Poor, Invisible, and Left Behind: Understanding Financial Instability, Material Hardship, and the Availability and Use of Community Resources among Low-Income Rural Households

January 13, 2017

The project: More than 85% of persistently poor counties in the U.S. are rural, and yet, researchers and policymakers overwhelmingly focus on urban poverty. This study set out to gain a better understanding of the factors likely to contribute to material hardship and financial instability in rural areas and to assess the availability of community resources for low-income rural households.

The process: The study analyzed federal household financial survey data from 2013 to 2016 for more than 66,000 low- to moderate-income tax filers in order to compile demographic information on varying levels of financial instability in urban and rural areas. To determine the availability of nonprofit resources, the study divided total nonprofit program expenses in 688 commuting zones by the number of people with incomes at or below 200 percent of the poverty line (about $50,000 for a family four). Each zone is classified as rural or urban in order to discern whether there’s a difference in available resources depending on the type of area.

Results: The study found significant differences in the financial hardship of low-income rural households and low-income urban households. Urban households had higher liquid assets and net worth, and they were more likely to have a checking and savings account, credit cards, health insurance, and to regularly save money. Rural households had higher rates of car and home ownership. Overall, rural households had significantly higher rates of all types of material and healthcare hardship compared to urban households with similar income levels.

On the point of available community resources, the study found there were significantly more nonprofit organizations in urban areas compared to rural areas, but the per capita spending on nonprofit programs was comparable. Those results varied by region, with the South seeing fewer resources in rural areas compared to urban areas, especially in Arkansas, Louisiana, Oklahoma, and Texas.

“This is concerning given the rural poverty rate is nearly 6 percentage points higher than the urban poverty rate in the South,” according to a paper on the study’s findings submitted to the Society for Social Work and Research’s 23rd annual conference in January 2019. “Government discretionary human service funding formulas and national and regional foundation funding priorities could be adjusted to reduce these resource disparities.”

Mathieu Despard, U-M School of Social Work
Addie Weaver, U-M School of Social Work