Rural Employment

Shifting from farming to manufacturing and services.

In the not too distant past, farming was nearly synonymous with "rural." That is no longer the case. While farming remains important as a source of jobs and income in many rural areas and is the largest single user of rural land, it is no longer the dominant rural industry it once was, nor will it likely be again.

In the last four decades, farming employment dropped from just under 8 million to a little over 3 million. The number of farms has gone from 5.8 million to 2.1 million. In the last 20 years, the percentage of the rural workforce employed in farming has gone from 14.4 percent to 7.6 percent. Even by including agricultural services, forestry, and fishing, the share has gone from only 15.3 percent to 8.5 percent.

Figure: Farming's "double-edged sword".

Today, only about 5 million people, less than 10 percent of the rural population, live on farms. In addition, in 1990, 58 percent of U.S. farm operator households received wages and salary (averaging nearly $30,000 per reporting household) from off-farm employment. For example, one or more household members might work at a manufacturing plant, telemarketing office, or in retail trade. Therefore, even for the remaining farm households, the nonfarm rural economy is a critical source of employment and income.

The decline of farming employment is, in many ways, a consequence of success. Improvements in technology, crop science, and farm management have all boosted output while reducing the need for labor. Productivity growth has, in turn, led to farm consolidation, declining farm numbers, decreases in farm employment, and consequently a surplus of farm labor. Thus, the ability to produce more with less, while benefiting many, has caused economic hardship for others.

Today, the largest share of rural jobs and employment growth comes from the services sector, which employs over half of all rural workers. This dominance of the services sector mirrors the urban employment picture. Rural services related to recreation, retirement, and such natural amenities as mountains, lakes, shorelines, etc., have emerged as important new sources of rural employment and growth. Other services--financial, insurance, real estate, as well as retail stores, dry cleaners, restaurants, etc.--are also important. And there is anecdotal evidence that advances in telecommunications are enabling still other types of services--telemarketing, data processing--to move to rural areas.

Figure: Services and manufacturing together employ more than 2 out of 3 rural workers.

Manufacturing also is a major provider of both rural jobs and income, providing jobs for nearly 17 percent of the rural workforce and employing more people than farming, agricultural services, forestry, fishing, and mining combined. Manufacturing also provides roughly a quarter of all rural earnings. However, like farming, the share of manufacturing jobs in rural areas has declined. From 1969 to 1992, that share dropped from 20.4 percent to 16.9 percent of rural employment.

Given these changes in the rural economy, and its current structure, the economic future and well-being of most rural people now depend on the availability and quality of jobs in the rural services and manufacturing sectors and the entrepreneurial opportunities in those sectors.

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Updated: February 10, 1997