DOCUMENT RESUME RC 019 968 ED 396 866 Rural Conditions and Trends, 1990-1994. TITLE Economic Research Service (DOA), Washington, D.C. INSTITUTION 94 PUB DATE 534p.; Photographs, maps, and some bar grpahs may not NOTE reproduce adequately. Statistical Data Serials (022) PUB TYPE Collected Works (110) Rural Conditions and Trends; v1-5 1990-94 JOURNAL CIT MF02/PL22 Plus Postage. RICE EDR Banking; Business Cycles; Counties; Economic Factors; DESCRJYTORS Elementary Secondary Education; Employment; *Employment Patterns; Income; Labor Force; *Nonmetropolitan Areas; *Population Trends; Poverty; Rural Economics; Rural Family; *Rural Population; Rural to Urban Migration; *Pnral Urban Differences; *Unemployment ABSTRACT The five volumes of Rural Conditions and Trends for 1990-1994 contain information and statistical data on economic and social conditions and trends of interest to rural educators and researchers. Articles cover the following areas: macroeconomic trends; employment; unemployment; industry; earnings; income; poverty; population; national economic conditions; national economy links to rural areas; county classifications; the rural workforce; and farm income. A supplement to the Spring 1991 issue discusses financial institutions; rural banks; rural savings and loans; credit unions; rural credit markets; deposit insurance reform; and projected trends. Volume 3 number 1 discusses the loss of better educated people to urban areas. Wider opportunities for jobs requiring higher skills and paying higher wages in metro areas undoubtedly has contributed to the loss of college-educated nonmetro people to metro areas. If rural areas do not find ways to create or attract high-skill, high-wage jobs, then there may be little that can be done to close the earnings, income, and poverty gaps and keep more highly educated residents in rural areas. Volume 4 number 3, the special census issue, compares economic and social changes during the 1980s to those of the 1970s. Educational attainment and earnings of hired farmworkers is also covered. Issues contain extensive data tables, statistical figures, and appendices providing data sources and definitions. 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U DEPARTNINT OF EDUCATION : bra rovemM Offrcre of E0u.:4601111( R0101,411 ::::: EDUCATIONAL RESOURCES INFORMATION : CENTER IERIQ :.:. Thul 00CUITent hat beim footoduced se ;; . ::.' removed from the Dorian Or olliemtallaa ': ornamotmg Motor chingos Iev b000 mod. to morowe ,511foductoo em Pointe of vole* or opmon$ m Mei clocu. mom 00 INA nCISsaftly rOr01.111 0%004 OE NI Damon o aNT litNo DEPARTMENT OF AGRICULTURE OFFICE OF THE SECRETARY WASHINGTON, D.C. 20250 Dear Colleague, I am pleased to introduce you to Rural Conditions and Trends, a new USDA periodical that brings you up-to-date information on what's happening in rural Amcrica. Much of our Nation's strength comes from the small towns and countryside spread across our landscape. Yet, many of those places face major challenges in building and maintaining an economy that will support their residents. Economic shifts during the 1980's were especially hard on rural counties and thc people living there. The 1990's, however, offer an opportunity to revive rural economies. Every 3 months, Rural Conditions and Trends will bring you the latest available data about conditions in rural America and the well-being of rural people and their communities. Forthcoming issues will discuss recent changes in rural America in crisp, nontechnical language. Plentiful charts and short tables help tell the story about topics such as these: Employment and unemploymentHow have they changed recently and why? Industrial structureWhat industries are becoming more important to rural areas? Do those industries offer jobs with a future? Earnings and income--What are the differences between nonmetro and metro areas? Why? PovertyHow, are changes in employment affecting the poorest rural residents? Population migration and growth--Are rural areas growing? Where are rurai people moving? Aftcr you have read through this premiere issue of Rural Conditions and Trends, I think you will agree with me that this quarterly periodical will help you understand current conditions in rural America as you make decisions influencing its future. Be sure to take a moment to complete the order form on the inside back cover to ensure that you receive the coming issues of Rural Conditions and T-ends. Or call the ERS-NASS order desk toll- free at 1-800-999-6779. Sincerely, ROLAND R. VAUTOUR Under Secretary for Small Community and Rural Development Rurkt..:Cooditioeisr. .and Teonft.. Vol. 1, No. 1 Spring 1990 United Stater. Department of Agriculture Economic Research Service 041 Employment up as long stall ends ; ,46 %.14 Unemployment down: Nonmetro still lags metro . 