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Regional Matters

July 8, 2021

Introducing Rural Spotlights

Introduction

Demographic and industry shifts have contributed to decades of out migration and economic decline in many rural areas. Without easy access to resources in metropolitan areas, rural communities often rely on creative solutions that capitalize on their strengths. At the Richmond Fed, we regularly rely on outreach and community engagement to complement economic indicators to understand the full economic reality across the diverse rural communities in the Fifth District. We hear directly from business and community leaders about economic challenges they face as well as community-driven efforts to address them. In our new Rural Spotlight series, we will feature organizations and initiatives in rural communities and small towns across the Fifth District that are working toward improving household financial stability and community economic outcomes. By understanding the strategies, tools, and partnerships that are working in rural communities, we hope to shed light on promising practices and how they can be tailored to rural communities of different assets, populations, and geographies. This post sets the stage for the series by providing context on the rural Fifth District.

Defining Rural in the Fifth District

There are different approaches to define a geography’s rurality that are used for research and to determine government program and funding eligibility. These methods generally incorporate a combination of administrative boundaries, population size and density, proximity to major metropolitan areas or urbanized clusters, and commuting patterns. In this series, we define rural and urban geographies using the U.S. Department of Agriculture’s (USDA) 2013 Rural-Urban Continuum Codes (RUCC) for counties and county-equivalents in the Fifth District. The 2013 RUCC framework classifies counties into one of nine categories based on each county’s urbanization and adjacency to metropolitan areas, with higher numbers indicating more rural counties. (See table below.) We categorize counties in metro areas of 250,000 or more (RUCC 1-2) as “urban,” or bigger cities. Counties in metro areas with fewer than 250,000 residents (RUCC 3), and all nonmetro counties (RUCC 4-9), many of which are home to small cities and towns, are classified as “rural.” By this definition, 76 percent of Fifth District residents live in counties that comprise bigger cities and urban areas, and 24 percent live in rural counties. Among Fifth District jurisdictions, West Virginia has the highest proportion of its population living in rural counties (79 percent).

RUCCRUCC DefinitionFifth District Population (2019)% Fifth District Population
1Metro - Counties in metro areas of 1 million population or more16,255,07850%
2Metro - Counties in metro areas of 250,000 to 1 million population8,497,87926%
 Urban Total24,752,95776%
3Metro - Counties in metro areas of fewer than 250,000 population3,188,41910%
4Nonmetro - Urban population of 20,000 or more, adjacent to a metro area1,741,3655%
5Nonmetro - Urban population of 20,000 or more, not adjacent to a metro area209,1081%
6Nonmetro - Urban population of 2,500 to 19,999, adjacent to a metro area1,811,2996%
7Nonmetro - Urban population of 2,500 to 19,999, not adjacent to a metro area417,2031%
8Nonmetro - Completely rural or less than 2,500 urban population, adjacent to a metro area437,5841%
9Nonmetro - Completely rural or less than 2,500 urban population, not adjacent to a metro area216,2631%
 Rural Total8,021,24124%

Source: U.S. Census Bureau Vintage 2020 County Population Totals, 2010-2020; USDA Rural-Urban Continuum Codes; author’s calculations.

Sources: U.S. Census Bureau Vintage 2020 County Population Totals, American Community Survey 2019 5-Year Estimates, and USDA RUCC

Download data: Rural-Urban Continuum in the Fifth District

It is worth noting that these definitions do not fully account for recent population shifts and the economic and cultural diversity among rural communities in the Fifth District. Urban counties and county-equivalents in Virginia, for example, include Richmond City (RUCC 1), the Commonwealth’s capital, and Washington County (RUCC 2) in Southwest Virginia. Charlottesville City (RUCC 3), in Central Virginia, and Accomack County (RUCC 8), on the Eastern Shore, both qualify as rural. The RUCC codes are driven in part by population data from the 2010 census and may not capture migration and urbanization trends in the past decade. Nonetheless, there are commonalities within the RUCC codes, which makes them a useful structure for understanding differences in economic outcomes between the rural and urban Fifth District.

Disparities in Rural and Urban Outcomes

An important driver of a region’s economy is the health of its labor market. One labor market measure that illustrates the urban-rural economic disparity is the employment/population ratio, which is the percent of the population actively employed. In 2019, 76.2 percent of the adult working age population (ages 25-64) in urban Fifth District counties was employed, compared with just 66.9 in rural counties. The gap between the most urban (RUCC 1) and most rural (RUCC 9) counties is even more pronounced. (See chart below.) 

