“What we need in rural communities is a rethinking of where the money goes,” said Richard W. Rathge, a demographer on the faculty of North Dakota State University and director of the North Dakota State Data Center. “Oftentimes the money is earmarked for agriculture, and we have very few farmers anymore.”

Lawmakers writing a five-year reauthorization of farm programs in 2008 recognized this development to an extent and expanded those development programs that are aimed at helping local economies diversify. They also required the Agriculture Department to devise a better way to define rural areas.

Critics of existing policy who want the flow of resources recalibrated saw this as a step in the right direction. But those critics also say Congress hasn’t gone far enough and that evidence of how federal money is misdirected can easily be found in the programs financed by this year’s stimulus package.

“You have a divorce of Washington-driven formulas and definitions from both the rural and the urban realities,” said Mark Muro, director of policy for the Metropolitan Policy Program at the Brookings Institution, which advocates that federal allocations should reflect the growing economic role of metropolitan regions that encompass both urban and rural areas.

Instead of defining by size and location which communities qualify for federal grants and then awarding the money to separate local governments, a better approach would encourage localities to collaborate on initiatives that would benefit broader interdependent regions, Muro said.

Federal agencies should also develop better methods of measuring the impact of the money they give out, he said: “We advocate fewer stipulations, more flexibility and greater performance assessment.”

The Real Rural Economy

While the popular image of rural America may be little changed from iconic Norman Rockwell paintings on the covers of the Saturday Evening Post 60 years ago, the economic and demographic reality is vastly different.

In the middle of the last century, when the baby boom was getting started in the aftermath of World War II, there were still 23 million people — about 40 percent of all rural Americans — residing on farms, and a third of all rural workers were employed in agriculture. Today, farms are home to only 3 million people — about 1 percent of the national population and 5 percent of the rural population. Farming employs less than 6 percent of non-metropolitan workers.

Who Gets the Money: Click Here to View Chart

Among the households that still live on farms, at least 80 percent of the income comes from activities other than farming.

“Rural America is not just agriculture,” said Kenneth M. Johnson, an expert on rural demographics at the Carsey Institute at the University of New Hampshire. “Sometimes when I talk to people in Washington, I get the idea that’s the way they look at the world.”

Rural historians say 20th-century federal policies that encouraged mechanization and consolidation helped speed the demise of the family farm. Meanwhile, rural America, with cheap land and an available labor force, came to provide a home to more and more of the nation’s new factories. “Many people don’t appreciate the fact that manufacturing employs a larger proportion of the rural labor force than the urban labor force,” Johnson said.

Today, though, both farming and manufacturing employment are in decline, and after a recent resurgence so are jobs in extractive industries such as mining. Rural Americans are increasingly likely to be employed by companies that provide services or by governments at all levels. This is true even in the areas of the country where farming remains a strong economic force. In North Dakota, for instance, agriculture accounted for just 8 percent of the state’s economy in 2004, down from 18 percent in 1979.

The federal government pays billions of dollars a year to bolster farm incomes, subsidize prices, compensate farmers for weather-related losses and encourage conservation. Over the past decade and a half, these subsidies have averaged roughly $15 billion a year, although the total is somewhat less today than it was earlier this decade.

But Agriculture Department researchers have found that these subsidies haven’t reversed population declines in farm counties. The counties that benefited most from federal crop payments in the 1990s all lost residents.

“We’ve passed the tipping point with respect to the importance of community vs. agriculture,” Rathge said. “If you look at the incomes of farm households, they need to subsidize the farm with off-farm employment. We’re still thinking too much on the agriculture side and not as much on the community development side.”

Investments in broadband and other infrastructure can help diversify local economies and spur entrepreneurship, said Brian Dabson, a professor at the University of Missouri and president of the Rural Policy Research Institute. “Entrepreneurship is something that is exciting a lot of people,” he said. “We don’t have to wait for someone to bring investment to us. We can create our own jobs in our own communities.”

