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.


Rural America ends first-ever period of population loss

Between July 2018 and July 2019, rural (nonmetro) counties as a whole continued a very small increase in population that began a year earlier, following seven years of population decline. The gains in population have been quite small, a 0.02-percent increase in 2018-19 following a 0.04-percent gain in 2017-18. This contrasts with first-ever declines in nonmetro population that occurred from 2010-17, when annual population losses averaged -0.08 percent per year. (These most recent county population estimates from the U.S. Census Bureau (as of March 26, 2020) reflect revisions to previous data.) 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. The post-recession recovery in population growth for rural 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—230,000 fewer people in 2019 compared with 2010—but this overall trend masks significant regional and local variation. Population declined in 1,326 rural counties—two-thirds of all rural counties. No longer concentrated in the Great Plains and Corn Belt as in previous years, declining counties are found in high numbers in most States, especially in the eastern half of the country. At the same time, 470 rural counties grew at moderate rates (below the national average of 6.3 percent). Many of these counties are located in recreation or retirement destinations, such as in the southern Appalachians and northern Rockies. The remaining 180 rural counties increased at rates above 6.3 percent. Some of the highest rates of growth during 2010-19 were seen in rural counties with booming energy sectors, such as counties in western North Dakota and west Texas. However, many energy-sector counties experienced a considerable population slowdown after 2015, in line with recent cut-backs in oil and gas production.

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 2018, the nonmetro poverty rate was 16.1 percent, while the metro rate was 12.6 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 2018, 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 35 percent. One explanation may be the higher pay more highly-educated workers can often earn in metropolitan labor markets.

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, May 05, 2020

For more information, contact: Kathleen Kassel