Rural Manufacturing Survival and Its Role in the Rural Economy

The manufacturing sector’s share of employment and earnings in rural (nonmetro) areas began to exceed its share in urban (metro) areas in the 1980s, when import competition forced domestic manufacturers to lower costs. Wages, property taxes, and land prices are generally lower in rural areas. And despite the sector’s declining employment since the 1950s, manufacturing jobs still represented 14 percent of rural private nonfarm jobs in 2015 (compared to 7 percent for urban). As a share, manufacturing earnings are even more important to rural America. Manufacturing earnings represented 21 percent of rural private nonfarm earnings in 2015 (compared to 11 percent for urban). Manufacturing provides a higher share of total jobs and total earnings in rural America than other sectors commonly associated with rural places: production agriculture and mining. In rural America in 2015, manufacturing jobs totaled 2.5 million, while farm jobs stood at 1.4 million and mining jobs (including oil and gas extraction) stood at 0.5 million. Rural earnings in 2015 included $158.1 million from manufacturing, $45.4 million from farming, and $37.3 million from mining. Still, employment in “service” industries dwarfs manufacturing employment in rural America, at least at a national level. Indeed, manufacturing’s relative rural importance is due, in part, to the rural service sector not growing as quickly as the urban service sector. As demand for services grows, economic restructuring is altering job opportunities in rural areas. Producer services jobs (e.g., information, finance, insurance, real estate) numbered 3.7 million in rural America in 2015, while jobs in consumer services (e.g., healthcare, entertainment, food service) numbered 6.2 million, over a quarter of all rural jobs. By comparison, rural manufacturing employment was only a little larger than that of healthcare and social assistance, a component of consumer services. These rural totals mask variation across different areas; in some rural areas, manufacturing employment is dwarfed by farm employment or has become relatively less important as mining employment has grown. Rural manufacturing is no longer the driver of job growth that it once was: 71 percent of U.S. counties experienced a decline in manufacturing employment between 2001 and 2015. Counties with the largest relative declines were concentrated in the Eastern United States, the traditional hub of U.S. manufacturing.