fact that — for the most part — schools are small enough to provide every student personal attention and opportunity. I like it that community services are delivered by people I personally know and trust.
Ben Winchester, at the University of Minnesota's Center for Community Vitality, has studied rural demographics extensively and sees positive trends in rural areas, largely tied to quality of life issues.
Winchester uses the term "brain gain" to challenge the narrative about "brain drain" in rural counties — when young people leave their communities for higher education and careers in cities.
According to Winchester, discussions of rural areas often focus on population loss from rural counties. To rebut that narrative, he cites census data documenting that people in the 30-to-50 age range are still moving into rural areas with their families. Through his research he has identified the three biggest reasons people move to rural: a slower pace of life, safety (especially families with children) and the low cost of housing.
Winchester's "brain gain" study is now augmented by the findings of the CRPD. I expect the move to rural is likely to accelerate as these findings are broadly shared. Having served southern Minnesota for 12 years in Congress, I am honored now to lead the Southern Minnesota Initiative Foundation which allows me to promote the assets of our region, as well as all of greater Minnesota.
Armed with this new CRPD study, rural communities, chambers of commerce and economic development agencies can begin touting these findings to retain and attract young talent, as well as lure new businesses and the self-employed. Especially with remote work becoming a viable option for so many careers, the cost of living and quality of life attraction makes me optimistic about the future of rural Minnesota.
Tim Penny is president, Southern Minnesota Initiative Foundation.