Our economy is not just about numbers. It’s about people. The United Vision for Idaho coalition is fighting for new rules for our economy to ensure we’re cared for when we provide care for each other. We’re fighting even harder now, because the Donald Trump administration is trying to widen the socioeconomic divide, with regulatory changes, spending and tax legislation that most economists grimly predict will make matters even worse.
Pedro Nicolaci da Costa, writing in Business Insider, asserts, “… rather than kicking off his economic agenda with worker-friendly policies that bolster poor- and middle-class Americans, like a fiscal stimulus or infrastructure spending, Trump is pushing for policies that, if implemented, would deepen an already destabilizing gap between the rich and poor that have polarized American politics to the point of paralysis.” A stunning example of that is demonstrated in the nationwide, nonpartisan backlash against Republican efforts to repeal the Affordable Care Act and replace it with what boils down to massive cuts in safety net programs like Medicaid and CHIP, its counterpart program for children, to provide huge tax cuts for the very wealthy
. Nobel Economics Laureate Angus Deaton agrees. He recently told Reuters he believes Trump’s policies risk creating growth that mostly benefits the rich and aggravates income inequality in the United States, reneging on campaign promises of help for poorer Americans, while introducing proposals to parcel off public lands for exploitation, roll back environmental and job safety requirements and eliminate regulations on finance and industry in ways that mostly help corporate groups with political influence.
The Trump administration’s stated objective to cut taxes and raise trade barriers, might, if enacted, Deaton said, result in a short-term income boost to some workers but would not deliver the long-term growth essential to offset income inequality. (Deaton, a Princeton University professor, won the Nobel Prize in economics in 2015 for his work on poverty, welfare and consumption.)
The House Budget Committee followed up with its own slightly different budget recommendations. The differences will, as always, be subject to what is widely expected to be an arduous and possibly prolonged negotiation process, the outcome of which is anybody’s guess. Among the differences, House Republicans basically ignored Trump’s proposed $54 billion in cuts to such departments and agencies as State and the National Institutes of Health, countering with a more modest $5 billion reduction overall, except for defense spending, which the House proposal would increase by $72 billion, or $18 billion more than the president’s plan.
Income disparity, which directly affects our well-being, has grown sharply in the United States over recent decades and the World Bank says that at a global level, the gap has widened too since the 1990s, despite progress recently in some countries. That is reflected in the decline in America’s standing among nations in the Legatum Prosperity Index, a measure of nine key aspects of quality of daily life that collectively illustrate a nation’s prosperity and prospects for improvement of standards of living.
The 2016 Index showed the United States had slipped to 17th overall among the 149 societies measured. (New Zealand ranked first.) Weighed by the specific prosperity factors, the U.S. was a dismal 52nd in security, 35th in environment, including quality and protection, 32nd in health care and infrastructure, and, stunning for a nation that boasts of its democratic heritage, 22nd in quality of governance, including representative democracy, citizen participation, and rule of law. Among states, Idaho stands 31st, measured by such factors as poverty rate (15.1 percent, 20th in the nation), a 10-year population growth of 18.6 percent (Eighth-highest in the nation), and life expectancy at birth of 79 years, making Idaho 21st in the nation.
A key element in the cost of living is, of course, income. While the cost of living varies among states and locales, the federal baseline for the minimum wage is $7.25 an hour, where it has been stuck since 2009. (The minimum is much worse for workers under the age of 20, who can be paid $4.25 per hour for up to 90 days. And part-time workers under age 16 aren’t protected at all. Tipped workers may receive a wage as low as $3.35 an hour in Idaho, as long as their total in tips adds up to $3.90 an hour (resulting in a net hourly income of $7.20 an hour). Idaho is among the 21 states that have stuck to the federal minimum. (Louisiana, which has no state wage statute, is obliged to comply with the federal standard.)
In a caring economy, the basic cost of living would at least be balanced by a comparable “living wage.” The harsh reality is that has not been the case in America for decades. And, while both household income and household spending have contracted since the Great Depression (roughly 1929-1939), a study of household expenditures and income released last year by the Pew Charitable Trusts found income has not only failed to keep pace with expenditures, since 1996, but the gap has widened.
Median household spending grew by about 25 percent between 1996 and 2014, returning to pre-recession levels, to $36,800 for the typical American household in 2014. At the same time, Median income fell about 13 percent from 2004. The use of “median” is misleading as well, because low-income families spend a much larger portion of income on such basic needs as housing, food, and transportation, than to upper-income families. As of 2014, the Pew study found, households in the lower-third spent 40 percent of their income on housing, and those who rented, rather than owning, spent nearly half their income on housing. With so much of total income going to the core costs of living, households in the lower-income tier spent considerably less than middle- and upper-income households on discretionary items that are important to a robust economy --dining out and entertainment.
