January 2025
By: Kelly Asche, Senior Research
Every year, the Center for Rural Policy and Development publishes the “State of Rural,” a report that tracks various economic and demographic trends in rural Minnesota. The following is a highlight from that report, which will be published the week of January 13th, 2025.
It’s common knowledge that wages and income are higher in metropolitan areas compared to rural areas. A lot of hand wringing is done over interpreting the meaning and consequences of this reality. Interestingly, despite the persistent gap in incomes between rural and urban areas, the gap isn’t getting worse, and that’s due to higher growth rates in earnings in our rural areas, something many people may not recognize.
To capture income, we like to use total earnings data provided by the Bureau of Economic Analysis (BEA). Typically, median household income is used to measure the economic health of residents in a given region. These data typically measure worker’s wages, but they don’t include other income a household might earn from rent, interest, dividends, and businesses. Rural residents tend to get their income from a variety of sources, and wage earners tend to be a smaller percentage of the overall adult population. The earnings provided by BEA captures a wider variety of income sources.
The chart below shows what we typically already know – earnings tend to be higher in urban areas. In our entirely urban counties, earnings are nearly $80,000 per person, while our town/rural mix counties are the lowest, with $59,293 per person—about $20,000 lower. Entirely rural counties are interesting because they tend to match town/rural mix and urban/town/rural mix, but they’re also subject to occasional “blips” due to the volatility of the farm economy—if that’s down, then the total earnings for these counties tend to go down; the opposite is true when the farm economy is doing well.
Figure 1: Our urban counties have the highest earnings per capita in Minnesota with nearly $80,000 per person. Data: Bureau of Economic Analysis, Local and Regional Personal Income
Figure 2 provides even more detail regarding where the highest earnings per capita are occurring. The seven-county Twin Cities are has three counties with the highest earnings per capita: Hennepin ($95,574 per person), Carver ($93,242 per person) and Washington ($84,018 per person). Interestingly, Traverse County on the western border has the fourth highest earnings per capita at $82,905 per person. The other interesting piece of information is that the central lakes and northeast Minnesota have the lowest earnings per capita in Minnesota.
Figure 2: Earnings per capita are highest around the seven-county Twin Cities area, as well as a few in southwest and western Minnesota. Data: Bureau of Economic Analysis, Local and Regional Personal Income
Rural earnings would have to grow significantly to catch up to their urban counterparts, and Figure 3 shows that this growth is happening. Entirely rural counties’ earnings per capita have grown 153% since 2001, compared to 135% for town/rural mix counties, 124% for urban/town/rural mix counties, and 110% for entirely urban counties.
Figure 3: Growth of earnings per capita in our rural areas has outpaced urban counties over the last 25 years. Data: Bureau of Economic Analysis, Local and Regional Personal Income
Figure 4 shows more detail in the growth of earnings per capita among counties. The highest growth has occurred in counties along the western side of Minnesota: Traverse, Red Lake, Todd, Lake of the Woods, and Marshall counties. They have each experienced growth in per-capita earnings of over 200% since 2001. The counties with the lowest growth have been Blue Earth, Dakota, Anoka, and Ramsey, with growth in earnings per capita less than 100% since 2001.
Figure 4: The growth in earnings per capita has been more significant in the western portion of Minnesota. Data: Bureau of Economic Analysis, Local and Regional Personal Income
The good news here is that despite a persistent gap of earnings per capita between urban and rural areas of Minnesota, the higher growth rate in rural areas means the gap isn’t widening.