Thanks to John Schultz for the heads up on the latest article on on-shoring from CNN Money, Forget India, outsource to Arkansas. The article outlines the trend of businesses looking to rural areas for skilled, low-cost labor – otherwise known as rural sourcing.
The idea is simple. We have folks who need jobs in the US. Folks in rural areas don’t need the same salary as folks in metropolitan areas because the cost of living is lower. They claim 23 percent lower…
Launched in 2004, Rural Sourcing Inc. sets up shop in mid-size cities that are near universities — places like Jonesboro, where the average IT salary is $35,000, versus $65,000 in a large metro area. The cost of living in Jonesboro is also 23% less than the U.S. average
One advantage of hiring locally is that everyone is working in the same time zone – so if there’s an issue you can handle it immediately. The article also mentions the risk of misunderstandings due to cultural differences and risk of working with people who have difference business and security laws.
The article features one Minnesota company, CrossUSA. We’ve written about them before, but it’s always fun to read about Minnesotans who are doing well…
Meanwhile, CrossUSA in Burnsville, Minn., recruits experienced, older IT workers who are nearing retirement for its 100-employee operations in Sebeka, Minn., (population 700) and Eveleth, Minn., (population 3,000).
The draw for workers is the chance to make their money stretch as far as possible prior to retirement. “They’re trying to figure out the best way to finish their careers, and some people want a small-town quality of life,” says John Beasley, CrossUSA’s director of business development.
CrossUSA is growing at a 7% annual clip, with $9 million in sales last year. Its turnover rate is low — in a town of 3,000 people, who can woo away your employees?
I don’t know whether to laugh or cry over articles like this. The cost of living argument is a non-starter–move beyond housing costs, and it falls apart. A box of Wheaties costs as much in Marshall as in Minneapolis, if not more.
Rural communities DO have advantages to the overall cost of doing business, as well as the quality of life. How much is a 5-minute commute worth? But if my work is worth $65k in Burnsville then I’m worth $65k in Eveleth.
Great point John – I’ve been wrestling with a reposnse because there are a couple of issues at hand. First equal pay. We all deserve it but it doesn’t always happen. And I guess there are two ways to think about it in terms of choosing a place to live. Should potential workers hold out for higher pay or do potential workers make themselves more attractive by moving to rural areas. On a practical basis I think the answer is different based on the general economy.
Also there’s the difference in cost of living. I did a quick search on Sperling’s Best Places cost of living calculator. http://www.bestplaces.net/col/ They found that a salary of $65,000 in Burnsville, Minnesota could decrease to $51,823 in Eveleth, Minnesota to maintain the same standard of living. But I don’t know if that’s accurate *and* that’s not really the $65,000 versus $35,000 difference quoted in the article.