While budgets were tighter for all households in 2014 than they were in 2004, low-income households went into the red. In short, lack of financial flexibility threatens the financial security of low-income families more seriously in the short term and restricts their economic mobility in the long term.
it is impossible to live anywhere in the United States on a salary of $7.25 an hour without some form of assistance. (And 29 percent of low-wage employees are single parents.) In 2016, the states with the highest percentages of hourly paid workers earning at or below the federal minimum wage were Idaho, Kentucky, Louisiana, Mississippi, and South Carolina (all were at or near 5 percent). Making matters worse is a shortfall in housing for people with very low incomes, with just 35 units available for every 100 qualifying minimum wage earners.
The wage disparity situation in Idaho is made more complex by the fact that neighboring states pay higher hourly wages, and four of those states are to raise their minimum wage again over the next tree years. Idaho Business Review reported in June that, by 2020, Montana’s minimum wage will rise to $8.75 an hour, from $8.16 now; Nevada’s will go to $8.96, from $8.37; Oregon’s will jump to $11.25 from $9.75, and Washington’s will go to $13.50 an hour from the current $11 to $13.50 in 2020. Utah and Wyoming join Idaho at the federal minimum.
Population growth in Idaho is also among the strongest among states, and may reflect some relative strengths, such as a comparatively lower cost of living, in which goods and services cost about 6.6 percent less than they do on average across the country. Low unemployment has also helped. But higher education generally equates to being more likely to withstand economic downturns and to raise healthy, prosperous families. And Idaho doesn’t do as well in the crucial element of education, with fewer high school graduates going on to college, and only 26 percent of adults holding a bachelor’s degree. It is also important to note that even with a modest increase in state spending on public education, Idaho’s overall legislative priorities, as weighed in a 2016 study commissioned by Boise-based Idaho 2020, are not conducive to positive outcomes.
In the constant struggle to make things better, an important reality to remember is that, while perceptions of the best solutions may vary, The rich continue to get richer and the not-rich continue to bear more of the burden. Nationwide, 37 percent of Idahoans live in poverty or qualify as the “working poor,” meaning they would be in poverty without some form of public assistance. And things are getting worse. As a recent article in Scientific American put it, “We may not want to believe it, but the United States is now the most unequal of all Western nations. To make matters worse, America has considerably less social mobility than Canada and Europe.”
Put another way, Idaho is among many states that have stringent income limits for qualification for government assistance programs, yet the Gem State also fails to provide the legislative foundations and policy support that would raise the state’s economy to a level better-equipped to reduce the need for such programs, specifically policies related to financing, taxes, economic incentives and education. In some respects, Idaho has been more successful than other states in having pulled out of some of the worst effects of the recession.
Based on Bureau of Labor Statistics data, Idaho, with a minimum wage stuck since 2009 at the federal level of $7.25 an hour, ranks 41st among states in median household income ( $48,275), and has one of the lowest unemployment rates in the nation, at 3 percent in July, the fifth straight month of decline. Thus, while Idaho households tend to earn incomes well below the national median income of $55,775, the state’s job market is relatively healthy. Idaho’s unemployment rate has continued to shrink, from a 2015 rate of 4.1%, to 12th lowest of all states, and exceptionally low compared with other low-income states. Some portion of residents earn very high incomes in every state. In Idaho, however, only 2.7percent of households earn $200,000 or more, nearly the lowest of any state. By contrast, 5.8 percent of households nationwide earn such high incomes. But the incomes of that small percentage are generally well above the national that $200,000 annual marker.
The U.S. Census Bureau’s most recent 2016 American Community Survey found:
• Between 2014 and 2015, poverty rates declined in 23 states. No state saw a poverty rate increase.
• Poverty rates in 2015 ranged from a low of 8.2 percent in New Hampshire to a high of 22.0 percent in Mississippi.
• Some of the highest poverty rates were found in Alabama, Arkansas, Kentucky, Louisiana, Mississippi and New Mexico.
• Some of the lowest poverty rates were found in Alaska, Connecticut, Hawaii, Maryland, Minnesota, New Hampshire, New Jersey and Vermont.
• From 2014 to 2015, the poverty rate decreased in 16 of the 25 most populous metropolitan areas. None of the 25 most populous metropolitan areas saw an increase in the poverty rate.
Idaho also shares the problem of income inequality, the measure of disparity in earnings of the top 1 percent of the population against that of the remaining 99 percent. While Idaho’s disparity ratio, with the top 1 percent earning 16.3 times more, is not as dramatic as the national gap in which the richest 1 percent make 25.3 times more than the remaining 99 percent, it is marked by the fact that Idaho’s cost of living is also relatively low compared with the rest of the nation. To qualify for the top 1 percent of Idaho’s earnings bracket requires an annual average income of $738,278. In ski country around Hailey, in Blaine County, you’d need an annual income of $2,226,561 to make it into the top 1 percent, or 36.3 times the average annual income of those in the lower 99 percent, for which the average is $61,404 a year.
