According to the United States Census Bureau, at least one in five Americans–that’s over 60 million people–live in rural America. Defined as “sparsely populated with low housing density, and far from urban centers,” rural areas span 97% of the country’s land area and houses 19.3% of the population. Rural communities often face a different set of economic challenges than urban or metropolitan areas, including education and poverty levels. However, an updated study from the National Institute for Retirement Security (NIRS) confirms that public pensions can serve as a vehicle for economic growth in rural America.
“Fortifying Main Street: The Economic Benefit of Public Pension Dollars in Small Towns and Rural America,” released earlier this month, researches how public pension benefit dollars impact 2,922 rural counties in America. Expanding on a previous study, the 2022 findings confirm that pension dollars have a significant impact on rural communities, both in terms of Gross Domestic Product (GDP) and personal income.
Of the 2,922 rural counties studied, NIRS determined the following key points:
- On average, public pension dollars account for between one and three percent of the GDP in the counties studied.
- The highest percentage of individuals receiving public pension benefits reside in rural communities.
- Counties composed of small towns are impacted by pension dollars more than urban or rural communities, both in terms of GDP and household income. Pensions also impact household income more significantly in rural counties than urban areas.
- Metropolitan counties that contain state capitals have a greater density of public employees and therefore have more pension dollar impact than other urban areas.
Results of public pension impact vary from state to state. Oklahoma’s total average percent of GDP in the state was 1.0%, with the highest percentages in small-town, micropolitan areas. Public pension income is attributable for 1.6% of the rural GDP, and for 1.9% of the Total Personal Income (TPI) in rural areas in Colorado. In Kentucky, pension dollars account for 2% of the average TPI in the state and 10.5% in Franklin County, where Frankfort is located.
Public pensions contribute dollars to local economies of all sizes in the U.S. and play an especially vital role in the vast area that is rural America. As we continue to face economic turmoil in the wake of Covid-19, protecting pensions for the hard-working public employees across the country remains our top priority.