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March, 2018

By Kelly Asche, Research Associate

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Each year, the Center for Rural Policy and Development provides a brief update on various economic and demographic data in rural Minnesota. As policy discussions concerning rural Minnesota unfold, it is important to understand the past, present, and potential futures of our rural regions. This report provides historical data points, illustrating how rural conditions have changed so we can have healthy discussions about the current demographic and economic vitality of these areas.


The share of Minnesota’s population is becoming increasingly urban, and early signs this decade indicate that trend may be intensifying. This trend is exacerbated by three larger statewide trends:

Outside of population, there are other positive trends for rural Minnesota. Although incomes are still highest in urban areas, rural areas are closing the gap in terms of per-capita income and median household incomes, particularly during and after the Great Recession.

There is nothing significantly different in employment when comparing urban and rural areas. Education and health services, along with trade, transportation, and utilities employ nearly 50% of the labor force in most of our counties no matter how rural.

Unemployment is at its lowest level since the late 1990s and early 2000s, while labor force participation rates are at their highest levels ever. In fact, some of the highest percentages of 25- to 64-year-olds participating in the labor force are in our most rural counties. The exceptions are the Iron Range and Arrowhead regions, which are experiencing some of the lowest percentages of participation.

Due to the tightening labor market, increasing economic activity, and retirements, job vacancies are at their highest levels since the Minnesota Department of Employment and Economic Development began measuring the statistic. Some of our rural regions have experienced higher growth in the number of job vacancies compared to the Twin Cities region. Across Minnesota, the ratio of unemployed people to job vacancies is about one to one. Although this tight labor market is an issue for all regions, it is significantly more challenging for rural areas that are not experiencing a net in-migration of working adults. On a positive note, wages for these job vacancies are increasing and becoming more competitive with wages in the Twin Cities metropolitan area.

Defining Rural

It is important to understand that there are multiple definitions of “rural” depending on the data source being used. And not only do the definitions themselves change over the years, but the classification of geographic areas can change, which in turn can have a significant impact on specific variables like population.

For example, the USDA uses its Rural-Urban Continuum Code to define each county as either metro or non-metro. This classification scheme distinguishes metropolitan and non-metropolitan counties based on population, level of urbanization, and proximity to a metropolitan area. (To read more, go to their website. County classifications are updated every ten years based on new census data.

Due to changes in population and other factors, between 1974 and 2013 the USDA reclassified 12 Minnesota counties from “rural” to “metro,” reducing the number of counties classified as “rural” from 72 to 60. This is important when reading and analyzing data, because it means the geographic area classified as rural in Minnesota was much larger before 1974. These changes impact statistics and in a sense punish rural areas for being successful since the counties with the most growth have been taken away from the rural aggregate. If all the counties classified as rural in 1974 were still classified that way today, the state’s rural population would be larger by 352,224 people (Figure 1).

Everyone has their own idea and definition of “rural” based on their perceptions-one person’s small town is another person’s weekend city shopping center. However, anyone traveling across our state can agree that most of Minnesota can’t be categorized as strictly rural or metropolitan. Most places are in between.

To develop a better understanding of trends across Minnesota, this report will highlight trends using two different breakdowns: a) the individual county level, and b) aggregating county-level data into four categories developed by the Minnesota State Demographer. (Definition of Four County Categories at the end of this report shows how these categories are defined.)

The number of counties within each category are: a) entirely rural: 14; b) town/rural mix: 35; c) urban/town/rural mix: 25; and d) entirely urban: 13 (Figure 2).

Population Changes Becoming Less Intense

When looking at the percent share of Minnesota’s population across our four types of counties, one would assume that only our urban counties have experienced population growth since 1900 (Figure 3).

However, most of Minnesota has experienced population gains, just not at the high rate seen in the more urban counties (Figure 4). Our most rural counties, on the other hand, have been experiencing population declines since the 1940s. The population of this group of counties peaked at 162,439 and has declined 41% since that time to an estimated 94,916 in 2016. Currently, about 2% of Minnesota’s population calls these counties home.

Despite these gains and declines, overall population change in Minnesota is slowing. As Figure 5 shows, we are no longer experiencing steep increases or declines in the population-the percent change in all four regions is trending closer to zero. This pattern is projected to continue unless the state makes significant changes to attract more migration from other states or more immigrants. This is especially true for our most rural counties, where they will be competing with urban counties for the same people.