Introduction

In the 60 years since the launch of the War on Poverty, a broad consensus has emerged that at least part of the answer to poverty lies with the “success sequence.”  That is, that finishing high school, getting a job, and avoiding pregnancy until after marriage—in that order—can play an important role in helping a young person avoid poverty.  

However, rural populations trail urban and suburban areas in work, education, and marriage, and continue to fall further behind. Unemployment is higher in rural areas and average wages are lower. Rural students are less likely to go to college. Roughly 54 percent of children in rural areas are born outside of marriage, compared to 45 percent of those born in urban areas. Moreover, the proportion of children living in single-parent households is increasing more rapidly in rural areas than in urban ones.

As a 2021 report from the Economic Innovation Group notes, rural areas have fallen behind the rest of the country “on nearly every measure of prosperity from poverty rates to labor force participation.” 

Support for education, employment, and family formation would be crucial to anti-poverty strategy anywhere. But finding successful policies in rural America is made more complex by the realities of rural life. 

Many rural communities are declining in both population and economic production. In fact, from 2010–2020, the overall rural population declined from one census to the next for the first time. Deaths exceed births in most rural counties. In addition, younger people and families are increasingly moving from rural areas to more urban environments. As of 2020, nearly a quarter of rural counties have suffered a loss of five percent or more of their working age populations over the previous 20 years. And by 2030, at least 694 additional rural counties are expected to do so. The result is not just a smaller rural population, but one that is older, less educated, and often sicker. 

Almost 90 percent of rural counties have a median age higher than the national median of 38. As rural population declines, the supporting institutions—schools, hospitals, and other vital services— often disappear as well. This  leads more young and educated people to leave in search of better prospects and greater economic opportunity, perpetuating a vicious cycle of decline. 

As a result, reducing rural poverty will require comprehensive policies that revitalize rural communities and address the underlying issues that trap so many rural Americans.  That means addressing education and job creation, but also broader issues such as health care reform, immigration, trade, and agricultural policy.  

What is Rural?

Discussions of rural poverty are complicated by the lack of a universal definition for “rural.” For instance, the Census Bureau does not actually have a definition for “rural” other than “not urban.” Effectively, that means the bureau defines rural as populations, territory, and settlements with fewer than 2,000 housing units and a population under 5,000. 

However, other government agencies use other definitions, notably variations of the Rural-Urban Commuting Area index (RUCA), which classifies census tracts based on population density, urbanization, and daily commuting time. And still others have devised their own definition or definitions. The Department of Agriculture, which may be expected to have a precise definition, generally  defines rural as a region with fewer than 20,000 people, but it  also uses other definitions for specific programs and grants. The Department of Health and Human Services uses at least six definitions. The Veterans Administration designates areas in which less than 30 percent of the population resides in urban areas as defined by the Census Bureau as rural, and those in which less than 10 percent of the working population commutes to a town with a population greater than 2,500 as “highly rural.” And, the Department of Education uses the size of a school district—under 600 students—as part of its definition of a rural school, along with the distance from an urban area. The Department of Housing and Urban Development uses at least three definitions, including one that defines rural as a county or parish without an urban center that has a population in excess of 20,000. (The Appendix lists the many definitions used by federal agencies.)

The different definitions of rural can lead to very different results.  For example, the size of the rural population can vary by as much as 10 percent using Agriculture Department definitions alone. Some 846 counties are considered rural under some definitions or for purposes of some programs, but not for others.  

The Census Bureau’s definition of rural ropes in a number of suburban and exurban areas that are doing quite well (Figure 1).  Under this definition, rural areas grew in population and increased employment. But measuring non-metropolitan counties as defined by the Office of Management and Budget, rural populations are declining and employment is sluggish (Figure 2). Developing an effective policy for dealing with rural poverty depends in part on which rural America policymakers see.

Figure 1

Figure 2

The lack of a uniform definition of rural across government creates a number of other problems as well. First, it can often be difficult to make direct comparisons between studies or across research. Indeed, sometimes government reports or academic papers do not even specify the definition they are using. As a result, it becomes harder to determine which policies or programs work. Second, it makes it difficult to develop a coherent programmatic approach across government. Different agencies or programs may target very different groups. And third, lak of definition allows  easier program expansion  beyond their original target or purpose. Yet, at the same time, local officials may not be aware of resources available to them. 

It would be useful, therefore, to develop a single government-wide definition of rural.  

The Extent of Rural Poverty

In 2023 the official U.S. poverty rate was 11.1 percent. However, in rural areas, it was a significantly higher 13.6 percent. In urban areas, it was just 10.7 percent, lower than the national rate. Rural areas are more likely to have higher rates of near-poverty, meaning income between 100 percent and 125 percent of the poverty level. 

These high rates of rural poverty hold across a wide swath of demographic categories: black, white, Latino, Native American, men, and women. And, importantly, more than one in four children under age 5 from rural families lives in poverty. Rural poverty rates are particularly high for people of color. Roughly 31 percent of African Americans, 30 percent of Native Americans, and 22 percent of Latinos in rural areas live in poverty compared with 13.3 percent of white rural residents. 

Rural poverty is not evenly distributed, of course. Some regions are particularly hard hit, notably Appalachia, the Southern “Black Belt,” the Mississippi Delta, tribal lands, and the Rio Grande Valley. Non-metropolitan poverty—a somewhat broader category than purely rural— ranges from a low of eight percent in Connecticut to a high of 22.8 percent in Louisiana. These regions are also the home to most counties experiencing persistent poverty:  areas experiencing poverty rates higher than 20 percent for more than 30 years. (Figure 3).

