SOURCE & METHODOLOGY

Distressed Designation and County Economic Status Classification System, FY 2002 – FY 2005


The Appalachian Regional Commission (ARC) uses a county economic classification system to target counties in need of special economic assistance. The system classifies counties into four economic status designations—distressed, transitional, competitive, and attainment—based on a comparison of county and national averages for three economic indicators: three-year average unemployment rate, per capita market income, and poverty rate.

Each fiscal year, using the most current data available, ARC determines each Appalachian county's economic status designation based on thresholds established for each level. The county's designation is then used in the distribution of funds for the fiscal year.



ARC County Economic Status Classification System

County Economic Levels County Economic Indicator Thresholds Alternate Criteria
Three-Year Average Unemployment Rate Per Capita Market Income Poverty Rate
Distressed 150% or more of U.S. average 67% or less of U.S. average 150% or more of U.S. average At least twice the U.S. poverty rate and meet the threshold of one other distressed-level indicator.
Transitional All counties that are worse than the national average for one or more indicator but do not meet the criteria for the distressed level.
Competitive 100% or less of U.S. average 80% or more of U.S. average 100% or less of U.S. average  
Attainment 100% or less of U.S. average 100% or more of U.S. average 100% or less of U.S. average  

County Economic Levels

Distressed
Distressed counties are the most economically depressed counties. These counties have three-year average unemployment rates at least 1.5 times the national average, per capita market income no greater than two-thirds of the national average, and poverty rates at least 1.5 times the national average; OR they have at least twice the national poverty rate and meet the criteria for either the unemployment or the income indicator.

Transitional
Transitional counties have rates worse than the national average for one or more of the three economic indicators (three-year average unemployment, per capita market income, and poverty) but do not meet the criteria for the distressed level.

Competitive
Competitive counties have three-year average unemployment rates and poverty rates equal to or better than the national average, and per capita market income equal to or greater than 80 percent, but less than 100 percent, of the national average.

Attainment
Attainment counties have economic indicators (three-year average unemployment, per capita market income, and poverty) equal to or better than the national averages.

County Economic Indicators

Three–Year Average Unemployment Rate
The three-year average unemployment rate is a measure of long-term structural unemployment that allows for the comparison of counties across state borders. The unemployment rate is calculated by dividing the three-year sum of persons unemployed by the three-year sum of the civilian labor force.

Source: U.S. Department of Labor, Bureau of Labor Statistics, Local Area Unemployment Statistics.

Per Capita Market Income
Per capita market income is calculated by dividing total personal income, less transfer payments, by population. Transfer payments include retirement and disability insurance benefit payments, medical payments, income maintenance benefit payments, unemployment insurance benefit payments, veterans benefit payments, and other such payments.

Source: U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Information System.

Poverty Rate
The poverty rate is computed by dividing the number of persons living below the poverty threshold by the number of persons for whom poverty status has been determined.

Source: U.S. Department of Commerce, Census Bureau, Census of Population and Housing 1990 Summary Tape File 3A, and 2000 Summary File 3.

Note: Poverty rates from the 2000 Census of Population and Housing were used in ARC's economic designations beginning with fiscal year 2004.

Time Series
ARC computes new county economic levels each fiscal year based on the most current data available at the beginning of the calendar year of computation. The time series used for each economic indicator and fiscal year is listed in the table below.  

Fiscal Year County Economic Indicators
Three–Year Average Unemployment Rate Per Capita Market Income Poverty Rate
2005
(Effective Oct. 1, 2004 – Sept. 30, 2005)
2000–2002 2001 2000
2004
(Effective Oct. 1, 2003 – Sept. 30, 2004)
1999–2001 2000 2000
2003
(Effective Oct. 1, 2002 – Sept. 30, 2003)
1998–2000 1999 1990
2002
(Effective Oct. 1, 2001 – Sept. 30, 2002)
1997–1999 1998 1990