Comparing Small Towns With Big City Economies In A Post-Covid World

Tuesday, 22 February 2022, 1:27 pm
Press Release: Hugh Grant

More than just small town blues and big city problems, the divide between small towns and big cities has only been amplified by Covid. Their economies are a snapshot into the distribution of wealth and businesses across the US. To fairly compare small town and big city economies, there are a number of factors to consider.

During Covid there was a tangible rumbling of national interest in moving to smaller towns. Many people were attracted to the quiet safety of towns with no skyscrapers or hustling and bustling. There was also an underurrently of loneliness and isolation in big cities, where its residents wondered if small towns offered the warmth of community. Despite these rumors, the United State Census Bureau confirmed that big cities continued to grow, and small towns grew unevenly - with Northeast small towns decreasing by 3%, and Western small towns increasing by 13.3%. Still, why was there so much noise about relocating to small towns during Covid, and what does the economy have to say about this?

Small town Economies vs. the Big City

The Size of the Matter

Small towns are somewhat innately disadvantaged due to their size in comparison to larger cities. A larger town or city has more of a workforce, and is usually more trusted as a home for bigger businesses. There is much more room for contacts, as well as an expansive talent pool.

If big companies were to move to small towns, there would be advantages: cheaper accommodation and property, lower taxation depending on town, and the benefit of a less dense space. However, these advantages did not translate into any significant moves. For most small towns, the economy is supported by small businesses. This is not the case for the densely populated big cities, who house large scale businesses en masse. There are, however, reasons for this. Big cities can provide more working hands, who are more diverse.

Response to Covid

At first glance, you might think that small towns would be much safer in the time of a pandemic, and initially, this would be correct. With densely populated spaces and vital public transportation networks, big cities require proximity. This made social distancing a difficult procedure. As a result, we saw rapid rises in Covid cases. With many sick, or unable to work in a physical space, this may lead you to believe that big cities suffered a tremendous dive in their economies. However, small towns soon caught up in proportional cases, and the more obvious cause came to light: economic distribution. Small towns, although less dense, routinely rely on agriculture for work. This sector can be distanced, but relies on physical work. Similarly, smaller businesses are less likely to offer remote work. Big cities, although still full with retail workers, healthcare professionals, and other workers that are required to be physically present, had more opportunities to switch to fully-remote work. This enabled their economies to persist, even if begrudgingly. Despite this, it is not so much about how populated towns and cities are, but how they are geographically distributed, and how the workforce is structured.

For small towns with small businesses, it is likely that the next few years will be filled with attempts at recovery, whereas big cities are already beginning to bounce back.

Business Formation

It is no secret that the top companies in the US are registered as LLCs. They offer greater financial protection and less taxation. New York City has seen a rise in tech startups during and post-Covid. These businesses are structured as LLCs, and enjoy the benefit of not having to pay double taxation. In a post-covid setting, it is no surprise that LLCs have protected many businesses. As a result, economies, like that of New York, will be able to revive and thrive.

The Really Useful Information Company, or TRUiC, offers a wide range of services and information on starting an LLC in New York.

Conclusion

Small towns and big cities fought very similar battles during the pandemic. Ultimately, it is not their density that caused adverse effects during Covid, but their spatial and economic distribution. Despite this, big cities will continue to have the upper hand in reviving their economy, whilst small towns will need time to recover.

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