A Glance at the Rural Economy

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Nonmetro population grew in 2016-17 for the first time in a decade. Declining rural unemployment, rising incomes, and declining poverty since 2013 are all factors likely attracting residents to come or remain in rural areas. In this post, I review the definition on nonmetro areas and highlight a few key factors for rural economic growth in the future.

Defining Nonmetro

Nonmetro areas are defined by the Office of Management and Budget (OMB) as 1) Central counties with one or more urbanized areas (densely settled urban areas with 50,000 or more people), and 2) outlying counties that are economically tied to central counties by labor commuting (25 percent of workers living in the county commute to the central counties or if 25 percent of the employment in the county is workers commuting from central counties).

Decreases in nonmetro populations can occur through migration out of nonmetro counties or through urbanization of nonmetro counties between censuses, causing nonmetro counties to be reclassified. In the map below, Montana has three metro regions centered around Missoula, Great Falls, and Billings. Bozeman’s population in 2017 was 46,596, just shy of metro status.

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Figure from USDA, Economic Research Service. “What is Rural?” https://www.ers.usda.gov/topics/rural-economy-population/rural-classifications/what-is-rural/

National Changes in Rural Population and Employment Rates

At the national level, rural unemployment rates fell from 10.3% in 2010 to 4.48% in 2017. Over 650,000 jobs were added to rural counties between 2013 and 2017 while nearly 280,000 rural residents left the workforce. Rural and urban unemployment rates are currently below their pre-recession levels, but growth in employment has been slower in nonmetro areas. 

Population, Migration, and Employment in Montana

A few key factors are needed for rural communities to attract and retain workers. The first is jobs. People move to locations where there are good economic opportunities. In Montana, Yellowstone County saw the greatest growth in the population of young adults (20s-30s) 2000-2010, largely because Billings offers many opportunities for young professionals. 

A second determining factor in where young families settle is the accessibility and quality of education. K-12 school enrollment rates declined between 2007/08 and 2016/17 in most counties located throughout Montana. However, enrollment rates grew in several counties, including Missoula, Lake, and Lewis and Clark counties, most counties along the northern and eastern borders of the state, and in Yellowstone, Musselshell, Big Horn, and Gallatin counties.

A third factor is access to childcare. Childcare is less expensive on average in Montana relative to other states, but it is still too expensive for many families. Childcare capacity as a ratio to the number of children under age 5 residing in Montana is 41 percent, placing Montana among the lowest ranking states in the country. However, low capacity rate alone may be deceiving since it may be the result of both low supply and demand, particularly if more families in Montana depend on relatives to provide childcare.

These are just a few factors that may determine who migrates to or from rural counties in the coming years. Businesses that rely on a steady labor supply are likely to pay attention to these factors as well.

Sources:

Amy Watson, Montana Department of Labor & Industry. Childcare in Montana: Supporting Montana Families and Caring for the State’s Most Precious Resource. http://lmi.mt.gov/Portals/193/Publications/LMI-Pubs/Articles/2018/0918-ChildcareInMontana.pdf

USDA, ERS. Rural America at a Glance, 2018 Edition

USDA, ERS. “What is Rural?” https://www.ers.usda.gov/topics/rural-economy-population/rural-classifications/what-is-rural/

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About Author

Diane Charlton

Diane Charlton is an assistant professor in the Department of Agricultural Economics and Economics at Montana State University. She received her Ph.D. in agricultural economics from the University of California, Davis. She has done research on agricultural labor markets in Mexico and the United States along with researching the determinants of migration. She never tires of talking about agriculture with her sister and brother-in-law from their almond orchard in the Central Valley of California, and she is looking forward to learning more about and researching agricultural production in Montana and the northern Great Plains.

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