Varying Unemployment Rates

Unemployment rates are often reported at the national or state level. These rates, though, can hide variation at the county level. Figure 1 maps the 2018 unemployment rate for each county in the country. The counties are divided into two categories: those with an employment rate below 3.87 percent are colored blue; and, those with unemployment rates above 3.87 percent are colored red. The 2018 unemployment rate for the nation was 3.9 percent. The map was created by the Federal Reserve Bank in St. Louis.

Nebraska stands out as having only a handful of counties with unemployment rates above the national average. In fact, many counties in the Great Plains states, along with Missouri, Iowa, and Indiana, have lower than average unemployment rates. In contrast, counties in West Coast states, Rust Belt states, Sun Belt states and other more populated areas have higher than average unemployment rates. In other words, the map would suggest the country’s more sparsely populated areas have the lowest unemployment rates.

Figure 1. Unemployment Rate by County, 2108

Source: The FRED Blog: One rate does not rule them all, Federal Reserve Bank of St. Louis, June 17, 2019

Low employment rates are a positive for rural areas as low rates are a sign of a healthy economy. However, another factor in a healthy economy is a growing workforce. On this front, rural areas don’t appear to fare as well. Figure 2 graphs changes in the metro and nonmetro labor forces since 2007. The graph uses 2008 as the base year. Any point above the line at 100 shows a growing workforce compared to 2008 and any point below the line shows a shrinking workforce. According to Figure 2, the labor force in nonmetro areas rose slightly through the first half of 2009, then turned downward and in 2016 equaled less than 98 percent of its 2008 level. In contrast, the labor force in metro areas has been growing to where it was almost 5 percent greater in 2016 compared to 2008. Experts attribute much of the labor force decline in nonmetro areas to an aging population.

Wrapping it up, what does the data on employment in rural areas suggest? The good news—rural counties are creating and adding jobs. The bad news—the labor force in rural counties is shrinking. This results in low unemployment rates, which is good, but suggests economic growth in rural areas will struggle due to the declining labor force.

Figure 2. U.S. Metro & Nonmetro Labor Force