Census numbers tell of stagnancy and slow recovery

Today is the big day that comes each year: the release of American Community Survey figures on income and poverty.

Ready for some numbers?

Michigan’s household median income in 2013 ($48,273) was a bit higher than in 2012, but is nearly $1,000 lower than in 2009. The income bracket that grew the largest from 2009 to 2013 was the share of Michigan households who make under $10,000 a year. The only other income bracket with a significant share increase was households making more than $200,000 a year. These numbers taken together suggest that the slow economic recovery in Michigan is primarily benefiting those at higher incomes.

The 2013 poverty rate remained basically the same as the year before at 17%. Child poverty went down from 24.9% to 23.8%. While a 1 percentage point decrease is not the type of thing to make headlines, it still is a good trend.  But unfortunately, the child poverty rate remains higher than in 2009.

The percentage of renters with unaffordable rent (rent that consumes over 1/3 of household income) also improved over the past several years. In 2009, nearly 47% of renters paid more than 35% of their income for rent, and in 2013, that number was down to nearly 44%. But 44% of renters paying unaffordable rent is still too many!

One area that showed decisive improvement is in the educational level of Michigan residents over 25 years of age. The respective percentages with associate, bachelor’s and graduate degrees all significantly increased from 2009 to 2013, while the percentages with no high school diploma or only a high school diploma significantly decreased. (This is important because having a postsecondary credential is becoming increasingly important, even in trades which traditionally required only a high school diploma and on-the-job training.)

Overall, the 2013 census figures have little by way of good news or terrible news. The main story is one of stagnancy, which in Michigan’s current climate means the improvement we have been hoping for has not really happened yet.

The Michigan League for Public Policy has outlined some options that we urge policymakers to consider:

  • Restore the Michigan Earned Income Tax Credit, which helps over 1 million children in families receiving the credit in Michigan. It was cut from 20 percent of the federal credit to 6 percent of the federal credit in 2011.
  • Raise the minimum wage to a higher level than what has recently been legislated ($9.25 by 2018). Polls show strong public support for $10.10 an hour and studies show that such an increase will not hinder job growth.
  • Resist more business tax cuts that would starve education and other needed state programs that help families.
  • Return unemployment benefits to a maximum of 26 weeks to provide a safety net while unemployed workers look for work.  The Michigan Legislature cut the maximum to 20 weeks in 2011.
  • Find ways to get more food assistance to the hungry. Michigan has options to expand federal food benefits in the state.
  • Enact policies that make it easier for workers earning low wages to develop skills and obtain credentials.

– Peter Ruark

Pay Falls for Men Earning Low Wages, Yet Women Far Behind

Over the past 35 years, wages for Michigan’s lowest-paid workers have plummeted (men) or stagnated (women), while wages for the highest-paid workers have increased substantially. Disparity in wage growth – with increases for a relatively small sector of the workforce and declines or stagnation for the vast majority – is one of the most important factors influencing the shrinking of the middle class and the faltering of living standards in the country.

Michigan women have higher rates of postsecondary degrees than their male counterparts, and their wages have increased over the years (particularly for higher-earning women). Yet, Michigan’s gender wage gap is the seventh highest in the country. Women of color and high-earning women are particularly affected.

While in Michigan, men’s earnings fared poorly for the most part and the earnings of women increased only modestly, wage trends in Minnesota tell a different story. Since 1979, median wages decreased only slightly for Minnesota men, and increased substantially for women.

The dramatic differences in wage trends seen in Michigan and Minnesota are in part the result of deindustrialization, which hurt Michigan more than Minnesota. However, these are also the result of different tax and spending strategies: While Michigan has a low flat personal income tax rate and has struggled to adequately fund its public schools, Minnesota is a “tax and spend” state that taxes its wealthy residents at a higher rate and spends more in the education of its workforce. This strategy has helped Minnesota grow its share of the knowledgebased job sector, which pays middle-class wages, much more substantially than Michigan.

 

World class colleges, sluggish financial aid

It is a point of pride among Michiganians that we have great public universities and private colleges.

We have two Top Ten universities that are friendly rivals, and high-quality regional universities. In addition to providing an excellent education for Michigan residents, our universities attract respected scholars and cream-of-the crop students from all over the world. We have a number of widely respected private colleges as well.

So why does Michigan lag behind most other Midwestern states and much of the country in providing financial aid that makes such great education affordable?

Per capita, Michigan spends $194 on need-based financial aid grants per undergraduate student — lower than every other Midwest state except Ohio, and is only one-quarter what Indiana and Illinois spend.

