The Economics of the Appalachia

J.D. Vance’s NY Times Bestseller, Hillbilly Elegy takes a deep dive into describing the culture of the Appalachian region of the United States: an area of predominantly white, lower-class citizens struggling through economic and social crises. Destitution, poverty, and illiteracy are some of the themes that come to mind when discussing the region of Appalachia. There are many culturaland economic nuances to consider that can better explain the behaviors and systemic poverty the region faces.

 

Geography and Demographics

The Appalachian Regional Commission defines the region as “a 205,000-square-mile region that follows the spine of the Appalachian Mountains from southern New York to northern Mississippi.”  Home to over 25 million people, the region includes 420 counties across 13 states. It is 42% rural and over 80% white. Geographically, the Appalachian remains isolated from its neighbors due to thick forests,

Map of Appalachian region

high elevations and rugged mountainous terrain.

 

The region has considerably lower postsecondary educational attainment levels than the national average as of 2016. The Educational Attainment of Persons Ages 25 to 64 in the Appalachian Region in 2010-2014 was 23.9% in the Appalachian region (as opposed to the 30.9% national average).

Income and poverty statistics paint a grim portrait of the region’s stagnant path to recovery from the financial crisis of 2008.  Poverty rates among children and families have increased two and three percentage points, respectively, since the 2005-09 time period. Since 1965, poverty rates in the Appalachian have been higher than the U.S. national average.  Income levels have also worsened: Per capita income levels are down three percentage points from the 2005-09 time period.

Labor force participation has decreased and unemployment has risen in the Appalachian since the recent recession.  Along with nationwide statistics, this suggests that the economy has not yet reached full recovery.  Though the Appalachian was not hit as hard as the U.S. economy by the recent housing bubble, it has been struggling since the 1980s recession to keep pace with changes in industry.  These factors further perpetuate the systemic poverty suffered by generations of Appalachians.

 

Isolation

Rugged terrain and difficulty of travel make it challenging to move out the Appalachian. Geographic mobility statistics show that its residents have become less mobile since the housing bubble of 2008. Geographically, it is challenging; culturally, it is stigmatized; and financially, it is unfeasible to move out of the region.

Lack of adequate highway systems further contributes to the region’s isolation.  It is extremely challenging to compete for federal funding to improve transportation infrastructure.  This is due to its sparse population relative to the U.S. along with the costs associated with building roads on challenging mountainous terrain. This inadequacy serves as a devastating barrier to trade with mainland America.

The capacity of telecommunications in the Appalachia has consistently lagged behind the U.S. averages since the 1960’s.  Residents experience less access to broadband and high-speed internet compared to the nation.  This inefficiency serves as a barrier to communication with the outside world, thus isolating Appalachians socially.  This limit[s] not only the in-flow of new ideas and technologies and the ability of area residents to learn, but also the ability of area residents and leaders to imagine a different future.  

 

Opioid Epidemic

“The United States is in the midst of an unprecedented drug overdose epidemic.”  The Center for Disease Control recently reported national prescription drug abuse statistics:

  • The number of drug overdose death rates have increased five-fold in the past 30 years
  • In 2008 (the first time in American history), drug overdose deaths surpassed deaths by motor vehicles
  • In 2010 alone, opioid analgesics far exceeded deaths from any other drug or drug class
Prescription Opioid Dosage

The CDC notes that opioid abuse (deaths, ER visits, and treatment programs) is most prevalent in white Americans, especially those on Medicaid.  Medicaid-eligible patients are more likely to be prescribed opioid analgesics, at higher doses, and for longer time periods. The highest rates of death, opioid sales, and nonmedical use are clustered in the Appalachian region.

West Virginia currently suffers from a devastating overdose crisis.  In December of 2016, a (now Pulitzer Prize-winning) journalist unraveled and reported on suspicious behavior of pharmaceutical distributors in WV.  His discoveries are equally heartbreaking and disturbing. Through investigative journalism, Eric Eyre discovered that a single pharmacy in Kermit, WV (population 392 hundred) was shipped 780 million hydrocodone and oxycodone pills in 2007-2012 alone.  This is enough to supply every individual in the entire state of West Virginia with 433 pills. In addition to the increasing number of pills shipped, the dosages of opioids strengthened rapidly over the period, as well as illustrated in the graph (right).

Effects of the overdose crisis are substantial.  The economic cost of opioid abuse on taxpayers is estimated at $72 billion annually, calculating only medical costs. There are additional billions of dollars of annual costs that fund substance abuse treatment, criminal justice costs, and lost labor productivity.

 

Education and Economic Mobility

Although only 70 miles apart, the public education systems vary dramatically between Hampshire County, WV, Frederick County, VA,  Clarke County, VA, Loudoun County, VA.  Hampshire is defined as part of the Appalachian region, while Loudoun is one of the nation’s top 5 wealthiest counties.

U.S. News publishes annual demographic statistics on every high school in America, including a college readiness index and the school’s percentage of economically disadvantaged students. The data among these four counties significantly worsens as we approach the Appalachian region.  As a student from Frederick Co., VA I witnessed the disparity firsthand, having visited a high school in each of these counties from playing sports.  Students from across these counties have do not share an equal opportunity of advancing their educations or careers.

HIGH SCHOOL DEMOGRAPHICS Hampshire, WV Frederick, VA Clarke, VA Loudoun, VA
College Readiness Index (out of 100 = best)

4.4

7.3 20.1 64.6

% of Total Economically Disadvantaged

63% 23% 13%

10%


This disparity exists on a national level
among the poorest of the poor, and the wealthiest 1%. Five of the ivy-league schools educate more students from the 1% than from the bottom 60%.  The majority of students from families in the top 1% attend private postsecondary schools, but the majority of the bottom 20% do not pursue higher education.

 

Economic immobility in the U.S. continues to place children in low-income families at even more disadvantage, as their statistical education and earnings outcomes are predicted to be significantly less than students born into families of the upper class.

 

Culture

Common characteristics of the Appalachian population include strong family ties, distrust of outsiders, reluctance to change, and little value placed on education. One of the most troubling characteristics of “hillbilly” culture is the belief in fatalism: the notion that a person’s circumstances are predetermined and unchanging. The fatalistic and fundamentalist viewpoints held by Appalachians contribute to the culture’s development of low self-efficacy, further perpetuating the acceptance of poverty as status quo.  Rooted in culturally held ideologies, Appalachians are stuck in a self-fulfilling prophecy of systemic, generational destitution.

 

Conclusion

How do we begin to fix all of this? Ultimately a focus must be placed on improving opportunity inequality, rather than solely focusing on equality of outcomes: and this needs to start at a childhood level.

Equality of opportunity does not exist when the majority of Hampshire County high school is economically disadvantaged and fails to prepare its students for higher education, while just about an hour away in Loudoun, VA, the majority of public school students are fully prepared to apply for college. Opportunity equality does not exist when a child in America who is born into a family of wealth is expected to earn 200 times the salary of a child born into the lower class.

One can better understand the culture’s feelings of hopelessness after realizing that today; a resident of Appalachia has a better (and more realistic) chance of obtaining a prescription to opioid analgesics than obtaining a Bachelor’s degree.

The Economics of the Appalachia