Rural Economy

Rural areas are defined in a number of ways according to the economic or social outcome of interest. Rural economic and demographic changes are closely linked; both are essential to understanding whether diverse rural areas are prospering or in distress, and how underlying factors such as education affect the well-being of rural communities. Recent trends point to relatively slow employment and population growth in rural areas, accompanied by increases in poverty. These trends vary widely across rural America.

Nonmetro poverty rates remain higher than metro

Nonmetro areas have had a higher rate of poverty than metro areas since the 1960s (when poverty rates were first officially recorded). Over time, however, the difference between nonmetro and metro poverty rates has generally narrowed, falling from an average difference of 4.5 percentage points in the 1980s to an average gap of about 3 percentage points in 2010-17. In 2017, the nonmetro poverty rate was 16.4 percent, while the metro rate was 12.9 percent.

Nonmetro education levels are improving, but still lag metro

Historically, nonmetro areas in the United States have lagged behind metro areas in educational attainment, but they are catching up. The share of adults with high school and college degrees in nonmetro areas rose over the 2000s. However, in 2017, nonmetro areas still faced a gap compared with metro areas in the share of adults with a bachelor’s degree or higher—20 percent versus 34 percent. One explanation may be the higher pay more highly-educated workers can often earn in metropolitan labor markets.

Rural America ends first-ever period of population loss

Between July 2016 and July 2017, rural (nonmetro) counties increased in population for the first time this decade, according to the Census Bureau’s latest population estimates. The shift in rural population change was quite small, from a loss of 15,000 people in 2015-16 to a gain of 33,000 in 2016-17. However, it continues an upward trend in all but one year since 2011-12, when rural counties declined by 61,000 people. Population growth rates for rural areas have been significantly lower than in urban (metro) areas since the mid-1990s, and the gap widened considerably after the housing-market crisis in 2007 and the Great Recession that followed. The gap between rural and urban growth rates has narrowed slightly in recent years, but remains significant. Urban areas grew by 0.82 percent in 2016-17, compared with 0.07 percent growth in rural areas. The post-recession recovery in population growth for nonmetro America during this decade has been much more gradual compared with previous post-recession periods.

Nonmetro population change varies across the United States

Rural (nonmetro) population loss has been relatively small—223,000 fewer people in 2017 compared with 2010—but this overall trend masks significant regional and local variation. Population declined by 907,000 people in the 1,333 rural counties that lost population since 2010. At the same time, 466 rural counties grew at moderate rates (below the national average of 5 percent) and added 258,000 people. Many of these moderate-growth counties are located in recreation or retirement destinations. The remaining 177 rural counties increased at rates above 5 percent and added 426,000 people. Some of the highest rates of growth during 2010-17 were seen in rural counties with booming energy sectors, such as counties in western North Dakota. However, many energy-sector counties experienced a considerable population slowdown in 2015, in line with recent cut-backs in oil and gas production.

Defining rural areas: "Nonmetro" is based on counties

The Economic Research Service, and others who analyze conditions in "rural" America, most often study conditions in nonmetropolitan (nonmetro) areas, which are defined on the basis of counties. Nonmetro counties include some combination of open countryside, rural towns (places with fewer than 2,500 people), and urban areas (with populations ranging from 2,500 to 49,999) that are not part of larger labor market areas (metropolitan areas). The 1,976 counties currently classified as nonmetro include 15 percent of the U.S. population (just over 46 million people) and 72 percent of the Nation's land area.

Defining rural areas: U.S. Census uses small geographic units (blocks) to define urban/rural

One definition of rural, based on relatively small geographic building blocks, is provided by the U.S. Census Bureau in its urban-rural classification system. In this delineation, rural areas comprise open country and settlements with fewer than 2,500 residents. Urban areas comprise larger places and the densely settled areas around them, but do not necessarily follow municipal boundaries. Urban areas are essentially densely settled territory as it might appear from the air.

Rural economies depend on different industries

Rural areas vary in the industries that underpin their economies. Counties’ employment levels are more sensitive to economic trends that strongly affect their leading industries. For example, trends in agricultural prices have a disproportionate effect on farming-dependent counties, which accounted for nearly 20 percent of all rural counties and 6 percent of the rural population in 2017. Likewise, the boom in U.S. oil and natural gas production that peaked in 2012 increased employment in many mining-dependent rural counties. Meanwhile, the decline in manufacturing employment has particularly affected manufacturing-dependent counties, which accounted for about 18 percent of rural counties and 22 percent of the rural population in 2017.

Last updated: Tuesday, August 20, 2019

For more information contact: Kathleen Kassel