Figure 3

While people of color are more likely to be poor everywhere in the United States, this disparity is even more the case in rural areas. Roughly 30 percent of rural African Americans, Latinos, and Native Americans live below the poverty line. Moreover, people of color living in rural areas experience higher levels of persistent poverty than both whites and people of color in urban areas.  

Nor is rural poverty simply a question of material deprivation. There is a miasma of hopelessness and despair that hangs over many rural communities. “Deaths of despair”—death from suicide, drug abuse, and alcohol-related liver disease—are disproportionately high in rural America. Stress-related deaths are also higher in rural areas. Indeed, overall, rural life expectancies are lower than for urban areas. Rates of smoking, obesity, and chronic conditions such as high blood pressure are higher in rural communities. And, the National Institutes of health warns the incidences of mental health disorders are higher in rural areas than in urban ones.   

The Failing Efforts to Fight Rural Poverty

Current efforts to combat rural poverty are emblematic of the shortcomings of the U.S. welfare system generally. There is no coherent strategy for alleviating rural poverty. Rather, there is a collection of disparate and unconnected programs aimed at a kaleidoscope of issues and constituencies. Figure 4 illustrates just a small sample of the fragmented, opaque, and bureaucratic approach that the federal government is taking toward the issue.

Figure 4

Source: https://www.brookings.edu/articles/what-everyone-should-know-about-rural-america-ahead-of-the-2024-election/

Per capita, the federal government spends more money in urban areas than in rural ones. Government spending in rural areas tends to be more focused on income support rather than on infrastructure or economic development. Still, there is no shortage of government spending in rural America.

Unfortunately, there is no single dataset that encompasses all development or social welfare spending in rural areas. Overall, the federal government spends roughly $31 billion annually on 55 programs specifically targeted at rural poverty. Roughly 90 percent of all rural counties receive some sort of “place-specific” government funding. But this dramatically understates the amount of federal anti-poverty spending in rural areas, most of which is from broadbased programs that include rural Americans as part of their remit. Programs such as Medicaid, SNAP, and TANF have greater utilization in rural areas than in urban ones. 

In short, a great deal of government spending is targeted to rural America. Yet, as the figures above show, high poverty levels persist. 

As with welfare more generally, this labyrinth of programs and spending has been somewhat successful in reducing material deprivation. But, as evidenced by the numbers cited above, it has done a poor job of helping rural Americans escape poverty, to become self-sufficient, and to be the masters of their own destinies. 

The contratemps over changes to Medicaid in the One Big Beautiful Bill Act (OBBBA) is illustrative. The debate highlights that the rural poor are disproportionately reliant on Medicaid. But that also demonstrates that policymakers have not successfully lifted those rural Americans out of poverty. They remain dependent on the vagaries of government policy. 

What rural Americans need is a strategy that moves beyond making it less miserable to be poor and toward meaningfully reducing poverty.

Recommended Reforms

A successful rural poverty reduction strategy needs to be multi-faceted, dealing with a range of issues. Some issues are common to poverty generally, but some are unique to rural America.

Among the areas that policymakers should target:

Agriculture

Farming remains at the heart of rural America, accounting for roughly 6.8 percent of the rural economy. Despite a 72 percent decline over the last century, there are still more than 1.9 million farms in America today. About 17 percent of employment in rural areas is directly or indirectly related to agriculture. And, while U.S. agriculture remains the envy of the world, that does not necessarily translate into rural prosperity. 

There are really two different farm economies. A small number of large agribusinesses—both family and non-family-owned—produces 84 percent of U.S. agricultural output. Small family-owned farms nevertheless account for 86 percent of all farms in the United States. 

Most small family farms operate on a profit margin of 10 percent or less. They are also likely to carry high levels of debt. Indeed, farm business models are often built on farmers going into debt early in the year, to purchase seeds and such, then realize profits and repay the debt after harvests and attending sales. This is obviously a model with a high degree of risk. 

Purely as a matter of output, it would make sense for policymakers to focus on big farms and agribusiness. However, small farms play a vital role in rural communities and in the larger agricultural landscape. Small farms are often the economic backbone of their committees. Their loss has been shown to lead to job losses and a decline in other rural businesses. 

Environmentally, small farms tend to be more sustainable and promote more biodiversity than their larger competitors. Notably, agribusinesses tend to be monocultural, focused on growing a single crop. Small farms, on the other hand, are more likely to grow a wider variety of crops and to use more environmentally friendly practices. 

It would be a mistake, therefore, for policymakers to abandon small farms. Yet, the political playing field is often tilted toward agribusiness. For example, the overwhelming majority of farm subsidies flow to the biggest and wealthiest agricultural operations. Less than a quarter of farms with annual incomes less than $100,000 receive any subsidies at all, while more than two-thirds of larger farms do. And, the larger the farm, the more likely it is to receive subsidies. One study found that between 1995 and 2021, the top one percent of farms received 27 percent of the total $478 billion in farm subsidies during this period. A second study showed that 60 percent of subsidies from three major programs—crop insurance, Agriculture Risk Coverage and Price Loss Coverage—are given to the top decile of farms. This study also indicated that large farms were more intensely subsidized. For example, the largest 10 percent of farms received an average of $29 per acre in crop insurance subsidies, compared to an average of $12 per acre for all farms.  Moreover producers of meat, fruits, and vegetables are almost completely excluded from the core subsidy programs, while commodity crops such as wheat, corn, and soy are heavily subsidized.