4{1' Manufacturing jobs fuel rural recovery 27,P N-f=. Nonmetro poptilation still dropping in 4. mid-America but growing on coasts , t. .., Rural earnings per . ...:Nad.;.. job shrink slightly: ----".110110 '7-- P 'i Metro/nonmetro gap V grows slightly --. ---- 2., -IN t :1-sr-rr . kse .!"." iv ....- 2" ' 771131\ ' ..6t% 11. 1., 1\ Contents Rural Conditions and Trends Spring 1990, Vol. 1, No. 1 3 Overview Rural Employment Growth Improves, Earnings Lag 4 Macroeconomic Trends Transition in 1989, Sustainable Growth in 1990 6 Employment Nonmetro Employment Growth Exceeds Metro 8 Unemployment Nonmetro Unemployment Continues To Decline industry 10 Nonmetro Job Growth in Cyclical Industries Increased During 1987 12 Earnings Nonmetro Areas Lag Metro in Earnings per Job 14 Income Nonmetro Income Growth Sluggish Poverty 16 Poveny Severe in Nonmetro Areas Population 18 Nonmetro Population Growth Improves Nonmetro Areas with Urban Settings Remain Attractive in the 1980's 22 Appendix I Data Sources 23 Appendix II Definitions 25 Appendix Tables Sara Mills Mazie, Executive Editor Rural Conckdons and Trends is published four times per year by USDA's Economic R-rsearch Service. Lindsay Mann, Managing Editor Subscription price is $14 for 1 year (subecriptions going outside the U.S., please add 25 percent for post- Louise Stutzman, Editorial age). Send check or money order to ERS-NASS, Box 1608, Rockville, MD 20849-1608. Make check or Assistant money order payable to ERS-NASS. You can charge your subscription to VISA or MasterCard. Use otii Susan De George, Design free telephone number 1-800-999-6779 to start your subscription. Sylvia Duerksen, Design Advisor Rural Conditions and Trends welcomes letters to the editor as well as ideas for future issues. Athiress Joyce Bailey, Production editorial correspondence and inquiries to Editor, Rural Conditions and Trends. Room 328, 1301 New Yorit Avenue, NW, Washington, DC 20005-4788. The Secretary of Agriculture has determined that publication of this periodical is necessary in the transac- tion of public business required by law of the Department. Contents of this journal may be reprinted without permission, but the editors would appreciate acknowl- edgment of such use and an advance copy of the matter to be reprinted. Use of commercial and trade names doas not imply approval or constitute endorsement by USDA. Overview Improves, Rural Employment Growth Earnings Lag economic conditions since ost economic indicators point to moderately improved rural M gains. Urban areas oon- 1986, particularly in 1988 and 1989, paralleling national economic differences in unemploy- Moderate improvements tinue to lead rural areas in most measures of economic well-being, but Nonmetro employment grew faster than in rural employment and ment and poverty rates have narrowed substantially. data for the last quarter of 1989 suggest metro employment during 1989 by some measures, but unemployment since associated with the overall weakness in manufactur- a slowing of employment growth, perhaps 1986 have been tem- ing employment. pered by slow income the peak of the expan- growth. Nonmetro The unemployment rate in rural areas fell in 1989 to a level unseen since unemployment rate averaged sionary period in 1979. At a low 5.7 percent, moreover, the rural areas still significantly the rural economy only half a percentage point above the metro rate. Thus, although it took lag metro areas in it apparently has got- much longer than the urban economy to pull out of the 1980-82 recessions, economic well-being. ten back on track alter staing in the middle of the decade. rural areas to sustain population This recent improvement is confirmed by the improved ability of rural people moved out rapidly growth. When the rural economy fared poorly in the mid-1980's, enough for the population to decrease in over half of all nonmetro counties. significantly since 