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Showing blog entries tagged as: Income Inequality


Brief: Child savings accounts advance economic opportunities for kids and families

Posted by Jennifer Tran at Jul 02, 2018 10:10 AM |
By Hana Jang, 2017-18 Narver policy fellow, and Jennifer Tran, senior policy analyst


In an inclusive economy, everyone – including the youngest among us – would have the means to have a lifetime of economic security. Yet this is not the case for many children and families in Washington state. Financial security and stability remain out of reach for many families, especially for families of color. Thirty percent of all households and 50 percent of households headed by people of color do not have enough savings to cover basic expenses for three months in the case of a sudden job loss, medical emergency, or another financial crisis – let alone enough resources to save for their own future and the future of their kids.

Our new brief, “Building Assets for Washington State’s Future” (the second in the Progress in Washington series), focuses on the need to create a statewide child savings account (CSA) program. CSAs are long-term savings accounts established for children early on in life that build until they reach adulthood, and offer incentives that can help accumulate savings along the way. By creating such a program, policymakers have the opportunity to give kids the opportunity for lifelong prosperity. CSA programs structured to advance equity can set kids up for lifelong economic success, particularly for kids of color in families who may face additional barriers to economic opportunity.

CSA

Whether they are set up at birth, kindergarten, or middle school, CSAs can have a big impact on a child’s life. Research shows that low- and moderate-income children with college savings are significantly more likely to go to college and graduate than those with no college savings. But the benefits of CSAs are not just limited to children’s post-secondary education opportunities. These accounts demonstrate the potential for parents and caregivers, together with children, to create a shared culture around savings. 

Washington’s elected leaders can give kids a strong financial foundation by developing a statewide CSA program. There are certainly logistics to work out to determine how best to establish a CSA program that reaches the needs of every child, but now is the time for big thinkers to come together and strategize about what that could look like in our state.

Our brief highlights the key elements of a CSA program that can advance equity and help build an inclusive economy for Washington state. Features that remove barriers to participation and encourage families to save – such as automatically enrolling every child, providing an initial deposit to kick start savings, and including additional incentives for children from families with low- and moderate-incomes – can help ensure all children from Washington state have the tools for lifelong financial security and stability.

Our state’s well-being is tied to the health and prosperity of kids and families. Policymakers who pursue the creation of CSAs can help our state thrive into the future and invest in our shared economic prosperity.

Building Assets for Washington State’s Future” is the second publication in our Progress in Washington 2018  series (see the first publication, “Building an Inclusive Economy,” here). This series examines ways our state can reach the goal of an inclusive Washington state economy with shared prosperity for everyone.


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New report: An inclusive economy is essential for all Washingtonians, our economy, and the future progress of our state

Washington is poised for great economic progress. By many measures, a better future for all people in our state is within our grasp. And yet, economic growth is not reaching all Washingtonians. There are persistent and deep disparities based on race, ethnicity, nativity, class, and geography across every measure of economic progress. Progress is meaningful only if it’s felt by everyone and prosperity is shared by all Washingtonians. To create real progress, our state must have an inclusive economy in which everyone, especially people with low incomes and people of color, can participate in growth and benefit from it. Those are the primary findings of our “Building an Inclusive Economy” report (the first in our Progress in Washington 2018 series of reports).

Inclusive Economy carouselShared economic prosperity is one of the best measures of how our state and country are progressing, but economic growth has not been broadly shared in our state. Gains in income have been concentrated at the top while wages for low- and middle-income people have stagnated or declined. This rise in inequality is the result of many state and federal policy and budget decisions by legislators that have negatively impacted certain Washington state residents. Decades of regressive taxation, deregulation, privatization, cuts to the safety net, as well as the decline of collective bargaining have all played a role in rising inequality.

Washington state’s own upside-down tax code has contributed to the problem. Hardworking families in our state pay as much as seven times more than the wealthiest pay while corporations and the ultra-wealthy benefit from unnecessary tax breaks, making it hard for our state to have the revenue it needs to invest in the foundations that serve us all, such as great schools, quality health care, and other public priorities that make Washington a great place to live. Policymakers must fix our broken tax code. Doing so will allow our state budget to have sustainable sources of revenue to build an inclusive economy and to invest equitably in our communities in the short and long term.