Table 1: Distribution of Farm Subsidies by Farm Size/Income

Characteristic	Proportion of Subsidy Payments	Implications
Top 10% of Recipients	>78% of commodity program subsidies (1995-2021)	Indicates extreme concentration of benefits among a small fraction of farms.
Top 1% of Recipients	27% of total $478B farm subsidies (1995-2021)	Highlights how a very small elite group captures a significant share of public funds.
Top 10% of Farms (by size)	60% of subsidies from crop insurance, ARC, PLC	Programs designed based on acreage/production inherently favor larger operations.
Largest 10% of Farms (Crop Insurance)	$29/acre (average subsidy) vs. $12/acre (all farms average)	Larger farms receive disproportionately higher per-acre subsidies, reinforcing their scale.
Households with Income > $140,000 (2015)	50% of crop payments, crop insurance, working-lands conservation subsidies	Subsidies flow to financially secure households, not primarily low-income farmers.
Farms with Revenue < $100,000	23% receive federal subsidies	Small farms are largely excluded from the primary subsidy mechanisms.
Farms with Revenue > $100,000	69% receive federal subsidies	Shows a clear correlation between farm size/revenue and subsidy receipt.
Farms with GCFI $150K-$350K (Crop Insurance)	<50% participation	Mid-sized farms have limited access to key risk management tools compared to larger ones.
Farms with GCFI > $1M (Crop Insurance)	71.2% participation	Highest participation rates among the largest, most financially secure farms.
Large Family Farms (GCFI > $1M)	13% of participants, 34% of cropland, 34% of indemnities	Significant share of benefits for a relatively small proportion of farms.
Small Farms (GCFI < $350K)	Operate >50% of acreage, but receive 16% of indemnities	Disparity between land operated and benefits received, indicating inequitable distribution.
Corn, Soybeans, Wheat Farmers	>70% of farm subsidies	Programs are heavily concentrated on a few staple commodities, neglecting diversified and specialty crop producers.
Landowners (not active farmers)	Primary beneficiaries due to capitalization of subsidies into land values	Subsidies inflate land prices, making entry harder for new farmers and benefiting absentee owners more than working tenants.

Reducing reliance on programs that blunt market signals would allow market competition to drive efficiency and innovation across the agricultural sector. Moreover, paring back subsidies would reduce farm consolidation and strengthen the position of small family farms in the marketplace.  

At the same time, government support for research and development should be broadened to benefit a wider range of agricultural systems, including specialty crops and diversified operations, rather than focusing predominantly on a few staple commodities. In addition, more research and support should target practices such as soil regeneration and biodiversity.  

A reformed U.S. farm policy should move towards a system that truly supports the economic viability of a diverse agricultural sector, promotes environmental stewardship, ensures food security for all Americans, and operates with fiscal responsibility. This requires a fundamental shift from a “production-at-all-costs” mentality to one that values resilience, equity, and sustainability in the agricultural landscape, fostering a more balanced and equitable future for American agriculture.

Education

Educational outcomes for rural areas are mixed, but problematic. Roughly 13 percent of rural students fail to graduate high school,  compared to 11.4 percent of urban students. Of those who graduate, 59 percent go to college, slightly lower than urban (62 percent) and suburban (67 percent) graduates. As with high school graduation, the variation is notable but not overwhelming. However, urban and suburban students who matriculate are far more likely to graduate from college. 

Nearly 35 percent of urban residents have a bachelor’s degree or higher, while just 21 percent of those living in rural areas do. Roughly 63 percent of urban Americans have at least some college, compared to just 51 percent of rural residents. To some extent, these numbers reflect the fact that many rural high school graduates who do attend college may ultimately settle in urban areas. For example, a 2016 study of University of Arkansas graduates found that less than half of students from rural areas returned to those areas within seven years of graduation. 

However, studies also show that graduates of rural high schools are less likely to go to college. Rural areas are also more likely to be defined as “education deserts,” that is, regions without any four-year colleges or universities and, at most, a single community college. 

There are some positives to rural education, however. First, rural schools are smaller on average than urban schools. In 2019, the student-to-teacher ratio at rural schools was 6.7 students per teacher, and this rate was even lower in remote rural schools, which had 6.1 students per teacher. Smaller class sizes can have positive benefits for students, such as more tailored instruction to individual student needs. Small rural schools also have close-knit communities. Close relationships between parents, teachers, and administrators can be beneficial for student success. There are also opportunities for hands-on learning in rural schools, such as outdoor exploration, community service, and more, which enriches students’ learning and practical knowledge. The positive aspects of rural education provide a solid foundation to build on.

Building on that foundation may require more creativity and innovation in rural communities than does education reform overall, but the building blocks remain the same. 

Education choice: The keys to educational reform are increasing competition and giving parents more choice and control. However, accomplishing this through traditional routes such as charter schools, vouchers, or tuition tax credits is more difficult in rural communities that have fewer resources or alternatives to traditional public schools. For example, there are roughly 772 charter schools in rural communities compared to 4,303 in urban areas, and 2,132 in suburbs.  

Fewer alternatives, however, does not mean zero. A 2017 study by the Brookings Institution, for instance, found that roughly 70 percent of rural families lived within ten miles of a private elementary school. Moreover, evidence from Arizona and Florida suggests that supply increases to meet demand. States can encourage this by removing barriers to rural charter and private schools. Currently, many states, like Utah, focus charter approvals almost exclusively on urban areas. 

Technological changes—particularly in the wake of the COVID-19 pandemic—are making more options available to students than ever before, including in rural communities. These options include virtual learning platforms and home school pods. Of course, the spread of Education Savings Accounts offers opportunities for even more innovation to come.