As a Forbes article on the disparity explains, “The real disparity between the classes isn't in income, however, but in net value: The 1 percent are worth about $8.4 million, or 70 times the worth of the lower classes.” More significantly, Forbes says, “Altogether, the top 1 percent control 43 percent of the wealth in the nation; the next 4 percent control an additional 29 percent.” And the gap continues to widen, both in Idaho and nationwide. “It's historically common for a powerful minority to control a majority of finances,” Forbes says, “but Americans haven't seen a disparity this wide since before the Great Depression -- and it keeps growing.”
In other words, the playing field is by no means equal. The Open Secrets report on wealth of members of the 115th Congress has shown a majority of members with net worth of $1 million or more since 2013, and the list continues to grow, despite the fact their base salary is “only” $174,000 a year. Wealthiest by far is California Republican Rep. Darrell Issa, who, the Los Angeles Times reports, may be worth far more than his reported $254.7 million. As much as 95 percent of Issa's wealth is in investments, including several high-yield bond accounts potentially worth more than $50 million each, and seven high-yield bond funds worth between $25 million and $50 million. Idaho’s senior Republican Sen. Jim Risch, of Boise, with net worth declining in the past year to a modest $19.14 million, most of it in real estate, including more than 250 acres in Ada and Canyon counties worth at least $16 million, is the 20th most wealthy member of Congress. (Other members of Idaho’s congressional delegation are less flush. Rep. Mike Simpson ranks 200th, with net worth of just under $1 million, Sen. Mike Crapo is 221st, with net worth of about $750,000, and Rep. Raul Labrador lags near the bottom, at No. 512, with negative net worth based on debt of about $250,000, including about $10,000 outstanding on his student loans.
The harsh reality, however, is that far too many Idaho families still struggle to make ends meet, much less get ahead. Numbers can’t adequately describe the human costs in terms of personal trauma involving some degree of economic distress. Numbers do, however, show Idaho stands 31st in the proportion of its residents living in poverty among all states, and suggest what we must do to fix that. Specifically, we know that a family of four in Idaho in 2015 needed an annual income of $24,250 to stay above poverty level. The progressive, nonpartisan policy think tank Center for American Progress compilation of economic data that relate to economic well-being for that year broke it down. Strictly based on the measure of total of Idaho residents living below that $24,250 annual poverty line, 17.4 percent were children, 17.1 percent were women of working age (who, by the way, earn just 74 cents for every dollar earned by male counterparts), and 14 percent of working age men were in that category.
Idaho stands, by many measures, near the bottom among all states, specifically:
• 44th in women’s median earnings for every dollar of men’s median earnings among full-time, year-around workers.
• 42nd in the of young adults ages 25 to 34 who had an associate’s degree or higher from 2015.
• 36th in the number of people under age 65 and below 138 percent of the poverty line who did not have health insurance at any time in 2015. This relates to Idaho’s infamous healthcare gap in qualifying for assistance in getting health insurance help under the expanded Medicaid provisions of the Affordable Care Act, based on the Legislature’s refusal to enact a qualifying program.
• 36th in the number of households that used high-cost, high-risk forms of credit to make ends meet during 2013. This includes usurious payday loans and automobile title loans, refund-anticipation loans, rent-to-own, and pawning. This is a key factor behind the fact most Idahoans are literally “just a paycheck away from poverty.”
• 36th in Health Insurance Coverage, based upon the 22.3 percent of people under age 65 and earning less than 138 percent of the poverty line who did not have health insurance at any time in 2015. (This was an improvement upon the 27 percent of Idahoans without health insurance before 2015.)
• 31st in the number of unemployment insurance recipients, representing 25.4 percent of qualifying unemployed workers who were helped by unemployment insurance in 2015.
• 29th in the number of apartments or other housing units that were affordable and available for every 100 renter households with very low incomes in 2015. Very low-income households are those with incomes at or below half of median income in the metropolitan or other area where they live. A more subjective U.S. News & World Report ranking of states put the Gem State 35th overall or its shortfall of low-income housing availability.
• 28th in hunger and food insecurity, based on households that were food insecure on average from 2013 to 2015, meaning that at some point during the year, they experienced difficulty providing enough food due to a lack of money or resources. Specifically, the Idaho Food Bank, found one in seven Idahoans – one in five Idaho children – 241,180 people in a 2016 population of 1,654,930.