Prosperity should be within reach of all Washingtonians
Making sure all Washingtonians have access to opportunity and resources is essential to ensuring prosperity is within reach of all residents. Across many indicators of economic progress, the data show that people with low incomes and people of color are starting off on unequal footing and are facing greater barriers in large part because of the impact of harmful historical housing, economic development, and financial policies. As Washington grows more racially and ethnically diverse, the future well-being of all of us hinges upon erasing the deep and pervasive racial imbalances that exist across these measures. By 2050, our state population will be majority people of color. Washington state’s young people are already at the forefront of this demographic transformation. Forty-three percent of children are kids of color.

 [Click on graphic to enlarge.]

WA_Demog_1980to2050

In an inclusive economy, all Washingtonians – regardless of race, ethnicity, nativity, income, or community of residence – would be able to access quality jobs and have financial security and stability. Our education system would be preparing students and workers for good jobs and jobs of the future. And all Washingtonians would be able to live healthy lives in vibrant communities so they can better connect to and participate in the economy. However, data trends highlighted in our report indicate economic prosperity is out or reach for many residents in three key areas – economic security; education and job readiness; and healthy people and communities. For example:

  • Economic security: Although economic growth holds the promise of prosperity for working people across the state, rising employment has not reached all communities. While unemployment in Washington state has overall dipped to 4.5 percent, for many communities of color – such as Pacific Islanders, American Indians, and Blacks – unemployment rates remain at or near 10 percent. There are geographic differences as well: the unemployment rate has remained high in many rural counties. In Ferry County, the unemployment rate is the highest in the state at 9.1 percent, and in Pacific and Wahkiakum counties, unemployment remains at just above 6 percent.
  • Education and job readiness: While the state’s Department of Early Learning’s goal is for 90 percent of kids to start kindergarten with the skills they need to succeed, currently only 47 percent of kindergartners are meeting that threshold, and there are significant differences by income and race. Only 33 percent of kids with low incomes, 27 percent of Pacific Islander kids, 30 percent of Latino kids, and 32 percent of American Indian kids were kindergarten ready in 2016.
  • Healthy people and communities: In Washington state, many low-income communities, communities of color, and rural communities experience worse health outcomes when it comes to chronic diseases, life expectancy, obesity, and more. Thirteen percent of households in Washington struggle with food insecurity – the inability to have three meals on the table every day as a result of lack of resources. Among 10th graders, Pacific Islander, Latino, and Black students have the highest likelihood of living in families that had to reduce meal sizes or skip meals compared to overall state average.

 [Click on graphic to enlarge.]

Food_Insecurity_10th_graders

Note about data: Disaggregated data is presented to provide a preliminary understanding of disparities by race, ethnicity, and nativity. On its own, the data throughout the report tells a limited story about the population it represents. We encourage users of this data to engage with communities of color to develop a more accurate and meaningful understanding than the data allows.

These and other trends highlighted in the report point to the fact that much work remains to be done for policymakers and all of us to advance shared prosperity and progress for generations to come. Our state budget and tax code are powerful tools to make this happen and to build an inclusive economy. In the upcoming 2018 legislative session and beyond, policymakers can choose to advance shared prosperity by making sure our state budget and policies increase economic security, promote racial equity, ensure all kids have access to great schools, and build thriving communities for everyone.

Stay tuned for the next publications in the Progress in Washington series, which will explore policy solutions that address the barriers to opportunities described in the “Building an Inclusive Economy” report.

“Building an Inclusive Economy” is the first report in our Progress in Washington 2018 series. The report is intended to offer a framework for understanding the challenges before us. To reach the goal of an inclusive Washington state economy with shared prosperity for everyone, we need to know where we are, where we need to be, and how we can get there.

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Raising Incomes for Home Care Workers Would Boost Economy

Posted by Melinda Young-Flynn at Sep 26, 2016 04:20 PM |
By David Hlebain, interim policy analyst


Raising incomes for low-wage home care workers would help strengthen our state economy, according to our new report, How Raising Incomes for Low-Wage Workers Boosts the Economy: A Study of Washington State’s Home Care Workforce. The report shows that if policymakers raise the base hourly wage of home care workers to $15, workers would be better able to meet the costs of basic needs for themselves and their families, leading to increased economic activity in the state. 

