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Raise the Wage Forum October 2015
- 1. TheIndianaInstituteforWorkingFamiliesconductsresearchand promotespublicpoliciestohelpHoosierfamiliesachieveandmaintain economicself-sufficiency. Raising the Wage and the Status of Working Families in Indiana Jessica Fraser | Program Manager, IIWF
- 2. What is Economic Self-Sufficiency? • Self-Sufficiency is the ability of individuals to care for their families without government support. • Generally, 200% of FPG is considered self-sufficiency • Our Self-Sufficiency Standard measures how much a family of a certain composition in a given geographic location needs to meet their basic needs. STAY TUNED IN JANUARY FOR NEWLY UPDATED DATA!!!! • Calculated for 70 family types in each of Indiana’s 92 counties. • Interactive Tool: The Self-Sufficiency Calculator www.indianaselfsufficiencystandard.org/
- 3. Self Sufficiency Standard Vs. Federal Poverty Guidelines (FPL) Self-Sufficiency Standard • Cost of basic needs based on local costs • County specific • Assumes all adults are working full-time • Adjusts by family size and composition • Includes taxes and tax credits Federal Poverty Guideline • Based solely on food costs • Assuming food represents 1/3rd of a families budget • Does not take into account geographic location • Assumes one parent stays at home and the other is working • Taxes not included
- 4. About the Report • Measuring the economic health of Hoosier families is a central function of the Institute’s mission. • Analyzes the general state of Indiana’s economy as it relates to working families by examining data on poverty, labor force and wages, followed by working-family friendly policy options. • Online and interactive data. • Guides our research and subsequent policy recommendations.
- 5. Chapter 1 • 2013 saw a record-breaking 1,015,127 Hoosiers in poverty. • Since 2000, poverty increased nationally by ~30% while Indiana saw a 57% increase. Among neighbors, only Michigan saw a larger increase. Our increase was near double Illinois’s increase. • Since 2007, poverty increased by more than 29% in Indiana – more than all neighbors and more than the national average. • 2014 finds us back at just over 975,000 with a statistically significant decrease in poverty and significant increase in median household income. • Indiana still has the highest rate low-income individuals than all of our neighboring states, except Kentucky. [ ]Poverty (Still) on the Rise
- 6. Growth in Poverty, 2000 - 2013
- 7. Growth in Child Poverty,2007 - 2013 22.2% 95 100 105 110 115 120 125 130 135 2007 2008 2009 2010 2011 2012 2013 U.S. (22.2) Illinois (20.7) Indiana (22.2) Kentucky (25.3) Michigan (23.8) Ohio (22.7) Source: Economic Policy Institute
- 8. Growth of Low-Income Hoosiers, 2007-2013 95 100 105 110 115 120 125 2007 2008 2009 2010 2011 2012 2013 U.S. (34.8) Illinois (31.9) Indiana (35.7) Kentucky (39.1) Michigan (35.6) Ohio (34.4) 35.7% Source: American Community Survey
- 9. Indiana’s Social Safety-Net’s NON- Response 926,694 1,015,127 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 2008 2009 2010 2011 2012 2013 SNAP TANF Poverty 24,276 Hoosiers on TANF in 2013 represents Source: Author analysis of TANF (U.S. Health and Human Services, Office of Family Assistance, Caseload Data), SNAP (USDA, SNAP Research and Analysis Division, Food and Nutrition Service) and Poverty (American Community Survey, 1 Year Averages) data. All 2013 annual averages calculated with data from January through September.
