Analysis: The Connection Between Race and Opportunity in Rural Parts of the 5th Federal Reserve District

This article was originally published by the Federal Reserve Bank of Richmond

In 2019, 10% of the U.S. population, 18% of the U.S. Black population, and 28% of the rural U.S. Black population, lived in the Fifth Federal Reserve District. From slavery through Jim Crow, to the higher poverty rates of today, this article seeks to connect the unique history of our rural Black population to today’s social and economic rural environment. …

Rural and Black in the South: A Short Summary of a Long History

In the 1860 census, the last census before the Civil War, there were about 1.5 million Black people living in the Fifth District—the broad majority enslaved in rural areas. The entire nation has been urbanizing for centuries, and the Great Migration took many southern Black residents north, but even today, many Fifth District rural counties maintain a large Black population. For example, the Black population of Clarendon County, S.C.—a 35,000-resident nonmetro county toward the middle of the state—made up about 50% of the population in 2019. This was also a county in 1865 where enslaved people made up 65% of the population.

At the end of the Civil War, Union general William T. Sherman’s Special Field Orders No. 15 intended to set apart land for freed people “so that each family shall have a plot of not more than forty acres of tillable ground.” Neither the 40 acres, nor the later promised mule, permanently materialized. In a 2018 article in Rural Sociology, King et al. wrote that after the Civil War, almost all former slaves became landless wage workers on southern plantations. According to Richard Kluger in his book Simple Justice, even by 1950, almost every Black person in Clarendon County lived on a farm and fewer than a quarter of the 4,000 farms in the county belonged to those who worked them. In Clarendon County (and likely in much of the South), landless, Black residents had three ways to avoid starvation as a tenant farmer: rent the land for an annual fee, contract the farm, or sharecrop. There were few, if any, economic arrangements that provided consistent opportunities for wealth building, and with Jim Crow segregation, educational opportunities were limited.

Over time, there were fewer and fewer Black landowners. According to an article in Southern Rural Sociology by Gilbert et al., Black farmers (most of whom were in the South) owned over 16 million acres in 1920, but by 1997, that number had decreased to 2 million acres. Furthermore, in an article from the Review of Black Political Economy, Wood and Gilbert write that over the same period, the number of Black farms declined by 98%, compared with a 66% decline for whites. In other words, from 1865 through the Jim Crow period, the rural Black southern population had few job opportunities, higher rates of poverty, and more limited access to education, while land ownership fell. That leaves us wondering: What is the landscape today?

Race Matters in Rural Poverty

Rural places have long had higher poverty rates than urban areas in the United States. More specifically, a legacy of opportunity gaps between white and Black southerners has contributed to an even higher poverty rate for rural Black residents. As in our recent Regional Matters post, we use the U.S. Department of Agriculture’s (USDA’s) classification codes, referred to here as Rural Urban-Continuum Codes (RUCC), to categorize counties across the rural-urban continuum. The codes range from 1 (most urban and counties in metro areas with 1 million residents) to 9 (most rural and counties with less than 2,500 urban population that are nonadjacent to metro areas).

When we think of rural areas, we often think of the completely rural counties in codes 8 and 9. However, only 2% of the Fifth District population lives in the completely rural counties. (Meanwhile, about 75% live in the metro counties classified in codes 1 and 2.) Thus, although we want to pull out the most rural counties, we also want to consider the environment for those in any smaller town or rural county in our district. In the Fifth District, the poverty rate among the Black population in the most urban areas (codes 1-2) was 18% in 2019, compared with nine percent for the white population. In rural/small town areas (codes 3-9), the poverty rate was 28% for Blacks and 14% for whites.

Within Fifth District states, the Black poverty rate was consistently higher in rural/small towns (codes 3-9). This was particularly relevant in North Carolina and South Carolina where the share of the rural population was 23% Black and 37% Black, respectively. In both states, the rural/small town Black poverty rate was 29%.

Current income disparities matter, but so do opportunities to improve economic well-being over generations—opportunities that have historically been lacking for our rural Black residents. In a study of racial disparities in income, Chetty et al. find that Black children across the rural-urban continuum in the United States experience much lower rates of upward mobility than their white counterparts with comparable upbringings. What is more, that gap widens in high-poverty and more segregated communities.