Vocational and technical education: The medium-to-long-term financial and opportunity costs of four-year college education makes alternatives such as vocational training all the more important. For example, a study of nine vocational and technical academies in New York by the Manpower Demonstration Resource Corporation found that vocational graduates earned an additional $30,000 per year, roughly a 17 percent premium. Similarly, a study of 11,000 vocational students in Connecticut found that male students at these schools had a graduation rate 10 percentage points higher than peers in traditional schools. It also found that their wages were 33–35 percent higher by age 23 than those who applied to vocational schools but were not admitted. Although there is little scholarship directly linking vocational education to marriage rates, studies draw connections to increased employment rates and income, which demonstrably improve marriageability—and marriage itself can play a role as an antidote to poverty, as my recent FREOPP paper shows. 

A growing number of students, largely young men, have enrolled in vocational or technical training over the last few years. In particular, they have enrolled in vocational training at the community college level. Richard Reeves convincingly makes the argument for investing more vocational resources at the high school level. Providing vocational opportunities earlier in a student’s educational path can help them improve earning potential, enter the workforce, and support themselves at an age when their college peers still rely on parental assistance. 

Some states have also begun developing location-specific programs to assist non-college bound rural students.  For example, Texas’ Collegiate Edu-Nation helps high school students earn industry credentials and associate degrees. Texas also has invested in Rural School Innovation Zones, through which the state provides career academies enabling students to earn certification in such fields as nursing and IT.

Energy

Rural poverty is exacerbated by the distinct energy needs of these populations. Energy costs make up a larger proportion of household expenses for rural Americans. In 2022, research by the American Council for an Energy-Efficient Economy found that rural households on average spent 7.6 percent of their gross income on energy, compared to 5.2 percent for urban households. This disparity is driven by the different needs of and opportunities available to rural Americans.

The majority of these energy costs were in the form of gasoline, as drivers in non-metro areas drive more miles per year. A survey by the AAA Foundation for Traffic Safety found that Americans who live in non-metro areas drive 15.9 percent more annually. Rural households are much less likely to have access to meaningful public transportation and need to use their personal vehicle for their transportation needs. Transportation energy costs consume 4.4 percent of rural households’ gross income, compared to 2.9 percent for urban households. Seventy percent of low-income households—those at or below 200 percent of the federal poverty line—spent more than 12 percent of their gross income on energy in 2022. Policies and undue regulatory burdens that raise the cost of gasoline for rural households are likely to exacerbate rural poverty.

The price of gasoline likewise has a significant effect on the cost of household necessities. The Economic Research Service found that the median distance between a rural household and a grocery store is 3.1 miles, while the third-nearest grocery store was 6.1 miles away. The cost of transportation likewise has consequences for the price of goods that are available at the nearest grocery store, as higher transportation costs for the producers and grocers are passed on to customers. Grocery stores are competitive businesses with an average of 1-3 percent gross profit. FREOPP research found that recent inflation has been particularly devastating for lower income Americans.

Rural households spend on average 3.2 percent of their gross income on home heating and electricity. Homes in non-metropolitan areas tend to be larger and consume more electricity. Additionally, rural Americans are less likely to have affordable natural gas heating in their home, as that infrastructure is more common in dense urban environments. Rural households are more likely to heat their home with electricity, propane, wood, heating oil, or kerosene. These fuels and electricity need to be affordable and readily available, all the more when severe weather or natural disasters strike.

The solution to high energy prices is to increase energy supply through better market design, which would include a regulatory environment that encourages competition and technological innovation. States and localities should be free to innovate as well, because they have the best knowledge of any specific challenges that are specific to their regions. For these reasons, the federal government should pursue an agenda which promotes consumer choice by removing regulatory barriers to cleaner energy sources, including nuclear and natural gas. Policymakers at federal and state levels should also invest in ensuring the reliability of the power grid. 

Health Care

According to a 2024 report from the Centers for Disease Control, rural Americans live with more illness and die younger than Americans as a whole. One reason for this is unhealthy lifestyles, as noted previously. From obesity and smoking to drug and alcohol abuse, many rural communities face significant health challenges. Making the situation worse, rural health care systems often are not able to deal with these consequent conditions. 

Rural health care presents a number of unique problems in addition to the general inefficiencies of the U.S. health care system. For instance, there are severe shortages of both doctors and hospitals in rural areas. Roughly 65 percent of rural counties have a shortage of primary care physicians. Specialists are also in short supply. While there are 263 specialist physicians per 100,000 residents in urban areas, there are just 30 per 100,000 in rural areas. These shortages have led to a 24 percent increase in wait times for rural patients to see a health care provider. It has also added an average 20 minutes of travel time for patients to receive care. 

Access to hospitals is also an increasing concern in rural communities. Since 2010, at least 136 rural hospitals have closed. And while disputed, it is at least possible that OBBBA could lead to additional closings. Even when they remain open, rural hospitals may drop crucial services. For instance, less than half of rural hospitals currently provide obstetric care, which is key to prevent infant and maternal mortality. Nearly 30 percent of rural communities have experienced health care consolidation, which increases prices, eliminates key life-saving services, and cuts jobs and wages from the rural health workforce.

Although beyond the scope of this paper, it is worth noting that FREOPP’s broader proposals for health care reform, as envisioned in the Fair Care Act (FCA), include provisions to reduce health care costs and expand access to care. Among other provisions, the FCA would benefit rural providers by allowing higher reimbursement rates for rural critical access hospitals.

There are also several other steps that both the federal and state governments can take to ensure that rural health care is both more available and affordable. 