- 10. Chapter 2 • A closer examination of the data reveals that several large pockets of weakness in the labor market persist. • Working families trying to make up ground from the last decade-and-a-half of weak income growth are further hampered by the reality that today’s jobs are not what they used to be. Labor Market & 21st Century Jobs Swap[ ]
- 11. Indiana's Jobs Deficit May 2015 2500 2600 2700 2800 2900 3000 3100 3200 Jobs needed to keep up with population growth Jobs lost since December 2007 Employment level since 2000 Peak: 2,993,000 jobs Trough: 245,400 less jobs Source: Economic Policy Institute
- 12. Labor Force Participation December2007 – May 2015 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 68.0% 70.0% Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 U.S. Illinois Indiana Kentucky Michigan Ohio Source: Economic Policy Institute
- 13. 21st Century Job Swap 40150 -35,800 50526 -10,572 -72,992 49,623 -100000 -80000 -60000 -40000 -20000 0 20000 40000 60000 80000 # During Growth (2001-2007) # During Recession (2007-2010) # During Recovery (2010-2013) High Wage Jobs More than $26/hour Mid Wage Jobs $15 - $26/hour $31,200 - $54,080/year Low Wage Jobs Less than $15/hour $31,200/year Source: Author analysis of Current Employment Statistics (CES) survey
- 14. Public Sector Jobs Shedding of LocalGovernmentJobs During Recovery Source: Author analysis of Current Employment Statistics (CES) survey 10,576 (580) (4,898) 8,413 (2,043) (2,733) (6,000) (4,000) (2,000) - 2,000 4,000 6,000 8,000 10,000 12,000 # During Growth (2001-2007) # During Recession (2007- 2010) # During Recovery (2010- 2013) Local Government Educational services Non Education Local Government
- 15. Chapter 3 Food Services and Drinking Places 227,389 $6.53 Administrative and Support Services 166,971 $12.95 Transportation and Equipment Manufacturing 130,202 $26.63 Top 3 Industries by Total Jobs and Average Hourly Wage Source: Author analysis of Current Employment Statistics (CES) survey [Working for a (Basic) Living ]
- 16. Annualized Value of 2014 & 1968 Minimum Wage (in 2014 Dollars) Source: U.S. Department of Health and Human Services, 2014 Poverty Guidelines, UC Berkeley Labor Center, EPI CPS analysis $15,080 $22,797 $41,101 $20,613 $32,947 $15,730 $0 $10,000 $20,000 $30,000 $40,000 $50,000 Current Minimum Wage ($7.25) 1968 Minimum Wage ($10.96) Minimum Wage to Productivity ($19.76) 20th Percentile, Hourly ($9.91) 50th Percentile, Hourly ($15.84) Federal Poverty Guidelines
- 17. Self-Sufficiency – Hourly Wage Innocountydoesthefederalminimumwageof $7.25per hoursupporteconomicself-sufficiencyfora singleadult Indiana’s median hourly self-sufficiency wage for 1 adult = $9.26 Source: IIWF, 15 Reasons to Raise the Minimum Wage: http://goo.gl/I0hBZc
- 18. Income of Most Affluent Working Hoosier Families Compared to Least Affluent, 2005-2013 $92,587 $108,774 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 Bottom Quintile Top Quintile $30,438 $30,450 Source: Working Poor Families Project
- 19. Median Household Income, 2001- 2013 75 80 85 90 95 100 105 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Illinois Indiana Kentucky Michigan Ohio Source: Economic Policy Institute $47,529 $48,273 $43,339
- 20. Policy decisions are key Public policy decisions can help to restore prosperity by: • Repurposing a state-designed social safety net. • Reverse deteriorating job quality, stagnating wages and job inconsistency. • Construct tax policy based on the principle of fairness.
- 21. Chapter 3 Policy Options •Raise the Minimum Wage •Raise the Tipped Minimum Wage •Provide tax relief to low- to middle- income Hoosiers with a ‘Working Families Tax Cut’ package (See next chapter)
- 22. Contact Info Website: www.incap.org/iiwf Twitter: https://twitter.com/INInstitute Facebook: www.facebook.com/IN.Institute Blog: www.iiwf.blogspot.com Report Link: http://www.incap.org/iiwf/2015status.html Jessica Fraser jfraser@incap.org (317) 636-4232 @JessicaDFraser
Notes de l'éditeur
- When the measure of poverty was first created in the 1960’s, it assumed food to be one-third of the cost of a family’s most basic needs. That, of course, is no longer relevant as the arrangement of basic needs and their costs have changed – i.e., for low-income families, childcare can be up to 40 percent of a family’s budget, which happens to be double the amount families spend on food. Acknowledging this, government agencies often use ratios of poverty to determine need, such as 185 percent of the Federal Poverty Level (FPL) for Women, Infants and Children (WIC) to determine benefit eligibility.
- The charts are from our most recent report with 2013 data. The 2014 data has just come out, only a month ago and we haven’t had time to fully analyze and since we only write this report every other year we haven’t decided how we are going to get the new data out there, likely it will be some sort of fact sheet. I’ll inject some 2014 stats along the way, but just keep in mind that 2014 won’t be included on the charts.
- Until 2014, Indiana’s poverty rate had been consistently on the rise and the number of poor Hoosiers has been yo-yoing back and forth over that 1 Million for the pas
- Note absolute rates.
- Note absolute rates in legend. Like poverty, the number of low-income Hoosiers is still rising. There are now 2,275,546 (35.7%) low-income Hoosiers. Low-income Hoosiers = 1,015,127 below 100% FPL plus 1,260,419 between 100 and 199% FPL. 2014 this is down significantly to 34.7% but again, still absolute rates are still higher than all neighbors except KY.
