State Economy

The only thing trickling down is the pain

Lori Pfingst — 2011-08-17T18:40:44Z

Most people would agree that all children, regardless of their social and economic background, deserve the same opportunities to succeed in life. For a growing number of Washington’s children those opportunities are slipping away. Without adequate public investment the chances of our children succeeding in life will continue to diminish.

According to a new report released today by the Annie E. Casey Foundation, a growing number of children in Washington are experiencing the impact of parental unemployment and foreclosure in the wake of the recession:

One in eight kids (169,000) in Washington state has at least one parent experiencing unemployment. That marks an increase of 90,000 since the beginning of the recession in 2007.

The number of Washington kids living in homes subject to foreclosure since 2007 totals 68,000.

The research is clear – children who grow up in families experiencing the economic impact of unemployment and foreclosure are less likely to navigate life’s challenges and achieve future success. The younger they are and the longer they are exposed to economic hardship, the more opportunities diminish and the higher the risk of failure.

Overwhelming evidence suggests that state investments to help children and families remain economically secure in the wake of the recession would be a wise investment in our children’s – and our own – future.

Too bad Washington is doing exactly the opposite. The most recent budget passed in our state significantly undermines our children’s opportunities for success in life by making cuts like the following (see report for list of all cuts):

Funding to reduce class sizes and improve learning opportunities in grades K-4 was eliminated, compromising the quality of education our children receive (a modest amount of funding was provided to reduce class sizes in K-3 high-poverty schools);
Eligibility for Working Connections Child Care was reduced from 200 percent of the federal poverty line to 175 percent, making it harder for thousands of families to find child care so they can work;
Funding for higher education was cut so severely that tuition at Washington’s four-year institutions and community and technical colleges increased 11 percent to 16 percent, reducing affordability;
Pregnancy support for at-risk mothers to ensure positive birth outcomes was reduced by 30 percent.

Congress and many states continue to pass legislation that disproportionately benefits the super-rich under the myth that investing in them will trickle down to the rest of us. Most economists agree that this is exactly the opposite of what we should be doing. We need to make stronger investments in all our children and families at the federal and state level if we want to put our country on a path to prosperity. Until federal and state governments decide to make those investments, the only thing trickling down will be the pain.

Special session should focus on revenue and reform

Tara Lee — 2011-06-13T22:34:04Z

The Legislature resumes its work today with a special session. In addition to a number of policy bills, the most pressing task before legislators is to finalize and pass a budget for the 2011-2013 biennium.

There are a number of things the Legislature should do in the Special Session to help meet our short-term fiscal goals and ensure the long-term prosperity of our state.

Take a balanced approach to solve our current budget crisis

Curtail special tax breaks to preserve essential services--

All options must be on the table if we are to address our ongoing economic problems in a balanced and responsible way. In addition to enacting painful but necessary budget cuts, policymakers must also find new sources of revenue. Eliminating even a small fraction of the billions of dollars spent each year on special tax breaks would free-up resources needed to preserve our core investments in health care, education, and safe communities.

Several bills have been introduced to close targeted tax breaks to fund education, healthcare, mental health services, and other public priorities.

While none of these bills would solve the entire revenue shortfall, passing one or several of them would be a step in the right direction.

Some have argued that I-1053 – which requires that any new revenues be approved by a supermajority (two-thirds) vote of the legislature or a vote of the people – prevents a balanced approach to the economy's impact on the state budget. However, given the magnitude of the cuts under consideration, two-thirds of legislators ought to agree on a package of sensible revenue enhancements to stave off the worst of the cuts. Failing that, the legislature should send such a package to the voters for approval in November.

Make long-term reforms that would make our state budget process stronger

Reform how special tax breaks are reviewed and evaluated--

As we have highlighted many times, our current state budget process fails to account for the billions of dollars spent each year on tax breaks or “tax expenditures” – the hundreds of special credits, exemptions, deductions and other tax preferences. The failure to do so has led to a distorted and incomplete view of our spending priorities as a state.

