HOUSEHOLD WEALTH AND FINANCIAL 

SECURITY IN APPALACHIA

Linda A. Jacobsen

Marlene Lee

Kelvin Pollard

Population Reference Bureau

Prepared for the Appalachian Regional Commission

Under Contract #CO-16506-09

November 2013

The authors wish to thank Keith Witt and Julie Marshall of ARC

for their support and guidance.
TABLE OF CONTENTS

PAGE

Executive Summary 5

1. Introduction 9

2. Background and Objectives 16

2.1 Defining Household Wealth 16

2.2 Study Objectives 16

3. Data Sources and Limitations 17

4. Trends in Household Income and Poverty in Appalachia 22

4.1 Household Income 22

4.2 Poverty 22

5. Wealth and Economic Indicator Indices 29

5.1 Key Indicators of Household Wealth and Economic Well-Being 29

5.2 Trends in Household Wealth and Economic Well-Being within the

Appalachian States

30

5.3 Indices of Household Wealth and Economic Well-Being, 2007 to 2009 33

5.4 Indices of Household Wealth and Economic Well-Being, 2007-2011 42

6. Wealth Determinants of County Economic Status within the Appalachian Region 51

6.1 Introduction 51

6.2 Data and Hypotheses 52

6.3 How to Interpret Regression Results 57

6.4 Discussion of Regression Analysis Results 58

6.5 Conclusion 60

7. Summary and Policy Implications 61

References 63

Appendix A: Household Wealth Concepts 65

Appendix B: Specification of the Regression Models 67

Appendix C: Methodology for Estimating Aggregate Housing Value for Counties with 

Population Under 20,000

74

1 
LIST OF TABLES

PAGE

Table 3.1: Population of 13 Appalachian States by Appalachian and Non-Appalachian 

Status, 2007 and 2009

19

Table 3.2: Population of Appalachian Counties in 13 Appalachian States Aggregated to 

Subregion, County Type, and Economic Status Classification, 2007 and 2009

20

Table 3.3: Population of Non-Appalachian Counties in 13 Appalachian States 

Aggregated to County Type and Economic Status Classification, 2007 and 2009

21

Table 4.1: Mean and Median Household Income in the Appalachian Region (In Adjusted 

2009 Dollars), 1999 and 2005-2009

24

Table 4.2: Poverty Status of Persons in the Appalachian Region, 1999 and 2005-2009 27

Table 5.1: Changes in U.S. Household Economic Indicators, 2007 to 2009 29

Table 5.2: Change in Indicators of Economic Well-Being for Appalachia, 2007 to 2009 31

Table 5.3: Change in Economic Indicators by County Type and Economic Status, 2007 

to 2009

32

Table 5.4: Definitions of Household Wealth and Economic Well-Being Indices 33

Table 5.5: Housing and Household Wealth Variables for the United States for Index 

Calculations, 2007 and 2009

34

Table 5.6: Housing and Household Wealth Indices in the Appalachian Region, 2007 and

2009

36

Table 5.7: Home Value and Household Wealth Value Indices in the Appalachian Region, 

2007 and 2009

37

Table 5.8: Housing and Household Wealth Indices by County Type and Economic 

Status, 2007 and 2009

40

Table 5.9: Housing and Household Wealth Value Indices by County Type and Economic 

Status, 2007 and 2009

41

Table 5.10: Household Wealth and Economic Well-Being Indices in the Appalachian 

Region, 2007-2011

44

Table 6.1: Components of the Economic Status Index 52

Table 6.2: Effect on Economic Status Index, Fiscal Year 2011 56

Table 6.3: Effect of County Wealth, Demographic, and Employment Variables on 

Economic Status Index (FY 2011), Appalachian Counties

59

APPENDIX TABLES

Table A.1: Household Wealth Concepts – Definitions, Indicators, and Data Availability 65

Table B.1: Means of Variables 67

Table B.2: Correlation Matrix for Continuous Variables, All Counties in 13 Appalachian 

States

68

2 
PAGE

Table B.3: Factors Associated with County Economic Status Index (Fiscal Year 2011), 

All Counties in 13 Appalachian States

70

Table B.4: Appalachian Counties (Full Specification) 72

Table B.5: All Counties in 13 Appalachian States (Full Specification) 73

3 
LIST OF FIGURES

PAGE

Figure 1.1: Appalachian Subregions 11

Figure 1.2: County Types in the Appalachian Region 12

Figure 1.3: County Economic Status Designations in the Appalachian Region, Fiscal 

Year 2007

13

Figure 1.4: County Economic Status Designations in the Appalachian Region, Fiscal 

Year 2009

14

Figure 1.5: County Economic Status Designations in the Appalachian Region, Fiscal 

Year 2011

15

Figure 4.1: Mean Household Income in the Appalachian Region (In Adjusted 2009 

Dollars), 2005-2009

25

Figure 4.2: Median Household Income in the Appalachian Region (In Adjusted 2009 

Dollars), 2005-2009

26

Figure 4.3: Percent of Persons in the Appalachian Region in Poverty, 2005-2009 28

Figure 5.1: Homeownership Index in the Appalachian Region, 2007-2011 45

Figure 5.2: Housing Burden Index in the Appalachian Region, 2007-2011 46

Figure 5.3: Percent with Interest Income Index in the Appalachian Region, 2007-2011 47

Figure 5.4: Home Value Index in the Appalachian Region, 2007-2011 48

Figure 5.5: Household Income Index in the Appalachian Region, 2007-2011 49

Figure 5.6: Interest Income Value Index in the Appalachian Region, 2007-2011 50

Figure 6.1: Average Fiscal Year 2011 Economic Status Index for Appalachian and NonAppalachian Counties53

4 
Executive Summary

With the onset in 2007 of the deepest economic recession in the United States since the Great 

Depression, Americans lost jobs and experienced sharp declines in the value of their homes and 

investments. Decreases in household wealth impact not only individual and household financial security, 

but also community and regional economic prosperity and growth. Given the history of economic 

difficulties in the Appalachian Region, the Appalachian Regional Commission (ARC) commissioned this 

research report to analyze the effects of the recent recession on household wealth and economic wellbeing in Appalachia and to assess whether Appalachia has been disproportionately affected by the 

economic downturn.

Using data from the 2000 Census (1999 data for income) and the Census Bureau’s American Community 

Survey for the period from 2005 through 2011, this study examines changes in indicators of household 

wealth and economic well-being for Appalachian counties, subregions, county types, and economic status 

designations; analyzes the most current (2007-2011) indicators of household wealth and economic wellbeing in Appalachia to assess the degree of recovery from the recession; and uses multiple regression 

analysis to identify how closely county differences in aggregate housing value are associated with county 

differences in economic status.

Median household income declined by seven percent in Appalachia between 1999 and 2005-2009 

compared with five percent for the U.S. as a whole. But there was diversity across Appalachian 

subregions, with median household income declining by almost 10 percent in South Central Appalachia 

across this period and only three percent in Central Appalachia. While the poverty rate for the U.S. rose

by only one percentage point between 1999 and 2005-2009, the poverty rate increased by two 

percentage points in Appalachia, and by three percentage points in the South Central subregion.

As property values dropped and foreclosures reached record highs between 2007 and 2009, the 

homeownership rate in the United States declined for the first time in many years. The rate of 

homeownership in Appalachia was higher in 2007 than in the U.S., and declined slightly less by 2009 

than the U.S. rate. However, there was considerable variation within Appalachia. Among subregions, 

homeownership decreased most (1.4 percentage points) in North Central Appalachia and least (0.4 

percentage points) in South Central Appalachia. Between 2007 and 2009, homeownership rates declined 

by almost two percentage points among both Appalachian counties located in large metropolitan areas 

and those located in rural areas that were not adjacent to a metro area. Homeownership also declined in 

all five economic status groups, ranging from a high of three percentage points for Attainment counties to 

a low of 0.7 percentage points for Appalachian counties in the Transitional group. Attainment counties are 

among the economically strongest in the nation, but they also appear to have been hardest hit by 

declines in employment, household income, and home values during the recession.

Homeowners who spend more than 30 percent of their monthly income on housing costs are considered 

to have a housing cost burden. While the share of homeowners with a housing cost burden was 

considerably lower in 2007 in Appalachia (21.5 percent) than in the U.S. (30 percent), this share 

increased to 22 percent in Appalachia by 2009, but remained at 30 percent for the nation. The share with 

a housing burden increased in both the South Central and Southern subregions during the recession, but 

decreased slightly in the North Central subregion. The share of homeowners with a housing burden also 

increased for every county type except those located in large metropolitan areas. Although housing 

burden increased by one to two percentage points for counties in the Distressed, Transitional, and 

Competitive economic status groups, it decreased by three percentage points between 2007 and 2009 for 

Attainment counties. This decline in housing burden likely reflects homeowners losing their homes to 

foreclosure during the recession, and is consistent with the decline in homeownership across this period. 

Income from sources other than wages and salaries can help households offset income declines due to 

job losses during a recession. However, a slightly smaller share of households in Appalachia (21.8 

percent) than in the nation (24.9 percent) had income in 2007 from interest, dividends, net rental income, 

royalty income, and estates and trusts, and there was considerable variation across subregions. About 25 

percent of households in the Northern subregion reported such income compared with only about 15 

5 
percent in the Central subregion. The share of households with interest and other income dropped in 

Appalachia by one percentage point between 2007 and 2009, but this decline reached at least 1.5 

percentage points in both the Northern and the South Central subregions. During the recession, the share 

with interest and other income also declined for every county type except those located in rural areas that 

were not adjacent to a metro area, and for counties in the Distressed, Transitional, and Competitive 

economic status groups.

The recession also had an impact on average home values, average household income, and the average 

amount of household income from interest, dividends, and other sources. Between 2007 and 2009, 

average home value in the U.S. decreased by 10 percent, average household income by four percent, 

and average income from interest and other sources by 14 percent. In 2007, average home value in 

Appalachia was 45 percent lower than in the nation, although this varied from 63 percent less in the 

Central subregion to only 37 percent less in the Southern subregion. Although average home values 

remained considerably lower in the Appalachian Region than in the U.S. in 2009, the gap shrank by about 

4 percentage points during the recession. This indicates that home values dropped less in Appalachia 

than they did in the nation as a whole during the recession, and this is consistent with other data 

indicating that the housing crisis affected metropolitan areas more than nonmetropolitan and rural areas. 

Average household income in Appalachia was 22 percent lower than the national average in 2007, 

ranging from 40 percent lower in Central Appalachia to only 16 percent lower in Southern Appalachia. 

The household income gap between Appalachia and the U.S. also shrank slightly between 2007 and 

2009, and this pattern was consistent across all of the subregions. As of 2009, then, these data indicate 

that average household income did not drop as much in Appalachia as in the nation as a whole. 

The share of households with income from interest, dividends, and other non-wage sources is lower in 

the Appalachian Region than in the United States. In addition, the average amount of such income is also 

much lower in Appalachia. In 2007, average household interest income in Appalachia was 36 percent 

lower than in the U.S., ranging from 66 percent less in the Central subregion to only 22 percent less in the 

South Central subregion. However, the change between 2007 and 2009 was not consistent across the 

subregions. The gap in interest and other income declined in the Northern, North Central, and Central 

subregions, but increased in the South Central and Southern subregions. The average amount of 

household interest income was also lower in 2007 in Appalachian counties than in the nation in every 

county type and economic status group. However, unlike average household income, the interest income 

gap widened between 2007 and 2009 for Appalachian counties in large metropolitan areas and in rural 

areas, and for those in the Competitive and Attainment economic status groups. Appalachian counties in 

these four categories fared worse on average during the recession than counties in the nation, and 

Appalachian households had fewer dollars from other sources to help them weather job and income 

losses during the recession.

To assess the degree of recovery from the recession in Appalachia, we use five-year ACS data for the 

period 2007-2011 and construct six indices that measure the relative status of Appalachian subregions, 

county types, economic status groups, and counties compared with the nation as a whole. Although it 

would be ideal to use 2011 ACS data for this assessment, single-year ACS data are only available for 

geographic areas with a population of at least 65,000, which excludes many of the counties in the 

Appalachian Region. Therefore, to examine household wealth and economic well-being with comparable 

data for all counties, subregions, county types, and economic status groups in Appalachia, we must use 

five-year data. These data include both the recession period from 2007 to 2009 and the post-recession 

recovery period from 2009 to 2011, and provide the most current picture of the status of the Appalachian

Region, subregions, and counties compared with the United States. 

For the 2007-2011 period, the rate of homeownership was nine percent higher in the Appalachian Region 

than in the United States. This is one percentage point higher than it was in 2007 when the recession 

began. Homeownership levels were highest in the North Central and Central Appalachian subregions 

exceeding the U.S. rate by about 11 percent. Although the relative homeownership rate in Appalachia 

was higher for 2007-2011 than 2007 in all subregions and county types, it was 3 percentage points lower 

in Attainment counties in 2007-2011 than in 2007, indicating that post-recession recovery from 2009-2011 

had not yet returned homeownership in these counties to pre-recession levels. 

6 
In 2007, the share of homeowners whose housing costs exceeded 30 percent of their monthly income 

was 29 percent lower in Appalachia compared with the nation, but this gap decreased slightly to 23 

percent for the entire period from 2007-2011. The increase in housing cost burden in Appalachia during 

the recession was not reduced enough in the first two years of recovery to bring it back down to its prerecession level. The housing burden index was higher in 2007-2011 than in 2007 for every Appalachian 

subregion and county type, and all economic status groups except Attainment counties. 

The share of households with income from interest, dividends, and other non-wage sources was 10 

percent lower in the Appalachian Region than in the nation in 2007-2011, and this gap was slightly 

smaller than it was in 2007. In Northern Appalachia, the share of households with interest income was 

almost nine percent higher than the share for the U.S., but it was lower than the U.S. share in every other 

subregion and county type. Among economic status groups, only Competitive counties registered a 

higher share of households with interest income than the U.S. as a whole, while the share was 45 percent 

lower among Distressed counties. These gaps between Appalachia and the nation were slightly smaller in 

the 2007-2011 period than they were in 2007, but this relative improvement reflects a slow rate of 

recovery for such assets in the U.S. rather than an increase in the share of Appalachian households with 

non-wage income. 

Average home values in Appalachia were 45 percent lower than the U.S. average in 2007, and this gap 

shrank slightly to 39 percent for the 2007-2011 period. In 2007-2011, Appalachian home values were only 

30 percent lower than the U.S. average in large metro areas, but were 54 percent lower in rural areas. 

The gap in average home values between the Appalachian Region and the U.S. was smaller in the 2007-

2011 period than it was in 2007 when the recession began. This is not due to rising home values in 

Appalachia, but rather to the slow rate of recovery in home prices that plummeted during the housing 

crisis in areas such as Florida, Nevada, Arizona, and California. 

In 2007-2011, average household income in Appalachia was 20 percent below the U.S. average, and this 

gap ranged from a low of four percent to a high of 43 percent across subregions, county types, and 

economic status groups. Only Appalachian counties in the Attainment group had an average household 

income that exceeded the U.S. average. Once again, the gap between Appalachian subregions and the 

nation was slightly smaller in 2007-2011 than it was in 2007, but this reflects a slower pace of recovery in 

employment and income in the nation rather than a relative increase in average household income in 

Appalachia. 

Although the share of households with interest income was only 10 percent lower in Appalachia, the 

average amount of interest income was 35 percent lower than the U.S. average in 2007-2011. Moreover, 

the average amount of interest income was lower in every Appalachian subregion, county type, and 

economic status group than in the nation. While the gap in average interest income between Appalachia 

and the U.S. was slightly smaller in 2007-2011 than in 2007 for most subregions, county types, and 

economic status groups, it was larger in 2007-2011 for counties in the Southern subregion, in large metro 

counties, and in Distressed counties. The impact of the recession in these Appalachian counties had not 

been offset by post-recession gains between 2009 and 2011. 

Owner-occupied housing is widely held in the United States and represents a large share of the wealth of 

many households. Between 2000 and 2010, around two thirds of all households held equity in a home. 

Such equity represented 20 percent of household wealth in 2000 and 25 percent in 2011. The downturn 

in the U.S. housing market after its peak in 2006 and the associated financial crisis had significant 

implications for the economic well-being of households and their communities.

For the Appalachian Region, particularly Appalachian counties where asset levels are low, the potential 

impact of housing prices on economic development might be small compared to the impact of overall 

employment and the concentration of employment in particular sectors. In this report, multiple regression 

analysis is used to identify how closely county differences in aggregate value of housing are associated 

with county differences in economic status. The results suggest that housing wealth is just as important to 

county economic well-being as employment. Higher housing wealth in a county is associated with better 

economic status, and a county’s economic conditions affect its wealth accumulation. Thus, counties with 

higher aggregate wealth might have a buffer when economic conditions begin to deteriorate, and counties 

7 
with a history of worse economic status will not only suffer immediately but will experience more difficult 

economic conditions for a longer period than counties that have historically been better off.

During the recent recession, the Appalachian Region did experience a disproportionate decline in median 

household income and increase in the poverty rate, compared with the U.S. as a whole. However, 

although homeownership rates and average home values did decline in Appalachia, these declines were 

not as steep as those for the rest of the nation. In contrast, the share of homeowners with a housing cost 

burden increased in Appalachia, and both the share of households with interest and other non-wage 

income and the average amount of such income declined more in Appalachia than in the rest of the 

United States. Just as economic development policies can be crafted to increase income security in the 

Region, policies that stimulate asset accumulation could also improve the economic stability of 

households and help them offset income and wealth losses in future recessions. Raising levels of 

education and household income, along with boosting the level of assets, could help Appalachian 

households and communities better withstand future economic downturns, as well as reduce the amount 

of time needed for recovery.

8 
1. Introduction

With the onset in 2007 of the deepest economic recession since the Great Depression, Americans lost 

jobs and experienced sharp declines in the value of their homes and investments. Decreases in 

household wealth impact not only individual and household financial security, but also community and 

regional economic prosperity and growth. As a result, the Appalachian Regional Commission (ARC) has 

an increased interest in understanding the effects of the recent recession on economic well-being and 

commissioned this research report. Using data from the American Community Survey and other sources, 

this report examines changes between 2007 and 2009 in household wealth and financial security in the 

Appalachian Region. 

Trends in household wealth are important for individuals and families because household wealth provides 

a financial and psychological safety net to weather tough economic times.

1 People use household assets 

to leverage funds that in turn can create additional opportunities to produce more wealth. Wealth is 

largely transferable from one generation to the next and is a key component of intergenerational mobility. 

It creates opportunities for expanded social networks, provides social and economic prestige, and 

contributes to political power.

2 At the community level, household wealth provides a “pool of savings” that 

is a prerequisite for business development and for consumers to feel confident about their economic 

futures.3

Although many economists acknowledge the link between household wealth and economic growth, the 

size and nature of this relationship are not precisely quantified.4 The Kansas City Federal Reserve argues 

that household wealth, as a key source of financial stability for families, is closely linked to a region’s 

economic prosperity and potential for growth. They found that at the county level, three key components 

of household wealth—home values, agricultural land value, and financial investments—are positively 

correlated with job growth and income. Given the decline in household wealth across the United States

between 2007 and 2009, this report expands previous analyses and investigates the relationship between 

household wealth and broader economic indicators. Given the history of economic difficulties in the 

Appalachian Region, this report assesses the degree to which Appalachia has been disproportionately 

affected by the recent economic downturn. 

In Appalachia and across the United States, homeownership is the single most important source of 

wealth and financial security. In 2000, there were 6.6 million owner-occupied homes in Appalachia, and 

the homeownership rate in the Region (73 percent) exceeded the national average (66 percent).5

 

Historically, buying a home has been a key part of the American dream—an important step for families to 

improve their quality of life. 

But in recent years, homeownership has become a potential liability for many families. Home values have 

dropped dramatically; foreclosures have hit record levels; and many families are trapped in unaffordable 

subprime mortgages. In 2008, net household wealth6 in the United States declined by $11 billion, the 

largest loss of wealth since the federal government started keeping records of wealth accumulation 50 

years ago.7 Although the recession officially ended in 2009, the pace of economic recovery has been 

1 Lisa A. Keister and Stephanie Moller (2000), “Wealth Inequality in the United States,” Annual Review of Sociology 26:63-81.

2 Ibid.

3 Sarah A. Low (2005), “Regional Asset Indicators: The Wealth of Regions,” The Main Street Economist: A Commentary on the 

Rural Economy (September).

4 Ibid.

5 Mark Mather (2004), “Housing and Commuting Patterns in Appalachia,” Demographic and Socioeconomic 

Change in Appalachia (January).

6 This net worth estimate includes all family assets (e.g., housing, stocks, property), minus total debts.

7 S. Mitra Kalita (2009), “Americans See 18% of Wealth Vanish,” The Wall Street Journal (March 13). 

9 

 
slow and has varied considerably across different regions of the United States. This report also examines 

indicators of household wealth and economic well-being for the 2007-2011 period to compare the degree 

of recovery in Appalachia with the rest of the United States.