1986, just as But the most recent cIsia sugost that this trend has moderated growing as fast as elsewhere, but the rural economy began to improve. Rural areas may not be lower net outmigration. tirey are retaining more people than earlier, with substantially be tempered by the fact This good news about the rural economy and rural conditions should into much improvement in that higher employment and lower unemployment have not translated since 1985. real per capita income. It has been sluggish in both nonmetro and metro areas remains While the gap has apparently narrowed slightly, per capita income in nonmetro areas less than three-quarters that of metro areas. in nonmetro poverty rates In sharp contrast to the slow growth in income was significant decline especially benefited low- from 1986 to 1988. The recent employment growth seems to have have allowed laid-off bread- income people. For example, the recent employment growth may job, raising family winners to go back to work, or a second wage earner in a family to get a probably earn, however, do income above the poverty threshold. The low wages these workers improvement in per capita inoorne in not increase their income enough to produce impressive rural areas. was Real nonmetra earnings per job declined slightly in 1987, just as the nonmetro economy into the nonmetro picking up again. If this decline reflects the introduction of low-wage jobs the quality of rural jobs and the long- economy, as other data suggest, it raises concerns about term economic well-being of rural people. clear, but we do have Why the nonmetro economy began to improve in the last 2 years is not developments that helped the national economy in some ideas about contributing factors. The the total explanation since 1986 contributed to the improved rural economy. But, that cannot be in the mid-1980's. the metro portion of the economy so significantly outperformed the nonmetro the weaker dollar on Manufacturing employment grew significantty in 1986-87, encouraged by disproportion- foreign exchanges. The devalued dollar particularly helped rural areas, where a producers. The decline in ate share of routine manufacturing competes directly with overseas during the mid-1980's mining employment also slowed somewhat. Significant rural outmigration off unemployment, leaving fewer rural job seekers. may have taken some of the upward pressure of information, only a few Our assessment of conditions in rural areas draws from many sources in making any of which provide data on the last few months. We must, thus, be cautious about why it has assumptions about the future of the rural economy. We don't know enough continue. A strong improved since 1986 to predict with any confidence that the improvement will that would be national economy in the immediate future would be a good sign, but whether r;e enough to sustain nonmetro growth is less than clear. 6 Rural Conditbns and Trends, Spring 1990 3 Macroeconomic Trends Transition in 19893 Sustainable Growth in 1990 T he effects of Federal Reserve (Fed) policy dominated developments in 1989. Tighter mone- tary policyslower money and credit supply growthlowered 1989 economic growth com- After 3 years of rapid pared with the previous 3 years. Fed tightening, which began in the second half of 1988, was economic activity, rising designed to hold down inflation, a goal that appeared to have been accomplished by the end of 1989. interest rates cooled the economy in 1989. Why Did the Fed Tighten? Following an unusual first quarter, stable-to- Fears that too-rapid economic growth would generate inflation prompted the Fed's tightening. slightly falling rates The gross national product (GNP), adjusted for inflation, grew 4.4 percent in 1988, up from 3.7 percent in 1987. Industrial production growth accelerated, reaching a healthy 5.7 percent in should support expan- 1988. sion in 1990. As economic activity increased, the civilian unemployment rate dropped frcm 7 percent in 1986 to 5.5 percent in 1988, the lowest annual average since 1974. A 33-percent decline in the value of the dollar from 1985 to the end of 1988 sparked faster export growth and slower import growth between 1986 and 1988. Real exports posted gains, and trade deficits narrowed. Stimulated by export growth, capital investments rose dramatically. Business plant and equip- ment spending surged 