Thursday, December 8, 2022

Rural and Urban Economies


by Joel Schumacher, Extension Economics Associate Specialist in the Department of Agricultural Economics and Economics at Montana State University

One thing that really caught my attention during the election coverage earlier this month was a remark by a commentator that “people vote not acres.”  Maps were regularly shown that indicated the results for a particular contest that colored the counties or states that were for a particular candidate.  Interestingly, the size of the map has little to do with the number of votes that were actually cast for a particular candidate.  For example, Phillips County voters cast 2,231 votes for governor while Gallatin County voters cast 55,144 votes even though Phillips County is 98{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8} larger in size.  While I don’t have any insights to offer in terms of the political implications of this recent election or any future elections, it does highlight a trend that has been going on for decades in Montana and across the country.  Population and economic activity has been shifting from rural areas to more urban areas. This is true in terms of big cities (such as Denver or Seattle) and small urban areas (such as Billings or Missoula).

The USDA publishes a short report each year titled “Rural America at a Glance.”  This report highlights changing economic and demographic trends in rural America.  The 2016 report defined 46.2 million Americans as living in a non-metro county (or more simply a rural county).  In Montana, the only “metro counties” are Yellowstone County (Billings), Cascade County (Great Falls) and Missoula County (Missoula).  Gallatin County’s ongoing growth may put it on track to be reclassified as a metro area for the 2020 census cycle.  The population of rural America declined by 136,000 (0.3{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8}) between 2010 and 2014.  The urban population increased by approximately 8{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8} over the same time period. Rural employment rose by 1.8{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8} since 2013.  Rural employment is below 2007 employment levels while urban employment is 4{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8} above 2007 levels. Median earnings in rural areas have risen recently and are above pre-recession levels.  Urban median earnings are higher but are still well below their pre-recession levels.  Poverty rates have declined for both rural and urban areas in the last few years.

Rural and urban economies also vary in the contributions of different industries that comprise their local economy.  Agriculture, mining and manufacturing contribute more to rural economies while service industries (such as financial services, legal services, and health services) are relatively more important in urban settings.  The report also defines rural counties with economies that are dependent on farming, manufacturing, recreation, government, mining and other.  Population growth since 2000 has been positive for the different economic classifications of rural counties except those with a reliance on agriculture.  In Montana, 15 counties are defined as farming dependent and only 3 of the 15 have had an increase in population since 2000.  Poverty rates are also reported by type of economic activity.  Farming and recreation dependent counties have the lowest poverty rates among rural counties.

Joel Schumacher, an extension economics associate specialist in the Department of Agricultural Economics and Economics at Montana State University. Much of his research has focused on understanding the economics and public policy implications of small and community scale alternative energy projects. Joel also researches and provides extension training in retirement planning, saving and investing. Helping Montanans stay up to date on the ever changing laws and regulations affecting consumer issues is an interesting and challenging area.

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