Brian Thiede on the Rural Economy and Barriers to Work in Rural America

Chancellor: Hello and thanks for joining us for the Poverty Research & Policy Podcast from the Institute for Research on Poverty at the University of Wisconsin-Madison. I’m Dave Chancellor and this is our September 2019 episode. For this episode we hear from Brian Thiede about the rural economy and barriers to work in rural America. Thiede, who’s an Assistant Professor of Rural Sociology, Sociology, and Demography at Penn State, was on an IRP panel in late 2018 on labor market issues for lower wage workers.  I was able to catch up with him over the phone earlier this year. And, since we were talking about the rural economy, when we started out, I asked him how researchers might define “rural”.

Thiede: This is something that’s contested and sometimes confusing. In a lot of the data that I use, for example, the Current Population Survey, we tend to define rural or equate rural as residence in a nonmetropolitan area. We define metropolitan counties as counties with an urbanized area of at least 50,000 or more persons, or a county that has some kind of close social or economic integration with such a county as defined by commuting rates. And then non-metropolitan counties are the residual—so they tend to be counties that have generally more sparse populations and that lack connections, socially and economically, with major, core urbanized areas. So there’s an economic component as well as a population density component.

Chancellor: Nationally, there’s been an increased interest in the rural economy since the 2016 election. I asked Professor Thiede about his take on this and how some of the perspectives we’ve been hearing align with what he actually sees in his research.

Thiede: Yeah, certainly there has been renewed interest in rural issues since the 2016 election. I think a lot of that has to do with the assumption that many supporters of President Trump supported that political movement due to their dissatisfaction with the current economy. And the assumption was that those places that were struggling tended to be rural. There’s this prototypical Trump voter who was a former miner or someone who had worked in manufacturing plant that closed that lived in a rural area and was voting kind of—reflecting their economic anxiety. I think that to some extent, this is probably true although it’s much more complicated. For example, many of those voters were actually in small urban areas and not technically rural residents. There’s also lots of variation in terms of the rural population—the New York Times for example did many interviews with Trump voters in small cities or suburban areas and that was extrapolated to represent all of rural America when in fact those are just kind of limited anecdotes, limited examples that are not necessarily representative of what’s going on in rural America. But that said, there has been a lot of renewed attention to what’s going on and it’s highlighted the very real kind of economic struggles and challenges that have characterized the rural United States, really throughout the country’s history, but particularly over the last few decades.

Chancellor: Thiede says that when people think about the rural economy, they often think about agricultural jobs or mining jobs, but he says that today, only about 7 percent of rural workers are actually in agriculture or mining.

Thiede: Today, the service sector is the largest source of jobs in rural America, followed by trade and retail, and then followed by manufacturing. So there’s a unique industrial structure, I would say and then more broadly, I would say we see differences between rural and urban labor markets in terms of levels of employment. So today, the unemployment rate is about half a percentage point higher in non-metropolitan counties than in metropolitan counties and perhaps more importantly, we see a larger share of the rural workforce out of employment and actually completely out of the labor force itself so if we looked at non-metropolitan adults aged 18 to 64, we would see that both men and women in that age group in rural areas are much more likely to be out of the labor force than their urban counterparts which should suggest that there is a general lack of employment and employment opportunities in these places and more so than in metropolitan areas.

Chancellor: When we’re trying to understand some of the factors behind why there more rural adults out of the labor force, Professor Thiede says we can think about a number of different sets of barriers that they might face.

Thiede: I’ve been thinking about these barriers in terms of demographic and socioeconomic characteristics, health and behavioral outcomes, and then we can also think about barriers related to the broader social and spatial contexts of rural places. So, for example, with respect to demographic and socioeconomic barriers, we see that among working age adults age 18 to 64, in non-metro areas, among adults in that age group who are out of work, those adults in non-metro areas tend to be considerably older than their metropolitan counterparts, to have lower educational attainment, so for example, about 20 percent or a fifth of non-metro adults who are out of work lack a high school degree and only 10 percent have a college degree or more. And that compares to over a fifth of those out of work adults in metropolitan areas who have a college degree or more. So there’s kind of a lower level of educational attainment among the rural out of work.

Chancellor: Thiede says we also see other disadvantages. As an example, he says that rural adults who aren’t working are more likely to live in a poor household when compared to metropolitan non-working adults – about 1 in 3 of these rural non-working adults is living in a poor household compared to 1 in 4 of those in metropolitan areas.

