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. These trends vary widely across rural America.

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 nonmetro educational attainment levels continue to increase. From 2000 to 2017–21, the share of adults with less than a high school diploma declined in nonmetro areas from 24 percent to 13 percent and the share of adults with a bachelor’s degree or higher increased from 15 percent to 21 percent. However, the share of adults with a bachelor’s degree or higher in metro areas increased from 26 percent in 2000 to 36 percent in 2017–21, widening the nonmetro-metro gap from 11 percentage points to 15 percentage points. One explanation for the persisting and widening gap may be the higher pay more highly-educated workers can often earn in metropolitan labor markets.

Nonmetro population change varies across the United States

The overall rate of nonmetro population growth during 2020–21 (0.25 percent) exceeded the national rate (0.12 percent) for the first time since the mid-1990s. At the county level, however, there was regional and local variation in population change during 2020–21. Population declined in 929 nonmetro counties—nearly half of all nonmetro counties. No longer concentrated in the Great Plains and Corn Belt as in previous years, nonmetro counties with population loss during 2020–21 were found in most States, including the eastern half of the country. Population grew at rates at or above 0.12 percent in 931 nonmetro counties in 2020–21. Many of these counties are in recreation or retirement destinations, such as in the southern Appalachians and Ozarks, the upper Great Lakes, and throughout the intermountain West. Others are found adjacent to large metro areas, such as Nashville, Minneapolis-St. Paul, and Dallas-Ft. Worth. However, in the wake of the COVID-19 pandemic, higher-than-average-growing nonmetro counties were also found in all States of the Great Plains, reversing historic trends.

Rural America ends first-ever period of population loss

Population change in nonmetro areas reversed in 2020–21, going from a 0.09-percent decline in July 2019 to July 2020 to a 0.25-percent increase in the following 12 months. Renewed nonmetro growth in the wake of the COVID-19 pandemic contrasts with the previous decade that saw the first-ever loss in nonmetro population (from 2010–17) when annual population change averaged -0.08 percent per year. A turnaround in migration flows between metro and nonmetro counties occurred during the first year and a half of the COVID-19 pandemic, with many people choosing to reside in places with lower population density as COVID-19 infection rates accelerated.

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 2010-18. In 2019, the nonmetro poverty rate was 15.4 percent, while the metro rate was 11.9 percent.

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: Thursday, January 26, 2023

For more information, contact: Kathleen Kassel