Monday, November 17, 2014

SMOKE AND MIRRORS: PROFITS AND JOBS UP AS HOUSEHOLDS SUFFER



Harry Targ

“The numbers show a conservative blueprint for success: seven straight months of job growth with unemployment under 6 percent and a state that leads the nation in new manufacturing jobs. Plus, throw in tax cuts and a budget surplus for good measuresummarizing an interview with Governor Mike Pence. (David Brody, CBN News, “GOP Eyes Indiana’s Pence as Presidential Contender,” www.cbn.com/cbnnews/politics/2014, June/Indianas-Gov-Pence-a-Presidential-Contender-For-2016/)

News from Indiana celebrates the state’s economic recovery (still below pre-recession levels). As the statement above suggests, the recipe for Hoosier success has been tax cuts, corporate and private, and cutting budgets to maintain surpluses for emergencies. Indiana has been a trend-setter for the nation as to privatization of the public sector: including shifting to charter schools, establishing a voucher system encouraging parents to shift their children from public to private schools, selling off public roads, and recruiting controversial corporations such as Duke Power and government agencies, military and civilian, to support research at the state’s flagship research universities.

A panel of Purdue University economists recently predicted continued economic and job growth in 2015 approaching pre-recession levels. While panelists recognized the problem Indiana faces concerning long-term job loss and stagnant wages, they reported some growth in manufacturing employment and expanding jobs in data analysis and finance. They reported also that household expenditures had stabilized. Finally, agriculture, they said, is holding its own. For the future panelists recommended that workers should be trained for the skills demanded of a high technology 21st century economy.

The Purdue economists were more cautiously optimistic and less partisan than politicians such as Governor Pence cited in the Brody article.  However, the relatively positive narrative about the Indiana economy presented by the Governor and Purdue economists varies greatly from recently published research findings. For example, the Indiana Institute for Working Families reported on data from a study of work and poverty in Marion County, which includes the state’s largest city, Indianapolis.  Four of five of the largest growing industries in the county pay wages at or below family sustainability ($798 per week for a family of three) and individual and household wages declined significantly between 2008 and 2012 (Derek Thomas, “Inequality in Indy - A Rising Problem With Ready Solutions,” August 13, 2014, (www.iiwf.blogspot.com).

Further, Thomas quoted a U.S. Conference of Mayors’ report on wages and income:  “wage inequality grew twice as rapidly in the Indianapolis metro area as in the rest of the nation since the recession.” This is so because new jobs created paid less on average than the jobs that were lost since the recession started.

Thomas pointed out that the mayors’ report had several concrete proposals that could address declining real wages and stimulate job growth. These included “raising the minimum wage, strengthening the Earned Income Tax Credit, public programs to retrain displaced workers, universal pre-k and programs to build the nation’s infrastructure.”  They may have added that declining real wages also could be related to attacks on unions in both the private and public sectors and the dramatic reduction in public sector employment.

Thomas added that Indianapolis (and Indiana) should take these data seriously because in Marion County “poverty is still rising, the minimum wage is less than half of what it takes for a single-mother with an infant to be economically self-sufficient; 47 percent of workers do not have access to a paid sick day from work, and a full 32 percent are at or below 150 percent of the federal poverty guidelines ($29,685 for a family of three).” 

More recently, November 10, 2014, the Indiana Association of United Ways issued a 250 page report on the state called the “Study of Financial Hardship.” The study, parallel to similar studies in five other states and prepared by a research team at Rutgers University, refers to Asset Limited, Income Constrained, Employed or (ALICE). ALICE refers to households with incomes that are above the poverty rate but below “the basic cost of living.” The startling data revealed that:

-a third of Hoosier households cannot afford adequate housing, food, health care, child care, and transportation.

-more precisely 14 percent of households are below the poverty line and 23 percent above poverty but below the threshold out of ALICE, or earning enough to provide for the basic cost of living.

-570,000 households are within the ALICE status and 353,000 below the poverty line.

-over 21 percent of households in every Indiana county are above poverty but below the capacity to provide for basic sustenance.

Referring to those within the ALICE category of wage earners who struggle to survive but earn less than what it takes to meet basic needs, Kathy Ertel, Board Chairperson of Indiana Association of United Ways said: “ALICE is our child care worker, our retail clerk, the CAN who cares for our grandparents, and our delivery driver” (Roger L. Frick, “Groundbreaking Study Reveals 37% of Hoosier Households Struggle With the Basics,” Indiana Association of United Ways, November 10, 2014, (Roger.Frick@iauw.org).

Assessing the current state of the Indiana economy depends upon where one is located in terms of economic, political, or professional position. Those Indiana men, women, and children who come from the 37 percent of households who earn less, at, or slightly above the poverty line probably have a negative view of their futures. For them, the tax breaks for the rich and the austerity policies for the poor are not positive. 

It is the task of progressives to mobilize to reverse those policies that hurt so many Indiana citizens.