Rural America

By: Doug Anderson, EVP, Research & Development, The Nielsen Company

Rural America has historically been linked to farming. However, the United States has changed a great deal since Thomas Jefferson envisioned a nation of gentleman farmers. His notion of Arcadia, a sort of agrarian utopia, required a surplus of cultivatable land and most of the population engaged in farming. Jefferson felt that society had to be based on farming in order for individual freedom to be gained. For a century, this Jeffersonian ideal held sway. However, change, industrialization, and the modern world were in the wind, and 1880 was the last time that the majority of Americans lived on farms or that the majority of men worked in farming occupations. Today, more than a century later, less than 1% of the workforce of the United States is engaged in farming, fishing, or forestry occupations, though many people still live in rural areas.

No longer based on farming, rural America is a diverse and important marketplace to marketers of consumer products. Many areas are economically depressed, making price a prime consideration for shoppers, but others are enjoying relative booms, particularly more scenic areas within a few hours of major cities. But there are other changes happening too. The traditional economic base of rural areas is diversifying and becoming more robust. Ethnic composition is also in flux, driven primarily by growth in Hispanics, particularly in the South.

Defining rural America
The number of farming occupations fell in step with the rise of urban America. By 1920, the majority of Americans lived in urbanized areas, a share that has continued to grow to the present day. In 2008, depending on how rural and urban are defined, somewhere between 20% and 40% of Americans live in rural areas, covering between 80% and 98% of the land area of the country. The wide range in these numbers highlights the key difficulty in describing the rural population of the U.S.—how do we define rural? 

One set of definitions is based on the size of place (a level of geography defined by the Census Bureau consisting of incorporated cities and towns and unincorporated areas that are recognizable places), but using places highlights the two primary problems in defining rural populations—how many people can live in an area and have it still be called rural, and how does the place relate to larger places. (See sidebar, Defining Rural America.)

To better differentiate these sorts of distinctions, the Census Bureau also defines Rural-Urban Commuting Area Codes (RUCAs). These codes take into account both the size of a place and its relationship to the surrounding area. RUCA codes differentiate between outlying suburbs that are connected to a metro market and similarly sized places that are genuinely rural. For most of the data presented in this article, RUCA codes 4–10 have been combined. This grouping creates a definition of rural America that includes 20% of the population and 81% of the land area of the country. 

Note that this is a fairly strict definition of rural. Another 10-15% of the population could easily have been included. All told, rural America probably accounts for around one-third of the total U.S. population, and at least three-quarters of the land area of the country.

An area in demographic flux
Demographically, rural America both fulfills and contradicts commonly held perceptions. Levels of educational attainment are lower in rural versus metro areas. Persons with a high school diploma or less are 30% more likely to be rural, while those with at least some college are nearly 25% less likely to be rural. Lower levels of education lead directly to lower incomes. Rural areas are 33% more likely to have incomes less than $40k than are metro areas. As industry has moved away from cities over the past decades, so have blue collar jobs. Rural workers are nearly 40% more likely to be in blue collar jobs than their metro counterparts, and far less likely to be in executive, professional or technical occupations. Service jobs, mirroring the U.S. trend, have grown in rural areas, particularly in healthcare. 

Rural areas are, however, no longer home to America’s families. Families with young children are 13% less likely to be in rural areas. The incidence of families with older children is about on par with metro areas, but as those children leave home, they will be likely to leave the area for better opportunities in the metros. Family types are changing as well. In 1990, 76% of children in rural areas lived in married couple families versus 72% elsewhere (cities and suburbs). Currently, however, the share of children in rural areas in married couple families has dropped to 68% versus 69% in cities (61%) and suburbs (74%).

An ongoing youth exodus has accelerated the aging seen throughout America, particularly in traditional farming areas. Rural adults are 27% more likely to be over the age of 65 than their metro counterparts. The two maps that follow illustrate the correlation between traditional farming areas and population loss. The second of the maps also shows the continuing loss of population from one of our poorest rural areas—Appalachia (stretching throughout southern West Virginia and western Virginia).

Though there are heavy concentrations of blacks and Hispanics in some areas, by and large rural America is strongly skewed to non-Hispanic whites. Adults in rural areas are 26% more likely to be white than their metro counterparts. The incidence of blacks, Hispanics, Asians, and other ethnicities is barely more than half the levels seen in metro America.