Diversity within Appalachia

The Appalachian Region covers 205,000 square miles and includes all of West Virginia and portions of 

twelve other states from New York to Mississippi. The 420 counties of the Region are grouped into five 

subregions, based on similarities in economic and demographic characteristics and geographic location

(see Figure 1.1). More than 25 million people live in the Appalachian Region, with 42 percent residing in 

rural areas—much higher than the national average of 20 percent. While Appalachia is a distinct part of 

the United States, the Region is far from homogeneous, covering both rural areas and major metropolitan 

areas such as Pittsburgh. This range of county types is shown in the map in Figure 1.2. Although the 

Region has historically had high rates of poverty (33 percent in 1965) and an economy dominated by 

mining, forestry, agriculture, chemical industries, and heavy industry, economic development efforts have 

reduced poverty and diversified the economy in some communities. To track the economic status of 

Appalachian counties, the Appalachian Regional Commission has developed an index-based county 

economic classification system based on unemployment rates, per capita market income, and poverty 

rates.8 The five economic status designations are:

• Distressed: the most economically depressed counties that rank in the worst 10 percent of the 

nation’s counties;

• At-Risk: counties at risk of becoming economically distressed that rank between the worst 10 

percent and 25 percent of the nation’s counties;

• Transitional: counties transitioning between strong and weak economies that rank between the 

worst 25 percent and the best 25 percent of the nation’s counties; 

• Competitive: counties that are able to compete in the national economy and rank between the 

best 10 percent and 25 percent of the nation’s counties;

• Attainment: the economically strongest counties that rank in the best 10 percent of the nation’s 

counties.

Tracking changes from fiscal year (FY) 2007 to FY 2011 in the economic status designations of counties 

within the 13 Appalachian states can help assess the impact of the recession on the Region. For 

example, before the onset of the recession in December, 2007, 78 Appalachian counties were Distressed

and 84 were classified as At-Risk (see Figure 1.3). By 2009, the number of Distressed counties had risen 

to 81, and the number of transitional counties had increased from 225 to 232 (See Figure 1.4). Although 

the recession officially ended in June of 2009, by 2011, the number of Distressed counties had increased 

to 82 and the number of At-Risk counties had risen to 86 (see Figure 1.5). Thus, between 2007 and 2011, 

the number of counties that were Distressed increased by 5 percent, while between 2009 and 2011, the 

number that were At-Risk increased by 6 percent. Because of the diversity within the Appalachian 

Region, we analyze changes in household wealth and economic well-being for subregions, county types, 

and economic status designations as well as for the 420 counties.9

 

8 For a detailed description of the data sources and methodology, see Appalachian Regional Commission (2013), “Distressed 

Designation and County Economic Status Classification System, FY 2007 – FY 2014,” available at 

http://www.arc.gov/research/SourceandMethodologyCountyEconomicStatusFY2007FY2014.asp . 

9 In FY 2007 there were 410 counties in the Appalachian Region. Between FY 2007 and FY 2009, 10 counties were added to the 

Appalachian Region. To create a comparable county geography over time to facilitate direct comparison between FY 2007 and FY 

2009, we use the FY 2009 definition of counties included in the Appalachian Region for all analyses and maps in this report.

10

 
Figure 1.1: Appalachian Subregions

11
Figure 1.2: County Types in the Appalachian Region

12
Figure 1.3: County Economic Status Designations in the Appalachian Region, Fiscal Year 2007

13
Figure 1.4: County Economic Status Designations in the Appalachian Region, Fiscal Year 2009

14
Figure 1.5: County Economic Status Designations in the Appalachian Region, Fiscal Year 2011

15
2. Background and Objectives

2.1 Defining Household Wealth 

Measuring changes in household wealth is one important way to assess the impact of the recent 

recession on economic well-being and financial security in Appalachia. Wealth is a measure of an 

individual or household’s economic well-being that can be broadly defined as the value of assets minus 

debts. Wealth is distinct from other important measures of well-being because it represents a stock of 

non-human capital whereas measures such as income and earnings represent flows of resources often 

based on returns to human capital. Many assets provide valuable services such as housing and 

transportation. In addition, many of the same assets may also be liquidated, allowing individuals to meet 

their consumption needs if income flows are interrupted. For this reason, household wealth may be 

considered a financial safety net and an indicator of consumption potential during tough times.

10 

Household wealth is also an important economic asset for local areas. A potential source of capital for 

new businesses, it can spur economic activity, and as a consumption stabilizer, it can soften the effects of 

a recession. Savings—one component of wealth—may also provide a foundation for economic 

development.11 Savings are a source of investment capital and as such may affect economic activity in 

the short-term, particularly in cases where capital investment improves the productivity of workers.12

On the individual and household level, wealth is built through savings and investments in long-term, 

appreciable assets such as housing. Homeownership has been the main repository of household wealth 

in the United States, with values growing steadily and remaining stable over the long-term. For 

households, wealth accumulation is important because it often provides retirement income, emergency 

funds, and supplements income to increase current consumption. Changes in household wealth, 

particularly housing wealth, can influence household consumption.13 

2.2 Study Objectives

This study has three objectives:

1. To examine changes in indicators of household wealth and economic well-being in Appalachia 

between 2007 and 2009 using household-level data and compare to trends in the nation as a whole;

2. To analyze current (2007-2011) indicators of household wealth and economic well-being of the

counties in Appalachia by subregion, county type, and economic status designation to assess the 

degree of recovery from the recession and compare to the nation as a whole;

3. To identify how closely county differences in aggregate housing value are associated with county 

differences in economic status. 

10 James B. Davies (2009), “Wealth and Economic Inequality,” pp.127-149 in The Oxford Handbook of Economic Inequality, edited 

by Wiemer Salverda et al. (Oxford: Oxford University Press); Edward N. Wolff (2010), “Recent Trends in Household Wealth in the 

United States: Rising Debt and the Middle-Class Squeeze—An Update to 2007” (Levy Economics Institute of Bard College, Working 

Paper No. 589).

11 Franco Modigliani (1986), “Life Cycle, Individual Thrift, and the Wealth of Nations,” The American Economic Review, 76(3):297-313.

12 Federal Reserve Board (2003), “Aging global population,” Chairman Alan Greenspan’s Testimony Before the Special Committee on 

Aging, U.S. Senate, Washington D.C. (February 27), available at http://www.federalreserve.gov/boarddocs/testimony/2003/20030227/. 

13 John D. Benjamin, Peter Chinloy, and G. Donald Jud (2004), “Real Estate Versus Financial Wealth in Consumption,” Journal of 

Real Estate Finance and Economics, 29(3):341-354; Karl E. Case, John M. Quigley, and Robert J. Shiller (2005), “Comparing 

Wealth Effects: The Stock Market Versus the Housing Market,” Advances in Macroeconomics, 5(1):1-32.

16

 
3. Data Sources and Limitations

Household wealth data at the national level are available from two key sources: the Federal Reserve’s 

Flow of Funds Report and the Survey of Consumer Finances Report. These data allow users to estimate 

current net worth (assets less liabilities). In addition, other nationally representative survey data such as 

the Panel Study of Income Dynamics and the Survey of Income and Program Participation can potentially 

accommodate estimates of other measures of household wealth at the national level. However, 

comparable data for household wealth at the state and county level are not readily available. Appendix A

provides an overview of key household wealth concepts and the availability of county-level data. In 

general, the Census Bureau’s American Community Survey (ACS) is the most promising source for 

county-level data, albeit for a limited number of indicators of wealth. The ACS was collected continuously 

from 2005 through 2011 and provides reliable demographic, social, and economic data for the period 

before, during, and after the 2007-2009 recession. 

Until 2010, the decennial census was the primary source of demographic, economic, and housing 

information for geographies down to the block group level for the entire United States. Unlike previous 

censuses—which consisted of a “short form” of basic demographic and housing questions and a “long 

form” (used for a sample of households) that also asked detailed questions about social, economic, and 

housing characteristics—the 2010 census only had a short form. The decennial long form has been 

replaced by the American Community Survey (ACS). Fully implemented in 2005, the ACS is a relatively 

new survey designed for continuous collection of demographic, housing, social, and economic information 

from 3.5 million addresses per year in every county in the United States. The ACS is designed to provide 

communities with reliable and timely demographic, social, economic, and housing data each year. The 

ACS provides detailed information about education, employment, income, housing characteristics, 

commuting, and other key social and economic characteristics. Traditionally, such information was 

available only once a decade, several years after the decennial census date. With the ACS, a continuous 

stream of updated information of unprecedented usefulness is available to researchers and organizations 

working to improve social and economic conditions. And, because ACS data were collected before, 

during, and after the recent recession, the ACS provides a unique opportunity to study the impact of the 

recession on household wealth and economic well-being. 

The annual sample size of the ACS is much smaller than the sample size of the decennial census long 

form. As a result, single-year estimates are only published for geographic areas with at least 65,000 

people. ACS data for multiple years must be combined to provide reliable estimates for geographic areas 

with less than 65,000 people. For example, data for three consecutive years must be combined to provide 

estimates for areas with populations between 20,000 and 65,000, while data for five years must be 

combined to provide reliable estimates for geographic areas with fewer than 20,000 people.

Previous estimates14 of state and regional household wealth have used dividend income as a proxy for 

financial assets (e.g., stocks and pension fund reserves) held by households and median housing prices 

as an estimate of gross housing wealth. The ACS provides an estimate of household income from 

interest, dividends, net rental income, royalty income, and income from estates and trusts. Housing prices 

are generally available for relatively few metropolitan areas on an annual basis; but owner-reported 

values of houses are reported each year in the ACS. For counties with at least 20,000 people, we obtain

estimates of housing value from the 2006-2008 ACS 3-year estimates, and we use a method to estimate 

aggregate housing value for counties with populations under 20,000 (see Appendix C). For many 

Americans, their home is their largest and most valuable asset, accounting for approximately 30 percent 

of total household assets on average. Because homes constitute such a large portion of household 

wealth, price changes in homes can have a significant effect on total wealth for both households and 

communities.

14 Chad R. Wilkerson and Megan D. Williams (2011), “Booms and Busts in Household Wealth: Implications for Tenth District States,” 

Economic Review (Second Quarter); Sarah A. Low (2005), “Regional Asset Indicators: The Wealth of Regions,” The Main Street 

Economist: A Commentary on the Rural Economy (September).

17

 
A sizeable number of counties in the Appalachian Region have fewer than 65,000 residents (see Table 

3.1), and many of these have populations that are below 20,000.15 Therefore, we must use the 2005-

2009 five-year ACS data files to have comparable statistics at the county level for all 420 counties in the 

Appalachian Region. However, by using the Census Bureau’s full ACS microdata files we are able to 

aggregate household-level data for 2007 and 2009 to the Appalachian and non-Appalachian portions of 

the 13 states in the Region with three exceptions—Maryland, South Carolina, and West Virginia (see 

Table 3.1). There are only three counties in the Appalachian portion of Maryland, and only one of these 

has less than 65,000 people. Therefore, we are not able to show data for the non-Appalachian portion of 

Maryland because it would be possible to derive the data for the county with less than 65,000 people by 

subtracting the estimates for the two counties with more than 65,000 people from the totals for the nonAppalachian portion of the state. Similarly, there are six counties in the Appalachian portion of South 

Carolina and only one of these has less than 65,000 people. As a result, in both Maryland and South 

Carolina we are able to show data only for the metropolitan counties in the Appalachian portion of the 

state, and the nonmetropolitan counties in both the Appalachian and non-Appalachian portions of the 

state must be combined to avoid data disclosure for counties with a population of less than 65,000 

people. In West Virginia, all of the counties are part of the Appalachian Region so there is no nonAppalachian portion within West Virginia. Finally, we are also able to aggregate household-level data for 

2007 and 2009 to several of the key classifications of counties within the Appalachian Region—

subregions, county types, and economic status groups, all of which meet the 65,000 population threshold 

for use of single-year ACS estimates (see Table 3.2).16 The ACS data allow us to examine the impact of 

the recession from 2007 to 2009 in Appalachia and make comparisons to the nation as a whole. For 

comparison purposes, Table 3.3 provides the population size characteristics for 2007 and 2009 of the 

non-Appalachian counties in the 13 Appalachian states. 

The five-year ACS estimates for 2005-2009 and 2007-2011 used in this report represent concepts that 

are fundamentally different from those associated with data from the decennial census. While the main 

function of the census is to provide counts of people for congressional apportionment and legislative 

redistricting, the primary purpose of the ACS is to measure the changing characteristics of the U.S. 

population. Moreover, while the decennial census provides a “snapshot” of the U.S. population once 

every 10 years, the ACS has been described as a “moving video image” that is continually updated. 

Finally, while the census provides “point in time” estimates designed to approximate an area’s 

characteristics on a specific date, the ACS provides “period” estimates that represent data collected over 

a period of time. The five-year estimates in this report, therefore, are data collected over the five-year (or 

60-month) period from 2005 through 2009 and 2007 through 2011. These ACS estimates are not 

averages of monthly or annual values, but rather an aggregation of data collected over the five-year 

period.

 

For areas with consistent population characteristics throughout the calendar year, ACS period estimates 

might not differ much from those that would result from a point-in-time survey like the decennial census. 

However, ACS period estimates might be noticeably different from point-in-time estimates for areas with 

seasonal populations or those that experience a natural disaster such as a hurricane. For example, a 

resort community in the upper Midwest might be dominated by locals in the winter months and by 

temporary workers and tourists in the summer months, with a corresponding decrease in employment 

rates during the winter and increase in these rates during the summer. In such a community, the ACS 

period estimate of the percent of persons in the labor force, which is based on data across the entire 

calendar year, would likely be higher than the decennial census point-in-time estimate from April 1. 

While five-year ACS data are needed to provide reliable estimates for areas with small populations, they 

can make it difficult to track trends in these areas. The 2005-2009 ACS data illustrate this problem. The 

2005-2009 time period covers three distinct periods of economic activity: the months of economic growth 

that preceded the recession of December 2007 to June 2009, the recession period itself, and the 

15 Population thresholds for counties in the ACS are based on the Census Bureau’s county definitions, not those of the Bureau of

Economic Analysis. Therefore, Tables 3.1, 3.2, and 3.3 show the number of counties based on Census Bureau definitions.

16 To create a comparable county geography over time to facilitate direct comparison between FY 2007 and FY 2009, we use the FY 

2009 definition of counties included in the Appalachian Region for all analyses in this report.

18

 
beginning of the economic recovery that followed the downturn. Since the 2005-2009 ACS pools data 

from all three periods, it smooths out the extreme variations in economic measures that would be evident 

in annual data from the recent severe recession. Similarly, the 2007-2011 ACS data cover the recession 

period and the initial recovery period from June 2009 through December 2011. 

Table 3.1: Population of 13 Appalachian States by Appalachian and Non-Appalachian Status, 2007 and 2009

Geographic Area 2007 

Population

2009 

Population

Number of 

Counties

Number of 

Counties 

with <65,000 

Population, 

2007

Number of 

Counties 

with <65,000 

Population, 

2009

Alabama

Appalachian Alabama 2,973,246 3,024,719 37 21 21

Non-Appalachian Alabama 1,664,658 1,683,989 30 25 25

Georgia

Appalachian Georgia 2,810,645 2,924,921 37 26 26

Non-Appalachian Georgia 6,723,116 6,904,290 122 101 101

Kentucky

Appalachian Kentucky 1,189,048 1,194,500 54 52 52

Non-Appalachian Kentucky 3,067,230 3,119,613 66 56 55

Maryland

Appalachian Maryland, Metropolitan 217,664 218,442 2 0 0

Non-Appalachian Maryland, Metropolitan 5,116,624 5,177,441 15 2 2

Maryland, Nonmetropolitan 299,954 303,595 7 6 6

Mississippi

Appalachian Mississippi 620,674 623,260 24 23 23

Non-Appalachian Mississippi 2,301,049 2,328,736 58 49 49

New York

Appalachian New York 1,052,512 1,049,686 14 8 8

Non-Appalachian New York 18,370,265 18,491,767 48 16 16

North Carolina

Appalachian North Carolina 1,635,530 1,662,282 29 22 22

Non-Appalachian North Carolina 7,428,544 7,718,602 71 41 41

Ohio

Appalachian Ohio 2,023,170 2,013,203 32 21 21

Non-Appalachian Ohio 9,497,645 9,529,442 56 29 29

Pennsylvania

Appalachian Pennsylvania 5,740,943 5,736,617 52 29 28

Non-Appalachian Pennsylvania 6,781,588 6,868,150 15 0 0

South Carolina

Appalachian South Carolina, Metropolitan 1,004,208 1,041,295 4 0 0

Non-Appalachian South Carolina, Metropolitan 2,364,525 2,451,754 17 5 5

South Carolina, Nonmetropolitan 1,055,499 1,068,193 25 20 20

Tennessee

Appalachian Tennessee 2,721,180 2,768,846 52 42 42

Non-Appalachian Tennessee 3,451,682 3,527,408 43 34 33

Virginia

Appalachian Virginia 758,430 760,060 33 32 32

Non-Appalachian Virginia 6,961,319 7,122,530 101 74 74

West Virginia (entire state) 1,811,198 1,819,777 55 48 48

Note: Number of counties includes 29 independent cities in Virginia. Appalachian and Non-Appalachian status based on county designations 

for FY 2009.

Data Source: U.S. Census Bureau, Vintage 2009 Population Estimates.

19
Table 3.2: Population of Appalachian Counties in 13 Appalachian States Aggregated to Subregion, County 

Type, and Economic Status Classification, 2007 and 2009

Geographic Area 2007 

Population

2009 

Population

Number of 

Counties

Number of 

Counties 

with <65,000 

Population, 

2007

Number of 

Counties 

with <65,000 

Population, 

2009

 

ALL APPALACHIAN COUNTIES IN 13 

STATES (428 counties) 24,712,934 24,993,391 428 326 325

Subregions 

 Northern Appalachia 8,311,909 8,292,750 86 47 46

 North Central Appalachia 2,365,840 2,378,968 63 53 53

 Central Appalachia 1,910,567 1,917,025 83 80 80

 South Central Appalachia 4,591,007 4,664,225 92 75 75

 Southern Appalachia 7,533,611 7,740,423 104 71 71

 

County Types 

 Large Metros (pop. 1 million +) 5,658,747 5,773,210 34 14 14

 Small Metros (pop. <1 million) 9,928,554 10,070,650 110 60 60

 Nonmetro, Adjacent to Large Metros 1,671,348 1,676,106 35 25 25

 Nonmetro, Adjacent to Small Metros 4,938,725 4,951,058 139 120 119

 Rural (nonmetro, not adj. to a metro) 2,515,560 2,522,367 110 107 107

Economic Status, FY 2007 

 Distressed 1,430,261 1,427,040 78 78 78

 At-Risk 2,377,017 2,378,194 86 83 83

 Transitional 14,788,012 14,891,371 231 152 151

 Competitive 4,617,593 4,714,751 26 11 11

 Attainment 1,500,051 1,582,035 7 2 2 

 

Economic Status, FY 2009 

 Distressed 1,427,612 1,424,622 81 81 81

 At-Risk 2,414,167 2,416,167 82 78 78

 Transitional 15,944,553 16,089,321 239 156 155

 Competitive 3,257,601 3,308,230 19 9 9 

 Attainment 1,669,001 1,755,051 7 2 2 

Note: Number of counties includes eight independent cities in Virginia, and the counties that were added to the Appalachian Region between 

FY 2007 and FY 2009.

Data Source: U.S. Census Bureau, Vintage 2009 Population Estimates.

20
Table 3.3: Population of Non-Appalachian Counties in 13 Appalachian States Aggregated to County Type and 

Economic Status Classification, 2007 and 2009

Geographic Area 2007 

Population

2009 

Population

Number of 

Counties

Number of 

Counties 

with <65,000 

Population, 

2007

Number of 

Counties 

with <65,000 

Population, 

2009

ALL NON-APPALACHIAN COUNTIES IN 

13 STATES (671 counties) 74,929,212 76,139,727 671 456 454

County Types 

 Large Metros (pop. 1 million +) 43,498,439 44,200,027 156 66 65

 Small Metros (pop. <1 million) 20,613,896 21,032,423 175 81 81

 Nonmetro, Adjacent to Large Metros 2,203,775 2,242,270 58 49 49

 Nonmetro, Adjacent to Small Metros 6,225,977 6,272,283 184 167 167

 Rural (nonmetro, not adj. to a metro) 2,387,125 2,392,724 98 93 92

Economic Status, FY 2007

 Distressed 3,045,156 3,043,943 84 82 82

 At-Risk 7,927,080 7,990,977 122 110 110

 Transitional 28,718,328 29,069,571 286 191 190

 Competitive 14,824,121 15,181,424 92 42 41

 Attainment 20,414,527 20,853,812 87 31 31

 

Economic Status, FY 2009 

 Distressed 3,201,417 3,203,505 87 84 84

 At-Risk 8,710,549 8,793,703 135 117 117

 Transitional 29,366,783 29,737,844 285 190 189

 Competitive 12,212,403 12,487,002 75 31 30

 Attainment 21,438,060 21,917,673 89 34 34

Note: Number of counties includes 21 independent cities in Virginia, and excludes the counties that were added to the Appalachian Region 

between FY 2007 and FY 2009.

