The Rural Economy and Structural Explanations for Poverty and Stratification

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The Rural Economy and Structural Explanations for
Poverty and Stratification

• Today we will
• Look at role of the rural economy for poverty and
  stratification
• Define industrial sectors
• Compare metro and nonmetro areas on
• Distribution and change in employment
• Average earnings
• Quality of jobs
• Difference between occupation and industry
• Link back to poverty

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What causes povertycontd

• Structural explanations (restricted
  opportunities)
• Insufficient labor demand
• Discrimination in education, job training
• Discrimination in labor markets
• Worker exploitation
• Restructuring of employment due to technology,
  globalization, change in demand
• National and local implications

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Why is it important to study the rural economy?

• The demand side of the labor market
• Plays a large role in providing income generating
  opportunities to rural people
• Provides tax base (directly and indirectly
  through wages) to support rural communities
• Interesting aspects of social interaction and
  power relationships operate within the local,
  national, and global economy

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We will focus on employment as an indicator of
the structure and contributions of the economy

• Current economic restructuring
• Distribution of jobs across industries
• Distribution of jobs across space
• Changing nature of jobs
• These changes affect the economic viability and
  sustainability of local communities, from large
  cities to small rural towns, by influencing labor
  market conditions

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Measures of the operation of labor markets

• Labor force participation rates Percentage of
  all people ages 16 and over who are currently
  working or unemployed (actively looking for work)
• Underemployment Percentage who are
  underemployed discouraged, unemployed,
  involuntary part-time (lt35 hours), low income
  workers (lt125 poverty compared to the total of
  underemployed and adequately employed.
• Earnings and benefits

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How does the industrial structure differ in metro
and nonmetro areas?
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Industrial structure

• Classified by the products
• There are many different industries in the
  economy---new classification of NAICS (North
  American Industrial Classification System)
  contains hundreds of different detailed
  industries
• For general discussion, these are combined into
  13 broad industry categoriessuch as are found in
  the Census.

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Broad industry categories

• Goods producing sector
• Farming, forestry, fisheries
• Mining
• Construction
• Manufacturing
• Durable
• Nondurable

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Broad industry categories (cont.)

• Services Producing Sector
• Transportation, communication, utilities
• Wholesale trade
• Retail trade
• Finance, insurance and real estate
• Services (business, personal, professional)
• Public administration (federal, state, local
  government)

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Why is industrial structure important?

• Earnings vary across industries
• Job quality varies across industries
• Stability
• Benefits
• Safety

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What is the difference between occupations and
industries?

• Occupations classify the types of work an
  individual does
• Industries are classified by the type of product
  or output a firm generates
• Almost every occupation can be found in each
  industrial sector
• The occupational structure of an industry
  determines the types of workers (skills) that are
  needed
• Recent restructuring has occurred as much in
  occupational structures within industries as in
  types of industries

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Occupational categories

• Like industry categories, occupational categories
  can be very detailed (Dictionary of Occupational
  Titles from the U.S. Department of Labor, Bureau
  of Labor Statistics)
• Up to 800 different occupations listed in the
  DOT.
• We will talk about the broad occupational
  categories used in the Census

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Characteristics used to classify occupations

• Work performed
• Skills
• Education
• Training
• Credentials

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Blue-collar and white-collar occupations A
common classification

• White collarhigher prestige
• Professional technical
• Managers
• Sales
• Clerical (often called pink-collar)
• Blue collarlower prestige
• Craftsmen
• Nonfarm laborers
• Operatives

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13 Broad occupational categories(to help you
figure out last next figures)

• Executive, administrative managerial
• Professional specialty
• Technicians and related support
• Sales
• Administrative support, including clerical
• Private household services
• Protective services
• Other services (food prep, health services,
  cleaning building repair, personal services)
• Farming, forestry and fishing
• Precision production, craft and repair
• Machine operators, assemblers and inspectors
• Transportation and material moving
• Handlers, equipment cleaners, helpers laborers

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Variations in occupational structure by industry
and residence

• An example

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Labor markets

• Market in which buyers and sellers of labor
  interact.
• determines wages paid,
• benefits offered and
• employment stability
• Are labor markets national, regional, local, or
  occupational/ industrial?

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What determines relative power of employers and
workers

• Factors increasing employer power
• Factors increasing worker power

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Why should we care?

• Relative power of employers and workers plays out
  at all levels (global, national, local) but the
  strongest effects in the short run are felt at
  the local level in terms of jobs, earnings levels
  and benefits.
• Rural labor markets a combination of lower
  human capital, different job structure, and
  greater employer power lead to lower earnings
  within industries/ occupations and higher
  poverty.
• Exacerbated in areas with high minority
  concentrations and Appalachia.

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Role of welfare in offsetting low wages, low
human capital, or poor job opportunities, lack of
child care or transportation
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Percentage of poor families that received welfare
income, 2000
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Why the nonmetro poor are less likely to receive
welfare income

• Lack of availability
• Lack of access
• Lack of knowledge
• Stronger work ethic (Yankee individualism)
• Stronger stigma
• Less anonymity

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There is evidence that the rural poor rely more
on the informal economy Why?

• We will talk about this strategy to make ends
  meet later in the semester.

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In- Class Application Child Poverty

• Use Data Wheel from Population Reference Bureau
• See instruction sheet.