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The Digital Divide Between Small Towns and Big Cities

By disrupting traditional in-person and paper-based processes, the pandemic has accelerated the transition of government into the digital age. At the federal level, this has culminated in a recent executive order by President Biden directing the federal government to improve its “customer service,” with an emphasis on the transition to improved digital services.

A similar acceleration toward digitization in local government across the United States has also occurred recently. In a recent survey we conducted of local government department heads, we found that 60% of departments in local governments serving populations of 50k or more had adopted any specialized software in the last three years.


Fig 1: Local Government Adoption of Specialized Software by Community Size

This figure displays the percentage of local governments that have adopted at least one specialized software product in the last three years, broken out by the population size of the community.
This figure displays the percentage of local governments that have adopted at least one specialized software product in the last three years, broken out by the population size of the community.

However, the digitization of local government has not happened uniformly. The smaller the local government, the less likely it is to have adopted digital technologies in the last few years. For example, only 48% of department heads in local governments serving populations between 10 and 50k reported having adopted any specialized software in the last three years. And only 36% of respondents from local governments serving 1-10k communities had done so.

As it turns outs, most local governments in America are very small. There are roughly twenty thousand local governments serving populations between 1 and 50k. By comparison, the number of larger local governments serving populations of 50k or more—where most of the digitization is happening—is around two thousand.

Why does the digital divide persist between governments in large cities and small towns in the United States? One obvious statement about smaller communities is that they are, well, small. This means that there is less incentive to adopt new software to help automate services at scale, where it might be a no-brainer for local governments with hundreds of employees or hundreds of thousands of constituents. For example, as the head of the finance department in one small town in New York succinctly told us, “We could easily go back to paper ledgers and postcard billing for our 16 water and sewer customers.”

However, this isn’t the whole picture. The demographics of smaller communities in the United States are also different from those of larger, more urban communities. In particular, residents tend to be older and are less likely to have a college education (see Figure 2). For both these reasons, residents of these communities may have greater difficulty accessing and navigating new digital services.


Fig 2: Age and Education of Residents by Community Size

This figure displays the percentage of residents that are age 65 or older (left) and have a college degree (right), broken out by the population size of the community.
This figure displays the percentage of residents that are age 65 or older (left) and have a college degree (right), broken out by the population size of the community.

What can technology companies wishing to serve smaller local government in America do? The answer cannot simply be to try harder to sell to them. In our recent report, we found that even the smaller local governments that had adopted specialized software were less likely than larger governments to report the experience as being a positive one (See Figure 2.11, 2021 Software Adoption Trends in Local Government).


Instead, software providers should consider how to customize their products and services for smaller local communities. Not only can providers consider low-budget options that allow smaller departments to justify procurement, they should also consider how the different demographics of these communities might affect ease of deployment.


The pandemic has underscored the need for government agencies to be able to effectively deliver services in a digital environment. While this has accelerated a much-needed movement toward digitization in local government, it has also further underscored the enormous urban-rural digital divide in America. Greater attention to the particular characteristics and needs of these smaller communities would help bridge this divide.

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