September 24, 2013

New Census Data Confirms Missouri’s Economy Isn’t Working for Everyone
The economy isn’t working for many workers, around the nation or here at home in Missouri. Too many people are unemployed and have been for far too long. Too many people have fallen from the middle class into poverty, and some of those who were struggling to rise out of poverty have fallen even further behind. Data released this week by the Census Bureau shows us that poverty remains unacceptably high and that stunning numbers of people cannot afford to pay their rent or, according to the Agriculture Department’s latest report, feed their families. We know what we should be doing to help rebuild the economy and restore people’s lives: provide unemployment benefits for those who can’t find jobs, continue tax credits to help working families make ends meet, maintain nutrition assistance to help buy food, rebuild our aging infrastructure to provide the framework for a strong economy and create jobs and invest in education from the earliest years to college to train the workers that a 21st century economy needs. These and other steps keep people out of poverty, strengthen our economy now and help build a prosperous future. We also know how to afford these essential investments: make sure everyone, including the wealthy and big corporations, pays their fair share. Unfortunately, rather than choosing to make these investments, extremists in Congress wish to force another round of shortsighted and counterproductive cuts, harming people and threatening to stall the very slow and weak recovery.
For Millions, the Economy Is Worse Now Than In the First Year of the Recession

Another Year of Short-sighted and Counterproductive Cuts Will Make It Worse

While the recession officially ended in June of 2009, the economy still is deeply troubled. Poverty was higher in 2012 than it was in 2008, the first full year of the recession, according to data released on September 17 by the Census Bureau. In 2008, 13.2 percent of the country was poor; in 2012, 15 percent or more than one in seven lived in poverty.i For a family of four, that means living on an income under $23,492. Additional new data released September 19 by the Census Bureau shows that one in six people in Missouri are living in poverty—an increase from 2008 when fewer than one in seven were poor. The share of households in Missouri with income under $35,000 has grown, while the share of households making $50,000 or more has fallen.ii

The number of those living in near-poverty also has grown; today more than onethird of the nation and more than one-third of Missouri live under twice the poverty income level (below $36,568 for a three-person family).iii Poverty is common even for those who work; nationally, one-quarter of families headed by part-time or part-year non-elderly workers are poor,iv and two-thirds of families headed by part-time or part-year workers are near poor.v Poverty is most common for those with the least education; one out of three people with less education than a high school degree is poor, but only one out of seven with a high school degree and fewer than one out of five with a college degree. In Missouri, 29 percent of people who have not finished high school are poor.

People of color fare even worse. Nationally, more than one out of three black children and one out of three Hispanic children are poor;vi here in Missouri, 44 percent of black children and 38 percent of Hispanic children are growing up in poverty.vii Nationally, nearly half our children are children of colorviii and they are a growing part of our population. It compromises all our futures when children of color remain so disproportionately poor because growing up poor means a greater chance of worse health, more struggles in school, a smaller likelihood of completing high school or advancing to post-secondary education and unacceptable social outcomes.ix There is no mystery about why poverty is so pervasive. In 2008, the first full year of the recession, the annual unemployment rate was only 5.8 percent. x Today, more than four years after the recession officially ended, unemployment stands at 7.3 percent nationally and 7.2 percent in Missouri.xi One out of seven workers nationally and one out of eight in Missouri are unemployed or underemployed— that includes those who can’t find enough hours of work and those who have given up looking for work.xii Over 4 million workers have been out of work for more than half a year. This is a portrait of a nation and a state in deep distress.
Indeed, only the very richest among us are flourishing. They have been garnering more and more of the nation’s income for decades, but now the pace has accelerated dramatically. This month, researchers from Berkeley and the Paris School of Economics updated their research showing that in 2012, the top 1 percent of U.S. earners collected 19.3 percent of household income. The top 10 percent of earners collected more than half of all household income, their largest share since it was first tracked in 1917. In the last three years, the income of the top 1 percent grew by 31.4 percent while incomes for the other 99 percent grew only by 0.4 percent. In 2011, the Census data showed the first annual increase in inequality since 1993, the earliest year such data have been collected.xiii Between 1993 and 2012, inequality as measured by the Gini index rose by 5.2 percent. xiv We pay a heavy price for our struggling economy. Because our economy isn’t working, millions of people are going hungry and risk homelessness. According to Department of Agriculture data released this month, nearly one in seven American households were food insecure at some point in 2012, meaning they lacked enough food for an active, healthy life for all household members. Here in Missouri over the past three years, one in six were food insecurexv. The Census data released September 19, 2013 shows that nationwide 43.1 percent of renters pay more than 35 percent of their income in rent, the official definition of families overburdened by rent costs.xvi Today, Missouri has even more overburdened households in 2012—41.7 percent—than they had in the recession year of 2008 when 36.2 percent paid too much for rental housing. xvii

One bright spot is health insurance; the number of uninsured has been dropping due to expansions of children’s health insurance programs and implementation of some provisions of the Affordable Care Act that particularly benefited young adults.xviii Simple Policy Choices Can Help Missouri’s Economy Isn’t Working for Everyone 3

A number of policies help keep families out of poverty and ensure better outcomes for children and adults. The new Census report shows us that in 2012, nearly four million people were kept out of poverty when their Supplemental Nutrition Assistance (SNAP, formerly food stamps) are counted as part of their income. Similarly, unemployment insurance kept 1.7 million out.xix In Missouri between 2009 and 2011, on average the combined effect of the Earned Income Tax Credit and the Child Tax Credit kept 178,548 people including 96,736 children out of povertyxx. These kinds of policies help build a prosperous country while helping vulnerable children and families. For example, we know that children from families that benefit from the EITC do better in school and end up working and earning more as adults.xxi Other important investments in education and infrastructure also create jobs, build a stronger economy and lead to shared prosperity. Poverty reduction occurs when there is a combination of broadly shared economic growth and government policies to ensure that the lowest income people are not left out. Those conditions were in effect in the 1950s and 1960s and as a result, between 1960 and 1973 the poverty rate was cut in half, from 22 percent to 11 percent. Investments in the interstate highway system and in education through the post-WWII G.I. Bill were important underpinnings of economic growth, along with minimum wage increases, labor laws and the growing presence of Social Security and other income assistance. xxii But today, instead of replicating these investments, the public sector has been squeezed at all levels. Congress Risks Stalling the Already Slow Recovery Despite everything we know about which policies will improve our economy and support future prosperity, domestic appropriations from education to infrastructure have been cut by 15.7 percent since 2010xxiii. Congress may undercut these policies further, by failing to stop the sequestration cuts. Or, if Congress forces cuts to benefits in SNAP, Medicaid, Medicare, or Social Security instead, these choices will inflict another round of blows to people and the recovery. Because of the mindless cuts already imposed through the sequester, without regard to where funds were needed or where cuts could safely be made, we have sustained significant reductions to essential programs. For example, although we know that strong Pre-K programs are an invaluable experience to prepare children for school, 57,000 fewer children are enrolled in Head Start this fall.xxiv Reading proficiency by third grade is the most important predictor of high school graduation and career success but every year, more than 80 percent of low-income children miss this crucial milestone. In the face of this failure, school districts across the country are forced to - slice professional development (59 percent of districts), eliminate personnel (53 percent), increase class size (48 percent) and defer technology purchases (46 percent) because of the federal cuts.xxv We already have a student loan crisis but due to budget cuts, college students are paying $4.6 billion more in higher student loan interest rates and receiving fewer Pell grants.xxvi

Missouri’s Economy Isn’t Working for Everyone 4

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