Race Matters in Employment

Employment can go a long way to providing economic opportunity and alleviating poverty. However, employment-to-population (EP) ratios—or the share of the working age (16+) population that is employed—are lower for the Black population across the Fifth District. And, as with poverty, the gaps widen in more rural areas. For example, in small towns (code 7), where about 11% of the Fifth District population is Black, there is a 13-point difference in the Black and white EP ratios.

EP ratios in rural areas tend to lag metro areas for both races, and in some cases, severely. For example, in rural McCormick County, S.C., (code 8), about half of the population is Black, and just 33% of the total working age population is employed. McCormick County is an anomaly in that the Black EP ratio is 37%, which is eight points higher than the white EP ratio; however, parts of the county’s story resemble other largely rural Black counties. The Census Bureau estimates that manufacturing employs the largest share of the county’s population, accounting for 26% of total employment in 2018. The Joint Center for Political and Economic Studies reports that manufacturing made up about 17% of employment in rural Black southern counties in 2017, followed by retail trade (16%), and accommodation and food service (eight percent). These industries have a high potential for automation, further reducing opportunities for Black employment in rural counties. The report reveals that 40% of manufacturing employment among the rural Black population in the South was lost between 2001 and 2017. In fact, the decline in U.S. manufacturing employment is well documented, and recent survey evidence indicates the COVID-19 pandemic might further propel large companies across industries to continue replacing low-skill labor with automation.

Understanding gaps in EP ratios is complicated, but there are factors that clearly play a role, such as disparities in educational attainment and health outcomes.

Race Matters in Education

Disparities in educational attainment rates in the Fifth District follow the same trend as poverty and employment—the biggest gaps between racial groups occur in small towns. In metro areas (codes 1-2), 92% of white adults and 88% of Black adults have a high school education or higher. However, in rural/small towns (codes 3-9), 87% of white adults have a high school diploma compared with 80% of Black adults. Disparities in Virginia’s small towns are some of the widest among our jurisdictions: A 10-point gap separates Black and white adults with at least a high school education. (Importantly, high school graduation requirements can differ across states. For example, in the Fifth District, only Virginia and Maryland require students to pass an exam to graduate.)

Bachelor’s degree attainment makes a big difference in labor market outcomes. With a bachelor’s degree or higher, an individual is more likely to earn more, more likely to be employed, and less likely to become unemployed in economic downturns. The biggest racial disparities in four-year college completion occur in urban geographies, but notable differences also exist in rural areas. For example, in rural/small towns (codes 3-9), almost a quarter of white adults have a bachelor’s degree or higher compared with 12% among Black adults.

Although in recent years, rural educational outcomes have been improving, the gaps between rural and urban populations have been growing. The combination of growing racial and geographic disparities in educational attainment and anticipated automation of lower-skilled positions could further impede employment opportunities for rural Black populations.

Does Health Matter, Too?

There are many dimensions of health outcomes, and we know that Americans living in rural areas are more likely to be older, disabled, or suffer from health issues such as obesity, diabetes, and heart failure. Disability is likely a factor in the lower EP ratios in rural areas: Although racial differences in the Fifth District are not large, 17% of the rural/small town population (codes 3-9) reported a disability in 2019, compared with 12% of the urban population. There does seem to be a connection between mortality and race, however, as Henning-Smith et al. show that rural counties with large African American and Native American populations suffer from much higher rates of premature mortality than rural counties that are primarily non-Hispanic white. Compounding the existing health challenges in rural areas is the recent increase in rural hospital closures that is impacting all rural residents’ access to health care. This could be a particular issue for rural Black residents. In a recent poll from Harvard and Robert Wood Johnson Foundation, about 16% of rural Black families report losing a nearby hospital in recent years, compared with 10% of all rural respondents.

So Where Does This Leave Us?

The “what” is clear: Rural Black residents are more likely to live in poverty and less likely to be employed or access higher education. There is little doubt this is the continued legacy of our troubled history. However, to ensure that all of the Fifth District—including our rural Black population—has access to economic opportunity, we need to understand the “why” today and how to improve our outcomes. History plays a role, but declines in manufacturing employment and little improvement in educational and health disparities across the rural-urban or the racial continuum increase the urgency of moving beyond our legacy.

This article is part of a series of reports on race and opportunity produced by the Federal Reserve Bank of Richmond.