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, however.

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 a gap of about 3 percentage points in 2010-16. In 2016, the nonmetro poverty rate was 16.9 percent, while the metro rate was 13.6 percent.

First period of nonmetro population loss continued during 2015-16

Nonmetro population continued to decline slightly for a sixth straight year in 2015-16, according to the Census Bureau’s latest population estimates. Nonmetro counties in some parts of the country have experienced population loss for decades. However, the 2010-16 period marks the first time with an estimated population loss for nonmetro America as a whole. Historically, nonmetro population grew because natural increase (more births than deaths) always offset net migration loss (more people moving out than moving in). But falling birth rates and an aging population have steadily reduced natural increase in nonmetro areas over time. The recent recession has also dampened migration to nonmetro locations, contributing to the overall drop in nonmetro population levels.

Nonmetro population change varies across the United States

Nonmetro population loss has been relatively small—192,000 fewer people in 2016 compared with 2010—but this overall trend masks significant regional and local variation. Population declined by 790,000 people in the 1,350 nonmetro counties that lost population since 2010. At the same time, 466 rural counties grew at moderate rates (below the national average of 4.5 percent) and added 245,000 people. Many of these moderate-growth counties are located in recreation or retirement destinations. The remaining 160 rural counties that increased at rates above 4.5 percent added 353,000 people. The highest rates of growth during 2010-16 were seen in rural counties with booming energy sectors, such as counties western North Dakota. However, many energy-sector counties experienced a considerable population slowdown in 2015-16, in line with cut-backs in oil and gas production.

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 2015, nonmetro areas still faced a gap compared with metro areas in the share of adults with a bachelor’s degree or higher—19 percent versus 33 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.

Diversity in rural America is increasing

While the overall nonmetro population grew 4.5 percent in the 2000s, the nonmetro Hispanic population increased 45 percent. Additionally, Hispanic population growth was not confined to areas with large Hispanic concentrations in the Southwest. Hispanic populations more than doubled in most nonmetro counties in the South, and in many otherwise slow-growing or declining sections of the Nation’s Heartland. In 228 nonmetro counties, overall population loss over 2000-10 was avoided because Hispanic population growth more than offset non-Hispanic population decline.