10.5 percent in 1988, compared with a 2-percent decline in 1986. Moderate but rising inflation rates accompaniod faster real GNP growth. Consumer price infla- tion jumped from 1.1 percent in 1986 to 44 percent in both 1987 and 1988. In 1986, interest rates slipped with slower inflation and moderate GNP growth. In 1987, rates rose slowly throughout the first 9 months as inflation crept up and real growth accelerated, but dropped sharply after the October record stock market decline. interest Rates Rise In 1988, analysts began to fear an inflation surge. Faster growth increased credit demands, put- ting upward pressure on interest rates. In mid-1988, the Fed began slowing money and credit supply growth by reducing bank reserves. By the end cf 1988, the Federal funds ratethe inter- est rate chargcl between banks for borrowing bank reserveshad risen almost 2 percentage points. Bank prime rates rose with the Federal funds rate. Inflation continued to climb in the first half of 1989. Producer prices rose an annualized 10.2 per- cent in the first quarter, while consumer prices increased 6 percent. Rising crude oil prices ... Federal Reserve tightening slows economy Rising inflation alarmed the Fed . . . Which prompted an interest rate rise. . . Consumer and Producer Price Indexes Federal funds rate spurs prime rate rise Percent 9 - Annual percentage rate a - 12 Consumer Price Index 7 Producer Price Index 6 - 11 5 4 10 Prime rate 3 2 1 0 -1 - -2 - -- Federal funds rate -3 - 1st halt ik` 6 1985 2nd half 89 1986 1987 1988 1986 1985 1987 1988 1989 Rural Conditions and Trends, Spring 1990 4 Macroeconomic Trends still affected by the 1988 drought caused most of the price hike, although consumer prices were significantly above 1988, at 5.1 Although lower in the second quarter, annualized inflation was prices. percent for producer prices and 4.8 percent for consumer possible wage-price spiral, fur- High inflation in the first half of 1989 intensified concern about a prime rate rose to 11.5 percent from ther pushing interest rates up. By June 1989, the bank 10.5 percent in December 1988. slowed to an annual rate of 1.7 Due to higher interest rates, the Nation's industrial production in the second half of 1988. Manufacturing percent in the first quarter, compared with 3.6 percent 5.3-percent rate in the fourth production slowed to an annualized 2 percent, much less than the slowed. quarter of 1988. Growth in nonagricultural jobs also of the dollar, dimming hopes Rising interest rates began to push up the foreign exchange value and a slowing industrial sector for continued robust export growth. The expected slide in exports generated recession forecasts. the Fed reversed tactics and When the inflation rate began to subside after the second quarter, and by how much interest cautiously began to lower interest rates. A precise estimate of when Fed moved cautiously to avoid aggravating rates affect the economy is hard to make. Thus, the inflation while promoting growth. persisted, crippling manufac- Despite the change in Fed policy, the effects of high interest rates manufacturing production was turing, especially durable goods-producing firms. By December, in June. only 1.1 percent above the previous year, compared with 3.2 percent 121,000 between August Manufacturing jobs dropped with production. Durable goods jobs fell the same period a year earlier. and November, a sharp contrast to the 91,000-job gain during August and December. Although Overall, goods-producing industries lost 254,000 jobs between less sensitive to inter- service-producing industry job growth slowed, service sector firms seem est rate movements. should have seen continu- These conditions provided the backdrop for the events of 1990, which moderate real growth. Unusually ing moderate inflation, with slowly declining interest rates, and however, causing infla- harsh weather drove up energy and fresh food prices in the first quarter, additional shortrun pressure tion to jump. An early introduction of spring women's apparel put reversing some of the declines in the second hatf of on inflation. Long-term interest rates rose, 1989. likely scenario has Since the price run-up in the first quarter was largely temporary, the most of the unusual events, the only been postponed, not derailed entirely. Barring a continuation 3-percent real GNP growth, and sta- rest of 1990 should see 3.5- to 4.5-percent inflation, 2.5- to ble to slightly falling interest rates. 