Far From the Big City, New Economic Life

GAINESBORO, Tenn. — There is not much to suggest prosperity in Gainesboro, a hamlet of 920 in Tennessee’s Upper Cumberland region. Almost one in seven homes are vacant. One-quarter of the population lives in poverty.

Yet from his office in the Jackson County Courthouse, County Mayor Randy Heady outlines a picture of plenty: Revenue from sales and occupancy taxes almost doubled in the last fiscal year, and he expects another 20 percent increase this year. “Sales tax is up, occupancy tax is up, liquor tax is up,” he said.

And outsiders are flocking into the county. “They are coming from other states, trying to get away from the high taxes,” Mr. Heady said. “People are moving from Arizona and California, New York and New Jersey.”

Economists have long voiced fear that rural places like this are being left behind. The last of the textile businesses, once an economic mainstay, departed in the 1990s. Jackson County and several other counties in the Upper Cumberland are considered “distressed” or “at risk” by the Appalachian Regional Commission.

But the newcomers are fueling a boomlet in the area, based on a simple economic proposition: It is pretty, and it is cheap. While Jackson County’s typical household makes $35,207 a year, just over half the national average, the low cost of living allows residents to punch far above their weight in economic terms.

Some local businesses are busier than ever. Carol Abney has 250 clients for an internet-based accounting practice she runs from her husband’s auto-repair shop in Celina, about half an hour north of Gainesboro in Clay County. “I’m booming,” she said.

While the good times are still fragile, the turnaround could suggest a path for other rural areas to shake off their persistent story of decline.

“Our county has been growing pretty steadily over the last five years, but really growing in the last couple,” said Randy Porter, the mayor of Putnam County, the most populous in the region.

The region has a couple of things in its favor. It has long drawn summer tourists for hunting and fishing, as well as retirees who come from as far away as Ohio to settle among the rivers, lakes and hollers.

Cookeville, the region’s largest city, is home to the Tennessee Technological University, which has about 10,000 students. The university estimates that in the 2019-20 academic year it contributed $860 million to the economy of the Upper Cumberland region and added 7,356 jobs.

While manufacturing jobs in the commuting zone centered in Cookeville were nearly halved between 1990 and 2010, it has staged a bit of a rebound since then. Before the coronavirus pandemic, jobs reached over 14,000, about one-fifth of the region’s total employment, compared with 8.5 percent nationwide. The unemployment rate is 3.5 percent, considerably below the national average.

But there is another dynamic that Mayor Heady and others are hoping will stick: an exodus of workers fleeing the cost of living in big cities. The area is about an hour-and-a-half drive from Nashville, allowing for a not-unreasonable commute. Many of the new residents are coming from farther away.

The eight counties in the commuting zone are home to about 220,000. From 2010 to 2020, migration from the rest of the country bumped the population by almost 15,000. In 2020 alone, it grew by 2,692, making up almost all of the region’s population gain.

And the pandemic has only added to the trend, Mr. Heady and Mr. Porter say, by encouraging workers to leave congested and expensive urban hubs and work remotely from the Upper Cumberland. If remote work remains widespread, their counties could benefit from a decisive price advantage.

Research by Rebecca Diamond, an economist at Stanford University, and Enrico Moretti, an economist at the University of California, Berkeley, explains the attraction. They worked out how costs affect living standards in various parts of the country.

Workers without a four-year college degree earn little in the Cookeville commuting zone — their income puts them among the poorest 10 percent of households in hundreds of commuting zones across the country. After adjusting for the local cost of living, however, their purchasing power rises to the top 10 percent.

They can live more comfortable lives than if they moved to a bigger city, like Nashville or Knoxville. According to Ms. Diamond and Mr. Moretti’s work, which is based on data from 2014, the household income of a typical worker who never finished high school in Cookeville is about $43,000. In New York it is $58,000; in San Francisco, $62,000.

Still, adjusting for the local cost of living, the workers in San Francisco and New York could afford much less — roughly what someone with an income of $37,000 could buy in a city like Cleveland, which ranks in the middle of the national income distribution. The Cookeville workers, by contrast, live as if they were making $46,000 in Cleveland.

Big cities are not that good a deal for even highly educated workers. They do earn much higher wages in New York than in Cookeville — indeed, the college educated reap a bigger pay premium if they work in bigger cities than their less-educated peers. But according to the researchers, all the extra wages are eaten up by higher costs.

It’s mostly about housing. Last November, the typical home in Cookeville cost $217,303, according to Zillow. That’s one-fourth of the median price of a home in Los Angeles and one-sixth of the price in San Francisco. Median rent in Jackson County is $548 per month.