Data Source: U.S. Census Bureau, Vintage 2009 Population Estimates.

21
4. Trends in Household Income and Poverty in Appalachia

4.1 Household Income

Household income in Appalachia has historically lagged behind the rest of the country, and this gap was 

still evident prior to the onset of the recession in 2007. The 2000 Census found a mean household 

income in Appalachia of $58,702 in 1999, compared with $72,917 for the nation as a whole. Table 4.1 

shows the variation in mean and median household income within the 13 Appalachian states and across 

subregions and county types. Among subregions, mean household income is highest in Southern 

Appalachia and lowest in Central Appalachia. Appalachian counties that are part of metropolitan areas 

with a million or more people had a mean household income in 1999 that was almost $11,000 higher than 

the Appalachian average, while the mean in rural counties was more than $11,000 lower. There are only 

three states in the Appalachian Region where average household income in 1999 was higher in the 

Appalachian than in the non-Appalachian counties—Alabama, Georgia, and South Carolina. Median 

household income is also lower in Appalachia compared with the nation, and the patterns across 

subregions, county types, and the Appalachian states are the same as those for mean household income. 

The impact of the 2007-2009 recession on household income is also evident in Table 4.1. As described in 

Section 3, five years of ACS data must be combined to provide reliable estimates for all 420 counties in 

the Appalachian Region. Because the ACS was not fully implemented nationwide until 2005, the first fiveyear ACS file available is for the period from 2005 to 2009. Although this period also includes data for the 

pre-recession years, it is the closest approximation to the recession period available in ACS data. While 

median household income decreased by 5 percent in the United States between 1999 and 2005-2009, it 

decreased by almost 7 percent in Appalachia, indicating that the Region may have suffered a 

disproportionate impact (see Table 4.1).

17 Among subregions, median income declined most in South 

Central (9.7 percent) and Southern Appalachia (8.7 percent) and least (3.3 percent) in Central 

Appalachia. During the recession, job losses were highest among African Americans, those without a 

high school diploma, and those working in the construction, manufacturing, retail, and service industries. 

Counties in the South Central subregion have older populations and lower levels of education, while 

those in the Southern subregion have higher shares of African Americans and adults who have not 

completed high school. The South Central subregion also has a higher share of vacant housing units, 

many of which are seasonal vacancies indicating second or vacation homes. Declines in tourism and 

associated retail spending during the recession may also be one of the factors affecting income in the 

South Central subregion. Median income loss was lowest (5 percent) for households located in large 

metropolitan areas, but rose to almost 8 percent for those living in nonmetro counties adjacent to small 

metropolitan areas. Those who lost their jobs in large metro areas likely had more opportunities to find 

alternative employment, while those who lost jobs in nonmetro areas may have had fewer opportunities to 

find another job. Also, many homeowners who lost their jobs were unable to sell their homes to move to 

another area with more employment opportunities. The maps in Figures 4.1 and 4.2 display the variations

in mean and median household income across the Appalachian Region for the 2005-2009 period.

4.2 Poverty 

The poverty rate is the most widely used measure of economic well-being for individuals and families.

Poverty status is determined by a series of income thresholds that are defined based on family size and 

composition. For example, the poverty threshold in 2009 for a family of two adults and two children was 

$21,756. Poverty status also determines eligibility for many federal and state assistance programs. 

Poverty rates have historically been higher in Appalachia than in the rest of the United States. While the 

poverty rate in Appalachia was only about one percentage point higher in 1999, the gap between the U.S. 

and Appalachian poverty rates widened to two percentage points between 1999 and the 2005-2009

17 All dollar values have been adjusted to 2009 constant dollars so changes represent shifts in real income after accounting for 

inflation.

22

 
period. These results also suggest that the Appalachian Region may have been disproportionately 

affected by the 2007-2009 recession. Table 4.2 and Figure 4.3 show the wide variation in poverty rates 

within the Appalachian Region. 

While poverty was highest in Central Appalachia in both 1999 and 2005-2009, it increased most in the 

South Central and Southern subregions (see Table 4.2). This is consistent with the declines in household 

income across this period. The poverty rate remained highest in rural counties, but increased the most 

between 1999 and 2005-2009 in nonmetro counties that were adjacent to large metro areas. The 

housing crisis affected metropolitan areas more than nonmetropolitan areas, and these effects together 

with declines in employment and income seem to have spilled over to adjacent counties in the 

Appalachian Region. With the exception only of Kentucky and Tennessee, the Appalachian portions of 

the 13 Appalachian states saw larger increases in their poverty rates between 1999 and 2005-2009 than 

the non-Appalachian portions. However, the poverty rate in the Appalachian portions of both Kentucky 

and Tennessee was still higher than in the non-Appalachian portions of these states. 

23
Table 4.1: Mean and Median Household Income in the Appalachian Region (In Adjusted 2009 Dollars), 

1999 and 2005-2009

Household Income

(In Adjusted 2009 Dollars) 

Mean Household Income Median Household Income

1999 2005-2009 Percent 

Change 1999 2005-2009 Percent Change 

United States 72,917 70,096 -3.9 54,058 51,425 -4.9

Appalachian Region 58,702 55,524 -5.4 44,782 41,876 -6.5

Subregions

Northern Appalachia 58,691 56,316 -4.0 45,495 43,247 -4.9

North Central Appalachia 54,098 51,535 -4.7 41,138 39,121 -4.9

Central Appalachia 44,776 42,834 -4.3 32,374 31,321 -3.3

South Central Appalachia 58,632 54,016 -7.9 44,489 40,178 -9.7

Southern Appalachia 64,518 60,277 -6.6 49,698 45,369 -8.7

County Types

Large Metros (pop. 1 million +) 69,633 66,820 -4.0 53,684 51,014 -5.0

Small Metros (pop. <1 million) 59,962 56,463 -5.8 46,094 42,637 -7.5

Nonmetro, Adjacent to Large Metros 54,632 50,955 -6.7 43,222 40,012 -7.4

Nonmetro, Adjacent to Small Metros 52,054 48,230 -7.3 40,543 37,335 -7.9

Rural (nonmetro, not adj. to a metro) 47,075 44,220 -6.1 35,003 32,623 -6.8

Alabama 59,117 56,458 -4.5 43,942 41,216 -6.2

Appalachian Alabama 61,082 58,350 -4.5 45,619 42,801 -6.2

Non-Appalachian Alabama 55,590 53,091 -4.5 41,416 38,559 -6.9

Georgia 72,877 66,899 -8.2 54,624 49,466 -9.4

Appalachian Georgia 73,771 67,268 -8.8 59,446 52,883 -11.0

Non-Appalachian Georgia 72,556 66,750 -8.0 53,495 48,016 -10.2

Kentucky 58,245 55,091 -5.4 43,346 41,197 -5.0

Appalachian Kentucky 44,511 42,942 -3.5 31,615 30,793 -2.6

Non-Appalachian Kentucky 63,737 59,650 -6.4 49,005 45,305 -7.6

Maryland 86,832 89,803 3.4 68,056 69,475 2.1

Appalachian Maryland 58,072 61,126 5.3 46,797 46,050 -1.6

Non-Appalachian Maryland 88,209 91,203 3.4 70,027 70,916 1.3

Mississippi 54,471 50,995 -6.4 40,331 36,796 -8.8

Appalachian Mississippi 50,687 45,112 -11.0 38,354 32,766 -14.6

Non-Appalachian Mississippi 55,559 52,638 -5.3 41,249 38,131 -7.6

New York 79,627 79,862 0.3 55,859 55,233 -1.1

Appalachian New York 57,580 55,596 -3.4 45,060 43,495 -3.5

Non-Appalachian New York 81,007 81,382 0.5 57,138 56,520 -1.1

North Carolina 65,941 61,166 -7.2 50,441 45,069 -10.7

Appalachian North Carolina 59,984 54,807 -8.6 46,458 40,588 -12.6

Non-Appalachian North Carolina 67,412 62,634 -7.1 51,664 46,214 -10.5

Ohio 68,016 61,506 -9.6 52,722 47,144 -10.6

Appalachian Ohio 56,923 51,933 -8.8 44,879 40,626 -9.5

Non-Appalachian Ohio 70,403 63,526 -9.8 54,797 48,747 -11.0

Pennsylvania 67,817 66,294 -2.2 51,628 49,737 -3.7

Appalachian Pennsylvania 59,399 57,389 -3.4 45,734 43,801 -4.2

Non-Appalachian Pennsylvania 75,736 74,459 -1.7 58,110 56,140 -3.4

South Carolina 62,240 58,368 -6.2 47,735 43,572 -8.7

Appalachian South Carolina 63,820 57,938 -9.2 49,462 43,641 -11.8

Non-Appalachian South Carolina 61,678 58,518 -5.1 47,491 43,615 -8.2

Tennessee 62,676 58,540 -6.6 46,806 42,943 -8.3

Appalachian Tennessee 57,241 53,233 -7.0 42,835 39,451 -7.9

Non-Appalachian Tennessee 67,259 62,903 -6.5 50,892 45,919 -9.8

Virginia 79,320 80,851 1.9 60,087 60,316 0.4

Appalachian Virginia 51,978 47,551 -8.5 39,289 36,682 -6.6

Non-Appalachian Virginia 82,816 84,777 2.4 63,671 64,139 0.7

West Virginia (entire state) 51,530 49,727 -3.5 38,227 37,356 -2.3

Data Sources: U.S. Census Bureau, 2000 Decennial Census and 2005-2009 American Community Survey.

24
Figure 4.1: Mean Household Income in the Appalachian Region (In Adjusted 2009 Dollars), 2005-2009

Only eight counties in the Appalachian Region have a mean household income that matches or exceeds the U.S. 

average of $70,096, while more than three-fifths have mean household incomes below $50,000. The counties with 

mean household incomes at or above the Appalachian average can be found in every state, but tend to be 

concentrated in metropolitan areas such as Birmingham, Alabama, Atlanta, Georgia, and Pittsburgh, 

Pennsylvania. In contrast, the 66 counties with an average household income less than $40,000 are primarily 

found outside metropolitan areas in West Virginia, Kentucky, Tennessee, and Mississippi. 

25
Figure 4.2: Median Household Income in the Appalachian Region (In Adjusted 2009 Dollars), 2005-2009

At $41,876, median household income in Appalachia was only 81 percent that of the United States during the 

2005-2009 period. Only 18 counties in Appalachia had median household incomes that matched or surpassed the 

national average in 2005-2009. Counties with median household incomes at or above the Appalachian average 

are scattered across the Region but tend to be more concentrated in metropolitan areas. Although median 

household income declined less in Central Appalachia between 1999 and 2005-2009 than in South Central and 

Southern Appalachia, the counties with median incomes of less than $30,000 were still concentrated in the Central 

subregion in 2005-2009. 

26
Table 4.2: Poverty Status of Persons in the Appalachian Region, 1999 and 2005-2009

Poverty Status 

Persons Below Poverty Level, 

1999

Persons Below Poverty Level,

2005-2009 Percentage 

Point Change, 

1999 to

Number Percent Number Percent 2005-2009

United States 33,899,812 12.4 39,537,240 13.5 1.1

Appalachian Region 3,120,197 13.6 3,677,476 15.4 1.8

Subregions

Northern Appalachia 961,743 11.8 1,065,348 13.3 1.5

North Central Appalachia 362,048 16.1 392,408 17.1 1.0

Central Appalachia 423,219 23.0 430,944 23.2 0.2

South Central Appalachia 541,824 13.0 708,798 16.0 3.0

Southern Appalachia 831,363 12.7 1,079,978 14.7 2.0

County Types

Large Metros (pop. 1 million +) 523,496 10.3 638,942 11.5 1.2

Small Metros (pop. <1 million) 1,178,863 12.8 1,436,994 15.0 2.2

Nonmetro, Adjacent to Large Metros 218,223 13.8 264,275 16.4 2.6

Nonmetro, Adjacent to Small Metros 702,496 15.0 815,931 17.2 2.2

Rural (nonmetro, not adj. to a metro) 497,119 20.4 521,334 21.4 1.0

Alabama 698,097 16.1 757,833 16.8 0.7

Appalachian Alabama 397,223 14.4 446,528 15.4 1.0

Non-Appalachian Alabama 300,874 19.2 311,305 19.3 0.1

Georgia 1,033,793 13.0 1,384,518 15.0 2.0

Appalachian Georgia 200,543 9.2 336,319 12.3 3.1

Non-Appalachian Georgia 833,250 14.4 1,048,199 16.2 1.8

Kentucky 621,096 15.8 719,746 17.4 1.6

Appalachian Kentucky 274,818 24.4 282,739 24.5 0.1

Non-Appalachian Kentucky 346,278 12.4 437,007 14.7 2.3

Maryland 438,676 8.5 449,770 8.2 -0.3

Appalachian Maryland 25,719 11.7 26,475 11.4 -0.3

Non-Appalachian Maryland 412,957 8.4 423,295 8.0 -0.4

Mississippi 548,079 19.9 604,204 21.4 1.5

Appalachian Mississippi 116,283 19.4 135,564 22.5 3.1

Non-Appalachian Mississippi 431,796 20.1 468,640 21.1 1.0

New York 2,692,202 14.6 2,615,897 13.8 -0.8

Appalachian New York 138,586 13.6 150,801 15.1 1.5

Non-Appalachian New York 2,553,616 14.6 2,465,096 13.8 -0.8

North Carolina 958,667 12.3 1,320,816 15.1 2.8

Appalachian North Carolina 173,822 11.7 242,490 15.3 3.6

Non-Appalachian North Carolina 784,845 12.4 1,078,326 15.0 2.6

Ohio 1,170,698 10.6 1,526,350 13.6 3.0

Appalachian Ohio 257,780 13.0 313,519 16.0 3.0

Non-Appalachian Ohio 912,918 10.1 1,212,831 13.1 3.0

Pennsylvania 1,304,117 11.0 1,462,191 12.1 1.1

Appalachian Pennsylvania 639,853 11.4 701,758 12.7 1.3

Non-Appalachian Pennsylvania 664,264 10.6 760,433 11.6 1.0

South Carolina 547,869 14.1 676,555 15.8 1.7

Appalachian South Carolina 117,314 11.7 161,567 14.8 3.1

Non-Appalachian South Carolina 430,555 14.9 514,988 16.2 1.3

Tennessee 746,789 13.5 967,189 16.1 2.6

Appalachian Tennessee 349,934 14.2 441,371 16.7 2.5

Non-Appalachian Tennessee 396,855 12.9 525,818 15.7 2.8

Virginia 656,641 9.6 752,446 10.1 0.5

Appalachian Virginia 112,528 15.4 127,977 17.7 2.3

Non-Appalachian Virginia 544,113 8.9 624,469 9.3 0.4

West Virginia (entire state) 315,794 17.9 310,368 17.6 -0.3

Note: Poverty status is determined by a series of income thresholds that are determined by family size and composition. In 2009, the poverty 

threshold for a family of two adults and two children was $21,756.

Data Sources: U.S. Census Bureau, 2000 Decennial Census and 2005-2009 American Community Survey.

27
Figure 4.3: Percent of Persons in the Appalachian Region in Poverty, 2005-2009

During the 2005-2009 period, 15 percent of Appalachian residents lived below the poverty level, nearly two 

percentage points above the national average. In 129 Appalachian counties at least one-fifth of all residents were 

poor, and in another 146 counties the poverty rate matched or surpassed the Appalachian average. Most of these 

counties were outside metropolitan areas and concentrated in Central, South Central, and Southern Appalachia. In 

contrast, there were 84 counties in 2005-2009 whose poverty rates were below the U.S. average and nearly half 

were located in Northern Appalachia. 

28
5. Wealth and Economic Indicator Indices

5.1 Key Indicators of Household Wealth and Economic Well-Being

As indicated in Section 3, the ACS does not provide measures of all household assets and liabilities. 

However, there are six key indicators of household wealth and economic well-being that are available in

the 2007, 2009, and 2007-2011 American Community Surveys: 

1. Homeownership rate: percent of occupied housing units that are owned. 

2. Percent of homeowners who spend more than 30 percent of their monthly income on housing 

costs, and have a housing cost burden.

18

3. Percent of households with income from interest, dividends, net rental income, royalty income, 

and estates and trusts. 

4. Average household income. 

5. Average home value. 

6. Average value of income from interest, dividends, net rental income, royalty income, and estates 

and trusts.

19 

Table 5.1 shows the impact of the recession on these six key indicators for the United States.

Table 5.1: Changes in U.S. Household Economic Indicators, 2007 to 2009

Economic Indicators 2007 2009

Homeownership rate 67.2% 65.9%

Percent of homeowners with a cost burden 30.4% 30.4%

Percent of households with interest income* 24.9% 23.5%

Average household income** $71,579 $68,914 

Average household income from interest** $4,024 $3,460 

Average home value** $287,744 $258,527 

* Includes income from interest, dividends, net rental income, royalty income, and estates and trusts. 

**In constant 2009 dollars. 

Data sources: U.S. Census Bureau, 2007 and 2009 American Community Surveys. 

As property values dropped and foreclosures reached record highs between 2007 and 2009, the 

homeownership rate in the United States declined for the first time in many years. Average home value 

decreased by $29,000 or about ten percent over this period, although the share of homeowners with a 

housing cost burden did not increase. The share of households with income from interest, dividends, and 

other non-wage sources declined by one percentage point, while the average amount of such income

decreased by 14 percent. Average household income also dropped by 4 percent between 2007 and 

2009.

18 The 30 percent threshold for housing costs is based on research on affordable housing by the U.S. Department of Housing and 

Urban development (HUD). According to HUD, households that must allocate more than 30 percent of their income to housing 

expenses are less likely to have enough resources for food, clothing, medical care or other needs.

19 For ease of readability, we refer to this as “interest income” throughout the rest of this report, although it represents other 

household income from all of these sources.

29

 
5.2 Trends in Household Wealth and Economic Well-Being within the Appalachian States

Rates of homeownership have historically been higher in Appalachia than in the U.S., due in part to 

differences in the type and cost of the housing stock in the Appalachian Region.

20 This pattern continued 

during the recession period from 2007 through 2009 (see Table 5.2). Homeownership also decreased in 

Appalachia between 2007 and 2009, but the decrease was less than in the U.S. as a whole. However,

there was some variation across the subregions. For example, homeownership decreased by 1.4 

percentage points in North Central Appalachia but by less than half a percentage point in South Central 

Appalachia.

The share of homeowners with a housing cost burden is considerably lower in Appalachia than in the 

U.S.—22 percent versus 30 percent. Unlike the nation, however, the share of homeowners in Appalachia 

with a housing cost burden did increase by half a percentage point between 2007 and 2009, and this 

share jumped by 2.2 percentage points in South Central Appalachia. This is consistent with the data in 

Table 4.1 showing that the South Central subregion experienced the largest decrease in both mean and 

median household income between 1999 and 2005-2009. Apparently, homeowners were able to hold on 

to their homes, but declines in household income resulted in a larger share having to spend more than 30 

percent of their monthly income for housing costs.

A slightly smaller share of households in Appalachia than in the nation have income from interest, 

dividends, net rental income, royalty income, and estates and trusts, but there is considerable variation 

across subregions. For example, about 25 percent of households in the Northern subregion report such 

income compared with only about 15 percent in the Central subregion. The share with interest income

also dropped in Appalachia by about one percentage point between 2007 and 2009, but this decline 

reached at least 1.5 percentage points in both the Northern and the South Central subregions.

Table 5.3 shows the impact of the recession on homeownership, housing burden, and the share of 

households with interest income for both the Appalachian and non-Appalachian portions of the 13 

Appalachian states. In 2007, homeownership rates were higher in the Appalachian than non-Appalachian 

portion in every county type except for those in nonmetro areas adjacent to large metros. The lower 

homeownership rates among non-Appalachian counties in large and small metros likely reflect higher 

home prices compared with Appalachian counties in these same size metropolitan areas. 

Homeownership decreased between 2007 and 2009 among all county types in the 13 states except for 

Appalachian counties in nonmetropolitan areas adjacent to large metros.

