“...it is clear that rural counties in the United States are not strictly limited to the agricultural activities most people associate with such areas...rural and agricultural are not synonymous terms for describing non-urban counties...” (Plummer & Headd, Small Business Administration, 2008).

 

Fifty years ago, natural resource-based activities such as mining, fishing, agriculture, and logging dominated rural employment.  These economic and employment sectors have since declined significantly.  This changing economy affects all rural Americans, including those with disabilities.

Many people equate "rural" with agriculture, but rural America has changed.  The United States Department of Agriculture (2006) reports that the proportion of agricultural jobs has declined in recent decades and today "only a small proportion of jobs in rural and small-town America are in the agricultural sector."  For example, only 5% of rural Americans (1% of the U.S. population) currently live on farms (Census 2000 Summary File 3, Table P5).  Moreover, nearly 70% of those farms are classified as residence or lifestyle farms (USDA Economic Research Service, 2007). This means that most of these families choose to live in the country for the lifestyle, but they derive little or no income from the farm.  In fact, most households classified as living on farms earn most of their income from off-farm sources.

Description of Figure 1. 

Source: Calculated by United States Department of Agriculture's Economic Research Service using data from the 2005 March Current Population Survey. Figure adapted from the original.

 

Manufacturing has also declined in rural areas.  Like the rest of America, employment growth in rural areas has been in professional and service sectors such as health care, recreation, and tourism.  Figure 1 compares the metropolitan and non-metropolitan distribution of jobs by occupation, and identifies major U.S. economic sectors in non-metro and metro areas.  Since people with disabilities have high unemployment rates, rural job development might focus on small employers in the most-promising rural economic sectors.

The number of "footloose" businesses has also grown.  These are small or very small business owners who relocate their businesses from metropolitan to rural areas seeking a higher quality of life for themselves, their families and their employees. 

As such, the small and very small business sector is one of the more promising sources of employment in small towns and rural areas.  As Table 1 shows, businesses with one to four employees were the only non-metropolitan category in 2001-2002 to add jobs.

Description of Table 1.

Table 1. 2001-2002 U.S. Job Gain/Loss: Metropolitan Statistical Areas
vs. Non-metropolitan Statistical Areas*

Businesses by Number of Employees
	Total gain/loss	1-4	5-9	10-19	20-99	100-499	<500	500+
Total	(2,660,558)	841,442	77,137	(65,505)	(600,242)	(682,364)	(429,532)	(2,231,026)
MSA*	(2,249,767)	697,493	82,247	(39,689)	(507,222)	(601,158)	(368,329)	(1,881,438)
Non-MSA*	(410,791)	143,949	(5,110)	(25,816)	(93,020)	(81,206)	(61,203)	(349,588)

*Metropolitan Statistical Area: A county that has at least one urbanized area of 50,000 or more inhabitants.
 Non-metropolitan County: A county with no town of more than 49,999 inhabitants. 

 

Small Businesses are now the backbone of the rural economy.

 

In each of the previous ten years, small businesses created 60-80% of all new jobs (U.S. Small Business Administration, 2005).   As Table 1 shows, for both metropolitan statistical areas and non-metropolitan statistical areas, very small businesses with fewer than ten employees created all of the new U.S. jobs in  2001- 2002. Larger businesses lost jobs. 

Researchers and service providers are just beginning to study and understand the small business employer environment (National Institute on Disability and Rehabilitation Research, 2006).  For example, we don't know how employees with disabilities are distributed among small employers.  The Americans with Disabilities Act does not apply to businesses with fewer than 15 employees; researchers need to determine how this affects the prospects of a person with a disability getting a job with a small employer.

Given that small businesses create most new jobs, this is a significant gap in knowledge.  Research must address such questions as:  What are the hiring practices of very small businesses?  What barriers do they face in hiring people with disabilities?  What barriers do people with disabilities face in becoming employed by very small businesses?  What incentives might promote both the growth of very small businesses and their hiring of people with disabilities? 

There are almost 10 million Americans with disabilities who live in non-metropolitan counties (Seekins, T. & Enders, A., 2005). The answers could make a difference in their lives.

References:

Plummer, L. A. & Headd, Brian. (2008). Rural and urban establishment births and deaths using the U.S. Census Bureau’s Business Information Tracking Series. [Working Paper]. Washington, DC: United States Small Business Administration, Office of Advocacy.

Economic Research Service. (2006, December). Economic Information Bulletin Number 21:  Rural employment at a glance.  Washington, DC: United States Department of Agriculture. http://www.ers.usda.gov/publications/eib21/eib21.pdf

Economic Research Service. (2007). Farm household economics & well-being: Income forecasts & income perspective. Washington, DC: United States Department of Agriculture. http://www.ers.usda.gov//Briefing/Wellbeing/farmhouseincome.htm

Seekins, T. & Enders, A. (2005, April). Update on the demography of rural disability, part two: Non-metropolitan and metropolitan. [RURALfacts]. Missoula: The University of Montana Rural Institute.

U.S. Census Bureau. (2000). Urban and Rural [7] – Universe: Total Population.  Census Summary File 3, Sample Data, Table P5.

 

For more information, contact:

Tom Seekins, Ph.D., Director
Research & Training Center on Disability in Rural Communities
The University of Montana Rural Institute, 52 Corbin Hall, Missoula, MT  59812-7056
888-268-2743 (toll-free); 406-243-4200 TTY; 406-243-2349 fax
http://rtc:ruralinstitute.umt.edu; rural@ruralinstitute.umt.edu

Suggested citation:  Seekins, T., Arnold, N., & Ipsen, C. (2008). Small business: The changing face of rural employment. RURALfacts.  Missoula: The University of Montana Rural Institute.

 

National Institute on Disability and Rehabilitation Research, U.S. Dept. of Education Grant #H133B030501 supports our research.  Opinions expressed are the authors’ and are not necessarily those of the funding agency. 

This report is available in standard, large print, Braille, and text formats. © RTC: Rural, 2008.