Home care report cover image 2016Home care workers play an essential role in the lives of tens of thousands of Washington’s seniors and people with disabilities – providing assistance with activities of daily living such as dressing, eating, and getting to and from medical appointments. In Washington, state-paid home care workers are compensated through the Medicaid program and either contract directly with the state as individual providers or provide services through private agencies.  

With an average hourly wage of $12.82 and a field of work that tends to be part-time because of fluctuating client needs, a typical individual provider home care worker makes $10,540 a year — below the federal poverty line for an individual, and less than half the poverty line for a family of four. This is far from sufficient for a person, let alone a family, to cover the cost of basic needs such as food, housing, and transportation. 

Raising the base wage for home care workers to $15 per hour would provide an annual increase of $2,200 to the more than 81 percent of workers who currently make less than that per hour. (1) This would go a long way toward helping these workers better make ends meet. 

Further, using REMI, a geographically-specific economic analysis tool, to model a wage increase for individual provider and agency-based workers, our analysis showed that: 

  • The additional spending that would result from these workers’ wage increases would generate $180 million in total economic stimulus annually in communities throughout Washington state – through both the projected spending by home care workers and the resulting money that businesses, individuals, and communities would acquire as a result of these workers’ increased spending. 
  • This economic stimulus would increase private-sector employment. As a result of this ripple effect of spending, private sector employment in Washington state would be projected to grow by more than 800 jobs annually through 2020.
  • Every $1 the state invests into a $15 base wage for home care workers making less than that will lead to a $4 economic stimulus. Given half the cost of home care wages are covered by the federal government through Medicaid, this form of economic stimulus is a smart investment of state resources. 

During the 2017 legislative session, legislators can help strengthen our state economy and the well-being of home care workers and their families by approving the proposed wage increases of individual provider home care workers (and a corresponding increase for agency-based home care workers as provided in the agency parity law), which were recently negotiated as part of a collective bargaining agreement. Further, this increase is not just good for the well-being of home care workers; it's also good for the economy. With this in mind, policymakers must continue to take steps to ensure that all hardworking Washingtonians make enough money to not just make ends meet, but to be able to get ahead. 

1. This calculation is based on actual wage data for the state’s more than 34,000 individual provider home care workers. Given contract parity mandates that wage increases for individual providers must also be applied to agency-based workers, this calculation is also applied as an estimate to the state’s more than 15,000 agency-based workers. 

 

All Income Growth is Going to the Richest 1 Percent of Washingtonians

It’s time for policymakers in Washington state to take steps to reverse decades of widening economic disparities that threaten broad prosperity, now that it has again been shown that all income growth since 2009 continues to flow to the wealthiest Washingtonians.

An updated report from the Economic Policy Institute (EPI) shows that the richest 1 percent of households – those making over $388,000 a year – captured all of the new income generated in Washington state between 2009 and 2013 (see graph). By contrast, and in a stark reversal from past decades, average incomes among the remaining 99 percent of Washingtonians declined during this period, causing far too many hardworking families to fall even further behind.

2016-6_Top_1_Percent_Income_GrowthEPI

The richest 1 percent of Washingtonians didn’t always reap such an outsized share of income gains during periods of economic growth. Prior to 1980, the 99 percent typically captured at least 80 percent of all income gains during economic expansions.

Further, as the EPI report points out, it used to be considered outrageous for executives to receive multimillion dollar salaries and outsized bonuses while laying off workers. Today, as the vast majority of working people and families in Washington state continue to struggle, super-rich CEOs living here are doing better than ever. In fact, in 2015, the CEO of Washington state-based Expedia received the highest pay ($94.6 million) of any corporate chief executive in the county.

It has become abundantly clear in recent years that everyday Americans and Washingtonians are tired of the economic inequality that has become the norm. In our state, we need policies that help all communities thrive by strengthening employment and creating more living-wage jobs. We need to make sure our tax code doesn’t favor the wealthy and the politically connected over the common good.