As described in Section 1, ARC classifies each county into one of five economic status groups using an 

index based on unemployment rates, poverty rates, and per capita market income. Homeownership rates 

are higher among the Appalachian than non-Appalachian counties in every economic status group, with 

the largest gaps among counties in the Distressed and At-Risk groups (see Table 5.3). Between 2007 

and 2009, homeownership decreased for all economic status groups in the Appalachian counties, but 

increased slightly among non-Appalachian counties in the Distressed and At-Risk groups. The largest 

decline in homeownership (3.1 percentage points) occurred among Appalachian counties in the 

Attainment group. Counties in this group are among the economically strongest in the nation, but they 

also appear to have been hardest hit by declines in employment, household income, and home values 

during the recession. The decrease in homeownership was almost twice as high in the Appalachian 

Attainment counties than in the non-Appalachian counties in this economic status group.

In both Appalachian and non-Appalachian counties, the share of homeowners with a housing cost burden 

was highest in large metropolitan areas both before and during the recession (see Table 5.3). This is not 

surprising given higher home prices in these areas. The share with a housing burden increased during 

the recession in almost all Appalachian and non-Appalachian county types, but the increases were larger 

among nonmetro Appalachian counties than non-Appalachian nonmetro counties. Between 2007 and 

20 For more detailed information about the housing stock in Appalachia, see Mark Mather (2004), “Housing and Commuting Patterns 

in Appalachia,” available online at http://www.prb.org/Articles/2004/HousingandCommutinginUSAppalachiaPDF513KB.aspx. 

30

 
2009, the share of homeowners with a housing cost burden rose among Appalachian counties in the

Distressed, Transitional, and Competitive groups, but declined considerably among those in the 

Attainment group. Given the decline in homeownership in this economic status group, the decline in 

housing burden likely resulted from homeowners losing their homes during the recession. That is, 

homeowners who were already spending more than 30 percent of their monthly income on housing 

before the recession were more likely to be at risk of losing their homes during the recession than those 

without a housing cost burden. The share of homeowners with a housing burden is higher in nonAppalachian than Appalachian counties in every economic status group, but this share in nonAppalachian counties decreased between 2007 and 2009 for those in the Distressed and At-Risk groups 

even though these groups experienced slight increases in homeownership rates during the recession.

Almost 25 percent of households in Appalachian counties in large metropolitan areas had interest and 

dividend income compared with only 16 percent of households in rural Appalachian counties (see Table 

5.3). The share of households with such income declined between 2007 and 2009 in each county type, 

but decreases were largest (almost two percentage points) among counties in metropolitan areas. The 

pattern is very similar among non-Appalachian counties. In 2007, the share of households with interest 

income was the same or higher in Appalachian counties than in non-Appalachian counties in every 

economic status group except Attainment, where the share in non-Appalachian counties exceeded that in 

Appalachian counties by almost ten percentage points. While the share of households with such income 

in non-Appalachian counties decreased in every status group between 2007 and 2009, among 

Appalachian counties it increased slightly in the At-Risk and Attainment groups.

 

Table 5.2: Change in Indicators of Economic Well-Being for Appalachia, 2007 to 2009

 Homeownership Rate Percent with Housing 

Burden 

Percent with Interest 

Income 

2007 2009 2007 2009 2007 2009

United States 67.2 65.9 30.4 30.4 24.9 23.5

Appalachian Region 72.7 71.8 21.5 22.0 21.8 20.7

Subregions

Northern Appalachia 72.3 71.5 22.2 22.2 26.5 25.0

North Central Appalachia 74.1 72.7 18.7 17.4 19.1 18.5

Central Appalachia 73.7 72.5 18.7 18.7 14.9 14.4

South Central Appalachia 71.6 71.2 20.1 22.3 22.3 20.7

Southern Appalachia 73.1 71.9 23.0 24.1 18.7 17.9

Data sources: U.S. Census Bureau, 2007 and 2009 American Community Surveys.

31
Table 5.3: Change in Economic Indicators by County Type and Economic Status, 2007 to 2009

Homeownership Rate

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 73.6 72.1 62.5 61.4

Small Metros (pop. <1 million) 71.0 70.3 68.1 66.8

Nonmetro, Adjacent to Large Metros 73.3 73.2 73.4 71.8

Nonmetro, Adjacent to Small Metros 74.1 73.5 71.9 70.6

Rural (nonmetro, not adj. to a metro) 74.6 72.7 71.2 70.2

Economic Status

Distressed 74.2 72.8 47.5 48.7

At-Risk 74.5 72.6 53.8 54.2

Transitional 72.5 71.8 63.1 61.4

Competitive 70.5 69.2 67.8 67.7

Attainment 78.0 74.9 74.5 72.8

Percent with Housing Burden

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 24.9 24.6 30.5 30.7

Small Metros (pop. <1 million) 20.4 21.0 24.1 24.8

Nonmetro, Adjacent to Large Metros 22.8 24.3 24.9 24.4

Nonmetro, Adjacent to Small Metros 20.2 21.2 23.0 23.7

Rural (nonmetro, not adj. to a metro) 19.8 20.4 24.1 24.7

Economic Status

Distressed 19.1 21.0 29.1 27.9

At-Risk 19.7 19.2 29.6 28.2

Transitional 21.0 22.0 25.6 26.5

Competitive 22.3 23.0 25.1 25.8

Attainment 29.0 25.7 30.9 30.7

Percent with Interest Income

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 24.2 22.5 25.6 24.0

Small Metros (pop. <1 million) 23.0 21.5 23.1 21.1

Nonmetro, Adjacent to Large Metros 20.6 20.2 20.6 20.2

Nonmetro, Adjacent to Small Metros 20.0 19.3 18.7 17.6

Rural (nonmetro, not adj. to a metro) 16.2 16.1 18.8 17.2

Economic Status

Distressed 13.4 12.5 10.4 9.4

At-Risk 15.7 16.1 15.7 14.9

Transitional 22.4 21.1 21.8 20.3

Competitive 25.6 24.5 25.0 23.1

Attainment 21.8 22.1 31.6 29.6

Note: Economic status reflects fiscal years; data reflect calendar years.

Data sources: U.S. Census Bureau, 2007 and 2009 American Community Surveys.

32
5.3 Indices of Household Wealth and Economic Well-Being, 2007 to 2009 

Use of indices, rather than exact values, makes it easier to assess the “relative” status or well-being of the 

Appalachian Region compared with the United States as a whole. We construct an index for each of the six key 

indicators of household wealth and economic well-being for both 2007 and 2009. As defined in Table 5.4, each 

index is calculated by dividing the indicator value for a specific geography by the indicator value for the United 

States and multiplying by 100. Index values greater than 100 indicate that the level of the indicator is higher in the 

specific geography than in the U.S., while values less than 100 indicate the level of the indicator in the specific 

geography is lower than the level in the nation. For example, an index of 106 would indicate that the level of the 

indicator for that geography was six percent higher than the level in the nation. Table 5.5 shows the source 

variables used to calculate values for the six key indicators for the United States for 2007 and 2009. 

Table 5.4: Definitions of Household Wealth and Economic Well-Being Indices

Variable Definition Potential 

Values

Homeownership 

Index

Percent of households that are owned in the geographic area divided by 

the percent of households that are owned in the U.S., multiplied by 100. 1 to 200

Housing Burden 

Index

Percent of homeowners in the geographic area who spend more than 30

percent of their monthly income on housing costs divided by the percent of 

homeowners in the U.S. who spend more than 30 percent of their monthly 

income on housing costs, multiplied by 100. 

1 to 200

Percent With

Interest Income 

Index

Percent of households in the geographic area with any income from 

interest, dividends, net rental income, royalty income, and estates and 

trusts divided by the percent of households in the U.S. with any income 

from interest, dividends, net rental income, royalty income, and estates 

and trusts, multiplied by 100.

1 to 200

Home Value 

Index

Average home value in the geographic area divided by the average home 

value in the U.S., multiplied by 100. 1 to 200

Household 

Income Index

Average household income in the geographic area divided by the average 

household income in the U.S., multiplied by 100. 1 to 200

Interest Income 

Value Index

Average value of household income from interest, dividends, net rental 

income, royalty income, and estates and trusts in the geographic area 

divided by the average value of household income from interest, dividends, 

net rental income, royalty income, and estates and trusts in the U.S., 

multiplied by 100.

1 to 200

33
Table 5.5: Housing and Household Wealth Variables for the United States for Index Calculations, 2007 and 2009

Data Item

2007 2009

Estimate MOE (+/-) 

90-percent Estimate MOE (+/-) 90-percent

Total number of housing units 127,895,430 3,737 129,949,960 8,690

Number of vacant units 15,517,453 146,414 16,333,731 165,940

Number of occupied units (households) 112,377,977 144,356 113,616,229 161,397

Number of owner-occupied units 75,515,104 227,236 74,843,004 217,682

Number of households where selected monthly 

owner costs exceed 30 percent of monthly 

household income

22,995,894 74,675 22,726,648 75,703

Number of households that have income from 

interest, dividends, net rental income, and 

estates and trusts

27,985,152 118,120 26,725,960 121,103

Aggregate value (sum) of household income 

from interest, dividends, net rental income, and 

estates and trusts 

437,135,738,800 4,604,630,713 393,126,514,600 4,196,380,083

Aggregate value (sum) of total household 

income 7,775,818,743,200 16,634,178,575 7,829,705,455,700 18,101,144,325

Aggregate value (sum) for home value 21,004,708,385,000 50,938,584,780 19,348,970,528,400 58,535,537,966

Aggregate value (sum) for selected monthly 

owner costs 102,017,424,400 282,896,885 103,209,159,700 283,706,448

Source: U.S. Census Bureau, 2007 and 2009 American Community Surveys.

34
Relative differences between the Appalachian Region and the U.S. in homeownership rates, and the 

share of households with interest income and housing cost burden are shown in Table 5.6. The 

homeownership rate was eight percent higher in Appalachia than in the nation in 2007 and this relative 

difference increased to nine percent in 2009, indicating that homeownership rates dropped less in 

Appalachia during the recession than in the U.S. as a whole. This pattern was consistent across 

Appalachian subregions and the Appalachian portions of the 13 Appalachian states. However, the 

homeownership index declined between 2007 and 2009 in some of the non-Appalachian portions of the 

Appalachian states.

The share of homeowners with a housing cost burden was almost 30 percent lower in Appalachia in 2007 

compared to the U.S., but this gap shrank slightly to about 27 percent by 2009, indicating an increase in 

housing burden in Appalachia during the recession. Unlike the homeownership index, change between 

2007 and 2009 in the housing burden index varied considerably across the subregions. In particular, the 

gap in housing burden between the South Central and Southern Appalachian subregions and the U.S. 

decreased considerably during the recession. These subregions seem to have been disproportionately 

impacted by the recession compared to other Appalachian subregions.

The share of households in Appalachia with income from interest, dividends, and other sources is about 

12 percent lower than in the U.S., and this gap did not change between 2007 and 2009. However this gap 

varies widely across the Appalachian Region. For example, the share of households in Northern 

Appalachia with interest income is almost seven percent higher than in the nation, while in Central 

Appalachia the share is 40 percent lower. There is no consistent pattern of increase or decrease between 

2007 and 2009 in the gap between Appalachian subregions and the United States. In some areas in 

Table 5.6, the gap lessened indicating that some parts of Appalachia were not as negatively impacted by 

the recession as the U.S. as a whole, but in others—such as the Appalachian portion of North Carolina—

this gap widened.

Table 5.7 shows the impact of the recession on home value, average household income, and average

household income from interest, dividends, and other sources. In 2007, average home value in 

Appalachia was 45 percent lower than in the nation, although this varied from 63 percent less in the 

Central subregion to only 37 percent less in the Southern subregion. In all Appalachian states except 

Alabama, the gap in home values between the U.S. and the Appalachian portion of the state is larger 

than between the U.S. and the non-Appalachian portion of the state. Although average home values 

remained considerably lower in the Appalachian Region than in the U.S. in 2009, the gap shrank by about 

4 percentage points during the recession. This indicates that home values dropped less in Appalachia 

than they did in the nation as a whole during the recession, and this is consistent with other data 

indicating that the housing crisis affected metropolitan areas more than nonmetropolitan and rural areas. 

Average household income in Appalachia was 22 percent lower than the national average in 2007, 

ranging from 40 percent lower in Central Appalachia to only 16 percent lower in Southern Appalachia

(see Table 5.7). Again, with the exception of Alabama, the household income index was lower in the 

Appalachian portion of each state than in the non-Appalachian portion. The household income gap 

between Appalachia and the U.S. also shrank slightly between 2007 and 2009, and this pattern was 

consistent across all of the subregions. As of 2009, then, these data indicate that average household 

income did not drop by as much in Appalachia as in the nation as a whole. 

Not only is the share of households with interest income lower in the Appalachian Region, but also the 

average amount for each household that does have such income. In 2007, average household interest 

income in Appalachia was 36 percent lower than in the U.S., ranging from 66 percent less in the Central 

subregion to only 22 percent less in the South Central subregion (see Table 5.7). With the exceptions of 

North Carolina and Alabama, the household interest income index was lower in the Appalachian than the 

non-Appalachian portions of each state. However, the change between 2007 and 2009 was not 

consistent across the subregions. The gap in interest income declined in the Northern, North Central, 

and Central subregions, but increased in the South Central and Southern subregions. Among the 

Appalachian portions of the 13 states, the gap widened most in Mississippi, dropping from 48 percent of 

the U.S. average in 2007 to only 32 percent by 2009. 

35
Table 5.6: Housing and Household Wealth Indices in the Appalachian Region, 2007 and 2009

Indices (U.S. = 100)

Homeownership Index Housing Burden Index Percent with Interest 

Income Index

2007 2009 2007 2009 2007 2009

United States 100.0 100.0 100.0 100.0 100.0 100.0

Appalachian Region 108.2 108.9 70.5 72.5 87.7 87.8

Subregions

Northern Appalachia 107.6 108.6 73.2 73.0 106.5 106.2

North Central Appalachia 110.3 110.4 61.6 57.4 76.6 78.8

Central Appalachia 109.7 110.0 61.5 61.5 59.8 61.3

South Central Appalachia 106.6 108.1 66.1 73.3 89.4 87.9

Southern Appalachia 108.8 109.2 75.6 79.4 75.1 76.0

Alabama 105.5 105.6 70.2 72.7 75.5 73.7

Appalachian Alabama 107.7 107.9 68.1 71.1 79.0 76.8

Non-Appalachian Alabama 101.7 101.7 74.4 75.8 69.4 68.2

Georgia 102.0 101.8 89.1 91.0 75.9 74.9

Appalachian Georgia 111.0 112.3 90.6 93.9 72.1 77.1

Non-Appalachian Georgia 98.3 97.5 88.4 89.7 77.5 74.0

Kentucky 105.2 104.2 65.0 68.1 80.5 79.1

Appalachian Kentucky 108.4 108.1 62.0 65.9 56.8 57.8

Non-Appalachian Kentucky 104.1 102.8 66.1 68.9 89.2 87.0

Maryland 104.1 104.1 101.9 103.0 110.8 111.6

Appalachian Maryland, Metropolitan 99.3 99.2 75.4 79.9 103.2 98.4

Non-Appalachian Maryland, Metropolitan 103.8 103.8 102.7 104.1 111.7 111.6

Maryland, Nonmetropolitan 111.4 112.5 106.7 102.6 101.0 120.4

Mississippi 106.1 105.5 78.0 77.5 63.3 58.3

Appalachian Mississippi 109.4 108.1 68.7 79.3 57.2 56.6

Non-Appalachian Mississippi 105.2 104.8 80.6 76.9 64.9 58.8

New York 82.6 83.5 107.9 108.4 102.9 101.4

Appalachian New York 102.6 105.1 72.4 71.0 106.2 110.7

Non-Appalachian New York 81.4 82.2 110.6 111.4 102.7 100.8

North Carolina 101.6 102.0 78.0 81.6 86.9 86.2

Appalachian North Carolina 107.7 108.5 69.1 73.8 95.4 90.4

Non-Appalachian North Carolina 100.2 100.5 80.2 83.5 84.9 85.3

Ohio 103.7 103.3 78.9 79.6 97.1 94.3

Appalachian Ohio 109.4 110.8 72.9 69.8 83.7 82.4

Non-Appalachian Ohio 102.5 101.7 80.2 81.9 99.9 96.7

Pennsylvania 106.6 107.1 82.5 83.1 112.8 114.0

Appalachian Pennsylvania 108.3 108.8 73.8 73.9 110.3 109.9

Non-Appalachian Pennsylvania 105.1 105.4 90.6 91.8 115.0 117.7

South Carolina 104.2 106.5 77.3 78.6 76.7 79.3

Appalachian South Carolina, Metropolitan 106.4 105.7 64.6 66.8 82.2 84.3

Non-Appalachian South Carolina, Metropolitan 103.3 105.6 80.2 81.6 79.2 81.2

South Carolina, Nonmetropolitan 104.3 109.3 83.1 83.0 65.5 70.1

Tennessee 104.1 105.0 73.7 79.2 81.1 79.7

Appalachian Tennessee 106.7 108.8 66.8 72.5 83.7 83.5

Non-Appalachian Tennessee 101.9 101.8 79.6 85.1 78.9 76.6

Virginia 103.4 103.4 89.8 92.2 110.2 107.5

Appalachian Virginia 106.5 107.1 56.8 64.3 78.6 82.8

Non-Appalachian Virginia 103.1 103.0 93.8 95.6 113.9 110.3

West Virginia (entire state) 111.4 111.8 54.8 51.3 77.4 79.0

Note: Data cannot be shown for the entire Appalachian portions of Maryland and South Carolina due to data disclosure issues. 

Data sources: U.S. Census Bureau, 2007 and 2009 American Community Surveys.

36
Table 5.7: Home Value and Household Wealth Value Indices in the Appalachian Region, 2007 and 2009

Indices (U.S. = 100)

Home Value Index Household Income Index Interest Income Value 

Index

2007 2009 2007 2009 2007 2009

United States 100.0 100.0 100.0 100.0 100.0 100.0

Appalachian Region 55.1 59.5 77.6 79.3 64.2 64.2

Subregions

Northern Appalachia 50.7 55.8 78.6 81.3 66.4 67.4

North Central Appalachia 49.4 51.4 71.3 76.6 45.7 56.9

Central Appalachia 36.6 40.4 59.8 61.0 33.6 38.9

South Central Appalachia 61.1 66.4 75.7 76.0 78.0 75.8

Southern Appalachia 63.1 67.3 84.2 84.9 66.6 62.0

Alabama 55.7 60.6 79.0 80.7 68.4 66.9

Appalachian Alabama 56.8 61.5 81.7 83.7 72.0 66.3

Non-Appalachian Alabama 53.6 59.1 74.0 75.4 61.8 67.9

Georgia 78.0 80.8 94.6 93.6 81.6 71.6

Appalachian Georgia 78.0 79.3 92.9 93.3 59.8 57.3

Non-Appalachian Georgia 78.0 81.6 95.2 93.7 90.5 77.4

Kentucky 52.6 57.0 77.3 78.5 62.3 69.9

Appalachian Kentucky 36.1 37.6 60.4 60.4 34.1 36.4

Non-Appalachian Kentucky 59.0 64.6 83.6 85.3 72.8 82.4

Maryland 144.3 145.0 125.9 132.0 110.0 124.3

Appalachian Maryland, Metropolitan 84.8 83.0 84.7 82.4 59.1 53.5

Non-Appalachian Maryland, Metropolitan 148.1 147.7 129.1 135.5 113.4 122.6

Maryland, Nonmetropolitan 125.5 145.8 103.9 111.6 93.6 202.1

Mississippi 46.6 52.7 72.5 73.0 45.8 47.8

Appalachian Mississippi 37.2 44.5 62.9 64.0 48.2 32.3

Non-Appalachian Mississippi 49.3 55.1 75.2 75.6 45.1 52.2

New York 137.3 152.8 110.7 116.1 111.2 111.8

Appalachian New York 45.6 49.9 77.0 79.1 64.3 61.5

Non-Appalachian New York 144.5 161.0 112.8 118.4 114.2 115.0

North Carolina 69.8 76.4 86.2 86.7 82.2 81.9

Appalachian North Carolina 67.0 71.8 77.1 76.2 96.6 91.6

Non-Appalachian North Carolina 70.4 77.6 88.4 89.1 78.9 79.7

Ohio 60.4 62.0 86.6 87.0 77.4 73.2

Appalachian Ohio 46.7 50.2 71.9 75.8 51.6 59.2

Non-Appalachian Ohio 63.4 64.7 89.7 89.3 82.8 76.2

Pennsylvania 73.2 79.5 92.5 96.5 86.3 90.8

Appalachian Pennsylvania 51.6 57.6 80.2 83.4 68.9 72.0

Non-Appalachian Pennsylvania 93.4 100.2 103.8 108.7 102.1 108.1

South Carolina 67.5 73.4 82.5 82.9 78.6 81.9

Appalachian South Carolina, Metropolitan 59.0 67.6 83.8 82.1 80.2 79.0

Non-Appalachian South Carolina, Metropolitan 72.1 76.7 87.1 87.1 79.5 77.2

South Carolina, Nonmetropolitan 65.4 71.3 70.4 73.6 74.9 95.8

Tennessee 62.7 68.0 82.7 82.5 77.5 66.9

Appalachian Tennessee 56.5 62.4 74.3 75.1 65.6 66.5

Non-Appalachian Tennessee 68.1 72.9 89.5 88.5 87.3 67.3

Virginia 122.9 121.1 113.3 116.7 99.7 106.7

Appalachian Virginia 49.4 56.0 66.0 69.3 52.2 56.5

Non-Appalachian Virginia 131.8 128.9 118.9 122.2 105.2 112.5

West Virginia (entire state) 47.1 47.8 69.7 73.6 45.8 48.4

Note: Data cannot be shown for the entire Appalachian portions of Maryland and South Carolina due to data disclosure issues. 

