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Income, Poverty and Population in Rural America

The U.S. Census Bureau’s annual report on poverty and income in America was released on September 13, 2016.

The findings of this report have been highlighted by many sources as an example of the economic growth experienced in many communities in recent years, noting that the median household income increased 5.2 percent from 2014 to 2015, the fastest increase on record.  For example, the White House Blog stated that the “report from the Census Bureau shows the remarkable progress that American families have made as the recovery continues to strengthen. . . . Income grew for households across the income distribution, with the fastest growth among lower- and middle-income households.”

While statements like this are certainly supported by the findings of the Census report, they do not provide a complete picture as to where this growth has occurred and the economic state of communities all around the country.  Specifically, within metropolitan statistical areas (MSAs), income levels rose six percent (7.3 percent for city dwellers, 4 percent for suburban and exurban residents).  Alternatively, the income levels for rural communities (including micropolitan statistical areas and areas outside of MSAs and micropolitan areas) declined by 2 percent.

A 2015 CAP report, “The Uneven Housing Recovery,” found that while many Americans have recovered from the economic recession, those that have not primarily reside in rural and nonmetropolitan areas.  The improved economies in metropolitan areas is related to growing populations and strengthening labor markets, which have aided these areas’ recovery from the recession.

Differentiated from metropolitan counties, small rural communities, which have not experienced the same level of recovery, have seen shrinking populations.  In fact, the U.S. Department of Agriculture Economic Research Service (ERS) found that between 2010 and 2015 the population of rural communities dropped 33,000 per year from 2010-2014 and 4,000 in 2015.  Comparatively, between 2010 and 2014, the urban population increased by more than two million people each year.

Decreasing populations in rural communities present unique challenges, and are a further issue impeding economic growth for these areas.  For example, the Census report found that poverty rates overall declined 1.2 percent from 14.8 percent in 2014 to 13.5 percent in 2015.  As with the Census report’s findings on income, declining poverty overall does not mean poverty has not increased in certain communities.

From 2014 to 2015, the actual number of rural Americans living in poverty declined from around 8.2 million to 7.4 million.   However, the decline in the number of people living in rural poverty was primarily due to out-migration – not improved economic conditions. Thus, for this same time period, the Census report found that the poverty rate for rural areas actually increased, albeit slightly (+0.2). The point is there was not any progress in reducing economic distress in rural areas.

The 2015 CAP report looked at the difference levels of recovery experienced by counties across the country.  The report found that most “struggling” counties are located in nonmetropolitan and rural areas.  These counties are characterized in the report as, at best, “stagnant” and more often “slipping” or sinking.”

Since 2009, slipping counties have experienced slow population growth and declining labor participation, and nearly 18 percent of the population in these areas live in poverty.  While homeownership is prevalent and renting is less common in slipping counties, the percentage of households who are cost-burdened, meaning they pay more than 30 percent of their income on housing, is much higher for renters than homeowners. Additionally, as housing prices have increased (from about 11 percent in 2011 to 11.5 percent in 2014, so too have vacancy rates, which were at percent in 2014.

Sinking counties have fared the worst in terms of recovery from the economic recession.  In addition to higher unemployment rates than other counties, the labor force has declined since 2009 and since 2013, job growth has stalled.  New construction of housing has been declining since 2012, and vacancy rates between 2010 and 2014 remained stagnant.

The Census report shows that many communities’ across the country are recovering from the economic recession.  However, a closer look at the Census report, as well as other recent research on poverty, homeownership and employment demonstrates that this recovery is not spread equally with rural communities.  As the discussion on economic growth and recovery continues, policy makers should ensure that the need of rural Americans is not left out of the conversation.