In fact, our upside-down tax system – where Washingtonians with the lowest incomes pay seven times as much in state and local taxes as a share of their income than the richest 1 percent – makes it even harder for the 99 percent to get ahead.   

Building a stronger Washington economy requires greater economic equality and overall equity. Lawmakers must undo the systemic inequities that have created gaps in opportunity for many people of color to receive good jobs and living-wage salaries.

In Washington state:

  • Voters can help advance economic equality and close the opportunity gap if Initiative 1433, now gathering signatures, makes it on the November ballot and passes. It would incrementally raise the minimum wage to $13.50 over four years, increasing the take-home pay for 730,000 people working across a range of sectors. It would also provide paid sick leave, so parents don’t lose wages when they need to take care of themselves or their children when they’re sick.
  • Lawmakers during the 2017 legislative session must pass the capital gains tax recently proposed by Governor Inslee and leaders in the State House, which has been endorsed by major papers and many community groups throughout our state. And they should use the revenue from capital gains to invest in education, health care, and other services that expand economic opportunities for everyone.

And as lawmakers work to craft policies that seek to provide economic opportunity to Washingtonians, they must be especially mindful that those policies empower those who have been most harmed by racism and other structural inequalities that fuel the rise in economic inequality.

More Washington Kids Have Health Coverage, but Poverty Still a Roadblock

Excerpted from the KIDS COUNT of Washington press release

June 21, 2016 
 
SEATTLE — Kids and families in Washington state have made some progress in the face of poverty rates that have yet to improve, according to the new national 2016 KIDS COUNT Data Book from the Annie E. Casey Foundation. Washington is ranked 15th among the 50 states in the Data Book, moving up four places in the national rankings of child well-being since 2015.

 

KIDS COUNT Data Book 2016 badgeKey among the positive changes: Since 2008, the number of children growing up without the health coverage they need to see a doctor when they’re sick has improved by 38 percent. What’s at work is the state’s Cover All Kids law, which passed in 2007 and created affordable health coverage called Apple Health for Kids. The Affordable Care Act’s 2014 creation of a flexible market for individual plans has also propelled child coverage in Washington to one of the nation’s highest.

Yet the child poverty rate is nearly 30 percent higher than it was in 2008, with an additional 59,000 children growing up below the federal poverty level. Poverty can impede children’s cognitive, social, and emotional development and contribute to poor health. And poverty disproportionately harms kids and families in communities of color, who face other barriers to economic security in the form of an educational opportunity gap and a high cost burden for housing, food, and other basic needs. These stressors are caused by, and contribute to, the structural racism faced by families of color. This undermines progress for children and the state as a whole.

The two organizations that make up KIDS COUNT in Washington – the Washington State Budget & Policy Center and the Children's Alliance – support two-generation approaches to creating economic security for both children and their parents. One 2016 proposal that would help both kids and families is Initiative 1433, the $13.50 minimum wage initiative now gathering signatures for the state’s November ballot. It would raise the take-home pay for the working parents of thousands of Washington children. And it would also provide up to seven days of paid sick and safe leave per year, helping Washington families by ensuring that workers don’t lose wages when they need to take care of themselves or their children when they’re sick.

The implementation of a higher minimum wage would be an important step toward lifting more Washington kids out of poverty. And, as noted in the 2016 Data Book, it is one of many policy solutions needed to improve the well-being of future generations.

Read the full 2016 KIDS COUNT Data Book. And read the one-page KIDS COUNT Washington state 2016 profile

The Annie E. Casey Foundation creates a brighter future for the nation’s children by developing solutions to strengthen families, build paths to economic opportunity, and transform struggling communities into safer and healthier places to live, work, and grow. For more information, visit www.aecf.org. Visit datacenter.kidscount.org for the most recent national, state, and local data on hundreds of indicators of child well-being. 

