Economic and Demographic Trends in the Mid-Appalachia Region

MDC, Inc.

June 2002

Economic and Demographic Trends in the Mid-Appalachia Region

Executive Summary

Home to 7,591,467 people, the 214 counties of the Mid-Appalachia region are characterized by their mountainous geography and history of poverty. Kentucky, North Carolina, Tennessee, Virginia, and West Virginia's Appalachian counties have economies that were historically based on natural resource extraction and low-skill, low-wage manufacturing; the demise of both leaves many counties that have not diversified economically in a situation of distress or decline and out-migration. Even while much of the rest of the South saw booming economies in the 1990s with population and job growth that led the nation, the Mid-Appalachia region remained behind.

This analysis presents an economic and demographic profile of the Appalachia regions of Kentucky, North Carolina, Tennessee, Virginia, and West Virginia based on an analysis conducted by MDC, Inc., a private nonprofit development organization based in Chapel Hill, NC, and focusing on the South. The goal of this profile is to provide a context for determining the region's challenges to progress as well as opportunities for action by an institute on rural journalism.

Major Findings:

Entrenched Challenges: In this global age where a local economy's performance is tied to that of its state and the nation, the failure of much of Appalachia to thrive during the booming 90s indicates entrenched challenges that will continue to compromise the region's well-being. Much of the region's economic base is retrenching and is concentrated in low-growth or declining industries and low-wage services, while booming areas of the South had more diversified economic and occupational mixes with high growth in services, durable goods manufacturing, health care, and retail.

Economic Distress: While some counties are in markedly better economic shape than they were in 1990, the overall number of counties in distress has increased. In 1980, 59 of the 214 Appalachia counties in these five states were classified as "distressed" by the Appalachian Regional Commission. In 1990, this figure increased to 78 of 214 counties. In 2000, this figure increased to 83 counties. The number of jobs per 100 people and the unemployment rates underscore the lack of economic opportunity in the region, as do the low per capita income rates. The types of jobs available in the region account in part for both income levels and the number of jobs available.

Poverty: Poverty continues to be an extreme challenge to the region. In 1997, 16.1 percent of Mid-Appalachia's total population lived in poverty, as compared to 13.3 percent of the U.S. population. Owsley County, Kentucky, had the dubious distinction of the highest poverty rate in the Mid-Appalachia region that year, with 40.9 percent of its total population and 50 percent of its children living in poverty.

Education: The Mid-Appalachia region's adult population is also markedly less educated than that of the U.S. In the year 2000, of those age 25 years and older in the U.S., 51.7 percent has at least some education beyond high school, and only 19.6 percent has less than a high school diploma. In Mid-Appalachia, only 38.9 percent has any education beyond high school, and a staggering 27.5 percent— more than a quarter of the adult population— has not completed high school. In a knowledge economy where education is increasingly critical for economic survival, these statistics shed a great deal of light on why poverty is so entrenched in the region.

Aging: The population of Mid-Appalachia is markedly older than that of the U.S. as a whole, with 39.2 percent of its population age 45 or older as compared to 34.4 percent for the U.S. The region's youth make up only 22.6 percent of the population, versus the U.S. figure of 25.7 percent. These figures indicate that the region is left with an aging workforce and fewer young people to potentially fill the gap left by those leaving the workforce. In the remainder of the South, the population is aging but not at such extreme levels, and the gap of younger workers is being filled by foreign-born immigrants drawn by job growth. The lack of jobs in Mid-Appalachia disallows such an opportunity and reinforces the downward spiral.

Opportunity: While the aggregate statistics indicate major challenges, the region does include economically vital communities and a wealth of educational resources. Many metro, resort, and retirement areas within the region have seen a great deal of economic progress in the past 10 years, and these areas can be part of a strong foundation for the region at large. Another crucial piece of that foundation is the higher education infrastructure; the 214 counties of Mid-Appalachia include 104 institutions of higher education for the strengthening of the region's human capital and its civic and economic infrastructure.

Economic and Demographic Trends in the Mid-Appalachia Region

Introduction and Notes on Data

The basic foundation for economic progress is a community's capacity to do two things: bring dollars into a community and keep those dollars within the community. While the factors related to these two functions are numerous, economic diversity is key. An economy that is concentrated in low-profit, declining industries such as natural resource extraction or low-skill manufacturing has much less dollar-importing capacity than an economy that also includes a mix of tourism, high-end professional services, and other value-added industries. A diversified economy also allows a community the flexibility and resilience to weather economic shifts.

Even while much of the rest of the South saw booming economies in the 1990s with population and job growth that led the nation, the Mid-Appalachia region remained behind. While metropolitan and high-amenity areas in the region experienced healthy progress and provide an asset for the region to build upon, the majority of the region, faced with a preponderance of declining and low-wage industries and an undereducated, aging workforce, has been faced with economic stagnation or distress.

