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This study, titled “Declining Wages of Young Workers in Rural America,” by William O’Hare and Anne Pauti (May 1990), analyzes the economic well-being of young workers (16-34 years old) in rural America between 1979 and 1987, comparing them to their urban counterparts. Key findings include:
- Declining Wages and Low-Wage Jobs: The proportion of young rural workers in low-wage jobs increased significantly by 11 percentage points (from 46% to 57%) between 1979 and 1987, compared to a 4 percentage point increase for young urban workers. This contributed to a process termed “downward wage polarization” in rural areas, where the middle-wage segment decreased, and most of those workers shifted to low-wage jobs. Mean earnings for young rural workers decreased by 13% during this period, while urban workers saw a slight increase.
- Unemployment and Underemployment: While the study focuses on wages, it highlights that unemployment rates in rural areas exceeded urban areas in the 1980s. Official figures also underestimate the true extent of unemployment and underemployment in nonmetropolitan areas due to the exclusion of discouraged and involuntary part-time workers.
- Impact of Race: Young rural black workers experienced an extremely high concentration in low-wage jobs (72% in 1987, up from 59% in 1979) and a 15% decline in mean earnings, compared to a 10% increase in low-wage jobs and a 12% decline in mean earnings for young rural white workers.
- Full-Time/Part-Time Status: The decline in rural wages was not due to an increase in part-time work, as the share of full-time jobs actually increased slightly. However, wage deterioration occurred for both full-time (12% decrease in mean earnings, 12 percentage point increase in low-wage jobs) and part-time (22% decrease in mean earnings, 8 percentage point increase in low-wage jobs) young rural workers.
- Shifting Industry Mix: Although the shift from manufacturing to service jobs played a minor role, wage deterioration was pervasive across all major sectors of the rural economy. The service sector generally offers lower wages than manufacturing, and there were detrimental shifts (increase in low-wage jobs) even within these sectors.
- Geographic Pervasiveness: With the exception of New England, all major rural regions of the U.S. experienced significant wage deterioration for young workers, with increases of at least 10 percentage points in the share of low-wage jobs.
The study concludes that the decline in wages for young rural workers is a pervasive national problem, linked to changes within the national and international economic system. Rural economies, being more reliant on unskilled labor and resource-based industries, are more vulnerable to global economic shifts, mechanization, and the outsourcing of jobs. The decline in male earnings in rural areas is particularly notable, with potential ramifications for family structure and poverty.