Thiede: And this is important because it suggests that these individuals live in households that lack the resources that may be needed to invest, for example, in further education or jobs training and so forth that would help them obtain employment in the future. I also mentioned that there are a number of health and behavioral barriers, so again if we look at this population of adults who are out of work, over a third of those adults in rural areas report having only fair or poor health and just a third report having very good or excellent health. This is much different than what we see among the comparable population in urban areas where over half report having excellent or very good health. And then we can see this translate into more specific problematic labor force outcomes. For example, about 35 percent of those adults who are out of work in rural areas report having a disability that limits or prevents their work. This compares to about a quarter in urban areas. And a full 15 percent of those adults in rural areas quit or retired for health reasons, so this is about five percentage points more than we see in urban areas. So we see that poor health directly translates into poor labor market outcomes. So that’s just one example of the health and behavioral barriers that we could think about preventing rural workers from obtaining gainful employment.

Chancellor: And as Thiede mentioned, we can also think about unique spatial or social contexts for rural areas that may present challenges for workers.

Thiede: So one, we can just by definition, these rural areas tend to be isolated and so that there are increased transportation costs associated with both searching for and maintaining employment. So as just one indication here, the average rural worker travels approximately 38 percent more miles per person than their urban counterparts. And if we look at low income workers specifically, we see that low income travel about 60 percent more miles than their urban counterparts. So this is just one indication of the fact that rural workers and those who are seeking employment in rural areas have additional transportation costs that are both time and, obviously, resource intensive and may present barriers to both searching for jobs and holding those jobs once they attain them. So again, that’s just one example of the broader spatial and social barriers that we could think about representing a barrier to working in these places.

Chancellor: Socially, another issue here involves the changing demographics that some rural areas are seeing.

Thiede: We can think about this from both the demand and the supply side. From the demand side, we see some evidence that the general demographic changes that we are seeing on average in rural places, including declining populations, and increases in the age structure of the populations, so generally older age structures in rural communities, both as a result of changes in fertility, but more importantly in many of these places because many of the young adults in rural communities are leaving these places and so you have this kind of top heavy age distribution. Both that and population loss in general, according to some studies, tend to reduce the number of service providing establishments and other employers in these places. So you see these demographic changes actually de-incentivising employers from locating in rural areas which then of course feeds back and leads to declining quality of life in these places, spurs further outmigration, and so forth, and has this negative or it’s a positive feedback loop in having a detrimental effect on these communities. And then you see the supply side or individual level perspective, we see a lot of outmigration of young adults, college age and slightly older adults from rural communities, in part at least anecdotally due to a lack of opportunities in terms of employment, or at least high paying employment. And this has pretty significant impacts in terms of both the age structure of these places, of the communities themselves, and in thinking about the skills of those who remain. So, if we imagine that the young adults who leave these communities tend to be the best educated, the most ambitious, and so forth, those who are left tend to be negatively selected and may have lower skills perhaps, lower ambition, and so forth, which can then further deplete the levels of human capital among the rural workforce. And of course, this is not to say that all of those individuals who remain in rural communities are poorly educated or lack ambition or anything like that. It’s really just highlighting that at a national level, we see this selection effect that has detrimental effects for the rural workforce in terms of human capital, age structure, and so forth.

Chancellor: When it comes to thinking about policies that might help, Thiede says that one of the big caveats here is that there’s a ton of variation across rural areas in the United States.

Thiede: Yeah, it’s really hard despite the temptation to do so, it’s really hard to talk about rural America as a monolithic region or population or so forth, right? There’s a high degree of variation in terms of the demographic characteristics of the rural population, the economic outcomes in rural communities across the country. For example, if we’re talking about just employment and general economic conditions, we see some rural communities in Appalachia or the Mississippi Delta with some of the highest poverty rates and lowest labor force participation rates in the country, but then we can look at places such as some of the rural communities around Jackson Hole, Wyoming and some of these other tourist destinations that have extremely tight labor markets and extremely high median income, are extremely prosperous and really represent a thriving local economies. So it’s hard to put all of those cases into one single basket. And then there’s a question of, can we actually look at these success stories and replicate them? And I think that’s an important question and I think the answer is probably no, but it’s something to think about.

Chancellor: But as we think about policy, one effort that we tend to hear about often is the expansion of broadband internet service into rural areas that don’t have steady options. I asked Thiede what he thinks about the likely impact of these kinds of efforts.

