Government transfer payments comprise a large share of personal
income for both nonmetro and metro residents. Transfer
payments to individuals accounted for 24.8 percent of total
nonmetro personal income and 16.3 percent of metro personal income,
in 2011. Of the $2.2 trillion in Federal, State, and local
government personal transfer payments to individuals in 2011, $421
billion went to nonmetro residents and $1.8 trillion went to metro
residents. Per capita, nonmetro residents received more government
transfers than metro residents, $8,236 vs. $7,022, in
2011.
Unemployment insurance compensation and Supplemental Nutrition
Assistance Program (SNAP, formerly the Food Stamp Program) payments
have increased sharply since the beginning of the recession in 2007
(see the ERS topic
on SNAP). Between 2007 and 2011, nonmetro unemployment
compensation payments increased by 162.8 percent (in 2011 dollars),
compared with 207.0 percent in metro areas. Nonmetro SNAP payments
jumped by 100.4 percent in the same period, while metro payments
increased by 121.1 percent. Since 2010 however, transfer payments
have fallen. This is primarily due to a decline in unemployment
insurance compensation, which has fallen 25 percent in both metro
and nonmetro areas, as the economy has recovered and benefits have
expired.
Since 1978, nonmetro per capita transfer payments have risen
faster than payments in metro areas. Most of this increase comes
from the rising cost of government programs that provide medical
benefits, such as Medicare and Medicaid. Because nonmetro areas
have an older population and a higher proportion of persons with
disabilities than metro areas, nonmetro areas receive more transfer
payments for retirement and medical costs. See the ERS report
Health
Status and Health Care Access for the Rural and Farm Population
(EIB-57, August 2009) for more information.
Medical benefits are the single largest transfer payment
category in both nonmetro and metro areas. In 1978, medical
benefits accounted for 18.9 percent of all nonmetro transfer
payments (the second largest category) and by 2011 these had risen
to 41.7 percent (the largest category) of all nonmetro transfer
payments. Similarly, in metro areas, medical benefits increased
from 22.7 percent of all transfer payments in 1978 to 42.1 percent
of payments in 2011. Overall, between 1978 and 2011, nonmetro
transfer payments for medical benefits increased 581.5 percent,
compared with 498.9 percent in metro areas. Some of the increase in
transfer payments for medical benefits can be attributed to
legislation expanding health insurance to children in working
families through Medicaid and the Children's Health Insurance
Program (CHIP). However, the rising cost of health care,
which has far outpaced the overall rate of inflation, is a major
source of this increase.
Transfer payments for retirement and disability insurance are
also increasing, but in contrast to medical benefits, have been
declining as a proportion of total transfer payments. In 1978,
nonmetro retirement and disability payments accounted for 51.7
percent of total transfers; by 2011, this percentage had fallen to
34.8 percent. Nonmetro retirement and disability transfer payments
increased by 107.9 percent over this period. Metro retirement and
disability payments fell from 46.1 percent of total transfers in
1978 to 31.8 percent in 2011, but increased by 122.0 percent over
this period. Barring changes in program eligibility and support,
per capita transfer payments in rural America are likely to
increase as a result of the aging of the baby boom population, many
of whom are expected to move to rural areas as they
retire. For more information see
Baby Boom Migration Tilts Towards Rural America (Amber
Waves, September 2009).
The counties with the highest percentage of total income from
government transfer payments in 2011 were concentrated in
Appalachia and the Mississippi Delta. The top three nonmetro
counties with the highest percentage of total income from
government transfer payments were located in eastern coal fields of
Kentucky (Owsley County with 54.5 percent, Wolfe County and
McCreary County both with 52.8 percent). These counties have high
levels of disability payments, along with very high unemployment
and poverty rates.