Despite these broad trends, there is tremendous diversity across the rural landscape of America. The Carsey Institute at the University of New Hampshire divides the rural U.S. into four distinct types of rural community that highlight the major trends we see in these areas:

1. Amenity-Rich Rural America
   This is the rural America that appears on post cards and calendars—rugged mountains, forests and rocky coastlines. These are the places where 60% of Baby Boomers would like to retire. These areas have seen a boom in recent years, with big growth in vacation homes. The boom has also driven up housing prices and taxes, and substantially changed the nature of businesses, providing more opportunity for restaurants, galleries, etc.
2. Declining Resource-Dependent Rural America
   These areas have depended for decades on the abundance of their landscapes, their economic basis depending almost entirely on timber, farming, or mining and the related manufacturing industries that that they spawned. These industries supported a strong blue collar middle class lifestyle. Today, some resources have been used up while automation has reduced the number of jobs needed to extract what is left. Much of the local industry has faced, and often lost to, strong competition from abroad as globalization provides for the easy movement of jobs across borders.
3. Chronically Poor Rural America
   In parts of rural America, times have never been good, and have gotten even worse in recent years. Appalachia is perhaps the best known example of an area of the U.S. that has a long history of hardship. These areas have been losing population for decades and are largely ignored and forgotten by national priorities.
4. Amenity/Decline Rural America
   These areas are transitional areas, with some aspects of both the Amenity Rich and Declining groups. The traditional economic basis has deteriorated, but there has been some success at revitalizing the areas with new sources of jobs and growth.

Broad differences in product preferences
Even looking at broad categories of consumer products, there are still marked differences between the preferences of rural and metro America. Prepared foods (packaged meats, baking mixes, frozen breads, canned vegetables, etc.) tend to over-index in rural areas relative to non-rural ones. Tobacco products are also quite strong—36% more likely to be purchased in rural areas than in metro ones. Some traditional crafts like baking remain strong though, reflected in the 10%+ levels of purchasing for flour, yeast, baking mixes and other baking suppliers in rural America. The table below shows Nielsen data for the categories most over- and under-developed in rural areas versus metro ones.

Channel choice is clearly skewed
Although both rural and metro America in general have access to a wide range of retail options, some channels are clearly more skewed than others. Nielsen retail trading areas show that over half the all-commodity volume (ACV) of dollar stores comes from rural areas, which also account for one-third of ACV from the mass and convenience channels. The grocery channel gets 20% of its sales from rural areas, but drug only gets 13% and warehouse clubs only 5% of their overall sales.

While Walmart has long been regarded as a rural chain, its stores get the majority of their sales from non-rural areas. Supercenters—the majority of the chain today—receives two-thirds of sales from non-rural areas and one-third from rural America. Non-supercenters are even less skewed to rural areas today, getting less than 20% of their sales from those areas.

Marked television viewing differences
Television viewing data from Nielsen also shows some marked differences between rural and non-rural America. First, rural households watch almost 13% more television than major metro counterparts. Second, the ranking of programs also varies. The table below shows the top programs for the U.S. overall from September to November 2008 and how they perform in metro and rural areas.

The economic base of rural areas is in transition

Where’s the beef?
The economic base of rural areas is in transition. Over the past several decades the price of poultry has fallen substantially relative to the price of beef. This has spurred growth in chicken consumption, as has concerns over the health implications of a beef-rich diet. The effect has been that per-capita consumption of beef fell from 80 to 65 pounds while chicken consumption increased from 28 to 53 pounds per person between 1970 and 2000. During this same time period, demand for the form in which we buy meat has also changed. In 1963, 85% of poultry was sold as whole birds and 15% cut-up product, but by 1997 that proportion had reversed.

These changes have fostered variations in how meat is processed, making substantial impacts on rural America. New technologies and consumption patterns have caused meat processors to shift production to larger, more specialized plants in fewer locations—locations as close as possible to the sources of the meat itself. From 1981 to 2000, the number of meat processing employees has grown nationally from 319k to 491k, with nearly two-thirds of those jobs appearing in rural areas in the South. These low-skilled, non-union jobs have almost completely replaced what had been an urban, skilled, and unionized labor force of butchers.

As these jobs have moved, there have been labor shortages in many rural communities that have been largely met by Hispanics, particularly new immigrants. Between 1980 and 2000, the share of meat processing employees who are non-Hispanic and white has fallen from 74% to 49%, while Hispanics have increased their share from 9% to 29%. Roughly 10% of all non-metro Hispanics in the U.S. works in the meat processing industry. This trend has been particularly strong in the rural South, with Hispanics coming in sufficient numbers to stem the long-term trend of population declines in over 100 counties.

Ongoing changes in rural America
As the Baby Boom retires over the next decade or two, there could be strong growth in both the Amenity-Rich and the Amenity-Decline areas of rural America. That, of course, assumes that in today’s economic climate, the Baby Boom will be able to afford to retire and to move when they do so. However, some Baby Boomers have already bought second homes in many of these areas. 

In addition, automobile manufacturing has grown strongly in rural areas, particularly those of the South. The Southern Automotive—Corridor running from northern Georgia, across Mississippi, and into eastern Tennessee—now includes a number of auto manufacturers, but also scores of plants that supply the manufacturer ring process. Volkswagen in Tennessee, Toyota in Mississippi, and Kia in Georgia are joining multiple plants owned by Nissan and BMW. Alabama now has nearly 49,000 jobs related to the auto industry.

As rural America continues to transform and diversify, makers and sellers of consumer products need to adapt their strategies in concordance. Ethnic diversity, together with ongoing economic instability and technology-driven developments, will continue. Understanding how these changes impact rural life allows marketers to stay ahead of the curve.