Incomes on the Rise in Rural Virginia, According to New Weldon Cooper Report

People who live in rural Virginia have seen a larger rise in their incomes so far this decade than people who live in metro areas, according to a recent report out of the University of Virginia’s Weldon Cooper Center for Public Service.

Researcher Hamilton Lombard says rural household incomes have risen by 12% since 2010, compared to just 5% in Virginia’s metro areas during the same period (though the median household income in rural areas remains lower than in metro areas.)

Additionally, Lombard says poverty rates outside Virginia’s metro areas have fallen more than in metro areas since 2010 and are now lower than before the Great Recession.

UVA Today caught up with Lombard.

Q. Which Virginia regions have seen the largest rises in income this decade?

A. Southside and Southwest Virginia, aside from the coal-producing counties, both saw their median household incomes rise over 15%, nearly twice as much as Virginia overall. The Eastern Shore, Middle Peninsula, Northern Neck and most of the Interstate 81 corridor also experienced faster income growth than Virginia’s metro areas.

Though income growth in rural Virginia has overall outperformed Virginia metro areas, the cities of Alexandria, Lynchburg and Richmond also had above-average income growth.

Q. Did your findings surprise you?

A. They certainly did. Northern Virginia, along with some of Virginia’s other metro areas, have led the commonwealth in population and job growth during this decade, so I was not expecting rural areas to have outperformed Virginia’s metro areas in income growth by such a large amount. Nationally, large metro areas have experienced the most population and job growth, while the U.S. rural population has declined during much of this decade.

Q. In your report, you said wages have grown the most outside of Virginia’s largest metro areas, yet job growth there has been mostly weak or non-existent. How do you explain that?

A. The trend can seem counterintuitive, but looking at it from a simple supply and demand model it makes more sense. Most rural areas in Virginia have a very limited labor supply, meaning that employers have had to pay more to attract or retain workers. In Virginia’s larger metro areas, there has been less of labor shortage and employers have felt less pressure to raise wages.

Q. How does the aging baby boomer population, which you’ve previously reported on, factor into everything?

A. Baby boomers make up a disproportionate share of the population in most of Virginia’s rural counties. A large number of young adults moving out of rural counties over the decades to go to college or start their careers has helped increase baby boomers’ share of the population in rural Virginia.

Now baby boomers are retiring in increasing numbers, while there are often not enough young adults entering the labor force to replace them. In many counties, employers are being forced to either raise wages to attract workers or increase productivity to make up for the shortage in workers. Though rural counties have felt the impact of baby boomers leaving the labor force more than the rest of Virginia, over the next decade the labor supply will likely also tighten in Virginia’s metro areas as baby boomers retire.

Q. Anything else noteworthy about your findings?

A. Rising incomes are generally seen as a positive trend, particularly when it is helping shrink the income gap between Virginia’s rural and metro areas. But the income gains seen in much of rural Virginia appear to have come at a cost. The labor shortages that are causing more employers to raise wages are in part a result of young adults moving out of rural counties for college and work. Despite the income gains, wages in most rural counties are still lower than in Virginia’s larger metro areas. So far this decade, young adults have been moving out of rural counties at a higher rate than in any recent decade.

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Whitelaw Reid

University News Associate Office of University Communications