Discussion Paper

Are Labor Shortages in Small Cities and Rural Areas Worse Than Urban Ones?

Abstract: In the past, the Richmond Fed has reported about the difficulty of businesses finding workers with the right skills. In conversations with business leaders across the Fifth District, we have heard about labor availability challenges across all geographies: in large urban centers, small cities, and rural areas. This post examines how labor availability differs between small cities and rural areas versus large urban centers. We find that the COVID-19 pandemic made it harder for firms in small cities and rural areas to find workers compared to firms in urban areas. Perhaps because of the increased challenges of finding workers, wage growth dynamics in the Fifth District have shifted: Surveyed firms in small cities and rural areas used to report lower wage growth than urban firms, but that is no longer the case.

Keywords: labor shortage; wage growth; rural; labor market;

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Regional Matters

Publication Date: 2024-08-15