This analysis presents an economic and demographic profile of the Appalachian regions of Kentucky, North Carolina, Tennessee, Virginia, and West Virginia based on an analysis of 10-year trends conducted by MDC, Inc., a private nonprofit development organization based in Chapel Hill, NC, and focusing on the South.

Founded in 1967, MDC's mission is to advance the South through strategies that expand opportunity, reduce poverty, and build inclusive communities. The organization analyzes trends to identify challenges that impede progress for the South and its people, and it addresses those challenges from multiple angles, including informing the public dialog through resources such as its State of the South reports, a biennial analysis of the South's economy and how Southerners are faring in it.

The goal of this profile is to provide a context for determining the region's challenges to progress as well as opportunities for action by an institute on rural journalism. The analysis aims to answer the following research questions:

In Mid-Appalachia counties, what are the total population, population density, and composition by age, race, and gender? How has the population changed over the past 10 years?

How does mid-Appalachia compare to the rest of the United States in terms of per capita income, home ownership, and unemployment? How many people are living in poverty, and how many children? What are the longer-term trends?

What are the predominant industries and occupations in Mid-Appalachia? Are these industries growing, stagnant, or declining?

What percentage of the adult population has a high school education? A college education? How does this compare to the rest of the United States? What postsecondary education and vocational training opportunities are available?

Definition of Terms:

"Mid-Appalachia" and "the region" refer to the Appalachian counties of Kentucky, North Carolina, Tennessee, Virginia, and West Virginia, as those counties are defined by the federal government's Appalachian Regional Commission (ARC).

"State Appalachia," such as "Kentucky Appalachia," refers to Appalachian counties within that state.

"State Appalachia Median County," such as "Kentucky Appalachia Median County," refers to the county with the median statistical figure within the Appalachian counties of that state.

"State Name," such as "Kentucky," refers to the entire state of Kentucky, including the Appalachian counties.

Notes on Data:

The data for this analysis is included in the appendix. The data sets are: Demographics, Economics, Details of Population by Age, Mining Employment, Location of Higher Education Institutions, and Educational Attainment[*]. Each state data section is organized alphabetically by county.

All counties in West Virginia are included in the Appalachian region; therefore, we do not include a separate data point for "West Virginia Appalachia."

Metro areas or proximity to a metro area in NC, TN, VA, and WV skew some of the data, as do prosperous resort areas in parts of VA and WV. For this reason, we present state Appalachia area figures and the state Appalachia median figures for a fuller picture where appropriate.

Where available, data is provided on the county level. This analysis has required multiple sources of data, and sources are indicated on the data tables attached. The most recent data available at the county level has been used.

Overview

Overall, the Mid-Appalachia region remains mostly rural, lower-growth, less densely populated, much less diverse, older, poorer, and less educated than the states of which it is comprised and the U.S. In an economy that through the 1990s rewarded metropolitan and high-amenity areas with highly educated workers, such characteristics did not bode well for Mid-Appalachia's economy or people. While metro and resort areas in the region did as well or better than their respective states in terms of economic and demographic growth, other areas made little or no progress. In this global age where a local economy's performance is tied to that of its state and the nation, the failure of much of Appalachia to thrive during the booming 90s indicates entrenched challenges that will continue to compromise the region's well-being.

Demography

Population growth from 1990 to 2000 in Mid-Appalachia was only 9.5 percent, compared to the U.S. rate of 13.1 percent. State Appalachia regions lagged each state's growth in all cases and also lagged U.S. rates, with the exception of NC Appalachia and TN Appalachia, which include major metropolitan areas. (See Figure1.)

Population density of each state's Appalachia region lags its state as well, with the exception of Tennessee due to Chattanooga and Knoxville. The most mountainous areas of Mid-Appalachia— Kentucky, Virginia, and West Virginia— had population densities significantly lower than their North Carolina and Tennessee counterparts. (See Figure2.)

Mid-Appalachia's population continues to be nearly all-white, with only NC Appalachia having people of color comprise more than 10 percent of its population. NC Appalachia's greater diversity is reflective of the state's having the country's highest growth rate for Hispanic population from 1990 to 2000. Mid-Appalachia's population was markedly less diverse than the country as a whole: the region's population was 92.5 percent white, 4.8 percent African American, 1.6 percent Hispanic, and .9 percent other, while the U.S. figures were 75.1 percent white, 12.3 percent African American, 12.5 percent Hispanic, and 4.5 percent other. (See Figure3.)

