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Monday, April 20, 2009

With Farms Dependent On Off-farm Income, What Is The Rural Job Market?



 

Early forecasts indicated the current recession had not crashed into agriculture, but there might be some scrapes, cuts, and bruises. Economists projected that consumers would still need food, agricultural lenders were sound, and farmers were in generally good financial position. While Cornbelt farmers may be able to weather the storm, what about the communities where they buy inputs, send their kids to school, and go to church? And particularly, since many farms depend on off-farm income, are there jobs available?

Rural America, and particularly non-metropolitan counties, are showing serious wear and tear from the recession. Those are counties, which are outside the influence of urban economies and have a population under 50,000. Those counties are depicted in a recent assessment by the Rural Policy Research Institute (RUPRI). RUPRI’s Center for Regional Competitiveness is directed by economist Mark Drabenstott, who says, “The rural economy is now losing jobs at a faster rate than the rest of the nation, with a particularly sharp rural slide over the past two months.” He says the strong commodity prices and good demand held off the recessionary impact on rural America for most of last year. But when the calendar changed, so did the economic winds of winter.

One of the flashpoints of the recession is manufacturing in rural areas, which Drabenstott says has worsened and caused a loss of 3.4% of jobs in non-metropolitan counties, while metropolitan counties only lost 2.8% of their jobs over the past 12 months.

Drabenstott refers to the “farm boom” which pushed net farm income to nearly $90 billion, and helped job growth in many rural counties. But he says rural counties that are dependent upon manufacturing have seen jobs “tumble,” particularly after November 2008. And he says in percentage terms, rural America has lost more manufacturing jobs than urban America, which he measures at 5% since the start of the recession, and he compares that to 2% in other parts of rural America not as dependent upon manufacturing.

During the past two recessions, Drabenstott says rural America did not suffer as much as it is in this one. He says job losses over all of rural America are about 3%, compared to 1% in the 2001 recession and even less in the 1990-91 recession. The RUPRI economist does offer a “glimmer of hope,” and says the last two recessions ended after 8 months and the prior two ended after 16 months. So he believes the end must be in sight.

Drabenstott bases his analysis on economic data offered in chart form at the RUPRI website:
1) Compared to a year ago, job loss for urban areas turned into negative territory in July of 2008, but rural job loss was not negative until September. However, rural job loss has taken a steeper downward trend and now surpasses urban job loss.
2) Comparing non-metropolitan counties, which are either dependent on farming or manufacturing, those that are manufacturing dependent have been in a slow decline since January of 2008, which farming dependent counties were actually growing in economic power last summer and fall, before turning down in September. He says the “farm boom” insulated those counties that were more dependent upon farming than on manufacturing.
3) While both urban and rural counties have lost jobs, rural counties held a positive position through mid-summer of last year, after urban job grown declined a month or two earlier. The rate of decent has increased for rural counties at this point.
4) Job losses in rural counties dependent on manufacturing reached 4.75% in January, but for counties dependent on farming, job losses were at 2.3% in January.
5) While the last two recessions showed recovery after 8 months, the current recessionary index continues downward unchecked.

Summary:
The current recession has impacted rural areas significantly, primarily in the loss of manufacturing jobs, and with a greater impact than on urban counties where industry job losses have also be considered as significant. Non-metropolitan counties where the economy is more focused on agriculture than on manufacturing have been insulated from the recession, and its impact has not been as significant.

Posted by Stu Ellis on 04/20 at 01:26 AM | Permalink

Comments

Why are "they" surprised or unhappy? It is all part of "WalMarting" the World (Globalization). Look at May 15, 2007 FarmGate.

Posted by: Just Saying at April 20, 2009 9:09AM

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