The Revolt of the Left-Out Voter

Government figures tell us the US market—the world's biggest—has never been stronger. And yet there is unrest—politically, economically, and socially. In this occasional series, Korn Ferry examines a string of contradictions that are leaving so many corporate leaders baffled.

It’s the tale of two regions in the United States: one urban, the other rural. On the one hand, Wall Street is booming. It sits at the center of a metropolis where the unemployment rate is 4.3%. In the first half of 2017, New York City is once again resembling the boomtown it was before the financial crisis. Drive a couple hours to Cameron County, Pennsylvania, however, and things are quite different. There the unemployment rate stands at 7.4%.

Among the greatest mysteries of the job market over the past several years is why an economy that is growing overall is leaving some behind. A recent study published by the Manhattan-based Economic Cycle Research Institute (ECRI) made some shocking findings when it analyzed the jobs market from 2007 through November 2016, the month of the last presidential election. The white population, which held 81% of jobs in 2007 and dominates rural America, saw overall job losses even though the economy created more than 5 million jobs over that period, ECRI says. Asian-Americans, Hispanics, and African-Americans all saw job gains, according to the report. (There is some double counting because there are white Hispanics and black Hispanics.)

The unhappiness with the situation became all too clear at the polls, including of course last November’s surprising presidential race. “I think for sure an election is a good chance to hold up a mirror in front of a country,” says Nathan Blain, global leader of Talent Strategy Solutions at Korn Ferry. “We learned some really valuable things. The surprise in the election results was an indicator that people weren’t sensitized to the economic shift that was occurring and the uncertainty people were feeling.” People in Cameron County definitely made their views known; they voted for Donald Trump by a factor of three to one.

Blain says the racial and ethnic breakdown of the jobs market can also be viewed as a divide between urban and rural residents. Indeed, in Pennsylvania, more than eight out of ten people are white, according to U.S. Census Bureau data. That compares to fewer than half the people in New York City.

You might have thought that the technological innovations of lightning-fast broadband, cheap telephony, and inexpensive computer equipment would have made rural areas more appealing to employers. In fact, Blain says he used to think that would happen. But it didn’t turn out that way. “Employers continued to set up shop in urban areas,” he says.

That makes sense as simple economic theory shows. If you want energy industry experts then you go to Dallas or Houston, rather than Atlanta. In Dallas and Houston, for instance, more than 200,000 and 87,000 people, respectively, were employed in the mining business (which includes oil and gas). Atlanta, by contrast, has fewer than 2,000, according to government data. That’s why certain urban centers are known for concentrations of types of businesses, such as New York for finance, San Francisco for technology, and Los Angeles for entertainment.

It means companies likely cannot set up new operations in whatever location happens to appeal to the leadership. Blain likens the problem to establishing a watchmaking factory. There are certainly a lot of skilled watchmakers in Switzerland. “But it’s very hard to move the talent,” he says. That means CEOs and other senior managers need to unite their leadership, and eventually the entire company, around the necessary strategy of setting up businesses where the required talent is abundant, even if that is a different location from where the company has normally operated. That’s the reality. “If you want coders you want to go where coders already are,” says Blain. And that’s in cities, not out in the country.