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Reclassification of Nonmetro Areas Exaggerates Employment Gap

Population growth has occurred in a number of nonmetro counties because they are on the edges of established metro areas or are centered on smaller but growing urban areas. After each decennial census, these population shifts cause some nonmetro counties to be reclassified as metropolitan. Metro areas that lose population are reclassified as nonmetropolitan much less frequently, primarily as a result of changes in metro area reclassification rules (see “Behind the Data,” Amber Waves, September 2003). The net result of these changes is that the area classified as nonmetropolitan becomes slightly smaller after each census, and many of the fastest growing nonmetro counties are reclassified as metro.

This reclassification can affect employment statistics, exaggerating the contrast in metro-nonmetro economic growth. In fact, the apparent decline of nonmetro employment and most of the evident gap between metro and nonmetro growth rates reflect the reclassification of nonmetro counties as metro.

For example, employment in America’s nonmetro counties fell 3.3 percent between 1976 and 2005 to 22.8 million. Because total U.S. employment grew nearly 60 percent in that span, nonmetro’s share declined from 26.6 percent to 16.1 percent. Meanwhile, metro employment jumped 82.5 percent to 118.9 million and the metro share of total U.S. employment rose from 73.4 to 83.9 percent.

To understand the impact of reclassification, consider the 2,486 counties classified as nonmetro in 1976. By 2005, employment in these counties had grown 54.1 percent to 36.3 million, and they accounted for 25.6 percent of total U.S. employment, just 1 percentage point below the corresponding value for 1976. Thus, comparing growth rates based on 1976 metro status reveals a relatively modest disparity between the experience of metro and nonmetro counties.

However, the 2000 census reclassified 464 nonmetro counties as metro, which changes the employment picture. Employment in these “new” metro counties increased 92.8 percent from 1976 to 2005, compared with 36.5 percent in the 2,022 counties that remained nonmetro. At the same time, employment in the 625 counties that remained metro from 1976 to 2005 grew 61.7 percent to 104.7 million. The reclassified counties represented more than 30 percent of the nonmetro employment base in 1976.

Even if the expansion of metro areas continues, the current nonmetro counties likely will still account for something close to their present share of national employment 30 years from now when growth rates are compared based on 2005 metro status. However, a disproportionate number of the fastest growing among these counties will be reclassified as metro, and statistically speaking, the remaining nonmetro counties’ share of national employment will decline even further.

This article is drawn from...

Rural Classifications, by John Cromartie and Timothy Parker, USDA, Economic Research Service, December 2013

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In The Long Run, by John Cromartie, USDA, Economic Research Service, February 2006

Defining Rural Areas Based on New County Classifications, USDA, Economic Research Service, September 2003, in Amber Waves, Volume 1, Issue 4.