ARC Report Cites Economic Progress and Challenges in Appalachian Region Since 1965 February 2015

WASHINGTON, February 22, 2015—The Appalachian Regional Commission (ARC) today issued a research report that shows substantial economic progress in the Appalachian Region since the inception of the Commission in 1965, although significant development challenges remain.

The report, Appalachia Then and Now: Examining Changes to the Appalachian Region Since 1965, was prepared for ARC by the Center for Regional Economic Competitiveness and West Virginia University.

ARC, a regional economic development agency that represents a partnership of federal, state, and local government, was created in 1965 with the passage of the Appalachian Regional Development Act. A broad bipartisan coalition in Congress approved the legislation early that year, and President Lyndon B. Johnson signed it into law on March 9.

ARC Federal Co-Chair Earl F. Gohl noted some of the significant improvements described in the report: "The Appalachian Region has gone from 295 high-poverty counties in 1960 to 107 today. The Region's high school graduation rates have increased to being almost on par with the nation's, infant mortality has plummeted, availability of potable water has gone up, and more than 2,000 miles of new highways have been built and opened since President Johnson made his historic 1964 visit to Martin County, Kentucky," he said. "The challenge going forward is to use the Region's assets: a history of hard work, innovative solutions to complex problems, and strong families and communities to leverage today's emerging economic opportunities into a diverse and vibrant economic future."

Kentucky Governor Steven Beshear, ARC's 2015 states' co-chair, called the report a major endorsement of ARC's mission. "The report makes clear that ARC has played a significant role in the economic development of the Appalachian Region and helped to create a brighter future for its people," he said. "We can be proud of what we have achieved, while remaining dedicated to overcoming the considerable challenges that remain."

Other Appalachian governors noted the role ARC has played in the progress made in their states and the need for continued effort:

"For five decades the Appalachian Regional Commission has worked with Alabama's governors to strengthen our economy and improve living standards in our Appalachian counties," Alabama Governor Robert Bentley said. "The Commission has provided 2,272 grants totaling $308 million for Alabama projects that create jobs, encourage business development, increase education and job training opportunities, and improve telecommunications, infrastructure, housing, and transportation. Appalachian Alabama's poverty rate has been cut in half since 1960, and I am confident that, working together, we can achieve even greater progress in the coming years."

"In Virginia, the Appalachian Regional Commission is making major strides by increasing educational attainment and household income and reducing poverty and the number of households lacking indoor plumbing," said Governor Terry McAuliffe. "This program is an important contributor to our efforts to build a new Virginia economy, both in the Appalachian region and in the Commonwealth as a whole."

West Virginia Governor Earl Ray Tomblin said, "I'm pleased with the work we've done not only to strengthen West Virginia's business climate, but also to improve the quality of life for everyone in the Appalachian Region. As this report indicates, we've made great progress, but there is still work to be done. I remain committed to serving the people of the Appalachian Region now and for years to come."

"Pennsylvania is pleased that with assistance from ARC, our 52 Appalachian counties have realized progress over the past 50 years," Governor Tom Wolf said. "I want to continue our efforts to improve the quality of life and provide necessary infrastructure and resources for our Appalachian citizens and businesses. We still have significant work left to do to reduce poverty, improve access to education, and create better economic security for these communities."

"Maryland has a long history of working with ARC in bringing economic development to the Appalachian Region," said Governor Larry Hogan. "ARC's investments have helped bolster local efforts to improve the lives our people, and I look forward to continuing to work with ARC in advancing the Region economically."

"The findings of this study are encouraging, as we work to bring all of North Carolina's regions to economic parity," Governor Pat McCrory said. "While there is still plenty of work to do, I applaud the Appalachian Region Commission for the progress it has made in North Carolina."

The research report quantifies and documents changes to Appalachia over the past 50 years, evaluates ARC's contribution to the Region's economic development during this time period, and assesses the extent to which Appalachia remains "a region apart" relative to the rest of the United States.

Among the points noted in the report are the following:

• Poverty has been cut in half in Appalachia; the rate has dropped from nearly 31 percent in 1960 to 16.6 percent today.
• Today, only 3.2 percent of Appalachian houses still lack complete plumbing, as compared with 2 percent nationally, a stark improvement from the nearly 14 percent lacking complete plumbing in 1970.
• Infant-mortality rates have dropped by more than two-thirds in Appalachia, moving much closer toward parity with the rest of the nation. But overall mortality rates are also up in the Region, while they continue to fall in the rest of the country.
• The Region has achieved near-parity in high school graduation rates, an important accomplishment; but Appalachia remains behind in post-secondary educational attainment.
• Major progress in reducing the Region's isolation has been achieved through construction of the Appalachian Development Highway System (ADHS) connecting Appalachia to the Interstate Highway System. As of September 2014, a total of 2,762.9 miles, or 89.4 percent of the 3,090 miles authorized for the ADHS, were either complete or under construction.
• Total economic impacts on the Region of completing the ADHS would, by 2035, result in the creation of an estimated 80,500 jobs, $5 billion in increased value-added production, and $3.2 billion in increased wages for Appalachian workers. At the national level, the estimated return on investment yields $3 for every dollar invested.
• Since 1965, ARC has funded nearly 25,000 strategic investments in nonhighway activities in the Region; funding for these investments included $3.8 billion in appropriated ARC funds and $9 billion in matching funds from other federal, state, and local funding sources.
• Since 1978, ARC-financed nonhighway investments in Appalachia have attracted nearly $16 billion in leveraged private investment, an average of $6.40 in private-sector financing for each $1 in funds invested by ARC. The ratio reached nearly 10 to 1 in the period 2007–2012, and nearly 15 to 1 in 2013.
• Over the last five decades, ARC's investments have helped create nearly 312,000 jobs and $10 billion in added earnings in the Region. On average, annually, these ARC funds supported an estimated 6,364 jobs and $204 million (in constant 2013 dollars) in earnings.
• A rigorous quasi-experimental research method indicates that ARC investments helped counties add employment at a 4.2 percent faster rate and increase per-capita income at a 5.5 percent faster rate than similar counties outside of the Region that did not receive ARC investments.
• Since the 2008–09 recession, the Region's unemployment rate has tracked the U.S. rate closely, with a few persistent pockets of joblessness, similar to the rest of the country.
• The Region is becoming less reliant on employment from resource-extractive and goods-producing sectors and more dependent on the service sector for employment.
• As late as 1970, 16.2 percent of area homes did not have access to phone service, compared with 13 percent of households nationally. By 2012, the proportion of households without phone services in the Appalachian Region was about 2.8 percent, very nearly the same as the national average of 2.5 percent.
• Appalachia trails significantly in the affordability of Internet service, as well as in access to high-speed broadband, especially at the household or business-unit level.
• There has been a steady outmigration of adults between the ages of 18 and 35 from the Region for access to jobs and other opportunities.

The full report is available on the ARC Web site.