For the Rural Wage Gap, What’s Missing Matters

by Henry Fields

December 9, 2020

Rural Lane County faces some serious headwinds when it comes to wages. Lane County in general falls behind the state in earnings, and in turn Oregonians have typically earned less than the average across the nation. In addition, across the U.S. rural areas tend to earn lower wages than urban areas.
So it’s unsurprising, if disappointing, that rural Lane County workers earn less in wages. In 2019, rural Lane County workers earned an average wage of $39,000, fully $15,000 less per worker than the state.

For the purposes of this analysis, I compared wages at the places of businesses located within the Eugene and Springfield Urban Growth Boundaries (“Urban”) and everywhere else in Lane County (“Rural”). It’s a fairly rough look – workers might or might not live in the rural areas these businesses are based in – but it provides some insight into the types of jobs rural workers have access to.

There are many reasons for wage disparities, but a critical element we’ll explore in this article has to do with the type of industries that are and are not concentrated in rural areas.

The graph below shows the concentration of certain industries in rural areas. Rural Lane County has 18% of all jobs, but ranges from 75% of Lane’s jobs in natural resources to 3% in management of companies.
Sometimes, the reasons for the disparity are obvious. Most natural resources (timber, gravel, agriculture) are by their nature concentrated in rural areas. Other rural businesses, such as those in transport and warehousing, benefit from more plentiful land available outside of cities.

The most urban sectors tend to be industries that benefit from close proximity to other types of businesses and population centers, such as the lawyers and engineers included in professional services.

Since these industries have different average wages, their concentration matters to the wage gap. Industries concentrated in rural areas are not necessarily low-wage; in fact, the average wage across the three most rural-concentrated industries is more than $50,000, significantly higher than the average wage for either rural or all of Lane County.

The real difference in Lane County arises from the jobs that aren’t in rural areas. Urban-focused industries do tend to be on the higher end of the wage spectrum. The three most urban-concentrated sectors pay an average of $65,000 per worker, which helps bring up the average urban wage.

The differences don’t end there: the rural-urban wage gap tends to exist even within industries. The high-wage industry employers that do locate within rural areas tend to pay less than their urban counterparts.
The graph above shows the average wage in rural and urban areas in several high-wage industries. In each of these sectors, the highest wage jobs are disproportionately based in cities. Professional services, for instance, pays on average $60,000 in urban Lane and only $45,000 in rural Lane. The gap is especially large in information and finance and insurance, where the average wage in Eugene-Springfield is $20,000 to $30,000 higher than it is outside.

This is a multifaceted issue without a clear silver bullet solution. There are economic reasons that many high-paying jobs in management, tech, and professional services locate in cities. Just one example: it seems likely that executives in company management benefit from a well-connected airport that can’t be easily replicated in the farthest reaches of Lane County. Other businesses will benefit from access to the larger urban workforce and are willing to pay more to attract the skilled workers they need.

That said, if infrastructure such as access to broadband in rural areas is a critical barrier, there may be a path to more wage equality in Lane County. As more people in technical fields work remotely than ever before, rural areas can benefit. It’s also possible that these geographical disparities matter less in a world where people have increased access to working remotely.

For now, these futures are speculation and the wage gap persists. Still, thinking about how jobs could be more evenly distributed is an important first step in greater rural access to opportunity.

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