Rural poverty skyrockets as jobs move away

The number of rural Americans living in poverty has skyrocketed in recent years amidst an economic evolution that has cost hundreds of thousands of manufacturing and mining jobs.

Poverty rates have also increased in the nation’s urban cores, which have generally recovered more quickly from the worst recession in modern history.

The difference is that the increase in poverty in urban counties happened almost entirely during and after the recession. The increase in poverty in rural counties began around the turn of the century, and has been exacerbated by the recession.

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After a decade of growth during the 1990s, the data show rural America has been effectively experiencing its own recession for far longer than the nation as a whole.

“There were fairly sharp declines in the number of places characterized by high poverty rates in the 1990s,” said Brian Thiede, a demographer at Penn State and the co-author of a new report on rural poverty released by the Carsey School of Public Policy at the University of New Hampshire. “This is a pretty stark reversal from what was happening in the 1990s.”

At the turn of the century, about 1 in 5 rural counties had a poverty rate higher than 20 percent. Today, about one in three rural counties — 657 counties — have similarly high rates of poverty, the study found.

At the same time, the share of urban counties with pervasive poverty has risen from just under 7 percent to just under 16 percent.

Demographers and economists point to two self-reinforcing trends. Declines in traditional blue-collar jobs that rural America long relied upon have crippled dominant industries, while younger workers, especially those with higher levels of education, have fled rural areas, robbing their communities of the next generation of new business owners.

Rural areas with low populations are far more likely to be reliant on a single industry than their larger metropolitan cousins. The dominant industries in many of those rural regions — manufacturing in the Midwest, resource extraction in Appalachia — have been experiencing long-term declines as automation increases and as energy consumption evolves.

About 15 years ago, 17 percent of Americans living in rural areas were employed in the manufacturing sector, Thiede said. Today, just 10 percent of nonmetro workers are employed in manufacturing. Since 2000, the number of manufacturing jobs in rural counties has declined by 20 percent.

“If you look at counties across the United States that are dependent on a single industry, like manufacturing or mining or farming, those are disproportionally nonmetros,” Thiede said. “This suggests that for these nonmetro areas, this return to high poverty rates is driven by more secular declines.”

And that leads younger workers — those most likely to start new businesses, the main drivers in job creation — to look elsewhere for work. The demography of rural America has gotten older, whiter and less educated as younger workers flee to larger communities.

“Rural America is increasingly inhabited by older and less-skilled, less educated individuals, resulting in a rising poverty rate,” said Cheryl Russell, a demographer and editorial director of New Strategist Press. ”In this century so far, there’s been a giant sucking sound coming from each major metropolitan area of the United States as it vacuums talent out of surrounding small towns and rural areas.”

Russell pointed to a decline in mom-and-pop stores that once lined Main Streets in rural communities and small towns. Those stores have been increasingly squeezed by mega-retailers like Walmart and dollar stores and by online retailers like Amazon.

Those larger businesses offer products at lower prices, undercutting smaller businesses. They also pay lower wages.

The global commodity market has also taken a toll on rural America. Coal, oil and natural gas prices are down dramatically, leading some companies to shutter production. In some cases, new technology has helped: The fracking boom has severely reduced poverty in much of North Dakota, home to some of the lowest unemployment rates in the nation.

If prices rebound, those areas dominated by extraction industries could stage a comeback — albeit one that reinforces a community’s dependency on a single industry.

“In a decade in which larger cities and urban density have been prospering, smaller places and America’s rural periphery has been struggling with a commodity down-cycle,” said Mark Muro, director of policy at the Metropolitan Policy Program at the Brookings Institution. “The recent firming of oil and gas prices may help in some places, but the broad trends remain challenging.”

The lack of jobs in rural America threatens to create a new generation of chronic poverty, Thiede said. In 1980, 70 percent of rural Americans living in poverty were working, albeit in low-wage jobs. Today, less than half of the rural poor are working. That has contributed to a host of other societal problems, including the rising opioid epidemic and lower life expectancy for those living outside of cities.

“Long term unemployment is correlated with all types of negative physiological outcomes,” Thiede said.

That could lead to what he called the “intergenerational transmission of poverty.” Today, more than 20 percent of newborns in rural America are born into poverty — the numbers are far higher for African-American and Hispanic residents living in rural areas. And those who are born into poverty have a far more difficult time climbing out of it than those whose parents have more financial stability.

What’s more, the social safety net as it exists today does less to help those facing chronic unemployment than those who are working, even in low-wage jobs.

“The safety net is increasingly geared towards workers, if we think about the earned income tax credit and other safety nets,” Thiede said. “Those jobless poor are most at risk of falling through the safety net and experiencing really deep poverty.”