The trick, however, is figuring out how to disperse those investments among the vastly different segments of the rural United States so that each area gets the types of assistance best suited to its particular needs.

Different Rural Americas

Compounding the illusion that rural America relies for its livelihood principally on the fruits of the land and on natural resources, the geographic stereotype of rural areas as a scattered collection of dying small towns is likewise inaccurate — or at least lacking in nuance.

Because rural population trends are far more complex than are commonly understood, and because divergent population patterns have created disparate needs in the parts of the country outside the metropolitan areas, the government’s approach to meeting the needs of the heartland is often seen as missing the mark.

Shift to City Dwelling: Click Here to View Chart

“Rural areas do vary greatly from one area of the country to the other, so federal programs must be flexible enough to serve all diverse communities,” said North Carolina Democrat Mike McIntyre , chairman of the House Agriculture Subcommittee on Rural Development.

And a chief misconception is that all of rural America is experiencing an inexorable population drain.

Overall, rural counties lost people from the 1930s until the 1970s, largely because young workers were migrating to cities. But beginning about 40 years ago, non-metro areas once again began counting a net gain in population. The number of rural Americans since then has been oscillating, with some localities registering increases and others marking declines.

In many rural counties, deaths outnumber births, leading to a population decline. But the main driver of population trends is migration: Remote areas that relied heavily on industry or farming have tended to contract in recent decades, while those on the outskirts of urban areas and those that have been developed to attract retirees or tourists and other recreational visitors have been growing.

“The fact of the matter is that there are many different rural Americas,” Dabson said. “The discussions about commodities and price supports are primarily about heartland America. Other parts, whether they’re in the central valley of California or the high- amenity parts of the Rocky Mountains, or the Mississippi Delta, these are all different faces of rural America with different histories, different challenges and different possibilities for the future. A single one-size-fits-all rural policy focused purely on commodity agriculture doesn’t get us where we need to be.”

Counties that have declining populations generally have lost much of their young workforce, leaving behind aging residents who will increasingly need health care and related services. That’s particularly the case in the Great Plains, Rathge said. “What you’re left with is a huge bulge of seniors,” he said. “That puts tremendous pressure on federal programs that are age-driven, such as Medicare, and at the same time those individuals are dropping out of the labor force.”

Some regions, though, have an opposite problem — too many people coming in. An influx of retirees and tourists to some desirable spots is creating sprawl and threatening the environment, rural experts say.

These divergent population trends aren’t the only reason why rural parts of the country have different needs. Rathge points out that dramatically different natural landscapes throughout the country create distinctive settlement patterns. A policy that awards grants to communities based on their proximity to metropolitan areas, for example, would have very different consequences in the Great Plains and New England, he said.

“Washington often has this very urban bias, and what they think is rural is Vermont or Connecticut, where you have these small hamlets close to each other,” he said. “Great Plains rural is very different. The big barrier is distance. When you’re thinking of policy, we have to understand that.”

Drawing a Line

In this day and age, perhaps the biggest problem in applying national rural policy is deciding what is truly rural, especially because sprawling development has blurred the lines between cities and outlying areas.

There is no consensus among federal agencies as to the best definition. For the past hundred years, the Census Bureau has classified areas as rural if they had a total population of less than 2,500.

WIRING AMERICA: Stringing fiber-optic cable for Internet access in Vermont and elsewhere is designed to benefit rural residents. (AP / TOBY TALBOT)

Using that definition as a building block, the White House Office of Management and Budget seeks to clarify the economic relationships among communities, and it divides the nation into metropolitan and non- metropolitan areas. In OMB’s lexicon, a metro area consists of an urban core of at least 50,000 people and surrounding counties where at least 25 percent of the residents commute into the urban core for work. About 50 percent of rural residents, as defined by the Census Bureau, lie within OMB’s delineation of a metropolitan area.