According to the Project on Student Debt, in 2011-2012, Michigan private 4-year college graduates owed an average of $32,672 in student debt, 74% more than similar graduates owed in 2003-2004. For public university graduates, it was $28,147, a 50% jump during the same period.

Having highly skilled people in our state is great for business and the economy, but when our graduates spend years paying off debt, it takes a little of the blush off the bloom. High college debt limits the upward mobility of those graduates and restricts the money they can spend in their communities. At worst, it can contribute to severe financial difficulty.

Michigan needs to make the affordability of education as high of a priority as the quality and prestige of our institutions:

 

Shooting ourselves in the foot

Michigan and the seven other states that cut unemployment benefits in the wake of the Great Recession caused financial hardship for unemployed workers and failed to boost the overall economic outlooks of the states, a new report from the Economic Policy Institute concludes.

Problems with the unemployment system actually stemmed from underfunding the state trust funds in good times, rather than paying out benefits too generously, the report concludes. And cutting benefits not only shortchanged jobless workers and their families, it undermined the countercyclical role of the unemployment system that is designed to kick in when times are tough. (more…)

Vets lose benefits as we celebrate Fourth of July

Just as we head into one of our most patriotic celebrations of the year next week (the Fourth of July), a new estimate out shows that 285,000 unemployed veterans will lose jobless benefits by the end of June, including thousands of out-of-work vets in Michigan.

Extended benefits known as Emergency Unemployment Compensation expired Dec. 28. Congress’ failure to extend the benefits means that 1.3 million workers were cut off from unemployment benefits nationwide at the end of last year, with an additional 1.6 million exhausting their regular state benefits in the first six months of this year. Included in those numbers are nearly 300,000 jobless vets, Chad Stone, chief economist at the Center on Budget and Policy Priorities, estimates. (more…)

Bad for MI: higher ed less affordable

Those of us moving our college students home for the summer this week probably are not surprised by a new national report showing that Michigan has made deep cuts in funding for colleges and universities, leading to steep increases in tuition.

Compared with other states, I’m afraid Michigan doesn’t look so good. Policymakers in Michigan cut per-student state spending more than 37 other states from 2008 to 2014—a 28% cut in state support. Michigan’s average tuition increase of over $2,000 (a 21% increase) during that time is higher than 34 other states. (more…)

EVIP madness

As I was filling out my NCAA bracket last week I had an epiphany—maybe this is how statutory revenue sharing is going to be decided in the future, thanks to a complicated Snyder administration program known as EVIP. For example, municipalities could get ranked and placed into a bracket with one another, advance by submitting more meaningless documentation to the state, and maybe receive enough to provide some of the public safety services they have had to stop delivering.

The odds of how much, if any, statutory revenue sharing a municipality will receive are surely similar to the largest of March Madness office pools. (more…)

Not a pie-in-the-sky idea

From the League’s First Tuesday newsletter
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  • Life is a bowl of cherries.
  • It’s the pits.
  • That’s a pie-in-the sky idea.

My staff and I have been making a lot of cherry puns over the last week. But it’s all for a serious reason.

We used a cherry pie to show what 20% of Michigan families earning the least would get if we roll back the Michigan personal income tax from 4.25% to 3.9%. Yep, that’s just $12 – enough to buy a cherry pie from the bakery. (more…)

What’s your agenda for Michigan?

 

Consider this: This November, voters will elect a governor, all 38 state senators and all 110 state representatives.

Clearly, it’s an important year for our state’s future. The Center for Michigan, described by founder Phil Power as a nonpartisan “think and do tank,” wants your input. What issues do you want elected officials to address on the campaign trail – and in the state Capitol once they are elected?

The League is hosting a Community Conversation, one of many held around the state, from 1 to 2:30 p.m. Monday at the Greater Lansing Housing Coalition, 600 W. Maple St. Lansing. (more…)

Exhausted but inspired

I recently returned from Health Action 2014, Families USA’s annual conference, in my usual condition – exhausted yet inspired! It was a good year for Michigan: Dizzy Warren, of Michigan Consumers for Healthcare, was awarded one of the three Advocate of the Year awards, and Michigan blogger Amy Lynn Smith won the painting created onsite by Regina Holliday!

The conference opened with a cancer survivor sharing her story of having her COBRA coverage end on Dec. 31, 2013 during her cancer treatment. Thanks to the Affordable Care Act, she was able to sign up for coverage starting Jan. 1 and continue her treatments uninterrupted. (more…)

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