This year, the Legislature has an opportunity to enact common-sense tax expenditure reforms that would bring greater accountability and transparency to our state budget process.

Key reforms that would allow policymakers to routinely balance the costs and benefits of tax expenditures against other public priorities include:

• Establishing routine oversight by requiring expiration dates for all tax expenditures;
• Improving fiscal management by allowing tax expenditures to be modified via a simple majority in the legislature;
• Fostering transparency through an executive tax expenditure budget;
• Ensuring tax expenditures are cost-effective by enhancing audit and review structures; and
• Enforcing accountability by enacting strict eligibility requirements for businesses that receive tax expenditures.

Without long-term tax expenditure reform, policymakers will not have the flexibility or the tools needed to make practical and balanced choices.

Read more about tax expenditure reform in our policy brief, “Every Dollar Counts: Why It’s Time for Tax Expenditure Reform,” which provides detailed analysis on how we can reform our tax break system.

Account for the costs of cuts --

Our current state budget process does not fully account for costs associated with cuts. As policymakers evaluate the pros and cons of legislation, one factor that weighs heavily is the cost or savings expected to result from a particular policy decision. Senator Nick Harper has sponsored a bill (SB 5872) that would require state agencies to estimate how cuts to one program impact other areas of the budget. For example, cuts to in-home care services for the elderly and people with developmental disabilities can lead to increased usage of nursing homes, which cost nearly three times that of services provided in a client’s own home.

SB 5872 would allow legislators to evaluate the full impact of cuts. Legislators should make choices that don’t undermine our future prosperity or leave us unprepared for the next recession. The reforms contained in Senator Harper’s bill would be a step in the right direction.

Make changes to the Rainy Day Fund--

Washington’s Budget Stabilization Account or “Rainy Day Fund” (RDF) was created to secure our essential public structures during recessions, natural disasters, and other state emergencies. Our current state RDF does not adequately support education, health care, and other important public priorities in times of need.

Legislators could make sensible, long-term reforms that would make our state rainy day fund more adequate and accessible during future state crises.

These reforms could include:
• Improving the adequacy of the RDF by increasing annual deposits;
• Fostering improved access and accountability by eliminating the supermajority requirement and applying strict limitations; and
• Ensuring the rainy day fund does not hinder recovery efforts by modifying deposit requirements.

For more analysis on how we can create a more robust rainy day fund, read the Budget & Policy Center Analysis, “Strengthening the Rainy Day Fund.”

Whether the special session is two weeks or 30 days, lawmakers are not just solving a short-term problem. The decisions they make now will impact our state for years, perhaps even decades to come.

Communities of Color Face High Underemployment in Washington

Andy Nicholas — 2010-02-11T22:17:47Z

As a result of the Great Recession, some 16.2 percent of Washington’s workforce was underemployed in 2009. Yesterday, we posted an analysis of new Bureau of Labor Statistics (BLS) data showing growth in the unemployment and underemployment rates in Washington since 2007. (We also described the differences between the two indicators.) Today we provide a deeper analysis of the new data, which show that underemployment was alarmingly high among certain communities of color in Washington State last year.

The graph below shows the 2009 underemployment rate by race and ethnicity in Washington. As the graph shows, white and Asian Washingtonians experienced average underemployment rates of 15 percent and 13 percent, respectively – significantly lower than the statewide rate. At the same time, underemployment among African Americans stood significantly above the statewide average at 21 percent. Finally, 26 percent of Hispanic workers were underemployed last year.

One-sixth of Washingtonians Were Underemployed in 2009

Andy Nicholas — 2010-02-11T00:24:46Z

On average, 16.2 percent of Washington’s workforce were underemployed in 2009, according to a Budget & Policy Center analysis of data from the U.S. Bureau of Labor Statistics. This is a dramatic increase from 8.8 percent two years earlier.

