The February 2019 Monetary Policy Report from the Board of Governors of the Federal Reserve System includes a section on differences in employment in rural and urban areas nationally (pages 10-12). It notes that the national employment-to-population (EPOP) ratio (the share of the population that is employed) “has returned to about its level before the recession. However, the labor market recovery has been uneven across the country, with ‘rural’ (or nonmetro) areas showing markedly less improvement than cities and their surroundings (metro areas).” Further, this divergence “almost entirely reflects divergences in [labor force participation rates] rather than in unemployment rates.”

The report finds that the gap in EPOP ratios between rural and urban areas is not “primarily driven by differences in years of education.” (The charts below are from the report.)

Nevertheless, because the recovery in the EPOP ratio for non-college-educated adults in rural areas has been particularly weak, it is likely that broader macroeconomic trends—including the ongoing shift in labor demand that has favored individuals with more education—have had more adverse consequences for the populations in rural areas than in urban areas. For example, manufacturing, where employment has stagnated, accounts for a larger share of employment in rural areas than in urban areas, while fast-growing services industries, such as health-care and professional services that tend to employ workers with more education, are more concentrated in urban areas. Indeed, employment in manufacturing has not yet fully recovered from the recession. And, despite the strength in the past two years, the share of total employment in manufacturing has remained near its post-recession low.

The post-recession low-point for manufacturing employment was February 2010, when manufacturing’s share of total employment was 8.8 percent nationally and 9.1 percent in Washington. In December 2018, manufacturing’s share of total employment was 8.5 percent nationally and 8.5 percent in Washington. (We’ve written about the importance of manufacturing jobs in Washington here, here, and here.)

Meanwhile, Opportunity Washington links to a Governing Magazine story on state employment growth in 2018 and focuses on Washington’s urban-rural divide. Washington had the nation’s third-highest job growth (3.0 percent) in 2018, but the “Seattle metro area accounted for about 63 percent of the state’s net increase — slightly more than its share of the state’s employment base.”