 

While there is a clear downward trend in the employment/population ratio at increasing degrees of rurality, there is significant variation within each of the RUCC categories. (See chart below.)

What is driving this urban-rural differential, and why is there so much variation within urban and rural counties? One part of the equation is educational attainment. As the job market in many areas has shifted toward high-skilled jobs, those without postsecondary education may be increasingly excluded from the traditional labor market. Educational attainment has improved overall in the Fifth District since 2010, but rural counties still lag their urban counterparts in bachelor’s and graduate degrees. (See chart below.) Forty-three percent of adults hold at least a bachelor’s degree in the most urban counties in the Fifth District, compared with just 16 percent in the most rural counties.

Raising Rural Outcomes

Increasing educational attainment is an important step to improving employment outcomes, but there are ranges of economic, social, demographic, and structural factors that create barriers to workforce participation in rural areas. The COVID-19 pandemic not only exacerbated some these problems, but also presented new opportunities for rural reinvention and underscored the importance of taking proactive steps towards economic resilience. Through our research and outreach, we have identified four themes that describe the elements to improving employment outcomes and economic stability in rural areas: education, connection to jobs, de-isolation, and participation.

Education

Equitable access to quality cradle-to-career education is critical to developing a robust workforce and promoting economic mobility. Education can drive household economic mobility, and areas with an educated workforce can attract employers. High-quality schools can also help mitigate rural population loss by providing an incentive for families to relocate or stay in their rural community to live and work. Disparities in educational attainment start early and can profoundly impact labor market outcomes and earnings trajectories. Rural community colleges that offer dual enrollment programs can play a powerful role in helping students transition to postsecondary options and prepare to enter the workforce.

Connection to Jobs

To attract and retain a strong workforce, rural communities must offer opportunities for new workforce entrants and workers dislocated by industry shifts to find gainful employment. Partnerships among employers, educational institutions, government, and local organizations can facilitate career exploration opportunities for students and help adults with workforce transitions and reskilling. Broadband connectivity can provide a lifeline to employment and training opportunities that would otherwise not be available in remote rural locations, but structural barriers to broadband expansion persist. Place-based policies that encourage small business development and entrepreneurship can generate employment options for local talent to build sustainable careers in their rural community.

De-Isolation

The remoteness of many rural communities poses a challenge for residents and businesses in accessing information and institutional services. Additionally, household broadband access can fill some of these gaps by providing rural residents with social connections, health care through telemedicine, and online banking services. The loss of an anchor institution, like a hospital or major employer, can have a ripple effect on the economic health of a rural area. Hospitals, HBCUs, and community colleges, and financial institutions not only provide critical services to residents and businesses in rural areas, but also have added economic and cultural importance in rural areas. Community development financial institutions’ (CDFIs) investments tend to be concentrated in urban areas, but CDFIs in rural communities play a pivotal role in connecting consumers and small businesses to credit and technical assistance.

Participation

Rural families must contend with a range of non-skill challenges to workforce participation. Caregiving responsibilities and insufficient child care options can prevent rural residents, particularly women, from entering and remaining in the labor force. Challenging terrain and a lack of safe and reliable transportation can make it difficult for rural residents to travel for employment. Housing instability and food access pose additional barriers. Rural counties, on average, have high rates of substance use disorders and disability, and lack access to health care providers and robust substance use treatment services. Programs designed at improving household financial security and access to services can help families navigate these barriers.

Each organization or program featured in our Rural Spotlight series has made inroads in addressing the needs of their local community in one or more of these areas. Key community and economic indicators and complementary interviews from community leaders that offer deeper insight into the programs will accompany each spotlight.

Conclusion

While there is no one-size-fits-all solution to the economic challenges facing rural areas, strategies that build on the strengths of rural communities can offer insight and ideas applicable across the rural landscape. Our new Rural Spotlight series will highlight programs and initiatives that rural Fifth District communities are using to address the barriers to improving economic outcomes. By delving into the people, organizations, and these community-driven programs, we hope to contribute to the dialogue around the nature of the economic challenges in rural areas and ideas to address them.  Our series launches July 15 with a feature on a Maryland Eastern Shore electric cooperative that is bringing broadband connectivity to rural households.

Interested in reading more articles like this one? Check out Our Regional Focus, where you can find additional research and analysis on rural communities and other pressing economic issues that affect our communities.

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Joseph Mengedoth (804) 697-2860