The population of Mid-Appalachia is markedly older than that of the U.S. as a whole, with 39.2 percent of its population age 45 or older as compared to 34.4 percent for the U.S. The region's retirement age population is higher, with 14.4 percent age 65 or older, with the U.S. figure at 12.4 percent. The region's youth make up only 22.6 percent of the population, versus the U.S. figure of 25.7 percent. (See Figure4.)

These figures indicate that the region is left with an aging workforce and fewer young people to potentially fill the gap left by those leaving the workforce. In the remainder of the South, the population is aging but not at such extreme levels, and the gap of younger workers is being filled by foreign-born immigrants drawn by job growth. The lack of jobs (see Economy section below) in Mid-Appalachia disallows such an opportunity and reinforces the downward spiral. The region's high median age in 2000, 37.9 years as opposed to the U.S. figure of 35.3 years, confirms that challenge. (See Figure5.)

The Mid-Appalachia region's adult population is also markedly less educated than that of the U.S. In the year 200, of those age 25 years and older in the U.S., 28.6 percent of the population has a high school diploma only, and 51.7 percent has at least some education beyond high school. Only 19.6 percent had less than a high school diploma. In Mid-Appalachia, while 34 percent has a high school diploma only, only 38.9 percent has any education beyond high school, and a staggering 27.5 percent— more than a quarter of the adult population— has not completed high school. Only 18 of the 214 counties had a lower percentage than the U.S. of adults with less than a high school diploma. (See Figure6.)

Economy

Economic possibilities for counties in Mid-Appalachia vary widely due to terrain, available services, and infrastructure. The ARC distressed counties map (see Figure7) indicates those counties which, as of 2000, were considered to have the most "structurally disadvantaged economies" as determined by poverty, unemployment, and per capita market income rates.

In 1997, 16.1 percent of Mid-Appalachia's total population lived in poverty, as compared to 13.3 percent of the U.S. population. (See Figure8.)

For all five states studied, per capita personal income (PCI) in 1999 was significantly less than for the U.S., and the PCI of each state's Appalachia region was even lower than the state PCI. The Mid-Appalachia region's figure was $21,954, and the U.S. figure was $28,546, a full 30 percent higher. (See Figure9.) The PCI figure for the median county in each state's Appalachia region was even lower than each state's Appalachia region figure, indicating an upward skew due to a few counties with higherthantypical figures.

Despite having significant leeway to make up ground in PCI between 1990 and 1999, only Virginia's Appalachia region managed to grow at a rate higher than its state, and VA Appalachia still ended with a PCI at only 75 percent of its state PCI. The below-state-level increases indicate that Mid-Appalachia was not able to take advantage of economic opportunities in even the most prosperous of times, and some of the counties fell even farther behind their states and the country. (See Figure10.)

The average wage per job is certainly a factor in the region's low per capita income and high poverty rates. In 2000, the average wage per job in the U.S. was $34, 652, a full 32.3 percent higher than the Mid-Appalachia figure of $26,194. (See Figure11.) Each state's Appalachia region lagged the state considerably; and in every case, the figure for the Appalachia region's median county was lower than the state's Appalachia region, again indicating the figures were skewed high by a few counties.

The percent increase in average wage per job from 1990 to 2000 again indicates a region unprepared to take advantage of economic opportunity and falling farther behind the U.S. and the involved states. The Mid-Appalachia increase of 35.02 percent is a full 13.4 percentage points behind the U.S. increase of 48.6 percent. (See Figure12.)

The number of jobs per 100 people and the unemployment rates underscore the lack of opportunity in the region. At 53.09 jobs per 100 people, the region's rate is well below the U.S.'s 59.51 jobs per 100 people, and the median county's number of jobs per 100 people in each state's Appalachia region is below the state level in every single case. (See Figure13.) Regarding unemployment, the figure for the median county in each state's Appalachia region was higher than the U.S., and with the exception of North Carolina, also higher than its state rate. (See Figure14.)

The types of jobs available in the region account in part for both income levels and the number of jobs available. Traditional resource-based industries— farming and mining— declined in each of the five states between 1978 and 1997. Nondurable goods manufacturing— chemicals, textiles and apparel, and tobacco— all saw significant declines in the states from 1978 to 1997. Still, manufacturing, services, and government occupations account for the majority of jobs in Mid-Appalachia.

The more mountainous states have few options for placement of manufacturing facilities, as reflected in the low percentage of jobs in manufacturing. The higher figures in North Carolina and Tennessee are accounted for mainly with traditional manufacturing, the number of jobs in which is declining in most industries due to technology replacing workers and to global competition. (See Figure15.)

Service and retail employment were areas of huge growth in the South in general from 1978 to 1997, with health and business services being areas with continued booming growth. Each state Appalachia region showed a percentage of jobs in services lower than the U.S. and lower than its state in 2000, indicating a lack of economic diversification and consistent with the areas' low population growth rates. (See Figure16.)