Many people have definitions for the term rural, but seldom are these definitions in agreement. While that doesn't seem critical for running a small business, it can important because the federal government provides a number of financial incentives for economic development of rural areas. Before applying for funding one needs to know if your area is indeed rural according the federal agency providing funding.
For some, rural is a subjective state of mind. For others, rural is an objective quantitative measure. The primary three definitions used by the federal government are:
The Bureau of the Census defines an urbanized area (UA) by population density. According to this definition, each UA includes a central city and the surrounding densely settled territory that together have a population of 50,000 or more and a population density generally exceeding 1,000 people per square mile. A "county" is a political distinction and is not incorporated in the Bureau of the Census' classification scheme, so one UA may cover parts of several counties.
Under this definition, all persons living in UA's and in places (cities, towns, villages) with a population of 2,500 or more outside of UA's are considered the urban population. All others are considered rural.
The Office of Management and Budget (OMB) designates areas as metro on the basis of standards released in January 1980. According to this definition, each metropolitan statistical area (MSA) must include at least:
- one city with 50,000 or more inhabitants or
- an urbanized area (defined by the Bureau of the Census) with at least 50,000 inhabitants and a total MSA population of at least 100,000 (75,000 in New England).
These standards provide that each MSA must include the county in which the central city is located (the central county) and additional contiguous counties (fringe counties), if they are economically and socially integrated with the central county. Any county not included in an MSA is considered nonmetro.
OMB periodically reclassifies counties on the basis of Census data and population estimates.
The Economic Research Service (ERS) of the United States Department of Agriculture (USDA) uses rural-urban continuum codes to distinguish metro counties by size and nonmetro counties by their degree of urbanization or proximity to metro areas. USDA defines codes zero to 3 as metro, and 4 to 9 as nonmetro. (for example, 4 = Urban population of 20,000 or more, adjacent to a metro area, and 9 = Completely rural or urban population of fewer than 2,500, not adjacent to a metro area)