The underemployment rate provides a broader perspective on labor force weakness than the unemployment rate, a more commonly reported labor force statistic. The unemployment rate includes only those workers who are actively looking for, but unable to find, work. Along with the unemployed, the underemployment rate also captures workers that are marginally attached to the labor force (such as those who have given up looking for work because they are discouraged) and workers who are working part-time for economic reasons, such as being unable to find fulltime work.

The graph below shows both the unemployment and the underemployment rate in Washington from 2007 to 2009. The graph shows that both indicators rose dramatically during this period as a result of the national recession. It also shows that the gap between the two measures has widened.

Tomorrow’s post will examine underemployment among communities of color in Washington.

Important Work Support in Jeopardy

Jeff Chapman — 2010-01-29T17:02:43Z

The Governor’s budget proposals would make it more difficult for lower income parents to be employed. Both of her proposals would result in significant cuts to Working Connections Child Care (WCCC), a program that helps lower income working families pay for child care. The Governor’s first budget proposal (“Book 1”) proposed an $89 million reduction in WCCC. A cut of that size would affect an estimated 17,000 families by the end of June 2011. Her “Book 2” proposal would also make significant cuts—$49 million.

Without work supports such as WCCC, maintaining employment can be difficult if not impossible. According to the state Department of Early Learning, the average cost of a child care center for two children is about $1,177 per month.* As shown in the graph below, that is over half of the total monthly income for a family earning $24,000 per year.

To make matters worse, the cuts also come at a time when finding and maintaining employment is especially difficult. In 2009, the unemployment rate for single parents averaged 10.4 percent, compared to 6.2 percent just two years earlier (see the graph below). (The unemployment rate is the share of the labor force that is looking for, but unable to find, work.)

By making it more difficult for families to remain employed, cuts to Working Connections Child Care violate the value Washingtonians place on work. Preserving this important work support is yet another reason consideration should be given to strategies to increase state revenue.

* Assuming one toddler and one school-age child.

Thanks to Karen Tvedt, Lauren Platt, and Lori Pfingst.

Investing in Washington’s Workforce

Jeff Chapman — 2010-01-15T19:26:31Z

Emerging out of the recession with our economic competitiveness intact will require an investment in workforce training. As the economy begins to grow, we will need to have workers whose skills match up with the needs of employers in the fields of green energy, health care, life sciences, accounting, and engineering.

The Worker Retraining Program, operated through our state’s community and technical colleges, provides training for dislocated and unemployed workers to gain the new skills and knowledge needed to successfully re-enter the workforce. The program pays for instructors, curriculum, as well as financial aid that helps pay for tuition, books, fees, and other related expenses for individuals who lost their jobs due to economic changes.

The program is effective. Over 80% of participants find jobs within three quarters of completion.* Workers who were in high paying jobs were able to recover 87% of their previous income within that time period. Workers who were in lower wages job were able to recover 118%.*

The graph below, from the Washington State Board for Community and Technical Colleges, shows how enrollment in the program has spiked along with the unemployment rate and is expected to increase to 16,000 by 2010-11.*

In response to the growing need, Governor Gregoire has proposed funding the Worker Retraining Program for an additional 2,500 (FTE) Washington workers. This is a step in the right direction, but it still leaves thousands of unfunded slots and other applicants being turned away. And at the same time, her budget proposes other reductions in funding for community and technical colleges on top of last year’s cuts that will strain their ability to provide education and training. Additionally, deep cuts in health care, child care, and other areas will also harm workers.

Maintaining our edge in a growing and changing economy will require a state budget that invests in Washington’s workforce.

* Worker Retraining Program Accountability Report

EOI releases "The State of Working Washington 2009"

Stacey Schultz — 2009-12-18T19:13:42Z

Today the Economic Opportunity Institute is releasing its annual report, "The State of Working Washington." The 2009 edition focuses on economic security and the increasing difficulties that Washingtonians face to afford home ownership, health care, college tuition, and retirement savings. The report also highlights diminishing median amily income over the last decade and reductions in employer provided benefits for many Washington workers.

To access the report, click here.

