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Understanding the income gap between urban and rural areas

September 22nd, 2016

 

The latest Census Bureau data released early this month on income and poverty shows the first significant growth in average household incomes in almost a decade.

 

The Census Bureau calculated the percent change in real median household income between 2014 and 2015 in principal cities, suburbs and rural areas.

 

This growth is a clear and crucial indicator that both the economy and individuals are begining to truly recover from the housing bubble of 2008.

 

There was a 5.4 percent between 2014 and 2015, with all races, ages and regions of the country enjoying the decade-long gains. However, there is one group that still is struggling despite the positive trending statistics: rural areas.

 

The Census Bureau collected the data from more than 20 million households outside metropolitan areas, focusing primarily on rural America. It found that these households saw their incomes drop by two percent between 2014 and 2015, precisely from $45,534 to $44,657. There were 63 million households inside metropolitan areas, but in the suburbs, households enjoyed healthy income growth of four percent, from an already high $61,671 to $64,144.

 

By looking at the statistics, it showed that the major gains accrued to the 41 million households situated in the principal city(s) of a metropolitan area, seeing a striking 7.3 percent increase. Their incomes ranged $47,095 to $51,378. These statistics provide the realization that the United States is recovering economically in major urban regions.

 

The reasoning behind this is that cities are constantly growing and becoming more advanced.

 

Incomes are increasing faster than their surrounding suburbs; both cities and suburbs have been seeing more positive changes in income than rural areas.

 

Although both suburb regions and urban areas are earning more, city-dwellers are closing the income gap. This emphasizes a key concept that larger cities and regions are securing the largest economic gains.

 

A classic historical theory, with sufficient evidence from the past, states that smaller regions or countries tend to grow faster than larger ones.

 

This explains why it is challenging for large cities like New York City and Chicago to continue to grow at a consistent pace; they are already expensive and crowded places to live.

 

With these disadvantages in large cities, it proves that it is easier for economic growth to happen in smaller towns or outlying suburbs.

 

However, with the topic of median household income, the historical pattern has been reversed. Principal cities have been seeing the fastest growth in jobs, while the urban regions have been suffering the weakest recovery in the past decade.

 

This past decade clearly emphasizes that the economic gains are flowing disproportionately to urban areas, while less populated areas are getting left behind in the dust.

 

Sadly, instead of the U.S. spreading its wealth equally across all levels across the country, American cities are getting richer and rural areas still experience the struggle of making basic ends meet.