Data sources: U.S. Census Bureau, 2007 and 2009 American Community Surveys.

37
Tables 5.8 and 5.9 examine changes from 2007 to 2009 in the indices for these six key indicators by 

county type and economic status classification for the Appalachian and non-Appalachian counties within 

each category. At the onset of the recession in 2007, the homeownership rate in Appalachian counties 

ranged from six to ten percent above the average for the United States for all county types (see Table 

5.8). Competitive counties had a homeownership rate that was 5 percent higher than the nation, while the 

rate in Attainment counties was 16 percent higher. The gap in homeownership rates between 

Appalachian counties and the nation changed only slightly between 2007 and 2009 across county types, 

but the gap widened by two percentage points among counties in the Attainment economic status group. 

Among all non-Appalachian counties in the 13 Appalachian states, the homeownership rate was 7 

percent lower than the nation for counties in large metro areas, but ranged from one to nine percent 

higher for other county types. However, the homeownership rate was lower than the U.S. average for 

non-Appalachian counties in three economic status groups—Distressed, At-Risk, and Transitional 

counties, although the gaps shrank between 2007 and 2009 for the Distressed and At-Risk groups.

Housing burden is lower among all Appalachian county types, ranging from 18 percent lower for counties 

in Large Metros to 35 percent lower for counties in rural areas (see Table 5.8). During the recession, the 

gap between Appalachian counties and the U.S. shrank for all county types except Large Metros. This 

indicates an increase in housing burden in most Appalachian counties relative to the nation. For example, 

among nonmetro Appalachian counties that are adjacent to large metros, the housing burden index 

increased by 5 percentage points between 2007 and 2009. Housing burden ranges from five to 37 

percent less than in the nation for Appalachian counties in the five economic status groups. Between 

2007 and 2009, there is no consistent pattern of increase or decrease for these five groups. The gap 

shrank most among Appalachian counties in the Distressed, Transitional, and Competitive economic 

status groups, indicating housing burden increased most relative to the U.S. in these economic groups. In

non-Appalachian counties, housing burden is lower than in the U.S. among most county types and 

economic status groups, but it is not as low as it is among the Appalachian counties. Between 2007 and 

2009, the housing burden gap shrank slightly for all non-Appalachian county types except Large Metros 

and Nonmetros Adjacent to Large Metros, and for all economic status groups except Distressed and AtRisk.

In 2007, the share of households with interest income was lower in Appalachian counties than in the 

nation for all county types, ranging from 35 percent lower in rural counties to only three percent lower in 

counties in large metro areas (see Table 5.8). Since sources of income other than wages and salary can 

help to buffer income declines from job loss, these data indicate that households in Appalachian counties 

were much less likely to have this type of income to fall back on during the recession. The gap in 

households with interest income increased among metropolitan counties between 2007 and 2009, 

indicating that these counties experienced a relative disadvantage compared to the nation as a whole 

during the recession. This is consistent with other economic data suggesting that job and income loss 

were greater in metro than nonmetro areas during the recession. Appalachian counties in all economic 

status groups except Competitive also had lower shares of households with interest income than the 

U.S.—ranging from 46 percent less among Distressed counties to only 10 percent less among 

Transitional counties. However, the gap between Appalachian counties and the nation shrank slightly 

between 2007 and 2009 among all economic status groups except Distressed. Among the nonAppalachian counties, the share with interest income is also lower than the nation for most county types 

and economic status groups, but the gaps between these counties and the U.S. were more likely to 

increase slightly during the recession than among the Appalachian counties.

Home values in Appalachia ranged from 33 to 59 percent across county types compared with the nation 

as a whole in 2007 (see Table 5.9). This home value gap shrank slightly by 3 to 5 percentage points 

during the recession, indicating that home values dropped less in Appalachian counties in each county 

type than among other counties in the U.S. Home values are considerably lower among Appalachian 

counties in the Distressed and At-Risk groups than in the nation—60 to almost 70 percent less. However, 

these gaps also shrank somewhat during the recession. Home values are also lower among nonAppalachian counties in the 13 Appalachian states than in the U.S., with the exception of those in large 

metros and those in the Attainment economic status group. 

38
In 2007, average household income ranged from six to 39 percent less for Appalachian counties than for 

the nation in each county type (see Table 5.9). This income gap decreased slightly between 2007 and 

2009 again suggesting that average household income decreased comparatively less in Appalachian 

counties than among all counties in the nation. Among economic status groups, household income in 

Appalachian Attainment counties exceeded the U.S. average in 2007 by 13 percent, and the income gap 

decreased slightly or stayed the same during the recession for all economic status groups. The patterns 

are very similar among non-Appalachian counties in the 13 Appalachian states.

The average amount of household interest income was also lower in 2007 in Appalachian counties than 

in the nation in every county type and economic status group (see Table 5.9). However, unlike average 

household income, the interest income gap widened between 2007 and 2009 for Appalachian counties in 

large metropolitan areas and in rural areas, and for those in the Competitive and Attainment economic 

status groups. Appalachian counties in these four categories fared worse on average during the 

recession than counties in the nation. Not only did fewer Appalachian households have interest income, 

but those that did had much lower average amounts than households in the U.S. as a whole. Thus, 

Appalachian households had fewer dollars from other sources to help them weather job and income 

losses during the recession. Non-Appalachian counties in the Appalachian states also had lower 

household interest income amounts than the U.S. average with the exception again of counties in large 

metro areas or in the Attainment economic status group.

39
Table 5.8: Housing and Household Wealth Indices by County Type and Economic Status, 2007 and 2009

Indices (U.S. = 100)

Homeownership Index

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 109.5 109.5 93.0 93.1

Small Metros (pop. <1 million) 105.6 106.7 101.3 101.5

Nonmetro, Adjacent to Large Metros 109.2 111.2 109.2 109.0

Nonmetro, Adjacent to Small Metros 110.2 111.5 107.1 107.1

Rural (nonmetro, not adj. to a metro) 111.0 110.4 106.0 106.6

Economic Status

Distressed 110.4 110.5 70.7 74.0

At-Risk 110.9 110.2 80.1 82.3

Transitional 107.9 109.0 93.9 93.2

Competitive 105.0 105.0 100.9 102.8

Attainment 116.0 113.7 110.8 110.5

Indices (U.S. = 100)

Housing Burden Index

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 81.8 80.9 100.1 101.1

Small Metros (pop. <1 million) 67.0 69.2 79.2 81.8

Nonmetro, Adjacent to Large Metros 74.8 80.0 81.9 80.4

Nonmetro, Adjacent to Small Metros 66.3 69.7 75.7 78.1

Rural (nonmetro, not adj. to a metro) 64.9 67.3 79.2 81.4

Economic Status

Distressed 62.7 69.3 95.4 91.9

At-Risk 64.6 63.3 97.1 92.7

Transitional 69.1 72.4 84.0 87.2

Competitive 73.1 75.7 82.5 85.1

Attainment 95.1 84.6 101.5 101.2

Indices (U.S. = 100)

Percent with Interest Income Index

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 97.1 95.6 102.9 101.8

Small Metros (pop. <1 million) 92.4 91.5 92.9 89.9

Nonmetro, Adjacent to Large Metros 82.7 86.0 82.6 85.8

Nonmetro, Adjacent to Small Metros 80.4 81.9 75.1 75.0

Rural (nonmetro, not adj. to a metro) 65.1 68.7 75.4 73.3

Economic Status

Distressed 53.9 53.0 41.9 40.1

At-Risk 63.0 68.6 63.2 63.3

Transitional 89.9 89.8 87.6 86.3

Competitive 103.0 104.0 100.5 98.1

Attainment 87.6 94.0 126.7 126.0

Note: Economic status reflects fiscal years; data reflect calendar years.

Data sources: U.S. Census Bureau, 2007 and 2009 American Community Surveys.

40
Table 5.9: Housing and Household Wealth Value Indices by County Type and Economic Status, 2007 and 2009

Indices (U.S. = 100)

Home Value Index

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 67.0 70.1 124.5 131.3

Small Metros (pop. <1 million) 56.9 62.0 69.1 74.2

Nonmetro, Adjacent to Large Metros 48.4 52.0 67.6 72.8

Nonmetro, Adjacent to Small Metros 47.5 52.2 52.7 57.9

Rural (nonmetro, not adj. to a metro) 41.1 46.0 53.4 61.1

Economic Status

Distressed 32.8 36.9 56.0 59.8

At-Risk 39.7 44.9 81.3 86.0

Transitional 52.8 58.7 74.8 85.5

Competitive 66.5 69.4 80.3 84.1

Attainment 90.9 90.5 146.0 145.3

Indices (U.S. = 100)

Household Income Index

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 93.7 95.2 114.1 117.7

Small Metros (pop. <1 million) 78.8 80.7 88.1 89.2

Nonmetro, Adjacent to Large Metros 70.1 71.9 80.8 82.2

Nonmetro, Adjacent to Small Metros 67.3 69.3 71.9 73.3

Rural (nonmetro, not adj. to a metro) 61.5 63.0 70.1 71.1

Economic Status

Distressed 56.2 56.0 60.9 63.3

At-Risk 60.7 64.5 74.0 77.6

Transitional 74.6 77.2 89.1 92.5

Competitive 91.7 94.0 98.4 97.2

Attainment 113.1 114.1 136.5 139.1

Indices (U.S. = 100)

Interest Income Value Index

Appalachian Non-Appalachian

2007 2009 2007 2009

County Types

Large Metros (pop. 1 million +) 80.7 73.3 111.2 112.9

Small Metros (pop. <1 million) 67.8 69.7 78.0 74.2

Nonmetro, Adjacent to Large Metros 51.8 55.5 63.0 72.3

Nonmetro, Adjacent to Small Metros 51.4 56.8 56.5 59.5

Rural (nonmetro, not adj. to a metro) 46.4 42.5 69.2 74.4

Economic Status

Distressed 35.1 35.6 32.1 33.5

At-Risk 36.5 43.7 53.0 52.6

Transitional 62.4 64.8 85.8 86.1

Competitive 89.0 84.6 95.5 89.4

Attainment 75.8 72.1 131.8 137.6

Note: Economic status reflects fiscal years; data reflect calendar years.

Data sources: U.S. Census Bureau, 2007 and 2009 American Community Surveys.

41
5.4 Indices of Household Wealth and Economic Well-Being, 2007-2011

In this section, we use the most current five-year ACS data to assess the degree of recovery from the 

recession in Appalachia compared with the nation as a whole. Although it would be ideal to use 2011 

ACS data for this assessment, single-year ACS data are only available for geographic areas with a 

population of at least 65,000, which excludes many of the counties in the Appalachian Region. Therefore, 

to examine household wealth and economic well-being with comparable data for all counties, subregions, 

county types, and economic status groups in Appalachia, we use five-year ACS data for the period 2007-

2011. These data include both the recession period from 2007 to 2009 and the post-recession recovery

period from 2009 to 2011, and provide the most current picture of the status of the Appalachian Region, 

subregions, and counties compared with the United States. We calculate indices for the same six key 

indicators as defined in Table 5.4.

Table 5.10 shows the relative differences between the Appalachian Region and the United States in 

homeownership rates, the share of homeowners with a housing cost burden, the share of households 

with income from interest, dividends, and other sources, average home values, average household 

income, and average household interest income. For the 2007-2011 period, the rate of homeownership 

was nine percent higher in the Appalachian Region than in the United States. This is one percentage 

point higher than it was in 2007 when the recession began (see Table 5.6). Homeownership levels were 

highest in the North Central and Central Appalachian subregions exceeding the U.S. rate by about 11 

percent. In fact, the rate of homeownership in Appalachia exceeded that for the nation in every county 

type and economic status category, including both Distressed and Attainment counties. Although the 

relative homeownership rate in Appalachia was higher for 2007-2011 than 2007 (see Table 5.8) in all 

subregions and county types, it was 3 percentage points lower in Attainment counties in 2007-2011 than 

in 2007. Compared with the U.S., homeownership was also higher in the Appalachian portion than nonAppalachian portion of the 13 Appalachian states (see Table 5.10). The variation in the homeownership 

index across counties in the Appalachian Region is shown in Figure 5.1.

In 2007, the share of homeowners whose housing costs exceeded 30 percent of their monthly income 

was 29 percent lower in Appalachia compared with the nation, but this gap decreased slightly to 23 

percent for the entire period from 2007-2011 (see Table 5.10). The increase in housing cost burden in 

Appalachia during the recession was not reduced enough in the first two years of recovery to bring it back 

down to its’ pre-recession level. The housing burden index was higher in 2007-2011 than in 2007 for 

every Appalachian subregion and county type, and all economic status groups except Attainment 

counties. The variation in housing cost burden across Appalachian counties is shown in Figure 5.2.

Income from non-wage sources is an indicator of income-producing assets which can be an important 

source of wealth for some households. The share of households with income from interest, dividends, 

and other non-wage sources was 10 percent lower in the Appalachian Region than in the nation in 2007-

2011, and this gap was slightly smaller than it was in 2007. In Northern Appalachia, the share of 

households with interest income was almost nine percent higher than the share for the U.S., but it was 

lower than the U.S. share in every other subregion and county type. Among economic status groups, only 

Competitive counties registered a higher share of households with interest income than the U.S. as a 

whole, while the share was 45 percent lower among Distressed counties. Again, these gaps between 

Appalachia and the nation were slightly smaller in the 2007-2011 period than they were in 2007, but this 

relative improvement reflects a slow rate of recovery for such assets in the U.S. rather than an increase in 

the share of Appalachian households with non-wage income. The strong regional pattern in the interest 

income index is displayed in Figure 5.3. 

Average home values in Appalachia were 39 percent lower than the U.S. average, with indices ranging 

from a low of 42 in Central Appalachia to a high of 68 in South Central Appalachia. In 2007-2011, 

Appalachian home values were only 30 percent lower than the U.S. average in large metro areas, but 

were 54 percent lower in rural areas. The gap in average home values between the Appalachian Region 

and the U.S. was smaller in the 2007-2011 period than it was in 2007 when the recession began. This is 

not due to rising home values in Appalachia, but rather to the slow rate of recovery in home prices that 

42
plummeted during the housing crisis in areas such as Florida, Nevada, Arizona, and California. County 

variations in the home value index are displayed in Figure 5.4.

In 2007-2011, average household income in Appalachia was 20 percent below the U.S. average, and this 

gap ranged from a low of four percent to a high of 43 percent across subregions, county types, and 

economic status groups. Only Appalachian counties in the Attainment group had an average household 

income that exceeded the U.S. average. Once again, the gap between Appalachian subregions and the 

nation was slightly smaller in 2007-2011 than it was in 2007, but this reflects a slower pace of recovery in 

employment and income in the nation rather than a relative increase in average household income in 

Appalachia. County variations in the household income index are displayed in Figure 5.5. 

Although the share of households with interest income was only 10 percent lower in Appalachia, the 

average amount of interest income was 35 percent lower than the U.S. average (see Table 5.10). The 

average amount of interest income was lower in every Appalachian subregion, county type, and 

economic status group than in the nation. While the gap in average interest income between Appalachia 

and the U.S. was slightly smaller in 2007-2011 than in 2007 for most subregions, county types, and 

economic status groups, it was larger in 2007-2011 for counties in the Southern subregion, in large metro 

counties, and in Distressed counties. The impact of the recession in these Appalachian counties had not 

been offset by post-recession gains between 2009 and 2011. The diversity in the interest income index 

across the Appalachian Region is shown in Figure 5.6.

43
Table 5.10: Household Wealth and Economic Well-Being Indices in the Appalachian Region, 2007-2011

Indices (U.S. = 100) Homeownership 

Index

Housing 

Burden Index

Percent with 

Interest 

Income Index

Home Value

Index

Household 

Income Index

Interest 

Income Value

Index

United States 100.0 100.0 100.0 100.0 100.0 100.0

Appalachian Region 109.2 77.0 90.0 60.7 79.8 64.7

Subregions

Northern Appalachia 108.9 77.2 108.5 56.7 81.6 67.5

North Central Appalachia 111.4 64.6 80.9 53.5 75.2 52.9

Central Appalachia 111.5 67.3 63.1 42.1 62.3 37.8

South Central Appalachia 107.7 75.6 91.4 68.0 76.8 77.6

Southern Appalachia 109.3 84.3 77.3 67.8 85.6 63.7

County Types

Large Metros (pop. 1 million +) 109.7 86.5 98.0 71.1 95.7 74.8

Small Metros (pop. <1 million) 106.6 73.5 93.8 63.1 81.1 69.8

Nonmetro, Adjacent to Large Metros 111.0 83.2 86.8 54.2 72.3 52.3

Nonmetro, Adjacent to Small Metros 112.0 73.7 84.3 53.9 69.6 55.0

Rural (nonmetro, not adj. to a metro) 112.3 72.1 69.8 46.5 63.9 49.1

Economic Status, FY 2011

Distressed 112.6 74.7 54.8 38.2 57.4 33.9

At-Risk 112.1 70.0 71.3 46.3 64.4 44.3

Transitional 108.7 76.0 91.1 60.0 77.4 63.8

Competitive 107.0 79.7 107.8 68.8 93.7 88.2

Attainment 113.0 93.1 95.8 91.4 113.4 75.7

Alabama 106.9 78.5 76.6 61.9 81.3 64.0

Appalachian Alabama 108.6 76.3 79.1 63.1 83.8 65.7

Non-Appalachian Alabama 103.7 82.6 72.1 59.7 76.9 61.0

Georgia 101.0 97.8 76.0 79.8 93.2 70.8

Appalachian Georgia 111.5 99.0 76.4 79.5 93.7 60.2

Non-Appalachian Georgia 96.8 97.3 75.9 80.0 93.0 75.2

Kentucky 105.1 72.5 80.3 58.2 79.2 63.2

Appalachian Kentucky 109.6 70.5 59.7 40.8 62.1 34.2

Non-Appalachian Kentucky 103.4 73.3 87.9 65.0 85.5 73.9

Maryland 103.8 108.9 112.6 144.4 129.6 109.8

Appalachian Maryland 104.4 85.9 96.8 87.9 86.0 72.8

Non-Appalachian Maryland 103.8 110.0 113.4 147.1 131.7 111.5

Mississippi 106.8 82.2 61.7 51.9 74.2 49.0

Appalachian Mississippi 108.9 80.6 59.1 43.2 65.5 47.5

Non-Appalachian Mississippi 106.2 82.7 62.4 54.4 76.7 49.4

New York 82.9 114.0 102.6 142.4 114.0 112.0

Appalachian New York 105.3 74.6 112.3 50.6 79.9 63.3

Non-Appalachian New York 81.5 117.2 102.0 149.8 116.1 115.1

North Carolina 102.5 87.5 89.7 76.8 87.2 82.3

Appalachian North Carolina 108.5 79.2 95.5 72.9 77.0 93.1

Non-Appalachian North Carolina 101.1 89.6 88.3 77.7 89.6 79.8

Ohio 103.8 85.0 97.9 63.7 87.5 72.5

Appalachian Ohio 111.0 76.7 86.5 51.0 74.3 53.6

Non-Appalachian Ohio 102.3 86.9 100.3 66.6 90.3 76.4

Pennsylvania 106.8 88.9 115.3 79.8 95.5 86.3

Appalachian Pennsylvania 109.2 78.0 112.3 58.5 83.6 70.7

Non-Appalachian Pennsylvania 104.6 99.0 118.1 99.6 106.1 100.2

South Carolina 105.5 84.2 80.6 72.9 82.9 78.3

Appalachian South Carolina 106.2 72.5 83.9 66.1 82.5 75.1

Non-Appalachian South Carolina 105.2 88.3 79.4 75.2 83.0 79.4

Tennessee 104.4 81.6 82.4 68.9 83.4 70.3

Appalachian Tennessee 108.1 74.7 85.8 63.5 75.8 66.4

Non-Appalachian Tennessee 101.3 87.8 79.6 73.6 89.8 73.7

Virginia 103.5 95.1 112.6 123.7 117.6 103.3

Appalachian Virginia 108.8 64.9 85.2 58.9 70.2 62.9

Non-Appalachian Virginia 102.9 98.8 115.7 131.6 123.0 107.9

West Virginia (entire state) 112.3 56.5 80.1 50.4 73.0 51.7

Data Source: U.S. Census Bureau, 2007-2011 American Community Survey. 