New Census Poverty Data Reveal Deep Disparities throughout Washington

Andy Nicholas — 2009-12-17T20:29:25Z

According to new data from the U.S. Census Bureau, nearly 730,000 Washingtonians lived in poverty in 2008. In total, 11.3 percent of the state’s population had incomes at or below the federal poverty line last year. The overall poverty rate in 2008 remained statistically unchanged from the previous year, signaling that the data does not capture the full impact of the recession. Data for 2009, when the economic crisis worsened dramatically, is likely to show a disturbing increase in the number of Washingtonians living in poverty.

Poverty among Minority Communities in Washington

Poverty rates varied significantly across communities in Washington, with certain minority groups and counties experiencing higher rates compared to the general population. For example, last year members of Native American, African American, and Hispanic households were more than twice as likely to be impoverished compared to the population as a whole. The graph below shows that the poverty rate among Native American households stood at 26.1 percent. Similarly, African American and Hispanic communities experienced poverty rates of 22.9 and 23.5 percent, respectively. At the same time, Asian (9.2 percent) and White (9.9 percent) households were significantly less likely to be in poverty compared with the general population.

Poverty by County

Poverty rates in 2008 also varied significantly among Washington’s 19 largest counties – those with populations above 65,000. Compared to the statewide average, sparsely-populated counties tended to see higher poverty rates. The graph below shows that the poverty rate was highest in Franklin County (20.5 percent), followed by the counties of Yakima (18.3 percent), Grant (15.7 percent), Whatcom (14.7 percent), and Spokane (13.7 percent).

Conversely, residents in the counties of Snohomish (7.9 percent), Island (8.0 percent), King (9.1 percent), and Clark (9.6 percent) were significantly less likely to live in poverty compared with the statewide general population.

The poverty rate was not significantly different from the state average in Benton, Chelan, Clallam, Cowlitz, Grays Harbor, Kitsap, Lewis, Pierce, Skagit, and Thurston counties.

2009 Data Likely to Be Much Worse

Today’s 2008 data does not capture the full impact of the current recession. While the unemployment rate in Washington averaged 5.3 percent in 2008, that number jumped to 9.2 percent by August 2009. Overall, 66,000 jobs have been lost in Washington since the start of 2009. Nationwide, the recession has taken a greater toll on communities of color. In the U.S., the unemployment rate among white workers was 8.9 percent in August; but among African American and Hispanic workers, the rates was 15.1 and 13.0 percent, respectively.

In Franklin and Yakima Counties, 28 Percent of the Population Lacked Health Insurance in 2008

Andy Nicholas — 2009-12-16T19:32:12Z

According to new data from the U.S. Census Bureau, 13.1 percent of Washington’s population went without health coverage last year. Among the state's 19 largest counties – those with populations over 65,000 – there was significant variation, with more than one of every four Washingtonians in Franklin County and Yakima County lacking health insurance.

Counties with larger populations generally experienced lower uninsured rates compared to the state average. Yet even in King County, one of every 10 residents (10.6 percent of the population) was uninsured in 2008. In addition to King County, Island County (9.5 percent), Thurston County (10.9 percent), and Spokane County (11.8 percent) all experienced uninsured rates significantly lower than the statewide average. In Benton, Clark, Kitsap, Lewis, Pierce, Snohomish, and Whatcom counties the uninsured rate was about the same as the state average.

Of Washington’s most populous counties, Franklin County and Yakima County had the highest uninsured rates in 2008, which stood at 27.7 percent and 27.5 percent, respectively. Residents in the counties of Grays Harbor (16.0 percent), Clallam (16.6 percent), Cowlitz (16.7 percent), Skagit (16.7 percent), Chelan (19.7 percent), and Grant (20.5) were also significantly more likely to lack coverage compared to those in rest of the state.