- Even as poverty increases, Indiana’s tradition of designing public programs that discourage participation continues. Examples include asset limits, strict lifetime limits for cash welfare, letting benefits erode with inflation, onerous work requirements and denying support to so-called “able-bodied” adults. But the data make it clear that even before the Great Recession, and nearly a half-decade into the recovery, a greater share of Hoosiers are being left behind than most of the U.S. While not all of the increases in poverty levels are explained by our state’s social safety net characteristics, its mark is visible. After an entire decade of increasing poverty and stagnant wages, policymakers in Indiana can restore the rungs on the ladder of mobility that lead to the middle class so that the latter-part of the second decade of the 21st century is one in which – to borrow the moniker used to describe our state budget surplus – Hoosier families’ finances are the fiscal envy of the nation.
- When the recession began in December 2007, Indiana had 2,993,000 jobs. Since then, Indiana has experienced 28 months of job loss. Indiana’s employment trough occurred in July 2009 when Indiana had 245,400 fewer jobs that in did before the recession started. Now in May 2015, Indiana has 3,042,800 jobs (49,7000 more than when recession started). Indiana’s job deficit, or the difference between the number of jobs Indiana has and the number if needs to regain its pre-recession employment rate is 117,600. That number includes the 49,700 jobs Indiana gained less the 167,300 jobs it needs to keep up with the 5.6% growth in population that Indiana has experienced in the 89 months since the recession began. As of August 2015 (most recent available) we have gained 63,900 jobs since the recession began, however the number of jobs needed to keep up with population growth is 173,600 so our jobs deficit is still 109,700 jobs. (we have closed up the Jobs deficit by about 8,000 jobs since May 2015, so some progress. We need to add 4,000 jobs every month to close the jobs deficit in 3 years. This analysis doesn’t measure jobs deficit since the year 2000.
- Labor Force Participation Ratio (LFPR)—the ratio of the civilian labor force to the total non-institutionalized civilian population 16 years and older—as a useful tool in determining the overall health of the labor market. A low LFPR means there is slack in the labor market, which puts downward pressure on wages, and holds back growth in household incomes. From February to April, Indiana saw a .5% decline in the unemployment rate, from 5.9% to 5.4%. That's the 5th largest decline in the nation in that time period. Yet, during that same time period, 18,800 Hoosiers dropped out of the labor force (more than the 16,600 jobs added from February to April). As a percent of the labor force, that's the second largest exodus from the labor market in the U.S. during that time period - just behind Wisconsin. This means that the unemployment rate decline can be explained - in part - by the number of Hoosiers leaving the labor force. Workers are only counted in the unemployment rate if they are actively seeking work. If someone finds no success in the job market, gives up the job search, and leaves the labor force, the unemployment rate goes down - but not for good reasons. To illustrate declining LFPR; while the state is reaching employment levels (total nonfarm employment) not seen since the summer of 2000, the population of adults in Indiana (16+) has grown by more than a half-million during that time period. In other words, Indiana has added jobs, but not nearly enough to keep up with population growth. BLOG POST: All That Glitters Is Not Gold. August LFPR showed improvement back up to about 1000 more folks in the laborforce than we had in February 2015, it has taken 6 months to make up for that loss in the labor force participation rate.
- The recovery has been more equal in its distribution – low-wage industries account for 33% of gains during the recovery and mid-wage industries account for 35% of recovery period gains. Nevertheless, that’s a net loss for mid-wage industries when factoring in the recession’s losses. But the true culprit for the dramatic job swap and the decade-and-a-half of economic decline that still persists to this day are the losses that preceded the Great Recession. GROWTH: From 2001 – 2007, Indiana saw a meager net gain of 18,000 private sector jobs, compared to population growth of individuals 26 years and older of more than 200,000 in the same time period – helping to explain the decades-long decline in labor force participation rates. Of all industries experiencing net growth in this period, 45% paid under $13.00 per hour (in 2013 dollars). Of all industries that experienced a net loss during this period, 64% paid over $20 per hour. RECESSION: Of the jobs in mid-wage industries lost, 43% were in manufacturing and 38% were construction and contracting. Widening the divide, both industries topped off of the mid-wage category with an average hourly wage of around $25 an hour. Of the high-wage losses, half were ‘manufacturers of transportation equipment’ – also known as the auto industry. RECOVERY MID-WAGE. The recovery has been more equal in the wages of the jobs that have come back, with mid-wage industries accounting for the largest share of job growth (35%). Of these, 35% are manufacturing. Other mid-wage gains were in ‘private education’, ‘hospitals’, ‘truck transportation’ and ‘warehousing and storage’. Construction and contracting jobs have gained just 20 percent of their total lost during the recession. HIGH-WAGE. Of the nearly 50,000 jobs in high-wage industries gained during the recovery, half were ‘transportation manufacturers’. After shedding 36,000 jobs in the recession, Indiana’s auto industry has gained about half of its recession losses back during the recovery, while ‘ambulatory health care services’ (i.e., medical assistants and medical secretaries) accounted for 25% of high-wage