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This report, “The Slowdown in Nonmetropolitan Development: The Impact of Economic Forces and the Affect on the Distribution of Wages” by Lucy Gorham (April 1991), analyzes the economic downturn in nonmetropolitan (nonmetro) areas of the U.S. during the 1980s, following a period of growth in the 1960s and 1970s.The paper highlights the following key points:
- Causes of the Slowdown: The decline was primarily due to a simultaneous contraction in traditional nonmetro industries like agriculture, mining, energy, and manufacturing. These industries faced challenges such as high interest rates, an overvalued dollar, international economic stagnation, and increased import competition. While manufacturing also suffered from firms moving production overseas or automating, nonmetro areas also lost some jobs to metro areas seeking faster responsiveness to consumer demand.
- Impact on Wages and Income: The income gap between nonmetro and metropolitan areas widened significantly in the 1980s. The percentage of “low earners” (individuals earning below the poverty line for a family of four, even with a full-time job) increased more sharply in nonmetro areas (from 31.9% in 1979 to 42.1% in 1987) than in metropolitan areas (from 23.4% to 28.9%).
- Demographic and Regional Differences:
- Gender: Nonmetro women were disproportionately affected, with over half (53.9%) being low earners in 1987, compared to less than a third of nonmetro men. The wage gap between nonmetro and metropolitan women also widened more dramatically than for men.
- Race: Racial inequality in earnings worsened, with nonmetro Blacks and Hispanics experiencing substantial increases in low earners (60% and 57% respectively in 1987).
- Age and Education: All age groups and education levels in nonmetro areas saw an increase in low earners, indicating a widespread decline in earning prospects, which could hinder economic revitalization.
- Region: Every nonmetro region experienced an increase in low earners, with the West North Central (farm belt) showing the largest increase in the nonmetro/metro wage gap.
- Role of Industrial Change: The growth in low earners was mainly due to changes within industries rather than shifts in employment between industries. While consumer and social services showed employment growth, these industries often offered low-wage jobs. Business and distribution services, though expanding and offering higher wages, accounted for a smaller share of employment.
- Future Outlook and Recommendations: The paper suggests that nonmetro economic prosperity is unlikely to return to 1970s levels soon. To adjust, it emphasizes investment in education, training, and telecommunications infrastructure, especially as the future of nonmetro development will be tied to services. It also calls for active intervention to address growing economic inequality.