The Agriculture Department uses a still different methodology that builds on the OMB definition. It further divides counties according to what percentage of the population is rural and how close they are to an urban core. But none of these definitions fully capture the diverse nature of how more than 300 million people are spread across the landscape of the United States. (Definitions, p. 2228)

“The question is, where do the suburbs end and where does rural begin?” said John Cromartie, a demographer at the Agriculture Department. “We have this incredibly wide gray area where no one can really say. So when you want to target programs to meet the challenges facing truly rural areas, it’s hard to draw that line. But these decisions become very important, obviously, in terms of who is eligible.”

One prominent case in point has been the effort to hand out $2.5 billion in money designated in the stimulus law to provide high-speed Internet service in rural areas.

The broadband program is run by an arm of the Agriculture Department and billed as the reincarnation of the rural electrification program of the 1930s. But 70 years ago, the divide between urban and rural was much clearer, and so was the task of the Rural Electrification Administration. Only 10 percent of rural households had electricity, while 90 percent of city dwellers did.

In 2002, a wide-ranging law authorizing farm programs directed the Rural Utilities Service (RUS) — the modern-day descendent of the Rural Electrification Administration — to make and guarantee loans for Internet providers serving rural areas that would otherwise be devoid of high-speed connections.

But it wasn’t easy for the agency to figure out who most deserved the help. First, there was no official map showing which areas had broadband and which didn’t, and an Agriculture Department audit in 2005 found the agency had backed loans in areas that already had some broadband service. That audit also underscored concerns about what constitutes a rural area, noting that the RUS “had not maintained its focus on rural communities and had instead funded communities near large metropolitan cities.”

Members of the House Agriculture Committee demanded new regulations to ensure that money was directed to truly rural areas in need. Nonetheless, in March, the Agriculture Department inspector general released an updated audit report expressing renewed concern that the stimulus law’s money for broadband service would also be funneled to metropolitan areas.

To counter this criticism, the RUS decreed that to qualify for the most extensive form of stimulus broadband aid — a grant of up to 100 percent of the cost of building the necessary electronic infrastructure, rather than a loan — communities must be at least 50 miles away from the nearest city of 20,000. By that definition, Wattsburg — where Biden made his showcase announcement about the program — wouldn’t qualify. Nor would much of rural America.

Lawmakers from both parties, several of them from farm states, complained to agency head Jonathan Adelstein during a recent House oversight hearing that their districts were rural but unable to qualify for grants. “The whole state of Ohio remains essentially ineligible for these funds,” said Democratic Rep. Zack Space , whose vast and geographically diverse district is the largest in Ohio, encompassing all or parts of 16 counties. “My constituents in Appalachia would argue that they live in remote, rural areas,” Space complained.

The RUS is now going back to the drawing board. The agency will seek public comment this month before producing yet another definition of remote rural areas for the next round of grants and loans, spokesman Bart Kendrick said.

Metro vs. Rural

Part of the reason for this confusion and gear-switching is that there’s no consensus on what kind of rural communities should get federal development aid. According to Johnson of the Carsey Institute, there’s a bias against giving money to rural areas that are developing as vacation or retirement destinations, which tend to be home to wealthier residents or migrants from cities.

At the same time, he said, investing in such areas might prove critical to preserving rural America. “If a community develops as an amenity destination, that can reduce the outmigration from these areas, especially of young people,” Johnson said. “You’re contributing to the future of these communities, the intellectual capital of these communities, so there will be people who will serve as volunteer firefighters and teachers and do everything that has to be done.”

There are, however, those who argue that remote areas suffering from population loss should just be left to wither.

“If it ever came to a debate in Congress, you would find very different positions in terms of whether the more-remote, less-well-off locations should be assisted,” said David L. Brown, a professor of development sociology at Cornell University. “There are people who ascribe to an efficiency position who say that’s not in the nation’s best interest. You want to move resources to where they have the highest return. And there are people who have an equity position, who say we need to find a way to get resources to people who live in more-remote places.”

