A hundred years ago, farming supported most rural communities; today, the non-farm economy anchors much of agriculture, and most small family farms are dependent on diversified rural economies that offer off-farm income opportunities.
Nearly 90 percent of total farm household income in 1999 originated from off-farm sources, a figure that likely has risen since the study was done.
“The health of the rural economy and effective operation of rural labor markets are of crucial importance to the future economic well-being of both farm and non-farm rural households,” says Rodney Brown, USDA deputy under secretary for research, education, and economics.
“Some rural areas have shared in the economic progress of the nation, but others have not,” he said at the annual USDA Agricultural Outlook Forum at Arlington, Va.
“Rural residents and policymakers — indeed all of America — face many decisions that will affect, if not determine rural America’s future.”
Changing population trends and economic factors in rural areas “show the need to help declining areas diversify and attract new populations and businesses, and to help rapidly growing areas provide essential services and infrastructure to sustain their success,” Brown says.
Among the social/economic changes in rural America are an increasing number of Hispanics, a growth rate exceeding 60 percent in the 1990s, and an aging population, with the number of people age 65 and over expected to double by 2050.
The nation’s rural areas shared in the good economic times of the ‘90s, he says, with the lowest unemployment rate in 20 years, an increase in real earnings, and poverty rates the lowest on record.
But the 2000 downturn in the manufacturing sector, which was disproportionate in rural areas, followed by the 2001 recession, resulted in higher unemployment and a dampening of earnings growth — though, in general, “the impact of this recession in rural areas has been milder than in earlier recessionary periods,” Brown says.
“Much of the rural South suffered large job losses in 2000-2001. Manufacturing, agriculture, and mining are highly dependent on exports, and global economic conditions can adversely affect these sectors.”
Natural amenities such as access to lakes or coastal areas and varied topography have generally been a boon to rural regions, enabling them to grow much more rapidly, Brown says. “Recreation has been one of the fastest-growing rural industries.”
While many manufacturing operations have left U.S. rural areas for foreign locations, the companies left have taken advantage of new technologies and management practices to compete based on product quality, he notes. “This shift brought a need for a more highly skilled labor force and more professional and technical works, leading manufacturers to shift toward rural areas with better schools and fewer high school drop-outs.”
Rural areas tend to have high education levels, Brown says, with potential to make farming areas more attractive to manufacturers. Between 1989 and 1997, manufacturing jobs grew by over 13 percent in farming counties.
“A prosperous rural America depends upon many of the same things as urban areas: good-paying jobs; access to critical services such as education, health care, technology, transportation, and communication; strong, safe communities; and a sustainable natural environment.
“Declining areas must diversify and attract new businesses, while growth areas must develop strategies to sustain their successes.”
Recent economic trends suggest two major emphases for enhancing rural development opportunities, Brown says:
- “Higher education levels have become important in attracting new employers, particularly in manufacturing. Low wage levels are no longer a sufficient attraction.”
- “Enhancing rural communities as places to live, retire, and vacation will improve not only the quality of life for existing residents, but also the possibility of attracting new businesses and residents.”