recovery period gains (having also increased by 6,400 during the recession). LOW-WAGE. The largest gain in low-wage industries was in ‘administrative support services’ – (i.e., security guards, janitors and landscapers) – accounting for nearly 23,000 jobs (45%) of the low-wage recovery share. More than 31% of this growth was in ‘food service and drinking places’ (i.e., fast food, waiters and waitresses and cooks). There are almost a quarter-million total jobs in this industry, and they account for 25% of all low-wage jobs. Illustrating its resiliency, the nearly 16,000 jobs gained in this sector during the recovery doubled the losses it experienced during the recession. At the same time, this impressive job growth in food services also makes ensuring the quality of these jobs is all the more important Social services (i.e., childcare workers) and ‘nursing and residential care facilities’ (i.e., home health aides and licensed practical and licensed vocational nurses) saw recovery and recession growth
- Firefighters, policemen, first responders and teachers not only provide important services to communities, but they fit squarely in the mid-wage job category, and their recession – and recovery – losses dent the balanced growth in the private sector recovery. Ultimately, the largest losses to both state and local government occurred during the recovery, as the state and local governments dealt with budget deficits by shedding public sector jobs. While such decisions might lead to balanced budgets in the short term, they can be incredibly short-sighted, leading to lower future growth Local Government makes up 75% of state and local government together, and more than half of local government is local educational services. The large majority (87%) of the nearly nine-thousand jobs lost between state and local government during the recovery were local government jobs. Of the 7,361 that were local government, 65% were local education and 30% were ‘executive, legislative and general government’. Job losses in state government were shared by ‘community and housing program administration’ and ‘justice, public order, and safety activities’.
- The shift from mid-wage jobs to low-wage jobs is partially illustrated by the changing arrangement of the largest three industries, by total employment, where ‘administrative and support services’—a typically lower-paying industry – replaced ‘transportation equipment manufacturing’ – a typically higher-paying industry – as number two. At the same time, many of the manufacturing jobs pay less than they did in the past, as do the low-wage jobs. Of the half-million jobs in the top three industries, 74% pay below $13.00 per hour. FOOD SERVICES: Nationally, 40% of occupations within this industry are ‘food preparation and serving workers, including fast food.’ As of May 2013, Indiana had the 5th highest concentration of employment per thousand jobs in this occupation. The main reason why pay in this field is so low is because state and federal law allows tipped workers, such as waiters and waitresses, to be paid a sub-minimum wage of $2.13 per hour – a wage floor that hasn’t been raised in 24 years. This loophole for tipped workers leads to dramatically higher poverty rates among waiters, waitresses, and bartenders than workers in all other occupations. ADMINISTRATIVE AND SUPPORT SERVICES INDUSTRY: Nationally, 30% of occupations within this industry are ‘janitors and cleaners, except maids and housekeeping cleaners’, and nationally, the median wages is $9.72; 30% are ‘security guards’ with a median wage of $10.97; and another 35 percent are ‘laborers and freight, stock, and material movers, hand’ and ‘landscaping and groundskeeping workers’ with median hourly wages of $9.58 and $11.43, respectively. TRANSPORTATION EQUIPMENT MANUFACTURING: This industry, by and large, drove Indiana’s recovery, yet wages are not what they used to be. Nationally, the majority of occupations within this industry – and the manufacturing industry altogether - are ‘team assemblers’, or line workers. According to National Employment Law Project (NELP), the number of temporary workers in this occupation has increased three-fold, yet their wages are 29% lower than direct hires. At $16.78, this hourly wage is well under the average hourly wage of $28.00 for the sector as a whole. NELP also finds that as a member of the ten “auto alley” states, Indiana was among five states (Michigan and Ohio included) where “new hires at auto parts plants are paid roughly one-quarter less than the other auto parts workers in the state – a 27% decline in monthly earnings.”
- Indiana’s low cost of living doesn’t justify wage inaction.
- From 2005-2013, income for the least affluent working families in Indiana declined 0.04% as most affluent grew 17.5% The growing divide between high-income earners and low- to middle-income earners in the U.S. continues to be of concern not only as a matter of basic fairness, but because it works against a growing middle class and a sustainable economy. According to the Census Bureau’s Household 2013 brief, the latest data available, only two other states saw larger increases in inequality over the previous year, as measured by the Gini Coefficient (a number used to represent income distribution). Policy choices, past and present, such as increasingly regressive tax policies and a lack of response to stagnating wages contribute to the loss of shared growth and equal opportunity for future generations.
- Median household income has been on the decline since the beginning of the century – down by nearly $8,000 since 2000, and still declining as of last count (while all neighbors states’ median household incomes are increasing). Up about $1,000 in 2014 but still down from its value in 2000.
- Work is the key to economic self-sufficiency, but simply having a job is not enough; Hoosier families and communities need quality jobs that pay well enough to meet a family’s most basic needs, such as childcare, housing, food and transportation.