While today’s data sheds much-needed light on the disparities in health coverage throughout Washington, next year’s data are likely to be far worse. In 2008, the unemployment rate averaged 5.3 percent in Washington. However, the economy deteriorated dramatically in 2009. As of August, the unemployment rate in Washington stood at 9.2 percent, and nearly 66,000 jobs have been lost in the state since January. A BPC analysis of the census health coverage data in 2007-08 shows the employer-based coverage weakened significantly during that period – a trend that will certainly continue throughout 2009.

For information on the uninsured rate among children in Washington State counties, click here to view an analysis from Washington Kids Count and the Children's Alliance.

Editor’s note: The Census Bureau originally planned to release single-year estimates of all indicators included in the 2008 American Community Survey (ACS) today. Due to a coding error, however, ACS poverty estimates will not be released until September 29, 2009. That morning, the Budget & Policy Center along with Washington Kids Count will release an analysis of the latest poverty data from the ACS.

Nearly 1 in 6 Washington Workers Were Underemployed in First Half of 2009

Jeff Chapman — 2009-12-15T23:57:05Z

In the first half of 2009, 16.2 percent of Washington’s potential workforce was underemployed each month on average. Two years earlier, before the recession, the underemployment rate was 9.4 percent.

The underemployed includes workers who:

Are unsuccessfully looking for work (the unemployed),
Are marginally attached to the labor market, such as workers who have given up looking for work because they have become discouraged,
Are working part-time for economic reasons, such as an inability to find fulltime work.

Struggling to Make Ends Meet

Jeff Chapman — 2009-12-15T23:57:43Z

Today, the Northwest Area Foundation released the findings from a national survey of 4,000 adults called "Struggling to Make Ends Meet." The findings are easily accessed using an interactive tool. Findings from Washington State include:

31% of respondents reported that they or a family member lost a job in the last 12 months.
35% had their hours (or those of a family member) cut at work in the last 12 months.
61% report cutting back on spending as a result of the recession.

Other topics include awareness of available services, ability to pay for basic needs, the scope of and explanations for hardship in local communities, and views about elected officials.

Income Inequality Grew Steadily from 2002-07

Andy Nicholas — 2009-12-17T01:44:48Z

The top one percent of wealthiest households in the U.S. saw almost unprecedented income growth between 2002 and 2007, with income rising ten times faster than it did for the bottom 90 percent of households. As a group, the richest one percent of households saw their incomes grow by 62 percent during this period, after adjusting for inflation. By comparison, the bottom 90 percent of Americans (those with annual incomes below $110,000) experienced income growth of only four percent.

According to a new analysis of IRS data by economists Thomas Piketty and Emmanuel Saez (summarized by CBPP), income growth skewed in favor of the wealthy during the 1920’s, but then turned towards the middle class during the post-WWII era. As the graph below shows, in the early 1980’s income growth again began to concentrate in the upper tiers of American households.

Income gains have been even more pronounced among those at the very top of the income scale. The CBPP report shows that incomes in the top one-tenth of one percent of U.S. households grew by about 94 percent ($3.5 million per household) from 2002 to 2007.

The report does not show the impact of the current economic recession. Even though it is expected that income concentration will fall in 2008-09, once the recovery begins economists predict income inequality trends will continue.

Public Insurance Keeps Uninsured Numbers from Rising, New Census Data Shows

Andy Nicholas — 2009-12-17T00:52:42Z

New Census data shows that while the overall share of Washingtonians who lacked health insurance went down between 2000-01 and 2007-08, employer-provided coverage weakened significantly over that time. Public coverage, that is Medicaid, increased during that time, offsetting the decreases in employer-based insurance.

National data shows that in 2000-01, 13.1 percent of Washingtonians lacked health insurance. This number dropped to 11.8 percent by 2007-08. Over that time, the table below shows that employer-sponsored health insurance fell from 67 percent of the population in 2000-01 to 64.6 percent in 2007-08. At the same time, the share of the population covered by Medicaid jumped from 12.1 percent to 13.6 percent.

Before the Census data was released, the Budget & Policy Center, Washington Kids Count, and others expected there would be a decrease in the share of Washingtonians with health insurance between 2000-01 and 2007-08. The news that the share of the population with health insurance actually went up, highlights the importance of publicly provided health care coverage.

