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Rural Poverty

New Hardships in the “New” Economy? Industry, Policy, and Working Poverty in Rural and Urban America 1981-2024 Jesse Shircliff*, Jesse Shircliff, Matthew Brooks, Regina Baker, J. Tom Mueller,

In 1978 the United States began a decades-long process of industrial restructuring while simultaneously intensifying work requirements in its social safety net. Why, then, did working poverty hit a 40-year low in 2021? Further, which industries continue to foster working poverty, and which industries have benefitted most from federal anti-poverty policy? We address these questions by studying economic hardship in the “new” economy between rural and urban America. We use data from the Current Population Survey and the Supplemental Poverty Measure to disaggregate change in the US industrial composition and industry-specific poverty rates for workers. New estimates show a secular decline in all industry-specific working poverty rates and a reversal of the rural disadvantage in most industries by 1995.  Unexpectedly, we also find that the same 5 of 10 industries represented 8 out of every 10 poor workers for the entire period, with some differences in rural versus urban. We use a counterfactual approach to illustrate that working poverty rates have been shaped by transfer programs more than the composition of industries themselves. That is, declining poverty rates were made possible by increased tax credit and transfer programs, and a reliance upon taxes/credits increased in rural overtime. By mitigating the negative effects of increased employment in “risky” industries, anti-poverty policies prevented poverty for millions of US workers, especially during the 2008 recession. These findings illustrate the malleability of poverty in the “new” industrial economy and provide support for political-institutional theories of poverty prevention.