Magazine article Amber Waves

Rural Employment in Recession and Recovery

Magazine article Amber Waves

Rural Employment in Recession and Recovery

Article excerpt


The recession of 2007-09 affected all areas of the country, but some regions fared better than others, in part because of their more favorable industrial composition.

Total employment loss rates during 2007-09 were slightly larger in rural (nonmetro) than urban (metro) counties and began a year earlier. Rural employment growth has lagged behind urban areas since the first half of 2011.

About two-fifths of the rural employment growth deficit is due to rural counties having a lower population growth trend and an older, less well-educated workforce.

In December 2007, 6 years of economic growth ended as the U.S. economy entered the most severe recession since the Great Depression. In May 2014, 5 years after the official end of the recession, nonfarm employment reached its pre-recessionary peak level. However, the share of the adult population that was employed in May 2014 remains 4 percentage points below its prerecessionary level, while 9.8 million people (or 6.3 percent of the U.S. workforce) remained unemployed, with 3.4 million having been out of work for more than 6 months.

Eighty-two percent of U.S. counties experienced employment losses between the fourth quarters of 2007 and 2009, but some areas fared better than others. States in the Great Plains experienced some of the lowest rates of employment loss during the recession and currently have some of the lowest unemployment rates in the Nation. Rural (nonmetro) counties as a whole experienced an earlier and slightly higher rate of decline in employment than urban (metro) areas during the recession, and rural employment growth has lagged well behind metro growth during the economic recovery. However, among nonmetro counties, the most rural areas fared better during the recession in terms of both rates of employment loss and changes in unemployment rates. After looking at nationwide trends in employment and unemployment during and after the 2007/09 recession, ERS researchers address a number of questions, including:

What explains why unemployment rates rose by much smaller amounts during the recession in counties located in the Plains States than elsewhere?

What explains the slow pace of employment growth in rural counties since the end of the recession?

Why did the least densely populated rural counties, and those that were not adjacent to metro areas, generally experience the smallest rates of employment loss during the recession?

Consequences of the 2007-09 Recession: A National Overview

The last recession was the deepest and longest lasting since the Great Depression. Nonfarm employment fell by 6.3 percent (8.7 million) between its peak in January 2008 and its trough in February 2010. By comparison, peak-to-trough employment losses in the 1981 recession were half as large, at 3.1 percent.

Not only was the drop in employment more severe, but employment rebounded more slowly following the 2007/09 recession than following other economic recessions in recent history. Employment did not match its pre-recessionary peak level until May 2014, 5 years after the end of the recession and 6.5 years after its start. Rebound periods for the previous two recessions averaged less than half as long.

The slow rate of employment recovery is even more evident when considering the employment needs of a growing population. On the eve of the 2007-09 recession, 63 percent of all adults, and 80 percent of prime working-age adults (ages 25-54), were employed. By 2010, these ratios had both fallen by 5 percentage points, to levels not seen since 1983. Since then, the overall employment rate has risen by just 0.4 percentage points and the employed share of the prime working-age population has risen by only 1.4 percentage points. Thus, while total nonfarm employment now stands at its pre-recessionary level, employment rates for adults and prime working-age adults remained 3.9 and 3.3 percentage points below their pre-recessionary levels, respectively, as of May 2014. …

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