Expand telemedicine: One solution to the shortage of providers and facilities in rural areas is to significantly expand the use and availability of telemedicine. Providing real-time interaction between a patient and a provider through telecommunication or videoconferencing equipment can reduce the financial and opportunity costs of routine or low-level care, addressing acute problems before they become chronic conditions.  

Telemedicine can significantly increase access to care by better distributing physician availability across sparsely populated and underserved rural communities. Telemedicine is also considerably less expensive than conventional in-person care. FREOPP chairman Avik Roy cites an analysis by Dale Yamamoto of Red Quill Consulting which shows a typical visit to the emergency room for a commercially-insured patient costs $1,595; a visit to an urgent care clinic $116; and a physician office visit $98. The typical telemedicine visit costs between $40 and $50.

Arkansas is the only state to essentially prohibit telemedicine,with only a handful of exceptions. However, both the federal government and many states restrict telemedicine or fail to take full advantage of its capabilities.  

Reimbursement for telehealth remains extremely problematic. As noted below, rural health care providers heavily depend on Medicaid and Medicare reimbursements. However, Medicare currently has significant restrictions on telemedicine reimbursement, putting limits on location, facilities, and services. At the same time, Medicaid reimbursement for telehealth is regulated at the state level, leading to a patchwork of regulations, restrictions, and reimbursement rules. Private insurers also have been slow to adapt their reimbursement policies to the changing telehealth environment. All three entities—Medicare, Medicaid, and private insurance—need to rethink their reimbursement policies to encourage greater use of telehealth.

A second barrier to the full utilization of telemedicine are medical licensing laws. Licensure varies across states and often requires providers to obtain licenses in every state in which they wish to practice medicine.  While this won’t matter for intrastate telemedicine, it poses a real barrier to telemedicine that crosses state lines. This, despite one of the biggest benefits to telemedicine being the ability to connect patients with providers and centers of excellence across large distances

While medical licensing in general needs reform, there are short-term steps that would help. Notably, the Federation of State Medical Boards has established the Interstate Medical Licensure Compact, with the goal of enabling participating states to streamline cross-licensure for physicians in their states. Forty-two states, the District of Columbia, and Guam have joined the compact. But Arkansas, California, Massachusetts, New Mexico, New York, Oregon, and South Carolina, have not yet done so. They should.

Expand the scope of practice for non-physician providers: A second mechanism for expanding access to care despite a shortage of physicians is to expand the use of non-physician professionals, such as nurse practitioners, physician assistants, pharmacists, and others. Some gaps in availability are already being filled by nurse practitioners and physician assistants. Roughly 15 percent of physician assistants, for example, currently practice in rural areas, meaning they are available to provide an immediate expansion of care in those regions. 

However, state scope-of-practice laws often restrict the ability of such professionals to see patients or prescribe care without extensive physician oversight. Currently, at least 23 states have policies in place that significantly curtail practice by physician assistants. This includes several states with large rural populations, such as Colorado, Kansas, Missouri, Montana, Nevada, and Pennsylvania.

Curtail hospital consolidation and anti-competitive practices: Rapid consolidation and regional hospital monopolies drive both the loss of services and the high prices of hospital care in rural communities.  

The federal government should strictly enforce antitrust regulations to slow the rush to consolidation and ensure continued competition in the health care marketplace. In addition, one way to force the unwinding of existing monopolies would be to cap reimbursement rates for private and individual payors at Medicare Advantage rates in extremely concentrated hospital markets, as measured by the Herfindahl-Hirschman Index, a widely used metric of market concentration. This proposal would help address the problems with consolidations that have already happened by giving regional hospital monopolies a choice: either remain consolidated but without exploitative pricing power, or voluntarily divest thereby restoring a competitive provider market. 

Implement reimbursement reforms: One issue with the current U.S. health care system is that it often allows providers to charge different amounts for the same service based on where that service was provided. Thus, hospitals often charge patients more for care in hospital-owned facilities such as physician clinics, ambulatory service centers, and even free-standing physician offices. 

In rural communities, where the consolidation of health services is already an issue, this billing practice can significantly drive-up out-of-pocket health care costs. At the same time, it encourages further health care consolidation in a vicious cycle of fewer choices, reduced competition, and higher prices. 

Rural health care could also benefit from the Rural Health Transformation Program (RHTP) that was established this year as part of OBBBA. This program allocates $50 billion in grants over five years for states to maintain essential services like emergency care, labor and delivery, and behavioral health. Grants could be used to attract or retain skilled health care workers, expand preventive care, or support state-driven models that tackle root causes such as provider shortages, outdated infrastructure, and poor health outcomes. This approach emphasizes local innovation and state-driven solutions to address unique rural challenges.

Still, the funding is temporary, while critics warn that associated Medicaid cuts are permanent. This mismatch could leave rural providers vulnerable in the long term. And without strict oversight, funds might be misallocated to ineffective projects, echoing past government spending pitfalls. Additionally, if states prioritize urban-adjacent areas, truly remote communities might see uneven benefits.

As FREOPP’s Grant Rigney has explained, Congress and HHS could solve some of these problems and improve the RHTP, by emphasizing performance-driven models. For instance, incorporating value-based payment incentives—where reimbursements tie to patient outcomes rather than service volume—could promote long-term sustainability beyond 2030, rewarding hospitals for preventive care, chronic disease management, and efficiency. Similarly, adopting hybrid global budgets that blend fixed funding with outcome bonuses would encourage innovative resource allocation, minimizing waste and focusing on high-impact services like behavioral health. Ideally, these refinements would tie payments to improvements and benefit patients, providers, and payors alike. 

In addition, FREOPP has identified inefficiencies in the Medicare Advantage and Medicare Prescription Drug programs. A portion of these savings should be redirected to boost reimbursement rates for rural providers. 

