Rural and small town employment still lags

Metro areas are bouncing back from the Great Recession more quickly.

 

Precipitated by the real estate collapse, in December of 2007 the U.S. plummeted into the most severe economic crisis since the Great Depression. A barrage of aggressive and controversial fiscal policies followed to right the ship — the government bailout, etc. — and in 2009, after the recession hit its low point, the country began rebuilding itself. But some places have recovered more vigorously than others, according to a new study by the Economic Research Service of the U.S. Department of Agriculture.

While cities and their greater areas appear to have climbed back towards pre-recession employment levels, rural America largely remains stuck. Before getting too far into the nuances of the recovery, let’s first define the terms. The USDA’s analysis is based on county-level recovery, which the report divides into two categories: Metropolitan counties have one or more urbanized areas with at least 50,000 people. Non-metropolitan counties have less population and are defined by small towns and sparsely populated rural areas. Of course, rural areas can exist within metropolitan counties: Coconino County in Arizona houses Grand Canyon National Park and two remote Indian reservations, but also Flagstaff, a city of almost 70,000.  

The USDA's study indicates that employment rates have plateaued in non-metro counties, unlike their metro counterparts. The graph below shows quarterly employment in both types of counties nationally from 2007 through June of 2014.

Since economic downturn in 2008, both nonmetro and metro areas have made up losses. Employment in the average nonmetro county, though, has grown by 1.57 percent cumulatively compared to 3.82 percent in the average metro county.

So why is this happening? First, as of this year, overall population growth in nonmetro counties has slowed to just below zero for the first time ever. Small towns and rural areas have seen periods of exodus in the past, but never before has rural America experienced population loss. “The loss is not huge,” says economist Tom Hertz, the lead author of the study, “but it is unprecedented.” Furthermore, the low rate of population growth is partly due to the loss of jobs during the recession, which only makes more people leave. According to the report, slower population growth in nonmetro areas accounts for about half of its job growth deficit.

Movement to nonmetro counties has also slowed. For several decades, a good share of development in many nonmetro counties was determined by baby boomers moving to highly desirable places close to recreation opportunities and natural beauty, like the mountainous Interior West. This movement brought with it sizeable populations to work in the building and service industries accompanying that growth. But as construction and manufacturing took enormous hits with the housing market crash that began in 2007, and as people pinched pennies to pay off housing debt, this growth plummeted and employment rates followed suit.

The report also mentions that the population in nonmetro counties is aging — there are less and less young to replace the old. A lower overall rate of college graduates in nonmetro counties, when compared to metro ones, also contributes to the slower employment growth post-recession.

Not all nonmetro counties are the same, of course. While more densely populated rural areas that rely heavily on manufacturing took the largest hits, the least densely populated rural counties (with an average of 5.8 people per square mile) experienced smaller job loss. These very rural counties typically have higher shares of farm and government employment, both of which performed relatively well during the recession. Average employment there fell by 1.3 percent, compared to 5 to 6 percent for more populous nonmetro areas. These very rural counties have rebounded more quickly than the more densely populated non-metro counties.

The narrative of economic stagnation may appear to contradict the news of large natural resource booms in sparsely populated pockets throughout the country. With the rise in fracking and natural gas production since 2007, nonmetro counties around the country have indeed seen unemployment shrink and population increase. The population of Richland County in eastern Montana across the state border from the Bakken oil field, for example, grew by 15.2 percent between 2010 and 2013. Between 2010 and 2012, the employment rate grew by 19.9 percent. But even these isolated spurts of exponential growth don’t alter the fact that nonmetro counties, on the whole, are struggling to bounce back economically in the wake of the recession.  

This is not to suggest that there have been no improvements at all. Unemployment rates in non-metro areas have indeed come down, if only incrementally (down by 1.79 and 3.14 percent in low and higher density nonmetro counties, respectively). And economists like Hertz say that real recovery will eventually kick in. “There’s no reason to think that rural America is in some great death spiral” Hertz says, “but there is a long climb ahead.”

Wyatt Orme is an editorial intern at High Country News. He tweets @wyatt_orme. Homepage photograph by Flickr user Just Having Some Fun in Cohagen, Montana.