Appalachian Regional Commission Economic Overview of Appalachia- 2011

Regional Planning and Research Division Sources: Bureau of Labor Statistics, Bureau of Economic Analysis, U.S. Census

202-884-7700 www.arc.gov/research Current dollars are adjusted for inflation using the PCE chained price index, base year=2005

4.6

4.7

4.9

4.9

6.1

4.6

4.3

9.3

9.7

8.8

8.8

11.1

10.5

10.1

9.6

9.7

9.2

9.8

10.9

9.9

9.9

4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0

United States

Appalachian Region

Northern Appalachia

North Central Appalachia

Central Appalachia

South Central Appalachia

Southern Appalachia

Unemployment rate unemployed/ labor force, percent 2007 peak 2009 2010

1.2

0.9

0.3

0.7

0.6

1.0

1.5

-1.7

-2.0

-1.6

-2.7

-0.8

-1.8

-2.6

-3.0 -2.0 -1.0 0.0 1.0 2.0

United States

Appalachian Region

Northern Appalachia

North Central Appalachia

Central Appalachia

South Central Appalachia

Southern Appalachia

Employment average annual percent change 2001q4-2007q4 expansion 2007q4-2010q4 recession

The Appalachian region was home to more than 25 million people in 2010, covering 420 counties in 13 states from New 

York to Mississippi. Once highly dependent on mining, forestry, agriculture, chemical, and heavy industries, the region's 

economy has become more diverse in recent times. The region now includes diverse manufacturing and professional

and technical service industries, as well as several auto manufacturing plants and a vast network of suppliers.

Appalachia has come a long way. In 1965, one in three Appalachians lived in poverty. The average poverty rate from 

2005-09 was 15.4%, close to the national average. The number of high poverty Appalachian counties (where the poverty 

rate is at least 1.5 times the U.S. average) declined from 295 to 120 over that period of time. These gains have 

transformed the region from one of widespread poverty to one of great contrasts. Some communities have successfully 

diversified their economies, while others are still isolated and require basic educational and infrastructure improvements

such as roads and water and sewer systems. 

Despite this progress, Appalachia still does not enjoy the same economic vitality and living conditions as the rest of the 

nation. The region’s traditional industries such as mining, manufacturing, textiles, and paper and wood products have 

faced intense global competition and are in decline. Population outmigration is among the worst in the nation, and there 

is continuing concern about the decline in Appalachia’s “prime age” workforce—workers between the ages of 25 and 55. 

The Central Appalachian region in particular still battles economic distress, with concentrated areas of high poverty, 

unemployment, poor health, and severe educational disparities. During this recession the Appalachian region fared far 

worse than the nation and was battered by job losses and structural economic changes. 

The role of the Commission is to make targeted investments in human and physical capital that will help Appalachia 

reach parity with the rest of the nation. The region’s isolation and its difficulty with diversifying its economy over past 

decades are major factors contributing to the gap in living standards and economic achievement. This era of intense 

global competition requires a special emphasis on identifying assets and opportunities, overcoming barriers to progress, 

and helping the people of Appalachia become a globally competitive workforce. 

Economic challenges: Appalachia’s lost decade

• Over the course of this recession, the Appalachian Region lost all of the jobs gained since 2000. 

• Two-thirds of Appalachian 

counties have unemployment 

rates that are higher than the 

national average. 

• Employment growth in 

Appalachia averaged 0.9% 

per year during the economic 

expansion from 2001-2007, 

compared to 1.2% per year 

for the nation as a whole. 

• The unemployment rate 

averaged 9.7% in Appalachia 

in 2010, compared to 9.6% 

for the nation as a whole

(unadjusted data). This figure 

does not account for 

“discouraged workers” who 

gave up the job search and 

left the labor force altogether.

• Of the 420 counties in 

Appalachia, only 35 had

positive employment growth 

from 2007q4 to 2010q4. 

