Urban-Rural Poverty Gap Has Widened Since the Great Recession

For decades, the poverty rate has been higher in rural America than in metropolitan areas, a situation often attributed to an older, lower paid, and less educated rural population. A new USDA report says the gap between rural and urban areas widened, to 3.5 percentage points, during the economic recovery that began a decade ago.

"The gap has widened since 2010," said USDA economist John Pender during a presentation on the 2019 edition of "Rural America at a Glance." The annual report said rural employment has not recovered to prerecession levels while urban employment has galloped ahead, partly due to more rapid population growth in cities. Labor force participation is higher in urban areas, too.

"It's not all depressing," responded Pender when asked during a webinar about the gloomy data. "The story is positive trends in many ways, but still lagging behind" metropolitan areas. Employment is up, personal income is rising, and poverty is down in rural America — three good signs — though none are improving as rapidly as in urban areas.

Poverty rates are highest in the most rural and remote of America's counties. The USDA said one reason is that income from farming and mining, which are more important in rural and remote counties than elsewhere, has declined in recent years. Net farm income peaked in 2013, then collapsed along with the commodity boom. Lower oil and gas prices reduced mining income. In farming-dependent counties, personal income fell by 5% from 2013 to 2017. "Some of this is probably cyclical," said Pender. "Farming is a bit cyclic."

In 2011, the rural poverty rate was 18.5% and the urban rate was 15.5%, a difference of 3 percentage points. In 2017, the rural rate was 16.4% and the urban rate was 12.9%, a difference of 3.5 percentage points. The poverty rate declined in all parts of rural America, whether completely rural or adjacent to a city. "The decline in poverty rates was smaller in more remote and rural counties, indicating a growing poverty gap between more remote/rural areas and other non-metro areas," said the USDA report.

The lower cost of living in rural America offsets the impact of generally lower income levels, said Pender. "For the same income, people in a sense are less poor." Some studies say that rural and urban poverty rates are comparable when adjusted for living costs, he said.

Roughly one in 7 Americans, or about 43 million people, lives in rural America, which covers the 90% of the United States that is outside of metropolitan areas. The 1920 Census was the first to show more people living in towns than in the country.