Thiede: I think there has been considerable attention to thinking about broadband and other ways of increasing communications technology that would both facilitate jobs training  (you can think about online education as a potential way to facilitate jobs training in remote rural places and also in terms of facilitating telecommuting and perhaps allowing high skill workers to still reside in more remote places but then still engage in some of these high skill jobs, particularly in the tech sector or other service jobs that can be completed via telecommuting. That infrastructure I think is really important and there’s evidence of a large broadband gap in rural communities. The question is, is that going to have a large enough effect on rural economies to reverse some of these negative trends in terms of unemployment and labor force participation. And, do rural workers have the skills needed to engage in the sectors of the economy where one can be employed via telecommuting and similar situations? I think that’s an open question, I think there much less good evidence about that. It’s something that if investments in broadband are in fact made, that that would be something to continue to monitor.

Chancellor: Thiede says as we think about other policies or interventions that are targeted at building rural economies, we can think of those policies that are aimed at promoting prosperity in places versus those that aim to improve economic outcomes of individuals. And he says there’s a real debate about the direction that will offer the most benefit.

Thiede: In rural communities in particular, I think the track that one chooses leads to very different policies. So for example, if we’re focused on individuals for example, we might focus on increasing their skills, increasing their education, generally increasing their employability. If we’re focused only on the individual and we look at recent trends, simply increasing skills and education is likely to just incentivize those individuals to leave their rural communities and move to labor markets where they can be employed in high skilled and high paying jobs. Because those aren’t available in rural places. If we would focus just on the rural places, that would lead to a different set of outcomes. And I think my contention would be that we probably need to think about both of those and how they interact and perhaps trying to increase the skills and the employability of rural workers at the same time that we think about what incentives could be put in place to increase the likelihood that employers will set up shop in those rural places as well.

Chancellor: I asked Thiede if there are any broad themes when it comes to rural Americans’ use of the safety net — and he says the picture is complicated, but that there are few things to highlight, especially as we think about issues of access.

Thiede: There’s evidence or at least anecdotal evidence going back quite a bit that poor rural individuals are less likely to access the safety net in part due to stigma. These are small communities where people tend to know each other and people may be reluctant to use public supports when they know that their neighbors will know about that and when they know that use of those programs is stigmatized. And also, just due to the challenges of access. I talked about the long commuting times and long commuting distances for many rural workers. You can think about similar types of disparities in terms of just the time and mileage to places where one would register for public supports and so forth. So there are barriers in that sense.

The other thing I would highlight in terms of access to the safety net is that more recently, over the last two decades, we’ve seen a shift away from employment. I mentioned the increase in labor force dropout among working age nonmetropolitan adults. That has translated also into a growing share of the rural poor who are out of work. So in the 1980s, the majority of the rural poor were working. So the working poor — that was kind of the modal form of poverty in rural America. Today, at least half of rural workers — again, if we’re looking at working age adults, about half of the rural poor are out of work. And given increasing conditionality in terms of the receipt of public supports on employment, the fact that large shares of the rural poor out of work suggests an increasing likelihood that these individuals are simply ineligible for these programs at all. Which suggests a new barrier to safety net access among these populations. And of course this is relevant to the question of jobs because many of those economic supports might be crucial to freeing up resources or providing resources in the first place that are needed to invest in new skills and job searches and other things that that will increase the likelihood of employment.

Chancellor: Despite some of the challenges we’ve talked about here, Thiede emphasizes that we shouldn’t think of this as a doom and gloom situation and that in the broad view, there’s a lot of reason for optimism here.

Thiede: It’s important to think about the rural economy, labor force outcomes, and poverty in a broader historical context. And when we do that, we see that there have been many important improvements in wellbeing and that many of the public investments that occurred in the 60s and early 70s had really dramatic effects and positive effects on rural wellbeing and closed the metro/non metro poverty gap considerably, and in the intervening decades, we really haven’t seen growing disparities between metro and non-metro areas or between urban and rural areas. We’ve seen that gap remain fairly consistent which suggests that in general, rural areas are basically following national trends in terms of employment outcomes and wellbeing. There are a few exceptions, but on the whole in this historical context, I would say that there is reason to be optimistic.

Chancellor: Thanks to Brian Thiede for taking the time to talk to us. This podcast was supported as part of a grant from the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation but its contents don’t necessarily represent the opinions or policies of that Office, any other agency of the Federal government, or the Institute for Research on Poverty. To catch new episodes of the Poverty Research and Policy Podcast, you can subscribe on Apple, Stitcher, or Google Play Podcasts. You can also find all of our past episodes on the Institute for Research on Poverty website. Thanks for listening.