Immigration

Whatever the problems and inefficiencies of current U.S. immigration policy, immigration is extremely important to the revitalization of rural America. Roughly half of all hired farm workers are immigrants, nearly one third of them are undocumented. Immigrants also make up a substantial portion of the rural workforce in areas such as health care, construction, and services. Policymakers should not encourage skirting the immigration system, no matter how Byzantine, but neither can they ignore the stark economic reality of rural dependence on immigrant labor.

Immigrants play a key role in revitalizing rural communities that otherwise would face shrinking populations. The American Immigration Council estimates that each new immigrant generates 1.2 new jobs.  That’s an important boost for the rural economy. 

The putative legal avenue for immigrant agricultural workers is through an H2A visa. However, the program has worked poorly for both employers and farm workers. Potential employers find the program complex, bureaucratic, slow, and often unsuited to the realities of farm life. For example, H2A workers cannot remain in this country for more than 10 months. After that, they must return to their home country for at least two months before returning. For farmers who require year-round help, such as dairy farmers, this can badly disrupt their operations. 

The paperwork required to hire H2A workers is long, must be filed through multiple agencies, and often cannot be done online. If, for example, farmers need to hire more than one crew of workers—say, planters in spring and harvesters in the fall,—they must apply for each group separately. They must also first seek to fill any jobs with American workers, even though such recruitment efforts are seldom successful. 

At the same time, there have been numerous complaints of abuse, trafficking, wage theft, and unsafe conditions for H2A workers. Workers are often unaware of their legal rights or employer obligations, and recent interior enforcement actions from the Trump administration have added to concerns from workers and employers alike. 

A bipartisan group of legislators, mostly representing rural districts, has introduced the Farm Workforce Modernization Act, which would reform the H2A visa program to both give employers more flexibility and provide increased protections for farm workers; provide a mechanism for farm workers to earn legal status; and allow access to the program for industries with year-round needs. While only a partial solution to rural immigration needs, such a bill would provide a solid foundation for further reforms and would demonstrate that constructive immigration reform is possible. 

In the longer term, rural areas would benefit significantly from comprehensive immigration reform. Beyond the immigrantion bombast, the Trump administration has indicated an openness to finding a solution to agricultural immigration needs. At the very least, it should pursue those efforts.  

Jobs

Fifty years ago, the rural poor were more likely to be employed than were poor Americans in urban areas by as much as 15 percentage points. Since then, rural unemployment has risen steadily, and today urban and rural unemployment rates are roughly comparable. Moreover, rural areas tend to have significantly lower rates of workforce participation.  

For those who are employed, wages in rural areas tend to be lower. Under criteria established by Georgetown University’s Center on Education and the Workforce, only 32 percent of rural workers earn enough to be considered “a good job.” That amounts to at least $43,000 per year for workers ages 25–44 and $55,000 for workers 45 and older. 

Making matters worse, entrepreneurship and small business startups in rural communities have declined in recent years. While as recently as the mid-1990s, rural America was actually adding jobs and creating new businesses at a faster rate than the country as a whole, the decline since then has been precipitous. By 2010, rural areas were producing fewer jobs than urban ones, and by 2018, non-metropolitan counties produced just 18,000 start-up businesses, 44 percent below their peak in 1995.

Several reasons have been suggested for why rural communities are struggling to create and maintain high-paying jobs.  

First, a high proportion of rural jobs are tied to commodity-based industries such as agriculture, forestry, mining, and energy. Worse, many rural communities are overwhelmingly tied to a single industry. Those industries—and, therefore, those communities—are particularly susceptible to global or national economic shocks. The lack of economic diversity also complicates and slows recovery from such disruptions. The financial collapse and recession of 2008, the downstream effects of President Trump’s tariffs, inflation, and ongoing climate issues have all had an adverse effects on rural economies.

Second, rural jobs are highly concentrated in fields that rely heavily on physical labor for routine tasks. These are jobs that will be extremely vulnerable to automation moving forward. Indeed, the four job sectors with the greatest potential for task-automation—hospitality and food services, manufacturing, agriculture, and transportation—account for roughly 30 percent of rural employment. 

Third, outmigration—especially of younger and more educated residents—creates demographic challenges. As discussed above, many rural youth who leave to attend college do not return after graduation, leaving behind a population that is older and less educated. This, in turn, makes business more reluctant to invest in rural communities, meaning fewer opportunities for educated young people, which leads to further outmigration, and the continuation of the cycle.     

And fourth, rural communities frequently lack the infrastructure to attract industries of the future. Many rural communities still lack broadband internet access. Roughly two-thirds of rural businesses complain that poor internet connectivity hinders their businesses.

Proactive government efforts to create jobs or to steer jobs to particular regions have generally failed to deliver. But this doesn’t mean that policymakers should do nothing to help rural communities become more competitive for economic development. 

For example, early results from two federal initiatives have shown promise. Both rural business investment companies, created by the 2008 farm bill, and opportunity zones, enacted as part of the 2017 Tax Cuts and Jobs Act (TCJA), have improved rural access to equity capital. Notably, rural areas seem competitive in attracting opportunity zone investments into startups and growth businesses.  

Broadband is also an important component of rural revitalization, yet many rural communities lack the requisite infrastructure. Efforts to expand rural broadband are hampered by low population density, rough terrain, and workforce shortages. Currently about 26 million Americans lack access to broadband internet, and most of those live in rural areas.  

