The 7 Habits of Highly Effective Small Towns

Ross DeVol and the Walton Family Foundation just did small-town America a huge favor. They showed every rural community, through quantitative data and objective research, the way out of recession.

They did it by measuring the performance of every micropolitan area in the nation, from first through 531st. In case you’re wondering, Pecos, Texas is the top-performing small town in America. Zapata, Texas ranks dead last.

The findings come from the Walton Family Foundation, which on Feb. 20 released new research that ranks every micropolitan statistical area across the United States, using a data-driven index to measure economic performance.

“The research concludes that small-town America has big-time potential for economic growth, which will help boost the nation’s economy and has the potential to bridge the economic gaps between the United States’ micropolitan and metropolitan areas,” said Ross DeVol, the lead researcher and a Walton Fellow at the Walton Foundation in Bentonville, Arkansas.

The research found that small towns with strong economic performance share several key traits, such as: travel, tourism and recreation as key industries; prevalence of professional services; a culture of entrepreneurship; and research universities and 4-year colleges.

The metric for all 531 micropolitan areas included a 2016 young firm employment ratio ranking; 2016 per-capita personal income ranking; 5-year job growth ranking; 1-year job growth; 5-year average annual income growth; 1-year pay growth; and 5-year personal income growth.

Based upon an aggregation of these scores, Pecos finished first and Summit Park, Utah finished second, followed by Jackson, Wyoming-Idaho; Heber, Utah; Bozeman, Montana; Hailey, Idaho; and Findlay, Ohio.

Findlay’s seventh-place performance was bolstered by the fact the micro area of 75,000 people in Northwest Ohio scored first in personal income growth from 2015 to 2016. It also confirmed something Site Selection magazine editors already knew quite well: when it comes to growing jobs and industry, Findlay has no equal in the country.

The $18-million Marathon Performing Arts Center is a new addition to downtown Findlay

Photo courtesy of Marathon Petroleum

Since 2014, Findlay has ranked first out of all micros in the nation in corporate real estate project performance every year, taking home Site Selection’s coveted No. 1 Micropolitan Area of the Year Award a record five consecutive times, including 2018.

‘You Can Succeed in the Midwest’

“Findlay is a really interesting story,” says DeVol. “It shows that you can succeed in the Midwest.”

Findlay, in fact, is something of an anomaly in the region. Only seven Midwestern communities finished in The Top 50 Most Dynamic Micropolitan Areas, per the Walton Family Foundation: No. 7 Findlay; No. 29 Effingham, Illinois; No. 31 Bardstown, Kentucky; No. 41 Spirit Lake, Iowa; No. 46 Auburn, Indiana; No. 48 Angola, Indiana; and No. 49 Brookings, South Dakota.

Expand the list to the top 100 and the Midwest scores a little better. From spots 51 to 100, the Midwest placed another 20 communities in the ranking.

Still, Findlay stands alone as the only TrustBelt town to crack the top 20. DeVol says he’s not surprised. “The scores of small towns in the Midwest reflect the performance of the Midwest overall,” he notes. “They’ve lost employment across the board. Many places still have not fully recovered from the Great Recession of 2008 and 2009.”

Findlay is an aberration, he says, because it’s mastered things that are largely ignored in the vast majority of American small towns. “They are obviously attracting investment into business expansions from outside the community. It shows that Findlay is an attractive location for new investment,” DeVol says. “They have several corporate headquarters; they have a lower cost of doing business than other places in the Midwest; they are a very good transportation location; and there is a close relationship between the area colleges and local employers, with a great deal of collaboration.”

He adds that Findlay excels in the engineering and technical fields, “is a tight-knit community, has a history of manufacturing excellence, and benefits from the automotive recovery.”

Findlay stands out, he adds, because other Midwestern communities often ignore the fundamentals of economic development. “Many smaller communities in the Midwest have lost focus on the importance that entrepreneurship plays in the role of long-term job creation. That’s why we included 5-year totals for young firms as a share of total employment. That’s where most jobs are created in the economy of a smaller location – between year 5 and year 15 at growing companies.”

DeVol: Adopt These 7 Traits

If more cities want to emulate Findlay, DeVol notes, they should adopt these seven qualities:

• Have a greater awareness of local entrepreneurship and support it.
• Work with local community colleges and high schools to encourage entrepreneurship as an alternate career path.
• Train young people in the skills that major employers demand.
• Focus on their niche industries.
• Refine their central value proposition.
• Recognize the importance that arts and museums play in attracting people and firms.
• Constantly evaluate the total portfolio of offerings as a business destination.

He cites places like Effingham, Illinois; Bardstown, Kentucky; Spirit Lake, Iowa; and Auburn, Indiana as towns that get economic development right. “Look at them. Most have community colleges that engage with local employers,” he says. “They focus not just on recruiting large companies; they attract smaller firms from other locations, and they pay attention to business retention and expansion. Those things get overlooked in most small towns. They don’t in the most successful ones.”

He adds, “It’s important to reiterate that it’s not just about being a travel destination. It’s what you do with your attributes. It’s about quality of life and place. All the top small towns have positive net in-migration. People want to move there.”