44
Figure 5.1: Homeownership Index in the Appalachian Region, 2007-2011

In all but 18 counties, the homeownership rate matched or exceeded the U.S. average (index of 100 or above), 

and more than half of these 18 counties were in small metropolitan areas with less than one million people. The 

homeownership rate exceeded the U.S. average by 20 percent or more in 72 Appalachian counties which were

distributed throughout the Region. Almost 60 percent of Appalachian counties have homeownership rates that are 

between 9.2 and 19.9 percent higher than the national rate, and 72 percent of these are located in nonmetropolitan 

and rural areas.

45
Figure 5.2: Housing Burden Index in the Appalachian Region, 2007-2011

Appalachian homeowners are much less likely to spend more than 30 percent of their monthly income on housing 

costs, which is considered to constitute a housing cost burden. There were only 25 Appalachian counties where 

the share of homeowners with a housing burden matched or exceeded the national average, and three-fifths of 

these were located outside metropolitan areas. In more than 60 percent of Appalachian counties, the share of 

homeowners with a housing burden is 23 percent or more below the U.S. average. Lower levels of housing burden 

reflect the lower home values in the Appalachian Region. However, the share of Appalachian homeowners with a 

housing burden increased during the recession.

46
Figure 5.3: Percent with Interest Income Index in the Appalachian Region, 2007-2011

There were only 88 counties where the share of households with income from interest, dividends, net rental 

income, royalty income, and estates and trusts matched or exceeded the national average (index of 100), and the 

vast majority of these were located in Northern Appalachia. In almost 70 percent of Appalachian counties, the 

share of households with interest income was 10 percent or more below the U.S. average, and these counties 

were concentrated in the Central and Southern subregions. Income from non-wage sources provides financial 

security and helps households weather job and wage losses during a recession. Fewer Appalachian households 

had this other income to supplement declines in wage income both in 2007 and in the 2007-2011 period. This is 

likely one factor contributing to the rise in housing burden in Appalachia during the recession.

47
Figure 5.4: Home Value Index in the Appalachian Region, 2007-2011

Although homeownership is the most important source of wealth for most Americans, home values in Appalachia 

are much lower than the national average. Indeed, there are only six Appalachian counties where home values 

matched or exceeded the national average (index of 100 or above), while in 308 of the 420 counties home values 

were 39 percent or more below the U.S. average (index of 60.7 or less). In 2007-2011, Appalachian homeowners 

continued to have lower levels of housing wealth, leaving them with fewer economic resources to buffer the effects 

of the recession.

48
Figure 5.5: Household Income Index in the Appalachian Region, 2007-2011

Average household income in Appalachia remained substantially below the national average in 2007-2011. Only 

nine counties had average household incomes at or above the national average (index of 100 and above), and all 

were located in metropolitan areas distributed throughout the Appalachian Region. The majority of counties—271 

out of 420—had household incomes that were 20 to 40 percent below the U.S. average (index of 60 to 79.7), and 

less than 30 percent of these counties were in metropolitan areas. There were still 81 Appalachian counties in 

2007-2011 with household incomes that were more than 40 percent below the national average (index of below 

60), and these were concentrated in the North Central, Central, and Southern subregions.

49
Figure 5.6: Interest Income Value Index in the Appalachian Region, 2007-2011

Although the share of Appalachian households with interest income is only 10 percent lower than the national 

share, the average value of such income was 35 percent lower in Appalachia than in the United States. Only 27 

counties had average interest income that matched or exceeded the national average (index of 100 or above), and 

17 of these were in nonmetro or rural areas. Half of Appalachian counties had average household interest income 

that was 50 percent or more below the U.S. average (index of 50 or below), and they are most concentrated in the 

Central and Southern subregions.

50
6. Wealth Determinants of County Economic Status within the Appalachian Region

6.1 Introduction

Wealth, including housing equity, is distinct from other important measures of well-being as it represents 

a stock of non-human capital. Income and earnings, in contrast, represent flows of resources that are 

usually based on returns to human capital and are generally less stable. Individuals and families rely on 

assets, such as their house values, to store resources. This storehouse, which may be liquidated to 

subsidize consumption, assures households a certain standard of living and may also create 

opportunities for financial gain. Household net worth, the market value of assets owned by every member 

of the household minus liabilities owed by household members, tends to increase in times of prosperity 

and decrease during economic downturns. From 2000 to 2011, volatility in household net worth seems to 

have largely been driven by volatility in housing values.21 

Owner-occupied housing is widely held in the United States and represents a large share of the wealth of 

many households. Between 2000 and 2010, around two thirds of all households held equity in a home.22

Indeed, equity in one’s primary residence has been the single most valuable asset held by U.S. 

households, representing between 20 percent of household wealth in 2000 and 25 percent in 2011.23 

The downturn in the U.S. housing market after its peak in 2006 and the associated financial crisis had 

significant implications for the economic well-being of households. As a result ARC has increased interest 

in understanding the extent to which lower housing prices places economic stress on communities in the 

Region. Changes in economic conditions that affect income, the traditional measure of well-being impact 

household well-being. But households also respond to shifts in the value of assets. Certainly, the extent 

to which Americans drew on home equity to finance spending prior to 2008 underscores the potential 

consumption value of assets. The role of housing value in household economic security suggests that it 

might be another indicator of economic well-being worthy of continued monitoring. Just as economic 

development policies may be crafted to increase income security in the Region, policies might be crafted 

to stimulate asset accumulation in order to improve the economic stability of households and the 

communities they constitute.24 

For the Appalachian Region, particularly Appalachian counties where asset levels are low, the potential 

impact of housing prices on economic development might be small compared to the impact of overall 

employment and the concentration of employment in particular sectors. Information about the relative 

importance of housing prices and employment in the Region could assist in assessing policy options, 

particularly in a time where government resources are stretched thin. A useful first step in analyzing the 

effect of the housing market on economic well-being in the Region is to develop a better understanding of 

how housing prices may be related to the overall economic state of Appalachian counties.

The Appalachian Regional Commission monitors the condition of Appalachian counties with the 

Economic Status Index. This Index measures the extent of a county’s economic distress, if any, with 

higher values indicating worse conditions and values greater than 100 signaling that the county 

experiences worse conditions than U.S. counties do on average. In this report, we use multiple regression 

21 Alfred Gottschalck, Marina Vornovytskyy and Adam Smith (2013), “Household Wealth in the U.S.: 2000 to 2011,” accessed at 

http://www.census.gov/people/wealth/files/Wealth%20Highlights%202011.pdf. 

22 Tables showing rates of asset ownership in the United States are available on the Wealth and Asset Ownership pages of the U.S. 

Census Bureau website: http://www.census.gov/people/wealth/. 

23 Gottschalck, Vornovytskyy, and Smith (2013).

24 Asset accumulation may be encouraged by program regulations that stimulate savings (e.g., raising the threshold whereby liquid 

assets disqualify households from income assistance programs), by programs to help individuals leverage existing assets 

(affordable homeownership programs, small business assistance, and homebuyer education programs), and by stronger laws that 

address threats to retaining assets (e.g., laws against predatory lending and health insurance laws that protect against bankruptcy 

due to medical expenses).

51

 
analysis to identify how closely county differences in aggregate value of housing are associated with 

county differences in economic status as measured by the Index.

6.2 Data and Hypotheses 

The regression analysis allows us to examine the effect of higher housing values on county economic 

status net of the level of employment and other factors that affect levels of employment, income, and 

poverty in the county. We examine the relationship between the following variables and economic status 

in fiscal year 2011 (as measured by the Index score): county economic status in fiscal year 2007, 

metropolitan status, proximity to a metropolitan area, racial and ethnic distribution of the working-age 

population, the proportion of the population at or near retirement age, the proportion of the population 

employed, the distribution of employment across industrial sectors (specifically manufacturing and 

construction). These statistical models also take into account the effect of extrapolating housing value 

from the 2000 Census for some counties and unmeasured effects of differences in state policies and 

administrations. Table 6.1 provides an overview of the Index in FY 2011 and FY 2007. Table 6.2 

describes other variables used in the analysis and indicates the hypothesized direction of the association 

between the Index in FY 2011 and the other variables. 

The Appalachian Regional Commission’s Index of Economic Status for fiscal year 2011 is based on the 

three-year average county unemployment rate from 2006-2008, county per capita market income from 

200725, and the county poverty rate from 2000 and is benchmarked against the average index value 

across U.S. counties. An index value of 100 represents the U.S. average. Table 6.1 below shows the 

inputs to the Index of Economic Status for fiscal years 2011 and 2007.

Table 6.1: Components of the Economic Status Index

Fiscal Year Three-Year Average 

Unemployment Rate

Per Capita Market 

Income

Poverty

Rate

2011

(Effective Oct. 1, 2010–Sept. 30, 2011)

2006–2008 2007 2000

2007

(Effective Oct. 1, 2006–Sept. 30, 2007)

2002–2004 2003 2000

25 Per capita market income is a measure of an area's total personal income, less transfer payments, divided by the resident 

population of the area. Personal income is the income received by all persons from all sources. Personal income is the sum of net 

earnings by place of residence; dividends interest, and rental income (property income) of persons; and personal current transfer 

receipts. Personal income is measured before the deduction of personal income taxes and other personal taxes.

52

 
Figure 6.1: Average Fiscal Year 2011 Economic Status Index for Appalachian and Non-Appalachian 

Counties 

 

On average, the Economic Status Index is higher in the Appalachian counties (denoted by “ARC” in 

Figure 6.1) within each state. Kentucky’s Appalachian counties have the highest mean value for the FY 

2011 Index. The mean value of the FY 2011 Index is greater than 100 for all Appalachian counties and 

nearly all non-Appalachian counties within each state, indicating that, on average, these counties 

experience higher levels of economic stress than U.S. counties generally do. Only the non-Appalachian 

counties for Maryland, Pennsylvania, and Virginia had an average FY 2011 Index that was lower (better) 

than the U.S. FY 2011 average. (Means for other variables used in the analysis and data sources from 

which their values were taken may be found in Appendix B, Table B.1.)

Conditions generally associated with economic strain include inflation, higher unemployment, and a drop 

in housing values.26 Large changes in the value of housing often indicate substantial changes in the 

consumption potential of households. Housing also provides a valuable service even in the absence of 

much equity. With positive equity, housing may be liquidated to meet basic consumption needs if income 

flows cease. In this way, home equity provides a financial safety net and is an indicator of consumption 

potential during hard times.

27 These characteristics mean that similar to higher income levels, higher 

aggregate housing value in a county is expected to be associated with a lower economic status index 

value, indicating better economic conditions for a county.

26 Robert A. Dye and Chad Sutherland (2009) "A New Metric to Gauge Household Stress: Improving on the Misery Index," Business 

Economics 44(2):109-113.

27 Ibid.

53

 
The unemployment rate in the Appalachian Region is generally higher than the rate for the nation as a 

whole. However, the unemployment rate, or the proportion of the labor force not employed and actively 

seeking employment, does not fully take into account the disproportionate share of workers that may be 

discouraged from seeking employment because of the lack of available jobs, particularly during a 

recession. For this reason, many labor force analysts advocate the use of the employment ratio as an 

indicator of economic health. The employment ratio measures the employed as a proportion of the 

working age population. Employment grew more slowly in the Appalachian Region than in the nation as a 

whole during the housing-led economic expansion (2002-2007), and the job loss during the recession that 

followed was more severe in the Region, with total employment falling to its 2000 level.28 A lower 

employment ratio in a county signals lower income security, so we hypothesize that the lower the 

employment ratio the higher the Economic Status Index value, and the worse off the county.

Unemployment rates are persistently high for some groups in the United States, namely some racial and 

ethnic minorities (Hispanics and blacks) and some age groups (young minority men and older people).29

These individuals cannot avoid poverty as readily as other groups because their economic opportunities 

are limited due to age or health, inherently low productivity associated with poor health or low education 

level, and the unavailability of employment options. 30 In addition, “social norms of racism and 

prejudice... may result in economic discrimination as racist and discriminatory attitudes are reflected 

through individual behavior in the market.” 31 Other groups that might face high levels of unemployment 

include workers in industries affected by rapid technological change, such as manufacturing. 

Mechanization and computer assistance in processes may result in worker displacement and 

unemployment. In addition, new jobs may not be open to workers with older or obsolete skills. 

Technology may also make it easier to substitute workers in one region (or country) with higher skilled or 

lower wage workers in another region. Groups with limited opportunity not only face higher unemployment 

but also higher poverty rates as a result of long-term unemployment. With greater limitations on the 

economic opportunities for Hispanics and blacks, counties with higher shares of these groups in their 

working-age population are expected to have a higher (worse) Economic Status Index value. Counties 

with greater shares of older persons are also likely to have a higher (worse) Economic Status Index 

value.

In Appalachia, relative to other sectors, the manufacturing sector has been viewed as a source of wellpaid, stable employment. However, declines in manufacturing employment in the U.S. have also been felt 

in Appalachia. From 2000 to 2007, manufacturing employment declined by 22 percent in the Region, 

despite 15 percent growth in construction.32 At the peak of the housing bubble in 2005, construction 

supported 5.1 percent of all U.S. employment.33 Demand for new home construction creates not just 

construction jobs but also jobs in industries that supply the construction sector, including wood and pulp 

manufacturing, cement manufacturing, and construction machinery manufacturing. During the boom, 

28 Appalachian Regional Commission (2010), Economic Assessment of Appalachia: An Appalachian Regional Development 

Initiative Report, (June), accessed in April 2013 at 

http://www.arc.gov/images/programs/ardi/EconomicAssessmentofAppalachiaJune2010.pdf.

29 Unemployment rates for African American men between ages 16 and 24 are substantially higher than the unemployment rates for 

white men of the same age. While unemployment rates for individuals between ages 60 and 74 are not substantially higher than for 

individuals between ages 35 and 59, workers displaced in their 50s are less likely to become reemployed, and labor force 

participation rates are much lower after age 60 than before age 60. See Labor Force Statistics from the Current Population Survey 

reported on the Bureau of Labor Statistics site (http://www.bls.gov/cps/demographics.htm).

30 Rebecca M. Blank (2003), “Selecting Among Anti-Poverty Policies: Can an Economist be Both Critical and Caring?” Review of 

Social Economy, 61(4):447-469.

31 Ibid, p. 453.

32 Appalachian Regional Commission (2010), Economic Assessment of Appalachia: An Appalachian Regional Development 

Initiative Report (June), accessed in April 2013 at

http://www.arc.gov/images/programs/ardi/EconomicAssessmentofAppalachiaJune2010.pdf.

33 Kathryn J. Buyn (2010), “The U.S. Housing Bubble and Bust: Impact on Employment,” Monthly Labor Review (December):3-17.

54

 
construction grew less rapidly in the Appalachian Region than in the U.S. as a whole. Given the 

relationship between construction, manufacturing, and stable employment, counties with higher shares of 

manufacturing employment would be expected to have lower (better) Economic Status Index value. 

Similarly, counties with higher shares of construction employment would also be expected to have a lower 

(better) Economic Status Index value.

With urbanization, other sources of economic stability emerged, leaving many rural communities behind. 

Rural (nonmetropolitan) areas today often suffer from a decrease in job creation, outmigration of young 

and skilled workers, and a decrease in the demand for many rural products. 34 Nonmetropolitan 

Appalachian counties encompass a range of settlement patterns, with some nonmetro areas being more 

densely populated than others and with their economies influenced by proximity to metropolitan areas.35

Given the challenges confronting more remote and less densely populated counties, we expect

metropolitan areas and nonmetropolitan areas adjacent to metropolitan areas to have lower (better) 

Economic Status Index values than the more isolated rural (nonmetropolitan not adjacent to metropolitan 

areas). 

The Appalachian Region historically has lagged behind the nation in economic achievement.36 Many of its 

communities still confront an array of economic development challenges, including dependence on 

resource-based industries, needed improvements to basic education and infrastructure, and youth outmigration. In models that include Appalachian and non-Appalachian counties, Appalachian counties are 

expected to have a higher (worse) Economic Status Index value, even after taking into account the other 

factors that would be associated with lower employment, increased poverty, and lower income. (See 

Appendix B, Table B.3 for regression results based on analysis of all counties in the 13 states that include 

the counties of the Appalachian Region.) 

Because all economies have a certain amount of momentum whereby past economic performance 

determines current economic status, we include the Economic Status Index measured in FY 2007 as one 

factor that explains the value of the FY 2011 Economic Status Index. A higher value of the FY 2007 Index 

is hypothesized to be associated with a higher (worse) value of the FY 2011 Index. This means that the 

effects of other variables on the FY 2011 Economic Status Index are net of a county’s economic status 

four years earlier.

Table 6.2 summarizes the hypothesized effects of each explanatory variable included in the regression 

models. A positive effect (“+”) means that a higher value for the variable is associated with a higher 

(worse) Economic Status Index value and the regression coefficient for the variable will be positive. A 

negative value (“-”) means a higher value of the variable is associated with a lower (better) Economic 

Status Index value, and the regression coefficient for the variable will be negative. 

34 Jason R. Henderson (2002), “Will the rural economy rebound with the rest of the nation?” The Main Street Economist (Center for 

the Study of Rural America, Federal Reserve Bank of Kansas City); Mario Pezzini (2000), “Rural Policy Lessons from OECD 

Countries,” Economic Review, Federal Reserve Bank of Kansas City (Third Quarter):47-57.

35 The USDA Economic Research Service provides an overview of Rural-Urban Continuum Codes that form a classification system 

for distinguishing metropolitan areas by their size and nonmetropolitan areas by their urbanization and adjacency to metropolitan 

areas. See http://www.ers.usda.gov/data-products/rural-urban-continuum-codes.aspx#.UgJUxW3LuSo. 

36 Appalachian Regional Commission (2010), Economic Assessment of Appalachia: An Appalachian Regional Development 

Initiative Report (June), accessed in April 2013 at 

http://www.arc.gov/images/programs/ardi/EconomicAssessmentofAppalachiaJune2010.pdf. 

55

 
Table 6.2: Effect on Economic Status Index, Fiscal Year 2011

Variable Descriptions and Data Sources Hypothesized Sign 

of Coefficient

Economic Status Index, FY 2007

The three-year average county unemployment rate from 2006-2008, 

county per capita market income from 2007, and county poverty rate from 

2000, benchmarked against the average index value across U.S. 

counties. 

+

Log (Housing Value)

Log of the aggregate value of all the owner-occupied housing units in a 

county in 2006-2008 measured in millions of 2008 dollars. Value imputed 

for counties with population under 20,000. 

-

Employment Ratio, 2007

Total employed as a percentage of the working age population. 

-

Percent Manufacturing, 2007 

Percentage of the total employed population in manufacturing.

-

Percent Construction, 2007

Percentage of the total employed population in construction.

-

Percent Black, 2008 

Percentage of the population ages 15-64 that is Black. 

+

Percent Hispanic, 2008

Percentage of the population ages 15-64 that is Hispanic. 

+

Percent 60 and older, 2008

Percentage of the population that is sixty years and older. 

+

Metro Area

This variable is coded 1 when the county is part of a metropolitan area 

(as designated by OMB based on population and commuting status). 

Otherwise, the variable is coded 0. 

-

Nonmetro Adjacent to Metro

This variable is coded 1 when the county is not designated as part of a 

metropolitan area but is adjacent to an OMB designated metropolitan 

area. Otherwise the variable is coded 0. 

-

Nonmetro Not Adjacent to Metro

The variable is coded 1 when the county is nonmetropolitan and also not 

adjacent to an OMB designated metropolitan area. Otherwise the variable 

is coded 0. This variable does not appear in any of the regression 

models.

N/A

Appalachian County

Designated as an Appalachian county by the Appalachian Regional 

Commission. 

+

Note: “+” means the variable is associated with a higher (worse) economic status index level and “-” means it is associated with a 

lower (better) economic status index level. “N/A” means “not applicable.” Metropolitan, nonmetropolitan adjacent to metro, and 

nonmetropolitan not adjacent to metro are county designations based on U.S. Department of Agriculture (USDA), Economic 

Research Service, Rural-Urban Continuum Codes, available at http://www.ers.usda.gov/data-products/rural-urban-continuumcodes.aspx#.UgJUxW3LuSo. 

Variables in the final regression analysis are dependent on data availability and various diagnostic 

procedures used to determine which variables and what type of model should be used to best explain the 

economic status of Appalachian counties. Of particular note is the choice to include aggregate housing 

value and to exclude measures of other types of wealth such as financial wealth (e.g., dividend and 

56
interest income; proprietor’s income). As noted above, many households in the U.S. hold housing wealth. 

In addition, housing wealth constitutes the major portion of all household wealth37 and is highly correlated 

with other forms of wealth for which county-level data are available. Only models using data on 

Appalachian counties are discussed in the main text of the chapter. Appendix B provides detailed 

information about the variables included in the models, as well as models using data from all counties in 

states in the Appalachian Region.

