Rural Manufacturing Survival and Its Role in the Rural Economy

Manufacturing is more important to the rural economy than to the urban economy. Rural manufacturing plants survive longer than urban plants, making rural areas better poised to retain manufacturing jobs.Access to financial capital is strongly associated with rural plant survival, while State and local tax rates may not be. However, U.S. manufacturing employment has been declining since the 1950s. Between 2001 and 2015, a period that included the 2001 and 2007-09 recessions, manufacturing employment fell by close to 30 percent. Because of manufacturing’s prevalence in rural America, this decline hit rural areas disproportionately hard. A better understanding of the factors affecting the survival of rural manufacturing plants may help develop strategies to retain these jobs. Despite the sector’s declining employment since the 1950s, manufacturing jobs still represented 14 percent of rural private nonfarm jobs in 2015 (compared to 7 percent for urban). As a share, manufacturing earnings are even more important to rural America. Manufacturing earnings represented 21 percent of rural private nonfarm earnings in 2015 (compared to 11 percent for urban).