202/786-1782.1 (For further information, contact RaOh Monaco or Elizabeth Mack, And lowering employment Curbing industrial production . Total and manufacturing employment, quarterly Change in production from the same quarter of Millions, manufacturirg jobs the previous year Millions, nonagricultural jobs 20 110 - Percentage change Total nonagricultural employment 7 Ill Manufacturing employment 19.5 105 6 5 19 100 4 3 18.5 95 2 I I I 11 Ihn1111111111116 I 980 1 191 18 90 0 1986 1985 1989 1988 1987 1985 1986 3 5 Rural Conditions and Trends, Spring 1990 Employment Nonmetro Employment Growth Exceeds Metro uring 1988-89, nonmetro civilian employment grew more rapidly than metro employment for D the first time since the 1980-82 recession, according to Census Bureau data from the Cur- Between 1988 and rent Population Survey (CPS). Nometro employment increased an average of 3.7 percent 1989, rural employment (891,000 workers) between 1988 and 1989. Metro employment rose hy only 1.6 percent (1.5 million workers) in the same period, while nonmetro employment grew faster than at any time grew faster than metro since 1983-84. employment for the first time since the 1980-82 Substantial increases in the nonmetro labor force participation rate suggest that many unem- recession. However, ployed may have been rehired during 1988-89 and that growth in the size of the labor force con- some data suggest that tinued. Over 63 percent of the nonmetro civilian population 16 years and older was in the labor force in 1989, an all-time high since the data were first collected in 1973 (app. table 1). Metro rural growth slowed in areas also posted a record-high labor force participation rate of 67.4 percent in 1989. Nonmetro the last 3 months of labor forca participation rates are lower, partly because of the higher rural proportions of dis- 1989. abled and other individuals prevented from working because of family obligations. Although nonmetro growth was substantial for 1989 as a whole, fourth quarter data indicate a slowdown. The extent of this slowdown is not clear because different data show slightly different trends. CPS data indicate a fourth quarter decline in nonmetro employment growth, which still outstripped the growth in metro are's. Preliminary county-level data from the Bureau of Labor Statistics (BLS) that had shown stronger nonmetro than metro growth in earlier 1989 quarters show nonmetro growth to be slower than metro growth in the fourth quarter of 1989. Final BLS revisions may not be as pessimistic as the preliminary numbers. National declines in manufac- turing employment in 1989, however, hit nonmetro areas harder than metro areas, taking some of the steam out of the recent improvement in rural employment. The largest percentage gains in nonmetro employment during 1988-89 were among the 35-54 age group (up 5.7 percent), women (up 4.7 percent), and Hispanics (up 10.3 percent). The larg- est absolute employment gains were among whites, women, and the 35-54 age group. Metro areas show a similar pattern of employment growth among these groups, but at slower rates. Rural employment finally recovered from the effects of the 1980-82 recession in 1988-89, but the fourth quarter data make continued nonmetro growth uncertain. Should interest rates fall, the economy axpand, and manufacturing employment rise in 1990, we expect nonmetro areas to continue their recovery. (For further information, contact Tim Parker, 202/786-1540.1 9 Rural Conditions and Trends, Spring 1990 6 Employment Employment growth rates Nonmetro employment gains were highest among women, Hispanics, and those 3b 54 years old, 1988-89 Percentage chance by age, sex. race/ethnicity MIESEMINCI -2.3 16-24 1.5 years asummom Metro 25-34 2.9 Nonmetro years 35-54 5.7 =Wm years 55 years 2.3 or older ingammin Men 2.9 MilMommmoiN Women 4.7 White 3.5 Hispanic 10.3 all1111.0.1 Black/other 4.2 11 9 7 5 3 -3 1 Source: Current Popuheon Survey. U.S. employment growth slows But, employment in nonmetro areas grew faster than elsewhere in 1989 1988-89 1986-87 1987-$38 1985-86 Area Percent change 3.74 2.25 Nonmetro 0.91 1.72 1.63 2.25 3.04 Metro 2.43 2.06 2.25 2.59 United States 2.28 Source: Current Population Survey. 1 0 7 Rural Condeins and Trends, Spring 1990