As the US population continues to concentrate in urban areas, rural communities often find themselves sidelined in conversations about economic mobility and growth. Contrary to the prevailing narrative that rural America is on the brink of decline, a closer examination reveals a different story: rural areas are not only growing but also diversifying their economies and populations.
### The Economic Significance of Rural America
Rural America plays an indispensable role in the national economy, accounting for approximately one-seventh of the total US population and contributing around $2.7 trillion to the US GDP. This figure represents nearly 10 percent of the total economic output of the country. Recognizing the contributions and potential of these communities is crucial, particularly as we seek to create more equitable opportunities for individuals residing outside urban centers.
Recently, McKinsey & Company, alongside its Institute for Black Economic Mobility, has committed to accelerating economic mobility in various underserved communities, including rural populations. Their efforts emphasize the need for increased understanding and resources to support economic growth in these areas, shedding light on the often-overlooked barriers faced by millions of Americans.
### Defining ‘Rural’: A Fundamental Challenge
One of the first hurdles in understanding rural America is the lack of a universally accepted definition. Various government agencies utilize different criteria for defining what constitutes “rural,” leading to significant inconsistencies. For example, definitions from the USDA and the US Census Bureau can categorize the rural population differently, which complicates policy-making, resource allocation, and program eligibility.
For this examination, McKinsey has adopted the USDA’s framework, which categorizes 61 percent of US counties as rural. This classification results in an estimated 46.3 million Americans residing in these rural areas. A standardized definition of rural could streamline efforts to distribute federal funds and resources, ultimately benefiting these communities more effectively.
### A More Comprehensive Picture of Rural America
Examining rural America through the lens of the USDA’s definition offers valuable insights. Every state and territory within the US has rural communities, which collectively make up about 71 percent of the country’s geographic area. This geographic breadth signifies that rural America is an integral part of the nation’s identity.
Over the past decade, rural areas have seen an increase in racial diversity, with the percentage of the White population decreasing from 80 to 77 percent and a corresponding rise in Hispanic and other racial groups. This shift towards diversity is a positive indicator of the evolving demographic landscape in rural communities.
However, rural America continues to lag behind urban areas in educational attainment. While 34 percent of urban residents hold a bachelor’s degree or higher, only 20 percent of rural residents can claim the same. This educational disparity reflects broader differences in labor mobility and economic opportunity.
### Economic Growth and Industrial Diversity
Despite the challenges, rural communities are not stagnant; they have experienced notable economic growth. Rural counties witnessed a 15 percent increase in GDP from 2010 to 2022, and median household income surged by 43 percent, reaching almost $60,000. While these benchmarks might still trail behind urban areas, they demonstrate the potential for ongoing progress.
Moreover, the rural economy is diversified beyond just agriculture, which represents only 7 percent of employment. Key industries in rural areas include government, manufacturing, and healthcare. Such diversity is essential for ensuring resilience against economic downturns and for creating job opportunities for local residents.
### Connectivity and Infrastructure Challenges
Although rural America faces unique infrastructure challenges, significant strides are being made to improve accessibility to essential services. The Bipartisan Infrastructure Act has allocated billions for infrastructure projects, including $65 billion aimed at enhancing broadband access. Connecting rural communities to reliable internet services is crucial, as it can lead to improved economic outcomes and increased access to education and healthcare.
Despite these efforts, disparities in broadband adoption persist. Currently, 65 percent of rural households use broadband, compared to higher percentages in urban areas. This gap underscores the need for continued investment in rural infrastructure.
### Future Opportunities in Rural America
Looking ahead, it is essential to recognize that economic mobility in rural America remains uneven. Many areas still face significant generational income declines, emphasizing the need for targeted interventions. As McKinsey’s forthcoming report reveals, the varied economic conditions across rural counties require tailored approaches to economic development.
The data illustrates a stark contrast: while some counties experience income growth, others are in decline. Factors such as local economic conditions, labor market dynamics, education access, and demographic shifts all play critical roles in determining economic mobility.
### Conclusion
Rural America is more than just a picturesque backdrop to urban life; it represents a vibrant and diverse portion of the nation with significant economic potential. To unlock this potential, stakeholders must adopt a nuanced understanding of rural communities, moving past outdated stereotypes and recognizing the real challenges and opportunities these areas face. By fostering awareness and circulating resources effectively, we can ensure that rural America is not just an afterthought but a vital contributor to the nation’s economic landscape.
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