This fight is playing out even now in a debate over highway assistance money in the stimulus law. The measure allocated $27.3 billion for surface transportation projects but left most of the actual distribution to the states. The U.S. Conference of Mayors soon complained that the largest metropolitan areas, with 63 percent of the country’s population, had received only 48 percent of the road money and demanded a bigger share. And with Congress preparing to rewrite the five-year authorization bill for federal highway and mass transit programs, the mayors are now lobbying to claim more money under the basic formulas for such assistance.

Meanwhile, rural advocates counter that roads in less-populated areas are essential for both urban and rural residents.

“Those things make rural America more accessible to urban America, and it means it’s easier for trucks to bring supplies to rural counties,” Johnson said. “It makes it easier for urban people to come to rural America for vacations, and it means that rural manufacturers can get their products to market.”

The big problem may be that government officials still see things in terms of urban and rural, when they are often the same thing. “This notion that by dealing with metros you’re leaving out rural America is a falsehood,” said Alan Berube, research director of the Brookings Metropolitan Policy Program.

The distribution of road money from the stimulus law hasn’t followed the real patterns of how people in vast metropolitan areas are linked, Berube said. The majority of Americans live in major metropolitan areas, he said, and most commute to other communities for work. He contends that the money hasn’t been used effectively “to promote that kind of interconnectivity in metro America.”

The Brookings program is advocating for federal agencies to rethink the way they distribute money so that it doesn’t flow through formula grants to specific communities with specific characteristics.

“I think we want to see the federal government use the power of the purse through existing programs and through new incentives to stimulate regional cooperation through programs that cut across city, suburban and rural lines,” Berube said.

That has been done successfully in some stimulus programs, he said, citing energy efficiency conservation block grants that the Department of Energy is distributing to regional consortiums to reduce energy use and carbon emissions without regard to traditional municipal boundaries.

But such approaches tend to be limited to relatively new activities, while longstanding programs allocate money through traditional channels, said Muro, Berube’s colleague at Brookings. “Much of the stimulus essentially pours new revenue through the rigid old silos and pipes,” Muro said.

Over the long term, Brown said, rural policy will also need to place more emphasis on aspects of rural life in addition to agriculture. But that’s not to say agricultural aid should be supplanted by community development projects, he said.

“If you put agriculture in opposition to rural interests, rural is going to lose,” he said. “Agricultural interests are well-organized; they have well-funded lobbies, and they’re able to manipulate images of rurality and of farming that may or may not be consistent with the reality of the situation. The rural constituency is not only not organized, but it’s not organizable because it’s so diverse.”

There are signs that this alternative way of viewing the dichotomy of rural vs. urban or metro vs. non-metro is getting some attention. The Agriculture Department’s Rural Development Office is beginning to rethink its approach, as prescribed by the last reauthorization of farm programs. A report outlining how to better define rural areas is due to Congress in 2010.

The Agriculture Department intends to ensure that federal assistance “reaches the most remote corners of rural America, while promoting regional collaboration,” spokesman Timothy McNeilly said in an e-mail. To accomplish that aim, he said, the department “is examining its funding formulas and the socioeconomic measures” it uses to allocate money.

According to Cromartie, the Agriculture Department demographer, the federal government may need to develop many definitions to accommodate many different purposes.

“Maybe there isn’t a one-size-fits-all definition,” he said. “If you want to, say, study economic trends, you might want to pick a definition based on labor market areas. If you want to study the effect of sprawl on farm prices and property prices, you might pick another based on density of population. There are economic definitions, land-use definitions, and administrative definitions, all of which might be useful.”

Still, Cromartie said, rural America remains such a complex place that even devising multiple definitions won’t be easy.

“Congress has a challenge in making sure the definition they choose works in whatever way they want it to work,” he said. “It’s never going to be perfect. It just never will.”

FOR FURTHER READING: Economic stimulus law (PL 111-5), CQ Weekly, p. 352; 2008 farm bill (PL 110-246), 2008 Almanac, p. 3-3; 2002 farm bill (PL 107-171), 2002 Almanac, p. 4-3; federal nutrition supports, 2008 CQ Weekly, p. 1238; farm policy, 2007 CQ Weekly, p. 114.