• 26th in teen births, based on a birthrate of 23.2 births per 1,000 women between the ages of 15 and 19 in 2014.
As the list above shows, many factors go into how we need to think of a “caring economy,” and establishing policies and crafting legislation that ensure we all share the birthright truths upon which our nation was established, that we are all created equal, with “… certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Business Insider’s assessment of the potential damage Trump administration policies could do to the well-being of America’s poorest citizens is here.
Nobel Economics Laureate Angus Deaton’s assessment of Trump policies worsening economic disparity, as reported by Reuters, is here.
The full spending proposal for fiscal 2018 as presented by the House Budget Committee is here.
The World Bank’s 2016 report “Poverty and Shared Prosperity: taking on Inequality,” is here.
The Motley Fool, information about financial markets and economic realities, asks, “Can the Average American Live Off Social Security,” then proceeds to explain why the answer is decidedly, “No.”
Our national partner, the Economic Policy Institute, provides the “Family Budget Calculator,” a tool to calculate how much money you and your family will need to attain a “modest yet adequate standard of living, here.
Our state partner, the Idaho Center for Fiscal Policy, explains that Idaho simply cannot afford the program shifts and tax cuts the proposed budget cuts would impose in a mid-year report, available here.
America’s comparative national standing, as measured by the 2016 Legatum Prosperity Index, is here.
EPI’s explanation of how it arrived at its baseline figures for calculating your family’s financial needs (which vary widely throughout the 618 points in the nation where data were collected) is here.
The Pew Charitable Trust’s 2016 survey of Household Expenditures and Income is summarized here.
Healthy growth hasn’t reached the bottom half of America’s wage-earners, based on a chart from Washington-based Equitable Growth, here.
Fifteen facts about U.S. income inequality are summarized in this graphic.
The Department of Labor’s question-and-answer page on minimum wage standards is here .
The Labor Department’s Western Information Office of the Bureau of Labor Statistics provides a breakout of Idaho’s wage situation here.
The Idaho Business Review’s report on minimum wage increases by 2020 for four of Idaho’s six neighboring states is here.
The National Low-Income Housing Coalition’s summation of research on the shortfall of available housing for people with very low incomes is here.
How people in Idaho see economic policy priorities, based on a comprehensive 2016 survey, is detailed in the report from the Boise State University School of Public Service Public Policy Survey, in PDF format, here.
The 2016 study sponsored by United Way of Treasure Valley (and included in a larger, reginal study) showing 37 percent of Idahoans living in poverty or classified as “working poor,” in PDF format, is here.
The overview of findings from the nationwide ALICE (Asset-Limited, Income-Constrained, Employed) studies, including links to the Idaho report and all others, is here.
The “Idaho 2020” preliminary report presented to business leaders in January 2016, found Idaho’s legislative policies are not conducive to the economic growth needed to lift the state out of its near-bottom rankings in most quality-of-life measures. A Statesman account of the findings is here.
The Center for American Progress “Talk Poverty” report on poverty, based on 15 key economic indicators drawn from 2015 nationwide statistics, is here.
The “Talk Poverty” overall assessment of economic circumstances, with state-by-state comparisons, is here.
The Public News Service story on Equal Pay Day in Idaho is here.
State-by-state rankings based on personal income are from 247WallStreet.com, with Idaho’s status shown here.
The American Association of University Women’s “The Simple Truth,” the latest report on pay inequality is here.
Idaho’s income disparity, measured against the rest of the nation and the other states, is explained in “The Unequal States of America,” a 2016 study by our national partner, the Economic Policy Institute, here.
Income disparity and net worth disparity explained in Forbes, “Average America vs the One Percent,” here. Earnings and net worth of members of the 115th Congress, compiled by the Center for Responsive Politics, are listed here.
The Los Angeles Times report on Rep. Darrell Issa’s net worth is here.
Net worth of Idaho’s congressional delegation is detailed by Roll Call, here.
http://media.cq.com/50Richest/ Details of Idaho Sen. Jim Risch’s net worth are also from Roll Call, here.
Rep. Raul Labrador’s debt is described in the Spokesman-Review article “Idaho Rep. Labrador is 6th Poorest Member of Congress, here.
Comparison earnings requirements, reported by CNBC.com in “Here’s How Much You Have To earn To Be In The 1% In the Wealthiest US Cities,” are detailed here.
The federal Bureau of Labor Statistics earnings data “State Occupational Employment and Wage Estimates: Idaho,” are reported here.
State-by-state employment data are reported monthly in Department of Numbers, here.
The Idaho Foodbank’s updated 2016 report on statewide food insecurity is here.
The percentage of Idahoans without health insurance before 2015, and comparisons with rates and rankings in other states, as reported by the Kaiser Family Foundation, is shown here.
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