• From 2000 to 2008 

Appalachia lost more than 

59,000 (15.0%) jobs in 

farming, forestry, and natural 

resources, and 473,000

(24.6%) manufacturing jobs.
Appalachian Regional Commission Economic Overview of Appalachia- 2011

Regional Planning and Research Division Sources: Bureau of Labor Statistics, Bureau of Economic Analysis, U.S. Census

202-884-7700 www.arc.gov/research Current dollars are adjusted for inflation using the PCE chained price index, base year=2005

36,306

29,702

31,931

28,703

24,578

28,926

29,358

20,000 24,000 28,000 32,000 36,000 40,000

United States

Appalachian Region

Northern Appalachia

North Central Appalachia

Central Appalachia

South Central Appalachia

Southern Appalachia

2009 2007 2000 Per Capita Personal Income (2005$)

29,945

22,491

23,983

21,045

15,964

21,702

23,428

14,000 18,000 22,000 26,000 30,000 34,000

United States

Appalachian Region

Northern Appalachia

North Central Appalachia

Central Appalachia

South Central Appalachia

Southern Appalachia

2009 2007 2000 Per Capita Market Income (2005$)

25,261

18,489

21,484

18,246

12,974

17,285

17,554

10,000 15,000 20,000 25,000 30,000 35,000

United States

Appalachian Region

Northern Appalachia

North Central Appalachia

Central Appalachia

South Central Appalachia

Southern Appalachia

2009 2007 2000 Average Proprietor's Income (2005$)

6,543

4,549

4,964

3,666

2,835

5,012

4,521

2,000 3,000 4,000 5,000 6,000 7,000

United States

Appalachian Region

Northern Appalachia

North Central Appalachia

Central Appalachia

South Central Appalachia

Southern Appalachia

2009 2007 2000 Per Capita Investment Income (2005$) Includes Income from dividends, interest, and rent

Income is lower in Appalachia 

• Per capita market income (personal 

income less transfer payments) was 

25% lower than the nation in 

Appalachia in 2009. In Central

Appalachia it was 47% lower. 

• Per capita personal income was 

18% lower than the nation in 2009. 

• Appalachian proprietors earned 

27% less than the national average. 

• Proprietors’ earnings were less than 

75% of the national average in the 

Appalachian portion of every state 

except Alabama, Pennsylvania, 

Tennessee, and West Virginia. 

• Per capita investment income was

30% lower in Appalachia. In Central 

Appalachia it was only 43% of the 

national average. These measures 

of wealth declined significantly since 

the beginning of the decade. 

• Population growth in Appalachia 

between 2000 and 2010 was 6.8%, 

compared to 9.7% for the nation. 

• Net population loss occurred in 271

Appalachian counties between 2000 

and 2010, compared with 83 

counties in the previous decade. 

• The proportion of adults in 

Appalachia with a college degree 

was 20.4% in 2005-2009, compared 

to 27.5% for the nation. In Central 

Appalachia, less than 12% of adults 

have a college degree. 

• College graduation rates are lower 

than the nation in the Appalachian 

portion of every state. Less than 

20% of adults have a college 

degree in the Appalachian portion 

of Kentucky, Maryland, Mississippi, 

Ohio, Tennessee, Virginia, and 

West Virginia. 

• Appalachia has higher rates of 

cancer, heart disease, and diabetes 

than the nation, and it is much more 

difficult to access treatment and 

affordable health care.

• ARC investments create jobs and 

opportunities for economic growth. 

In the last 5 years ARC investments 

provided over 124,000 households 

with public water and sewer

systems that also enabled new and 

existing businesses to expand.
Appalachian Regional Commission Economic Overview of Appalachia- 2011

Regional Planning and Research Division Sources: Bureau of Labor Statistics, Bureau of Economic Analysis, U.S. Census

202-884-7700 www.arc.gov/research Current dollars are adjusted for inflation using the PCE chained price index, base year=2005

336 134 54

896

1,453 1,548

876 983

1,485

429

1,428

1,930

252

1,532

0

500

1,000

1,500

2,000

2,500

Total Employment by Industry, Appalachian Region (thousands) 2000 2008 2020

7.3%

-15.0%

39.7%

-13.4%

13.7%

-24.6%

-0.1%

6.9%

31.1% 24.7%

8.0%

23.5% 17.5%

-5.0%

10.2%

-40%

-20%

0%

20%

40%

60%

Employment Change by Industry, Appalachia 2000-08 United States Appalachia

2.5%

1.0% 0.4%

6.7%

10.9% 11.6%

6.6% 7.4%

11.1%

3.2%

10.7%

14.5%

1.9%

11.5%

0%

4%

8%

12%

16%

Industry Shares of Total Employment, Appalachia 2008 United States Appalachia

1.31

1.58

1.25

1.09

1.41

1.12

0.95

0.77 0.80 0.79

1.05

0.99

0.70

1.06

0.6

1.0

1.4

1.8

Industry Index , Appalachia 2008 ratio to U.S. share: U.S.=1 United States Appalachia

