Service employment and income inequality: A rural dilemma

Using low wage cutoff points of annual wages and salaries, this study empirically supported the hypothesis that rural areas in the United States had higher proportions of low wage employment in 1968-1988 as compared to metro areas. Six out of nine census regions also supported this hypothesis. They were East and West North Central, South Atlantic, East and West South Central, and the Mountain regions. Three other regions, New England, Middle Atlantic, and the Pacific regions showed the reverse. Trend analysis supported the hypothesis that the low wage employment in rural areas increased relatively more in recent decades as a result of the transformation of the economy in the United States from the goods producing industries to services.;If the structure and trend of employment opportunities in rural areas were weighted more toward low wage employment, these areas would be more adversely affected in terms of unequal county income distribution and lower income levels than metro areas. Empirical evidence using multiple regression techniques provided limited support for the hypothesis that increases in the low wage sector employment were a major factor of growing inequality in rural areas as opposed to metro areas in 1970 and 1980. The regression coefficient of the effect of low wage employment in retail trade in 1980 for rural areas on income levels was about half the size of that in metro areas. This was contrary to the hypothesis that the proliferation of low wage employment would be more significant in explaining the variation in county median family income levels in rural as opposed to metro areas.;The results of this study suggest that the proliferation of low wage jobs will ultimately restrain income expansion and produce greater inequality in the distribution of income in rural and metro areas. Reversal of the trend toward lower wage employment requires a national effort to provide better jobs and expand the educational opportunities.