6.3 How to Interpret Regression Results

Results of the regression models using data for the 420 counties in the Appalachian Region are 

summarized below in Table 6.3. Only results for the main variables of interest are included; effects of 

control variables are not. The full specification of these models may be found in Appendix B, Table B.4. 

Similar tables using data from the 1070 Appalachian and non-Appalachian counties in the 13 Appalachian 

states may be found in Appendix B, with Tables 6.3A showing only results for the main variables and 

Table B.5 the full specification. 

For discussion of this analysis, variables significant at the 95 percent level (p<.05) are considered 

statistically significant and therefore contribute to the economic status of the counties as measured by the 

Economic Status Index. The size of the coefficients for each independent variable in the model 

determines the contribution each variable makes to the model, relative to all other independent variables. 

Each coefficient will be either positive or negative, indicating its association with economic status. Given 

the absolute value of the coefficient, larger values contribute more to the 2011 Index of Economic Status 

outcome than do smaller values. Below is an explanation of how to interpret each variable’s coefficient 

within the regression models. 

1. Log of county aggregate housing value: 

• A positive value indicates that one percent higher wealth is associated with an 

Economic Status Index value that is higher (by coefficient/100), signaling worse 

economic health.

• A negative value indicates that one percent higher wealth is associated with an 

Economic Status Index value that is lower (by coefficient/100), signaling better 

economic health.

2. Metropolitan:

• A positive value indicates that a metro county is associated with having a higher 

(worse) Economic Status Index value than a nonmetro county not adjacent to a metro 

county.

• A negative value indicates that a metro county is associated with having a lower 

(better) Economic Status Index value than a nonmetro county not adjacent to a metro 

county. 

3. Nonmetropolitan adjacent to metro:

• A positive value indicates that a nonmetro county adjacent to a metro county is 

associated with having a higher (worse) Economic Status Index value than a 

nonmetro county not adjacent to a metro county.

• A negative value indicates that a nonmetro county adjacent to a metro county is 

associated with having a lower (better) Economic Status Index value than a nonmetro

county not adjacent to a metro county. 

37 In 2002, home equity, the largest share of household net worth, represented 41.7 percent of total household net worth, while 

stocks and mutual funds held outside retirement accounts represented 11.1 percent of total household net worth. In 2000, the share 

of household wealth held in home equity was 30 percent and in 2011, it was 25 percent. Stocks and mutual funds not in retirement 

accounts were 15 percent of all wealth in 2011. See Gottschalck, Vornovytskyy, and Smith (2013), cited above; and Alfred O. 

Gottschalck (2008), “Net Worth and the Assets of Households,” Household Economic Studies P70-115, Current Population Reports 

(April), available at http://www.census.gov/prod/2008pubs/p70-115.pdf. 

57

 
4. Employment ratio:

• A positive value indicates that having higher percentages of the county working-age 

population employed is associated with higher (worse) Economic Status Index value

in the county.

• A negative value indicates that having higher percentages of the county working-age 

population employed is associated with lower (better) Economic Status Index value. 

5. Percent employed in a certain industry (construction or manufacturing):

• A positive value indicates that having higher percentages of persons employed in 

that industry is associated with higher (worse) Economic Status Index value. 

• A negative value indicates that having higher percentages of persons employed in 

that industry is associated with lower (better) Economic Status Index value.

6. Percentage black working-age population:

• A positive value indicates that having higher percentages of black population (ages 

15-64) is associated with higher (worse) county Economic Status Index value. 

• A negative value indicates that having higher percentages of black population (ages 

15-64) is associated with lower (better) county Economic Status Index value.

7. Percentage Hispanic working-age population:

• A positive value indicates that having higher percentages of Hispanic population

(ages 15-64) is associated with higher (worse) county Economic Status Index value. 

• A negative value indicates that having higher percentages of Hispanic population

(ages 15-64) is associated with lower (better) Economic Status Index value.

8. Percentage 60 and older population:

• A positive value indicates that having higher percentages of the county population 

age 60 years and older is associated with higher (worse) economic status scores.

• A negative value indicates that having higher percentages of the county population 

age 60 years and older is associated with lower (better) economic status scores.

In these results a negative coefficient (“Coeff”) indicates that a higher value of the variable is associated 

with a lower (better) value for the FY 2011 Economic Status Index. A positive coefficient indicates the 

opposite, that a higher value of the variable is associated with a higher (worse) Economic Status Index 

value. For example in Table 6.3, the positive coefficient for economic status in FY 2007 indicates that 

counties with a higher (worse) Economic Status Index value in FY 2007 likely have a higher (worse) 

Economic Status Index value in FY 2011. This result is consistent with the concept of economic 

momentum, where the past economic conditions in a county strongly influence the current or future 

conditions. The coefficient for the employment ratio is negative. That is, a lower employment ratio is 

associated with a higher (worse) economic status index value, or fewer employed people in a county 

usually result in a more distressed economy. This means that counties with more members of the working 

age population employed are more likely to be in better economic condition. 

6.4 Discussion of Regression Analysis Results

The regression analysis results shown in Table 6.3 include three separate regression models. Model 1 

shows estimates of effects when past economic performance (FY 2007 Economic Status Index), 

aggregate wealth (Log of Housing Value), geographic settlement patterns (metropolitan county, 

nonmetropolitan county adjacent to a metropolitan county, and nonmetropolitan county not adjacent to a 

metropolitan county), employment, industrial sector (manufacturing, construction, and other), black share 

of the working-age population, Hispanic share of the working-age population, and people age 60 or older 

as a share of the population, and control variables are included. Model 2 includes only the FY 2007 

Economic Status Index and control variables. Model 3 includes all variables except the FY 2007 

Economic Status Index. The explanatory power of each model as given by R-squared points to the 

persistence of a county’s past economic status.

Past economic status is the strongest predictor of current economic status for Appalachian counties. The 

results in regression models 1 and 2 show that even after taking into account other factors, the FY 2007 

58
Economic Status Index value almost perfectly predicts the FY 2011 Economic Status Index value. A one 

point higher Index in FY 2007 is associated with nearly a one point higher FY 2011 Index. Just the FY 

2007 index alone accounts for 97 percent of the variation in the FY 2011 Index across Appalachian 

counties. As Models 1 and 3 indicate, other factors are also significant, but the full effect of these factors 

is difficult to measure in the presence of past economic performance as this past performance is also 

determined by the same factors measured at an earlier point in time. These factors also do not change 

rapidly and their current values depend on past levels. Comparison of Model 1 and Model 3 show that the 

coefficients of housing value, metropolitan/nonmetropolitan settlement patterns, industrial sector, and 

demographic variables are generally much higher when the FY 2007 Index is excluded from the model. 

Though it is impossible to measure the effects of population and industrial sector in the absence of a 

county’s past economic performance, Model 3 suggests that the influence of these factors is greater than 

we are able to observe in Model 1.

The regression results for Model 1 indicate that, net of other factors including past county economic 

performance, a one percent higher housing value is associated with a 1.88 lower FY 2011 Economic Status 

Index value in Appalachian counties. An employment ratio that is higher by one percentage point is 

associated with 0.05 lower FY 2011 Economic Status Index value in Appalachian counties. The regression 

results suggest that both housing values and employment contribute to county economic status. 

Table 6.3: Effect of County Wealth, Demographic, and Employment Variables on Economic Status

Index (Fiscal Year 2011), Appalachian Counties

Variables

Model 1 Model 2 Model 3

Coeff Std Err 

(Robust) t-stat Coeff Std Err (Robust) t-stat Coeff Std Err (Robust) t-stat 

Economic Status Index

(FY 2007) 0.93 0.02 39.48 ** 0.99 0.02 61.64 **

Log (Housing Value) -1.88 0.66 -2.85 ** -15.86 1.88 -8.44 **

Metro -2.92 1.07 -2.74 ** -20.98 3.53 -5.94 **

Nonmetro Adjacent to 

Metro -1.56 0.94 -1.66 * -9.98 3.08 -3.24 **

Employment Ratio -0.05 0.02 -2.39 ** -0.49 0.06 -7.61 **

Percent Manufacturing 0.15 0.06 2.41 ** -0.52 0.14 -3.73 **

Percent Construction 0.15 0.16 0.91 -2.07 0.44 -4.69 **

Percent Black in 

Population, Ages 15-64 0.15 0.06 2.42 ** 0.62 0.12 5.14 **

Percent Hispanic in 

Population, Ages 15-64 0.23 0.12 1.84 * 0.53 0.34 1.57

Percent Age 60+ -0.08 0.11 -0.68 -0.39 0.35 -1.12

Constant 19.85 8.80 2.26 ** -2.37 2.27 -1.05 315.27 17.19 18.34 **

R2 0.97 0.97 0.78

Adjusted R2 0.97 0.97 0.77

N 420 420 420

Notes: **p<.05; *p<.10. Coefficients for control variables are not shown. These variables include: (1) states with Appalachian counties, with 

Alabama as the reference state and (2) control variable designating counties for which housing value was extrapolated from Census 2000 

and the Housing Price Index (HPI). The full model specifications with the coefficients for control variables may be found in Appendix B. 

Appalachian county status based on designation for FY 2011.

59 
The strong association between the Economic Status Index in FY 2007 and in FY 2011 suggests that 

economic conditions have a cumulative effect over time. Economic conditions might be particularly 

important to income generation necessary for wealth accumulation and the growth of capital intensive 

businesses in the county.

Despite the importance of past economic performance in Model 1, other factors should not be neglected 

in considering priorities for economic development. Including the Economic Status Index for fiscal year 

2007 in the regression models allows us, in effect, to isolate which factors are associated with county 

variation in economic status over a period of four years between fiscal year 2011 and fiscal year 2007. In 

addition to higher housing values and employment, and being a county in a metropolitan area or a 

nonmetropolitan county adjacent to a metropolitan area are associated with lower (better) economic 

status. The significant negative coefficient for “metro area” indicates that among Appalachian counties, 

metropolitan counties have a lower (better) Economic Status Index value than nonmetropolitan counties

not adjacent to metro counties but with otherwise similar characteristics. Nonmetro counties adjacent to 

metropolitan counties also fare better relative to nonmetro non-adjacent counties.

The results (in Model 1 and Model 3) for housing value, employment, and metropolitan counties are 

consistent with the effects hypothesized. Results (in both Model 1 and Model 3) for the percent black in 

the working-age population are also consistent with hypothesized effects. In Model 1, the significant 

positive coefficient for manufacturing, net of economic status in FY 2007, indicates that in Appalachian 

counties, having a higher share of workers engaged in the manufacturing sector is associated with a 

higher (worse) Economic Status Index value in FY 2011 which captures performance at the end of the 

U.S. housing-led expansion. This finding is consistent with the decrease in U.S. manufacturing production 

since 2007, with the slow recovery, and with the decline in manufacturing employment in the Appalachian 

Region between 2000 and 2007.38 In contrast, the negative coefficient for manufacturing in Model 3 

suggests that manufacturing is associated with lower (better) economic status when a county’s past 

economic performance is not taken into account. This is consistent with the relative stability of 

manufacturing employment in comparison to mining and possibly seasonal farm employment. 

6.5 Conclusion

The results of the above regression analysis suggest that housing wealth is just as important to county 

economic well-being as employment. Higher housing wealth in a county is associated with a lower 

(better) Economic Status Index value, and a county’s economic conditions affect its wealth accumulation. 

If this is true, then counties with higher aggregate wealth might have a buffer when economic conditions 

begin to deteriorate, and counties with a history of worse economic status will not only suffer immediately 

but will experience more difficult economic conditions for a longer period than counties that have been 

historically better off. 

38 Federal Reserve Board (2012), “Federal Reserve Statistical Release (May 16) – Industrial Production and Capacity Utilization,” 

accessed in May 2012 at http://www.federalreserve.gov/releases/g17/current/g17.pdf; Appalachian Regional Commission (2010), 

Economic Assessment of Appalachia: An Appalachian Regional Development Initiative Report (June), accessed in April 2013 at

http://www.arc.gov/images/programs/ardi/EconomicAssessmentofAppalachiaJune2010.pdf. 

60

 
7. Summary and Policy Implications

Trends in household wealth are important for individuals and families because household wealth provides 

a financial and psychological safety net to weather tough economic times. People use household assets 

to leverage funds that in turn can create additional opportunities to produce more wealth. Wealth is 

largely transferable from one generation to the next and is a key component of intergenerational mobility. 

It creates opportunities for expanded social networks, provides social and economic prestige, and 

contributes to political power. At the community level, household wealth provides a “pool of savings” that 

is a prerequisite for business development and for consumers to feel confident about their economic 

futures.

Between 2007 and 2009, the deepest economic recession in the United States since the Great 

Depression resulted in significant job and income losses for many Americans as well as sharp declines in 

the value of their homes and investments. As foreclosures hit record levels, homeownership rates 

dropped. Since home equity accounts for between 20 and 25 percent of household wealth in the U.S., the 

downturn in the U.S. housing market resulted in a decline of $11 billion in net household wealth by 

2008—the largest loss of wealth since the federal government started keeping records of wealth 

accumulation 50 years ago. Although the recession officially ended in 2009, the pace of economic 

recovery has been slow and has varied considerably across different regions of the United States.

The Appalachian Region has a history of economic difficulties compared with the rest of the nation. As a 

result, the Appalachian Regional Commission (ARC) has an increased interest in understanding the 

effects of the recent recession on household wealth and economic well-being in Appalachia and 

commissioned this research report to assess whether the Appalachian Region was disproportionately 

impacted and to assess the degree of recovery compared with the rest of the nation.

During the recent recession, the Appalachian Region did experience a disproportionate decline in median 

household income and increase in the poverty rate, compared with the U.S. as a whole. However, 

although homeownership rates and average home values did decline in Appalachia, these declines were 

not as steep as those for the rest of the nation. In contrast, the share of homeowners with a housing cost 

burden increased in Appalachia, and both the share of households with interest and other non-wage 

income and the average amount of such income declined more in Appalachia than in the rest of the 

United States. While these findings characterize the Appalachian Region as a whole, it is important to 

note that there is considerable diversity within the Region, and the patterns for particular subregions, 

county types, and economic status groups do vary across the period from 2007 to 2009.

Although economic conditions in many parts of the Appalachian Region have improved substantially 

since the early 1960s, household incomes, home values, and income from interest, dividends and other 

non-wage sources remain considerably lower than in the rest of the United States. These lower levels of 

wealth—from both housing and other investments—result in Appalachian households and communities 

having fewer resources to fall back on to compensate for job, income, and wealth losses due to economic 

downturns such as the recent recession. In addition, counties with a history of worse economic status will 

not only suffer immediately but will experience more difficult economic conditions for a longer period after 

a recession than counties that have historically been better off.

Although not analyzed in this report, lower levels of education in Appalachia have been documented 

elsewhere and may have compounded the effects of the recent recession.39 Adults with lower levels of 

education suffered much higher rates of unemployment during the recession, and were less able to move 

to other areas to find alternative employment.40 Policies and programs that continue to increase the 

levels of education among adults in the Appalachian Region will not only help to raise individual and 

39 Kelvin Pollard and Linda A. Jacobsen (2013), “The Appalachian Region: A Data Overview from the 2007-2011 American 

Community Survey,” (February). Available online at

http://www.prb.org/Publications/Reports/2013/appalachia-overview-acs-2011.aspx . 

40 Linda A. Jacobsen and Mark Mather (2011), “A Post-Recession Update on U.S. Social and Economic Trends,” (December). 

Available online at

http://www.prb.org/Publications/Reports/2011/us-economicsocialtrends-update1.aspx. 

61

 
household incomes, but may also ensure more labor mobility to help mitigate job losses during future 

economic downturns. 

The key role of housing value in household economic security suggests that it may be another indicator of 

economic well-being worthy of continued monitoring in the Appalachian Region. Just as economic 

development policies can be crafted to increase income security in the Region, policies that stimulate 

asset accumulation could also improve the economic stability of households and help them offset income 

and wealth losses in future recessions. Such policies could include program regulations that stimulate 

savings such as raising the threshold whereby liquid assets disqualify households from income 

assistance programs, or programs that help individuals leverage existing assets such as affordable 

homeownership programs, small business assistance, or homebuyer education programs. Laws that 

address threats to retaining assets could also be strengthened such as laws that prevent predatory 

lending or protect against bankruptcy due to medical expenses. Raising levels of education and 

household income, along with boosting the level of assets, could help Appalachian households and 

communities better withstand future economic downturns, as well as reduce the amount of time needed 

for recovery.

62
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Sociology 26:63-81. 

Low, S. A. 2005. “Regional Asset Indicators: The Wealth of Regions.” The Main Street Economist: A 

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Mather, M. 2004. “Housing and Commuting Patterns in Appalachia.” Demographic and Socioeconomic 

Change in Appalachia (January).

Modigliani, F. 1986. “Life Cycle, Individual Thrift, and the Wealth of Nations.” The American Economic 

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Pezzini, M. 2000. “Rural Policy Lessons from OECD Countries,” Economic Review, Federal Reserve 

Bank of Kansas City (Third Quarter):47-57.

Pollard, K. and L. A. Jacobsen. 2013. “The Appalachian Region: A Data Overview from the 2007-2011 

American Community Survey,” (February). Available online at

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U.S. Bureau of Labor Statistics. Labor Force Statistics from the Current Population Survey. Accessed at 

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U.S. Department of Agriculture (USDA), Economic Research Service. Rural-Urban Continuum Codes. 

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Wilkerson, C.R., and M.D. Williams. 2011. “Booms and Busts in Household Wealth: Implications for Tenth 

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64
APPENDIX A: HOUSEHOLD WEALTH CONCEPTS

Table A.1: Household Wealth Concepts – Definitions, Indicators, and Data Availability

Concept Indicators Data Variables Available by County

(*suppression/confidentiality data issues for 

some ARC counties OR public access issues)

Marketable 

Wealth 

current value of 

fungible assets 

less debt

Assets - gross value of owner-occupied 

housing; other real estate owned by the 

household; cash and demand deposits; 

time and savings deposits, certificates of 

deposit, and money market accounts; 

government bonds, corporate bonds, 

foreign bonds, and other financial 

securities; the cash surrender value of 

life insurance plans; the cash surrender 

value of pension plans, including IRAs, 

Keogh, and 401(k) plans; corporate 

stock and mutual funds; net equity in 

unincorporated businesses; and equity in 

trust funds. 

Debt - mortgage debt; consumer debt, 

including auto loans; and other debt

Assets

-Percent of All households That Are Owner-Occupied 

(ACS* 2006-08, 2007, 2009, 2007-11)

-Percent of Households With $1,000 Or More 

Agriculture Sales (ACS* 2006-08, 2007, 2009, 

2007-11)

-Percent of All Households With Real Estate, 

Dividend, Trust Income (ACS* 2006-08, 2007, 2009, 

2007-11)

-County Share of Deposits in FDIC-Insured 

Institutions (FDIC SOD, annual 1994-2009, note—

Household v. commercial ownership not determined)

-County Value of Time and Savings Deposits in 

FDIC-Insured Institutions (FDIC SOD*, annual 1994-

2009, note—Household v. commercial ownership not 

determined)

-Proprietors Income, (BEA 2000, 2007, note—not 

clear that this is a household measure)

-Dividend Interest and Rent, (BEA 2000, 2007, note 

not clear that this is a household measure)

Debt 

-Percent of All Households With a Mortgage (ACS* 

2006-08, 2007, 2009, 2007-11)

-Median Monthly Housing Cost Among OwnerOccupied Households (ACS* 2006-08, 2007, 2009, 

2007-11)

-Percent of Households for which Housing Cost is 

More than 30 Percent of Income (ACS* 2006-08, 

2007, 2009, 2007-11)

-County Mortgage Delinquency Rate (FRB NY*, 

available dates unknown)

-County Auto Loan Delinquency Rate (FRB NY*, 

available dates unknown)

-County Bank Card Delinquency Rate (FRB NY*, 

available dates unknown)

Augmented 

Wealth

sum of 

marketable and 

retirement 

wealth

Assets - see marketable wealth; current 

value of retirement benefits from social 

security and/or employer/union managed 

pensions

Debt - see marketable wealth

Assets

-see marketable wealth

-County Total OASDI Contributions (Table 3*, 

Earnings and Employment Data for Workers 

Covered Under Social Security and Medicare, by 

State and County, 2006)

Debt

-see marketable wealth

65
Table A.1: Household Wealth Concepts (continued)

Concept Indicators Data Variables Available by County

(*suppression/confidentiality data issues for 

some ARC counties OR public access issues)

Financial 

Wealth

marketable 

wealth minus 

net equity in 

owner-occupied 

housing

Assets - other real estate owned by the 

household; cash and demand deposits; 

time and savings deposits, certificates of 

deposit, and money market accounts; 

government bonds, corporate bonds, 

foreign bonds, and other financial 

securities; the cash surrender value of 

life insurance plans; the cash surrender 

value of pension plans, including IRAs, 

Keogh, and 401(k) plans; corporate 

stock and mutual funds; net equity in 

unincorporated businesses; and equity in 

trust funds. (These are the same as 

those listed in marketable wealth but 

exclude gross value of owner-occupied 

housing.)