Employment change by Industry

The industries with the greatest job growth

in Appalachia from 2000-2008 were 

Mining (39.7%), Finance, Insurance, and 

Real Estate (31.1%), Professional and 

Technical Services (24.7%), and Health

and Social Services (23.5%). 

Industries that lost jobs over this period 

included Manufacturing (-24.6%), Farming 

(-15.0%), Utilities (-13.4%), and Federal 

Government (-5.0%). Manufacturing 

employment declined at a faster rate than 

the nation in every region except Central 

Appalachia.

Employment Shares

The industries with the highest shares of 

total employment in Appalachia were 

Food, Lodging, and Entertainment 

(14.5%), Retail Trade (11.6%), State and 

Local Government (11.5%), Professional 

and Technical Services (11.1%), Health

and Social Services (10.7%), and 

Manufacturing (10.9%). The industries 

with the smallest shares of total 

employment were Utilities (0.4%), Mining 

(1.0%), Federal Government (1.9%), 

Farming (2.5%), and Education (3.2%). 

Employment Index

The most highly concentrated industries in 

Appalachia include Mining (1.58 times the 

national share), Manufacturing (1.41), 

Farming and Forestry (1.31), and Utilities 

(1.25). The industries with the lowest 

concentration included Federal 

Government (0.70), Finance (0.77), 

Education and Information Services 

(0.79), and Professional and Technical 

Services (0.80). 

It is important to note that the industry 

sectors with relatively low concentrations 

in Appalachia (Finance, Education and 

Information Services, and Professional 

and Technical Services) had some of the 

highest growth rates from 2000-2008. 

The reverse is also true: the industry 

sectors with relatively high concentrations 

in Appalachia are the industries that 

contracted over that period (Farming and 

Forestry, Manufacturing, and Utilities). 

This phenomenon largely explains why 

employment growth in Appalachia lags 

behind the nation during boom years and 

falls further during recessions. The 

notable exception to this rule is Mining, 

which experienced exceptional growth

over the last decade.
Appalachian Regional Commission Economic Overview of Appalachia- 2011

Regional Planning and Research Division Sources: Bureau of Labor Statistics, Bureau of Economic Analysis, U.S. Census 

202‐884‐7700      www.arc.gov/research   Current dollars are adjusted for inflation using the PCE chained price index, base year=2005

$0

$4,000

$8,000

$12,000

$16,000

Per Capita Federal Expenditures

Source: Consolidated Federal Funds Report

US 2010 US 2007

Appalachia 2010 Appalachia 2007

72%

97%

25%

87%

70%

53%

69%

89%

34%

76%

68%

51%

0.20

0.40

0.60

0.80

1.00

Per Capita Federal ExpendituresIndex

Appalachian Region as percentage of national average 

Source: Consolidated Federal Funds Report

2007 2010

Per Capita Federal spending lags in Appalachia 

Despite significant investment in 

infrastructure and economic 

development over the years, the 

Region receives 31% less Federal 

expenditures per capita than the 

national average: $11,435 for the 

Region vs. $16,569 for the nation. 

These disparities exist in every 

major category of spending except 

retirement and disability payments. 

Procurement contracts were 68% 

of the national average, salaries 

and wages were 51%, and loans 

and insurance were only 34% of 

the national average. 

Appalachia has been unable to 

take advantage of programs that 

could help mitigate long-standing 

problems due to a lack of human, 

financial, and technical resources, 

geographic isolation, 

disproportionate social and 

economic distress, low household 

incomes, and a declining tax base. 

The Region requires additional 

technical and financial assistance 

to meet future needs, and will 

continue to have difficulty reaching 

economic parity with the nation as 

long as public and private 

investment does not keep pace with 

the level of need. 