Housing costs are putting a big dent in the case for urban America. “If you are trying to raise people’s standard of living you want to move them away from big cities not towards them,” said Jesse Rothstein, an economist at the University of California, Berkeley. He wrote a research paper with David Card, his colleague at Berkeley, and Moises Yi of the Census Bureau that pours more cold water on the supposed advantages of America’s megalopolises.

David Autor, an economist at the Massachusetts Institute of Technology who has studied how jobs vary across urban and rural areas, agreed: “The notion of ‘go to the city, young man or woman,’ is simply not true.”

People are catching on. In 2020, 110,000 more people left Los Angeles than arrived from other parts of the country; New York City lost 150,000 people. “California is the main source of people, also New York and Oregon for some reason,” Mr. Porter said of Jackson County. “Folks sell their home, move here and can buy a house that’s twice the size for half the price.”

Cassie and Pete Kessler offer a glimpse into the Upper Cumberland’s improved fortunes. They arrived from Clearwater, Fla., where she tended bar and he cooked for restaurants on the beachfront. Following the hint of a regular who hailed from Tennessee, they gave the region a shot. In July 2020, they opened the Stolen Coin Oyster Bar & Bistro in Gainesboro, across the street from the courthouse.

They offer a Louisiana-inflected menu, with fresh, grilled or fried oysters, a shrimp-and-andouille starter in a Cajun Creole sauce and entrees like pecan-crusted salmon. Not quite standard fare for these parts. “They said people here won’t eat that,” Ms. Kessler said. But they did very good business. Sales hit $685,000 in 2021, she said — and not for lack of competition.

The fancier Bull and Thistle opened on the same block a few months before the Stolen Coin. The 12 Degrees Tavern came a few months before that. There is a new Mexican place by the Marathon gas station. One block over, the Roaring River Distillery opened in November.

“In 2018, the only restaurant we had was Faye’s Cafe,” Mr. Heady said. “A country breakfast joint.”

The Kesslers are so optimistic that they sunk much of their first-year profit into a “speakeasy” upstairs. They have a deal to buy the building in which the Stolen Coin sits — which they rent for $800 a month — for $54,000.

But whether the area’s budding prosperity will continue remains an open question. The explosion in sales filling the coffers in Jackson and Putnam Counties was propelled in part by the multitrillion-dollar economic rescue packages passed by Congress in 2020 and 2021. That stimulus is largely over.

It is also unclear how big and permanent a change remote work will bring about in the Upper Cumberland. Some early research suggested that the workers who were leaving cities during the pandemic mainly moved to nearby suburbs and exurbs.

Others have bet on the area before. In the 1990s, a man who owned a construction company in the Florida Keys bought a lot of buildings in Gainesboro, hoping the region would bounce back from the doldrums and he would mint a fortune. “He didn’t want to sell, waiting for it to appreciate,” Mr. Heady said. “But the appreciation didn’t happen.” Or at least not fast enough. The man died in January.

The other question is what will happen if the comeback endures. Mr. Porter, the mayor of Putnam County, says his biggest concern is how to keep up with population growth. “We never thought we would be growing at the pace we’re growing,” he said. This summer, the county will start building the third new school since he took office in 2014.

There is a downside to out-of-towners’ snapping up cheap real estate. The median home price in Cookeville has risen over 60 percent since the end of 2016, according to Zillow, outpacing a nationwide increase of 50 percent and vastly outstripping price increases in New York, Los Angeles and Chicago. Mr. Porter told of a newly married local couple who bid on 16 homes in Cookeville, without success, even when they offered the full asking price.

And an influx of new residents is likely to bring other changes to a rural community that is considerably whiter and more conservative than urban America. More than 80 percent of Putnam County’s population is white and not Hispanic. Donald Trump won 71 percent of the county vote in the presidential election of 2020. Jackson County skews even more in this direction.

Skyler Beason, Mr. Kessler’s right-hand man in the kitchen of the Stolen Coin, and his girlfriend, Hailey Allen, a photographer, welcome the changes they see. They are young: 25 and 27. Both grew up in the region. They live in Cookeville, and neither wants to leave. “It’s gotten very progressive,” Mr. Beason said.

Brie Flora, 30, a jeweler and metalsmith who came from Boston, is the face of such progressivity. She and her partner moved to a farm in nearby Overton County in 2016 and bought a home in Cookeville two years later. A few months ago, she and a friend opened an art gallery, The Silver Fern. “This is definitely home,” she said. Still, the “red-state feel” unnerves her. And she roots for a new nonprofit group that aims to help L.G.B.T.Q. youth in the area.

Not everybody will embrace the change the out-of-towners may bring. Local residents “don’t want people to come with the intent to change the community,” Mr. Porter said. The question, perhaps, is whether that is the price of prosperity.