Debt - consumer debt, including auto 

loans; and other debt. (These are the 

same as those listed in marketable 

wealth but exclude mortgage value.)

Assets

-Percent of Households With $1,000 Or More 

Agriculture Sales (ACS* 2006-08, 2007, 2009, 

2007-11)

-Percent of All Households With Real Estate, 

Dividend, Trust Income (ACS* 2006-08, 2007, 2009, 

2007-11)

-County Share of Deposits in FDIC-Insured 

Institutions (FDIC SOD, annual 1994-2009, note—

Household v. commercial ownership not determined)

-County Value of Time and Savings Deposits in 

FDIC-Insured Institutions (FDIC SOD, annual 1994-

2009, note—Household v. commercial ownership not 

determined)

-Proprietors Income, (BEA 2000, 2007, note—not 

clear that this is a household measure)

-Dividend Interest and Rent, (BEA 2000, 2007, note 

not clear that this is a household measure)

Debt 

-County Auto Loan Delinquency Rate (FRB NY*, 

available dates unknown)

-County Bank Card Delinquency Rate (FRB NY*, 

available dates unknown)

Net Equity in 

OwnerOccupied 

House

value of owner 

occupied 

housing less 

outstanding 

mortgage

Asset – value of home

Debt – value of the mortgage balance 

owed on home

Asset

-Percent of All Households That Are OwnerOccupied (ACS* 2006-08, 2007, 2009, 2007-11)

Debt 

-Percent of All Households With a Mortgage (ACS* 

2006-08, 2007, 2009, 2007-11)

-Median Monthly Housing Cost Among OwnerOccupied Households (ACS* 2006-08, 2007, 2009, 

2007-11)

-Percent of Households for which Housing Cost is 

More than 30 Percent of Income (ACS* 2006-08, 

2007, 2009, 2007-11)

-County Mortgage Delinquency Rate (FRB NY*, 

available dates unknown)

Asset Poverty 

whether 

household 

wealth exceeds 

poverty 

threshold (or 

minimum 

consumption 

threshold) 

-ratio of household wealth to poverty 

threshold

-number of months of minimal 

consumption that household wealth 

would support

Not applicable (N/A) because determination of net 

worth at the household level is possible in only a few 

surveys, e.g., SIPP and PSID, but sample sizes at 

the county level would not allow reliable measure. 

Possible indicators if data were reliable would be: 

Percent of Households with Wealth-to-Poverty Ratio 

Greater Than One; Percent of Households with 

Wealth Equivalent of Three or More Months of 

Minimal Consumption.

66
APPENDIX B: SPECIFICATION OF THE REGRESSION MODELS

Variables Included in Models

Table B.1 shows the mean of each variable for Appalachian and non-Appalachian counties within the 13 

Appalachian states; Table B.2 shows the bivariate correlations between each pair of continuous variables 

for Appalachian counties. Tables 6.4A and 6.5A show results for the full model specifications of Table 6.3 

from the main text and Table B.3 from the Appendix, respectively.

Table B.1: Means of Variables

Variable Name Data Source Appalachian 

Counties

NonAppalachian 

Counties

Economic Status Index, 

FY 2011

Appalachian Regional Commission 142.7 129.7

Economic Status Index,

FY 2007

Appalachian Regional Commission 136.6 128.11

Housing Value (millions in 

2008 dollars), 2008

U.S. Census Bureau, Department of 

Commerce, American Community Survey, 

2006-2008 and Decennial Census 2000; 

Federal Housing Finance Agency, House Price 

Index All-Transactions Indexes

2,560.9 7,605.1

Metropolitan (percent) USDA Economic Research Service, 2010 34 48

Nonmetro adjacent to metro 

(percent) 

USDA Economic Research Service, 2010 26 15

Nonmetro not adjacent to 

metro (percent) 

USDA Economic Research Service, 2010 40 37

Manufacturing (percent), 

2007

Woods & Poole, Complete Economic & 

Demographic Data Source (CEDDS), 2011

12.4 11.5

Construction (percent), 2007 Woods & Poole, Complete Economic & 

Demographic Data Source (CEDDS), 2011

7.6 7.3

Employment Ratio (per 100 

population), 2007

Woods & Poole, Complete Economic & 

Demographic Data Source (CEDDS), 2011

70.3 75.1

Age 60 and Older Population 

(percent), 2008

U.S. Census Bureau, Population Estimates, 

July 2008

21.4 19.1

Black Working-Age 

Population (percent), 2008

U.S. Census Bureau, Population Estimates, 

July 2008

17.4 24.3

Hispanic Working-Age 

Population (percent), 2008

U.S. Census Bureau, Population Estimates, 

July 2008

3.1 3.8

67
Table B.2: Correlation Matrix for Continuous Variables, All Counties in 13 Appalachian States

 

Economic

Status 

Index,

FY 2011

Economic

Status 

Index,

FY 2007

Housing 

Value

Employment 

Ratio Manufacturing Construction

Black

WorkingAge

Population

Hispanic

WorkingAge

Population

60+ 

Population

Economic 

Status Index, 

FY 2011

1.000 0.943 -0.320 -0.404 0.057 -0.230 0.367 -0.210 0.124

Economic 

Status Index, 

FY 2007

0.943 1.000 -0.397 -0.505 -0.190 -0.193 0.082 -0.327 0.037

Housing Value -0.320 -0.397 1.000 0.258 -0.183 -0.067 0.001 0.446 -0.178

Employment 

Ratio -0.404 -0.505 0.258 1.000 0.072 -0.253 -0.022 0.176 -0.025

Manufacturing 0.057 -0.190 -0.183 0.072 1.000 -0.244 -0.057 0.019 0.060

Construction -0.230 -0.193 -0.067 -0.253 -0.244 1.000 -0.185 -0.022 0.063

Black 

Working-Age 

Population

0.367 0.082 0.001 -0.022 -0.057 -0.185 1.000 0.059 -0.211

Hispanic 

Working-Age 

Population

-0.210 -0.327 0.446 0.176 0.019 -0.022 0.059 1.000 -0.319

60+ Population 0.124 0.037 -0.178 -0.025 0.060 0.063 -0.211 -0.319 1.000

68
The final regression models (Table 6.3 in the main text) present the effects of county aggregate housing 

value, demographics, and employment/industry variables on the FY 2011 Economic Status Index in 

Appalachian counties. These may be compared to results observed for all counties in the 13 states that 

are part of the Appalachian Region (Table B.3 below). 

In the analyses presented, the natural logarithm was used for measures of housing value to make the 

specification more consistent with the assumption of a linear relationship between the dependent variable 

measure and the explanatory measures included in the regression. For these measures, the beta 

coefficient signals the effect (direction and strength) of a relative change in the variable (e.g., county 

housing value) on the Economic Status Index. 

Regression models assess effects of county housing value, demographics, and employment/industry, 

both net of the county’s economic status four years ago (Model 1) and without taking into account the 

county’s past economic status (Model 3). Model 1 partially controls for important unmeasured factors that 

differ across counties but may remain the same over time. The inclusion of dummy variables for each 

state in all regression models also helps to control for unmeasured factors, including those attributable to 

differences in policies and regulations. For example, lending practices vary by state, partly due to state 

tax regulations, with the result that out-of-pocket closing costs for similar home loans may be much higher 

in one state than in another. Finally, the Stata procedure41 used to estimate whether or not a particular 

variable’s effect is significant produces reliable estimates even when some of the assumptions of the OLS 

linear regression model are violated. A key assumption of concern here is the independence of the 

observations. This assumption suggests that factors observed in each county occur independently of 

what is observed in other counties. This may not be true, for example, if one farming operation 

encompassed adjacent land in multiple counties. Also, counties with similar natural resource bases (or 

from the same subregion) may have some similar economic attributes because they benefit from the 

same geophysical structure. 

Results for All Counties in Appalachian Region States

The regression results shown in Table B.3 include three separate regression models. Model 1 shows 

estimates of effects when the following measures are included: past economic performance (FY 2007 

Economic Status Index), aggregate wealth (Log of Housing Value), geographic settlement patterns 

(metropolitan county, nonmetropolitan county adjacent to a metropolitan county, and nonmetropolitan 

county not adjacent to a metropolitan county), whether the county is in Appalachia or not, employment, 

industrial sector (manufacturing, construction, and other), black share of the working-age population, 

Hispanic share of the working-age population, and people age 60 or older as a share of the population, 

and control variables. Model 2 shows results when the regression includes only the FY 2007 Economic 

Status Index and control variables. Model 3 shows results when all variables except the FY 2007 

Economic Status Index are included. The explanatory power of each model as given by R-squared 

suggests persistence of a county’s past economic status.

Just the FY 2007 Economic Status Index alone accounts for 98 percent of the variation in the FY 2011 

Index across all counties. As Model 1 and 3 indicate, other factors are also significant, but the full effect of 

these factors is difficult to measure in the presence of past economic performance.

Appalachian counties have a significantly higher (worse) level of economic status in fiscal year 2011 than 

do non-Appalachian counties, even after taking into account differences in economic status four years 

before (in FY 2007) as well as industrial and population characteristics of the counties. The coefficient for 

“Appalachian County” is both positive and statistically significant in Table B.3. 

41 The analyses were conducted in Stata, Version 9, using the regress procedure with the robust variance estimation option.

69

 
Table B.3: Factors Associated with County Economic Status Index (Fiscal Year 2011), All Counties in 13 

Appalachian States

Variables

Model 1 Model 2 Model 3

Coeff Std Err 

(Robust) t-stat Coeff Std Err (Robust) t-stat Coeff Std Err (Robust) t-stat 

Economic Status Index 

(FY 2007) 0.96 0.01 69.17 ** 1.02 0.01 133.08 **

Log (Housing Value) -0.94 0.34 -2.77 ** -12.37 0.92 -13.47 **

Appalachian County 1.81 0.56 3.22 ** 21.26 1.62 13.10 **

Metro -2.12 0.70 -3.01 ** -19.39 2.23 -8.71 **

Nonmetro Adjacent to 

Metro -0.56 0.68 -0.83 -6.68 2.00 -3.34 **

Employment Ratio -0.03 0.01 -2.37 ** -0.34 0.05 -6.46 **

Percent Manufacturing 0.11 0.03 3.07 ** -0.42 0.09 -4.55 **

Percent Construction -0.12 0.09 -1.32 -1.95 0.26 -7.54 **

Percent Black in 

Population, Ages 15-64 0.06 0.02 2.41 ** 0.96 0.06 15.97 **

Percent Hispanic in 

Population, Ages 15-64 -0.08 0.06 -1.40 0.91 0.20 4.46 **

Percent Age 60+ -0.20 0.07 -2.80 ** -0.14 0.22 -0.62

Constant 12.06 4.60 2.62 ** -7.20 1.31 -5.51 ** 247.86 9.19 26.98 **

R2 0.98 0.97 0.78

Adjusted R2 0.98 0.97 0.77

N 1,070 1,070 1,070

Notes: **p<.05; *p<.10; Coefficients for control variables are not shown. These variables include: (1) states with Appalachian counties, with 

Alabama as the reference state and (2) control variable designating counties for which housing value was extrapolated from Census 2000 

and the Housing Price Index (HPI). The full model specifications with the coefficients for control variables may be found in the Appendix to 

this report. Appalachian county based on designation for FY 2011.

. 

70
The regression results for Model 1 (Table B.3) indicate that, net of other factors including past county 

economic performance, a one percent higher county housing value is associated with a county FY 2011 

Economic Status Index value that is lower (better) by 0.0094 (0.94/100). A county employment ratio that 

is higher by one percentage point is associated with a county FY 2011 Economic Status Index value that 

is lower (better) by 0.03. These results suggest that both housing values and employment are important 

to county economic health. 

In both Model 1 and Model 3 in Table B.3, metropolitan counties and nonmetropolitan counties adjacent 

to metropolitan areas, as expected, also have lower (better) FY 2011 Economic Status Index values, as 

expected. And a higher share of blacks in the working-age population is associated with higher (worse) 

FY 2011 Economic Status Index values. Surprisingly, in models where it is significant, a greater share of 

people age 60 and older in the population is associated with lower (better) FY 2011 Economic Status 

Index values. This result regarding the share of older people in the population possibly reflects the 

importance of stable incomes provided by income safety net programs such as Social Security.

In Model 1 (Table B.3), the significant positive coefficient for manufacturing, net of the Economic Status 

Index in FY 2007, indicates that in Appalachian counties, having a higher share of workers engaged in 

the manufacturing sector is associated with a higher (worse) economic status as measured by the FY 

2011 Index which captures economic performance at the end of the U.S. housing-led expansion. This 

finding is consistent with the decrease in U.S. manufacturing production since 2007, with the slow 

recovery, and with the decline in manufacturing employment in the Appalachian Region between 2000 

and 2007.42 In contrast, the negative coefficient for manufacturing and construction in Model 3 (Table B.3) 

suggests that manufacturing and construction are associated with lower (better) economic status when a 

county’s past economic performance is not taken into account. This is consistent with the relative stability 

of manufacturing employment in comparison to mining and possibly seasonal farm employment. 

42 Federal Reserve Board (2012), “Federal Reserve Statistical Release (May 16) – Industrial Production and Capacity Utilization,” 

accessed in May 2012 at http://www.federalreserve.gov/releases/g17/current/g17.pdf; Appalachian Regional Commission (2010), 

Economic Assessment of Appalachia: An Appalachian Regional Development Initiative Report (June), accessed in April 2013 at

http://www.arc.gov/images/programs/ardi/EconomicAssessmentofAppalachiaJune2010.pdf. 

71

 
Table B.4: Appalachian Counties (Full Specification) 

Variables

Model 1 Model 2 Model 3

Coeff Std Err 

(Robust) Coeff Std Err (Robust) Coeff Std Err (Robust) 

Economic Status Index

(FY 2007) 0.93 0.02 ** 0.99 0.02 **

Log (Housing Value) -1.88 0.66 ** -15.86 1.88 **

Metro -2.92 1.07 ** -20.98 3.53 **

Nonmetro Adjacent to 

Metro -1.56 0.94 * -9.98 3.08 **

Employment Ratio -0.05 0.02 ** -0.49 0.06 **

Percent Manufacturing 0.15 0.06 ** -0.52 0.14 **

Percent Construction 0.15 0.16 -2.07 0.44 **

Percent Black in Population, 

Ages 15-64 0.15 0.06 ** 0.62 0.12 **

Percent Hispanic in 

Population, Ages 15-64 0.23 0.12 * 0.53 0.34

Percent Age 60+ -0.08 0.11 -0.39 0.35

Whether Housing Value Was 

Imputed with HPI (Yes) 0.47 1.18 -5.79 2.99 *

States:

Georgia 14.65 1.70 ** 15.57 1.52 ** -0.18 3.32

Kentucky 23.07 2.08 ** 20.40 1.82 ** 42.20 5.37 **

Maryland 12.69 1.61 ** 7.46 1.44 ** 16.37 4.82 **

Mississippi 14.40 2.39 ** 18.64 2.42 ** 11.82 4.70 **

New York 9.64 2.00 ** 6.29 1.60 ** 1.71 4.36

North Carolina 9.51 1.54 ** 7.48 1.42 ** 15.19 4.49 **

Ohio 16.05 1.55 ** 12.99 1.36 ** 18.30 3.95 **

Pennsylvania 9.02 1.44 ** 5.73 1.16 ** 3.92 3.79

South Carolina 13.63 1.33 ** 11.11 1.31 ** 24.21 3.67 **

Tennessee 18.07 1.57 ** 15.69 1.47 ** 26.14 3.62 **

West Virginia 4.15 1.68 ** 0.61 1.37 8.44 4.13 **

Virginia 6.79 2.03 ** 5.55 1.68 ** -5.78 5.07

Constant 19.85 8.80 ** -2.37 2.27 315.27 17.19 **

R2 0.97 0.97 0.78

Adjusted R2 0.97 0.97 0.77

N 420 420 420

Note: **p<.05; *p<.10

72
Table B.5: All Counties in 13 Appalachian States (Full Specification)

Variables

Model 1 Model 2 Model 3

Coeff Std Err 

(Robust) Coeff Std Err (Robust) Coeff Std Err (Robust) 

Economic Status Index

(FY 2007) 0.96 0.01 ** 1.02 0.01 **

Log (Housing Value) -0.94 0.34 ** 0.76 0.47 -12.37 0.92 **

Appalachian County 1.81 0.56 ** 21.26 1.62 **

Metro -2.12 0.70 ** -19.39 2.23

Nonmetro Adjacent to 

Metro -0.56 0.68 -6.68 2.00 **

Employment Ratio -0.03 0.01 ** -0.34 0.05 **

Percent Manufacturing 0.11 0.03 ** -0.42 0.09 **

Percent Construction -0.12 0.09 -1.95 0.26 **

Percent Black in Population, 

Ages 15-64 0.06 0.02 ** 0.96 0.06 **

Percent Hispanic in 

Population, Ages 15-64 -0.08 0.06 0.91 0.20 **

Percent Age 60+ -0.20 0.07 ** -0.14 0.22

Whether Housing Value Was 

Imputed with HPI (Yes) 1.34 0.67 ** -2.80 1.95

States:

Georgia 17.19 0.99 ** 18.20 0.96 ** -0.31 2.80

Kentucky 17.62 1.19 ** 17.24 1.07 ** 31.49 3.55 **

Maryland 9.70 1.04 ** 7.90 1.04 ** -4.06 4.18

Mississippi 12.99 1.26 ** 13.67 1.31 ** 14.25 3.34 **

New York 9.15 1.15 ** 6.73 1.09 ** 10.82 3.35 **

North Carolina 7.36 0.97 ** 6.17 0.95 ** 5.86 2.99 *

Ohio 13.92 1.01 ** 13.49 0.93 ** 15.38 2.98 **

Pennsylvania 7.41 0.98 ** 6.14 0.92 ** 2.18 3.05

South Carolina 14.12 1.37 ** 13.36 1.41 ** 17.75 3.43 **

Tennessee 15.93 1.06 ** 15.36 1.06 ** 22.43 2.86 **

West Virginia 1.05 1.27 -0.36 1.27 9.69 3.63 **

Virginia 6.32 1.01 ** 6.15 0.99 ** -12.66 3.02 **

Constant 12.06 4.60 ** -7.20 1.31 ** 247.86 9.19 **

R2 0.98 0.97 0.78

Adjusted R2 0.98 0.97 0.77

N 1,070 1,070 1,070

Note: **p<.05; *p<.10

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APPENDIX C: METHODOLOGY FOR ESTIMATING AGGREGATE HOUSING VALUE FOR COUNTIES 

WITH POPULATION UNDER 20,000

For counties with population of 20,000 or more, county-level estimates of housing market value were 

obtained from the 2006-2008 American Community Survey (ACS) 3-year estimates. However, estimates 

for counties with population under 20,000 were not available at the time of the analysis.

We applied the following procedure to obtain county-level estimates of housing market value in 2008 for 

counties with population of less than 20,000:

Vi = Ri x Oi x Ni x Ii x Mi

Vi = aggregate value of owner-occupied housing in county i in the second quarter of 2008, 

Ri = homeownership rate in county i in 2000,

Oi = occupancy rate in county i in 2000,

Ni = estimated number of housing units in county i as of July 1, 2008,

Ii = appreciation (depreciation) between the second quarter of 2000 and the second quarter of 2008 

based on Federal Housing Finance Agency’s House Price Index (HPI) for county i, with HPI assignment 

based on the county metropolitan status,

Mi = average home price for county i in the base year, 2000.

We obtained the baseline county-level average home price Mi from estimates of home values reported in 

the 2000 Census of Population and Housing. Several studies have tried to measure the level of bias in 

self-reported home values and found that these may be as high as six percent. However, in life cycle 

models of wealth, homeowners’ perceived value may be the desirable measure because household 

consumption and savings behavior is likely to be based on perceived value. The average home prices are 

appreciated (depreciated) from 2000 to 2008 using the ratio of HPI in the second quarter of 2008 to HPI 

in the second quarter of 2000. 

We assigned HPI values to each county based on metro/nonmetro status in the respective quarters. For 

nonmetro counties, we used the HPI reported for the nonmetropolitan part of the state. For metro 

counties, we used the HPI for the metropolitan area in which the country is located.

Homeownership and occupancy rates for smaller counties are not available after the 2000 Census. We 

used the homeownership and occupancy rates from the 2000 Census rather than attempting to 

extrapolate rates for 2008. Past research by the Census Bureau suggests that for areas with small 

populations, using rates from the Decennial Census are more accurate and less subject to unrealistically 

large variation than results of extrapolation methods.

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