ARC makes targeted investments that promote economic growth and opportunity 

The Appalachian region’s isolation and its difficulty with diversifying its economy are major factors contributing to the 

gap in living standards and economic growth. ARC investments in human and physical capital help to create jobs and 

economic opportunity. Between 2006 and 2010, ARC investment served 124,733 households with infrastructure, 

provided education and training for 102,630 students and trainees, and created or retained 137,422 jobs. 

 Business development ARC investment of $93.6 million leveraged $329.3 million of other public investment and 

$2.4 billion of private investment that enhanced entrepreneurship and helped market new products and services. 

 Education and workforce development reduced gaps in educational attainment, enhanced job opportunities, and 

increased lifetime earning potential for thousands of students and trainees.

 Water and wastewater systems provided thousands of households with public water and sewer systems that also 

enabled new and existing businesses to relocate and expand.

 Highways and access roads reduced production and transportation costs and improved access to global markets.

 Telecommunications served dozens of communities with improved broadband access, which is essential to today’s 

commerce, education, and health care. 

 Energy efficiency and renewable energy projects $4.3 million of ARC investment leveraged $18 million in private 

investment that improved energy efficiency and reduced business costs.

 Health care investments served over 450,000 patients in underserved areas.
Appalachian Regional Commission Economic Overview of Appalachia- 2011

Regional Planning and Research Division Sources: Bureau of Labor Statistics, Bureau of Economic Analysis, U.S. Census

202-884-7700 www.arc.gov/research Current dollars are adjusted for inflation using the PCE chained price index, base year=2005

$0

$4,000

$8,000

$12,000

$16,000

Per Capita Federal Expenditures 

Source: Consolidated Federal Funds Report FY2007 & FY2009 US 2007

US 2009

Appalachia 2007

Appalachia 2009

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Per Capita Federal Expenditures Index

Source: Consolidated Federal Funds Report FY2007 & FY2009

Index 2007 (U.S.=1)

Index 2009 (U.S.=1)

Per Capita Federal spending lags in Appalachia, and the gap is widening

Despite significant investment in 

infrastructure and economic 

development over the years, the 

Region receives 33% less Federal 

expenditures per capita than the 

national average: $10,892 for the 

Region vs. $16,593 for the nation.

These disparities exist in every 

major category of spending except 

retirement and disability 

payments. Procurement contracts 

were 55% of the national average, 

salaries and wages were 53%, 

and loans and insurance were 

only 31% of the national average. 

Appalachia has been unable to 

take advantage of programs that 

could help mitigate long-standing 

problems due to a lack of human, 

financial, and technical resources, 

geographic isolation,

disproportionate social and 

economic distress, low household 

incomes, and a declining tax base. 

The Region requires additional 

technical and financial assistance 

to meet future needs, and will 

continue to have difficulty reaching 

economic parity with the nation as 

long as public and private 

investment does not keep pace 

with the level of need.

ARC makes targeted investments that promote economic growth and opportunity 

The Appalachian region’s isolation and its difficulty with diversifying its economy are major factors contributing to the 

gap in living standards and economic growth. ARC investments in human and physical capital help to create jobs and 

economic opportunity. Between 2006 and 2010, ARC investment served 124,733 households with infrastructure, 

provided education and training for 102,630 students and trainees, and created or retained 137,422 jobs. 

• Business development ARC investment of $93.6 million leveraged $329.3 million of other public investment and 

$2.4 billion of private investment that enhanced entrepreneurship and helped market new products and services. 

• Education and workforce development reduced gaps in educational attainment, enhanced job opportunities, and 

increased lifetime earning potential for thousands of students and trainees.

• Water and wastewater systems provided thousands of households with public water and sewer systems that also

enabled new and existing businesses to relocate and expand.

• Highways and access roads reduced production and transportation costs and improved access to global markets.

• Telecommunications served dozens of communities with improved broadband access, which is essential to today’s 

commerce, education, and health care. 

• Energy efficiency and renewable energy projects $4.3 million of ARC investment leveraged $18 million in private 

investment that improved energy efficiency and reduced business costs.

• Health care investments served over 450,000 patients in underserved areas.