That said, policymakers should be cautious in subsidizing broadband expansion. Studies suggest that large scale subsidies have had “little to no effect on rural penetration.” For example, the $42 billion Broadband Equity Access and Deployment (BEAD) program authorized in 2021 is not expected to begin its rollout until next year. To date, it has not connected a single household to the internet. Moreover, subsidies can reduce competition and innovation, often locking-in older technology at a time when internet connectivity is changing rapidly.

A better approach would encourage ongoing private sector expansion by streamlining the permitting process, expediting access to transmission right-of-ways, and eliminating regulatory barriers. Localities should avoid access fees that often function as little more than a revenue-raising mechanism. A competitive market-based approach is most likely to ensure that rural communities not only have access to broadband, but also to the newest and most effective technologies.  

Beyond broadband, general infrastructure is vital to rural economic growth. In particular, rural communities need better transportation, requiring investments in roads, bridges, railways, inland waterways, ports, harbors, and airports. Rural communities also need  reliable electrical grids and energy sources. State governments should be responsible for the overwhelming majority of infrastructure initiatives, but there is certainly a role for the federal government as well, especially for projects that cross state lines.  

However, infrastructure programs and financing too often prioritize urban and suburban projects, which can generate more voter support, leaving rural communities behind. Policymakers at all levels should pay more attention to rural infrastructure needs. 

Still, even if rural communities are successful in reenergizing entrepreneurial growth, more will need to be done to improve economic opportunities for rural residents, and especially for non-college educated men. For instance, states could eliminate degree requirements for most government jobs. Several states, including Maryland, New Jersey, Ohio, Pennsylvania, and Utah have taken steps to implement this change for up to 90 percent of state jobs. Minnesota has put similar but more modest reforms in place.

States can also revise their occupational licensing laws to make it easier for non-college-educated men to find work or start businesses. Today, more than 1,100 occupations from barbers to funeral attendants require a license in at least one state. As much as 25–30 percent of the workforce is currently covered by some form of occupational licensing. Although such licensing requirements amount to little more than a formality in some cases, the education, training, and financial burdens can be substantial in far too many jobs. These burdens effectively put professions off-limits to Americans who lack the time or money necessary to complete onerous training requirements. 

Another reform to boost low-income, low-education men would be to expand apprenticeship programs, which have a strong track record of success. Roughly 93 percent of those who enroll in an apprenticeship program find a job at the end of it, with an average annual salary of $77,000. 

Trade

Rural America stands to lose more from President Trump’s trade and  tariff policies than perhaps any other segment of the American polity. American farm policy has long been focused on promoting large-scale monocropping of commodities for export, especially wheat, corn, soy, and similar produce.  This makes American agriculture vulnerable to shifts in international commodity markets and therefore to trade wars. 

Already, some trade partners have imposed retaliatory tariffs or shifted their purchases to what are perceived as more reliable partners. U.S. agricultural exports to China were down by more than half during the first six months of this year, from $11.8 billion in 2024 to just $5.5 billion in 2025. Overall, the U.S. agricultural trade deficit reached a record high during the first half of 2025. 

At the same time, tariffs increase input costs for farmers. As of August, the average tariff rate on agricultural inputs has increased from less than one percent to 12.2 percent. Fertilizer and machinery are both harder to find and more expensive. Imports of potash and phosphorus, for example, are down 20 percent. As a result, fertilizer prices have risen 35 percent this year. 

These increased costs should come as no surprise. The president’s trade policies produced similar results during his first term. Retaliatory trade restrictions and general uncertainty reduced agricultural exports by roughly $10.4 billion, while simultaneously increasing production costs. The Trump administration tried to offset some of the fallout from its trade wars by authorizing some $61 billion in tariff relief payments to U.S. farmers. But the Government Accountability Office found that large agribusinesses received the lion’s share of bailout money, meaning that the most vulnerable small family farms were left behind. Partly as a result, farm bankruptcies rose 24 percent during the first Trump administration. 

 As reduced incomes and higher costs squeeze pocketbooks, farmers will find it increasingly difficult to purchase improvements and equipment, causing a ripple effect throughout rural economies. Already John Deere has announced significant layoffs. 

Nor should policymakers forget that tariffs generally fall hardest on low-income Americans. As an analysis by Jackson Mejia for FREOPP has shown:

“[H]igher inflation is particularly bad because low-income households are worse off than high-income households for the same rate of inflation. That is because they typically already have lower budgets and lower savings, so any increase in their prices hurts them even more. Moreover, they typically devote a larger share of their budget to essentials like food, housing, and transportation, which are disproportionately affected by rising prices. Goods like these tend to exhibit inelastic demand, meaning that even slight price increases can significantly erode purchasing power.”

It is difficult to predict the precise effects tariffs will have on the poor because the amount of the tariffs and the goods they apply to keep changing. However, so far they include goods such as food and produce, shoes, clothing, household goods, furniture and appliances, toys, and school supplies. As Federal Reserve economist Miguel Acosta and University of Wisconsin’s Lydia Cox have shown, “tariffs are systematically higher on lower lower‐​end versions of goods relative to their higher‐​end counterparts.” The authors note that, on average, lower‐​end consumer goods are subject to tariffs four percentage points higher than their higher‐​end counterparts.

Already retailers that primarily attract shoppers with lower-incomes—such as Target, Walmart, and Best Buy—are warning of price increases ahead. These stores all have a heavy presence in rural communities. 

Without a significant reversal of current trade policy, rural America will continue to face significant headwinds in its attempts to expand economic growth and to reduce poverty. 

Conclusion

The U.S. record on combating poverty is decidedly mixed. The social welfare safety net does a reasonably good job of providing for the basic material needs of those living in poverty, but the safety net is far less successful at actually reducing the number of Americans living in poverty.  