During the last legislative session in Washington, lawmakers decided to cut funding for the state’s Basic Health Plan. This will result in a loss of coverage for Washingtonians who do not receive insurance through their employer. At the same time, the unemployment rate in the state has been rising, which means many people who did have employer-sponsored insurance will no longer have coverage. Because of these trends, we anticipate that a drop in the share of Washingtonians with health insurance will become evident in the near future.

Editor’s note: On September 22, 2009 the Census Bureau will release state-by-state estimates of poverty, median income, and health insurance coverage for 2008 from the American Community Survey (ACS). The ACS has a very large sample size, allowing for single-year estimates at the state and county levels. On the 22nd, the Budget & Policy Center and Washington Kids Count will jointly release an analysis of poverty, median income, and health coverage in Washington using the latest ACS data.

The Children's Alliance along with Washington Kids Count posted an analysis of the latest census data looking specifically health coverage among children in Washington. Consistent with the general population, they find that Washington's S-CHIP program (Apple Health for Kids) has kept number of children without health insurance from climbing in 2007-08.

New Census Health Insurance Data Likely to Show Declines in Health Coverage throughout Washington State

Andy Nicholas — 2009-12-15T21:47:47Z

Tomorrow, the U.S. Census Bureau will release national and state health insurance data for 2007-2008. The data will provide a preliminary glimpse of the impact that the current recession has had on families in Washington and throughout the nation. The data will not however, capture the full impact of the current economic crisis which deepened dramatically in 2009.

The new Census data is expected to show significant increases in the share of the population that is uninsured since the early 2000’s to 2007-2008. The loss of employer-sponsored health insurance is likely to be the dominant driver behind this trend. During the current recession, the economy sunk rapidly in 2009 and many more people lost their jobs and their health insurance. So while tomorrow’s release will signal trouble, next year’s 2008-2009 health coverage data will undoubtedly be far worse.

For example, as the graph below shows here in Washington the unemployment rate jumped from an average of 5.3 percent in 2008 to 9.1 percent by July 2009. Since the start of 2009, over 64,000 jobs have been lost in the state. As a result, next year’s 2008-2009 data will show a large drop in the number of Washingtonians enrolled in employer-sponsored health coverage.

Stay tuned to schmudget tomorrow when the Budget & Policy Center in conjunction with Washington Kids Count will post an analysis of health coverage trends in Washington using the new Census data. Our analysis will highlight changes in the share of the population without health insurance over time and will detail changes in employer-sponsored coverage and public coverage in Washington State.

Editor’s note: Tomorrow’s release will also include updated data on poverty and median income. To obtain state-level estimates of these measures, however, the Census Bureau recommends using data from a different survey, the American Community Survey (ACS). The latest ACS data for 2008 will be released on September 22, 2009. That morning, the Budget & Policy Center and Washington Kids Count will post analysis of the ACS data on poverty, median income, and health coverage in Washington State.

KIDS COUNT Data Center: Higher Education and Future Prosperity

Stacey Schultz — 2009-12-17T00:25:06Z

Editor’s Note: This post is the final in a series on the launch of the new KIDS COUNT Data Center in Washington State. The series is written by our colleagues at Washington KIDS COUNT at the University of Washington. The work of KIDS COUNT intersects well with efforts of the Budget & Policy Center to highlight the importance of state investments.

Higher education reaps numerous benefits for individuals and society including higher lifetime earnings, better health, and more civic participation. In Washington, less than 30 percent of adults over 25 have obtained a post-secondary degree.

Within the state, there are regional disparities in educational attainment. As the map below shows, in some urban counties like King and Whitman, close to half of adults (44 and 48 percent, respectively) have earned a bachelor’s degree. In contrast, in 13 of the state’s rural counties, less than one in five adults have completed a BA.

Find hundreds of indicators of child and family well-being for your county at the new KIDS COUNT Data Center.