So too is it with rural poverty. Indeed, rural America faces both higher poverty rates today and difficult prospects moving forward.

As Archbishop Desmond Tutu once said, “There comes a point when we stop pulling people out of the river. We need to go upstream and find out why they’re falling in.”  

This is particularly applicable to rural poverty. Policymakers can continue throwing money at the problem without effectuating real change, or they can attempt to understand the problems facing rural communities and to craft solutions that will address those unique conditions. A successful rural poverty reduction strategy, therefore, needs to be multi-faceted, dealing with a range of issues including agriculture and farm policy, education reform, energy policy, health care, immigration, job creation and economic growth, and trade policy.

These changes will not be simple or easy, especially in a time of increasing political and cultural divergence between rural and urban America. But failure to develop new policy approaches to rural poverty would only mean that large portions of this country continue to be “left behind.”  

The United States can—and must—do better.

APPENDIX: Federal Definitions of “Rural”

	Definition of Rural	Year of Last Update	Geographic Unit of the Definition
Census Bureau	“Rural encompasses all population, housing, and territory not included within an urban area.For the 2020 Census, an urban area will comprise a densely settled core of census blocks that meet minimum housing unit density and/or population density requirements. To qualify as an urban area, the territory identified according to criteria must encompass at least 2,000 housing units or have a population of at least 5,000.”A rural area, being the opposite of an urban area, must encompass less than 2,000 housing units or have a population of less than 5,000.	2020	Population, housing, and/or territory
Department of Agriculture	“Congress has set in statute seven rural definitions to be used to determine eligible rural areas for different RD programs.” Population thresholds  for the rural definitions differ across programs that range from 5,000 to 50,000 people. Definitions also “often include requirements that a place not be a part of, associated with, or adjacent to an urban area.”	n/a	Areas; or counties outside of metropolitan statistical areas
Health Resources and Services Administration (HRSA)	“We define the following areas as rural:Non-metropolitan counties.Outlying metropolitan counties with no population from an urban area of 50,000 or more peopleCensus tracts with RUCA codes 4-10 in metropolitan countiesCensus tracts of at least 400 square miles in area with population density of 35 or fewer people per square mile with RUCA codes 2-3 in metropolitan countiesCensus tracts with RRS 5 and RUCA codes 2-3 that are at least 20 square miles in area in metropolitan counties”	2025	Counties and census tracts
Department of Veterans Affairs (VA)	VA uses RUCA codes as the basis of its definition of rural. VA defines highly rural areas as: “Sparsely populated areas – less than 10% of the working population commutes to any community larger than an urbanized cluster, which is typically a town of no more than 2,500 people.” Rural areas are those that are not highly rural and are not urban. They have less than 30% of the population residing “in an urbanized area as defined by the Census Bureau.”	2010	Land areas
Department of Education, National Center for Education Statistics (NCES)	NCES uses the Census Bureau’s urban and rural definitions, using proximity to an urban area or urban cluster to subdivide rural areas into three subcategories: fringe, distant, and remote rural areas. The Department of Education uses the NCES codes to determine eligibility for programs targeting rural communities, with different programs considering different NCES codes as rural.	2020	Population, housing, and/or territory
Department of Housing and Urban Development (HUD)	“HUD defines rural in three ways:A place having fewer than 2,500 inhabitants;A county or parish with an urban population of 20,000 inhabitants or less;Any place with a population not in excess of 20,000 inhabitants and not located in a Metropolitan Statistical Area”	FY NOFA 2018	Place, county, or parish
Department of Transportation (DOT)	DOT uses the Census Bureau’s rural definitions as its basis. The definition of rural varies across Department programs. Most programs specify that rural areas are located outside of US Census-designated urban areas, but the exact population threshold ranges from 50,000 to 150,000 or 200,000.	2020	Population, housing, and/or territory
Department of the Interior (DOI)	The DOI has a process for determining residency in a nonrural Alaskan community for the purpose of rural priority for harvesting fish and wildlife on federal public lands. All communities and areas not considered nonrural are defined as rural. The Federal Subsistence Board uses the nonrural determination process of the Secretaries of the Interior and Agriculture, which considers factors such as population size, density, economic indicators, remoteness, and more.	2020	Communities and areas
Department of Justice (DOJ)	The DOJ does not have a unified definition of rural. Agencies within the DOJ may classify areas as rural based on the Office of Management and Budget (OMB)’s classification of areas that are not Metropolitan Statistical Areas (MSAs), HRSA’s definition of rural counties, the Census Bureau’s designation of rural census tracts, and/or the Census Bureau’s definition of rural but with added population and housing density thresholds.	2020 and 2022	Counties, MSAs, Census tracts
Department of Labor, Bureau of Labor Statistics (BLS)	BLS uses the OMB’s and Census Bureau’s definition of rural for its Consumer Expenditure Survey.	2021	Metropolitan and micropolitan statistical areas
Department of the Treasury	The Treasury does not have its own definition of rural. The Community Development Financial Institutions Fund references non-metropolitan and metropolitan, using the OMB’s definitions.	n/a	Metropolitan and non-metropolitan areas
Department of Homeland Security (DHS)	DHS does not have a unified definition. Generally, DHS programs rely on the US Census Bureau’s definition of rural. A cybersecurity grant program administered by the Cybersecurity & Infrastructure Security Agency defines rural as an area with a population smaller than 50,000.	2020	Population, housing, and/or territory
Department of Energy (DOE)	DOE’s Office of Clean Energy Demonstrations defines rural or remote communities as those with populations of 10,000 or fewer.	n/a	Community