Media Contacts: 

  • Melinda Young-Flynn, Budget & Policy Center communications manager, 206.262.0973, ext. 223
  • Adam Hyla, Children's Alliance communications director, 206.324.0340, ext. 18

 

Scraping By Isn’t Enough: What the Poverty Data Doesn’t Show

Posted by ehernandez at Sep 17, 2015 09:55 PM |

While it’s good news that the new Census reports show that the number of Washingtonians living in poverty declined between 2013 and 2014, the data still doesn’t tell the whole story. Far too many Washingtonians are struggling to make ends meet. And this is happening in a landscape in which the top income earners in our state continue to benefit the most from the economic recovery. Policymakers must make investments in an economy that works for all Washingtonians – one in which people who work for a living are able to get ahead, not just get by.

The newly released Census data for Washington state shows (see more in fact sheet below):

  • More than one in eight people (13.2 percent) live below the poverty line. This is down from 14.1 percent in 2013. For a family of three, the poverty line is defined as earning less than $19,790 per year.
  • Child poverty declined to 17.5 percent after remaining stagnant last year. The share of children under five living in poverty remained unchanged at 19 percent.
  • Although median household income technically increased between 2013 and 2014, when adjusted for inflation and the rising cost of basic needs, median annual household income has actually declined by more than $2,000 since 2007.

(Click on graphic to view full fact sheet)

Pov_factsheet_image

Washington state’s economy is stronger when everyone has the opportunity to prosper. Working people should not have to struggle to provide for their families while the wealthy keep getting richer. When workers are paid well, are able to take time off when they are sick, and have the peace of mind that their children are receiving quality child care, their economic well-being improves. Policies like raising the minimum wage, ensuring workers have paid sick and safe leave, and expanding access to quality early learning also help to level the playing field for communities of color and women who are least likely to have access to these resources.

Policymakers can and must take steps to ensure that all Washingtonians benefit from growth in our economy. They must also recognize that they can’t rest on their laurels because the poverty numbers appear to be going down. The big picture must always be front of mind. And the big picture is that what it actually takes for families in Washington to scrape by is much higher than the federal poverty line – which is $19,790 for a family of three (1). 

Washington should be a state in which its people are thriving, and certainly not one in which so many are barely getting by.

1. Based on DSHS 2014 poverty guidelines for a family of 3.

 

Progress in Focus: Declining Economic Security Is a Big Threat for Washingtonians

With too many hardworking people struggling to get by, state lawmakers must do more to support the investments needed for Washingtonians’ long-term economic security than they did in the recent state budget.

For an eye-opening look at the challenges our state faces, see the "Progress at a Glance" table below and, for more details, check out our full Progress Index .

(Click on the image below to view the entire table)

 PI_econ_aag

Ultimately, state budget writers this year missed significant opportunities to help build an economy where prosperity is widely shared. Their budget did not do enough to rectify the fact that today’s economy is providing gains to a relative handful of Washingtonians, as these statistics dramatically show:

  • Nearly one quarter of all income in Washington state goes to the richest 1 percent – those with average annual incomes of $1.3 million. For perspective, the richest 1 percent held no more than 11 percent of all income during the height of middle-class prosperity from 1947 to 1979. 
  • Between 2009 and 2012, during the recovery from the Great Recession, all income gains went to the richest Washingtonians. The remaining 99 percent saw their income decline.
  • Median household income declined by $4,000 between 2008 and 2013, to $58,405 a year from $62,486. 
  • The share of Washingtonians who make too little to meet basic needs is rising, now encompassing nearly one-third of the population.  

In addition to all this, Washington continues to have the nation’s most upside-down state tax system: as a percentage of what they make in a year, the lowest-paid Washingtonians pay up to seven times more in state and local taxes than the wealthiest 1 percent. 

The disturbing situation these statistics describe should serve as a clarion call to lawmakers that investments need to be made to create affordable housing, connect workers to job training, keep children from going hungry, and in other ways promote opportunity and prosperity for all. Yet Washington state invests just 3 percent of its total operating revenue on ways to help Washingtonians maintain economic stability during an economic downturn or personal crisis.

Further, inadequate state support over the past five years has weakened the forms of assistance many Washingtonians need most. Temporary Assistance for Needy Families and Working Connections Child Care – critical tools to help families find or keep a job – serve significantly fewer children today than in 2008.

The recently adopted state budget did increase support in some key areas, like expanding early learning opportunities for all kids and providing a small increase in cash assistance to families struggling to get by. But those gains are severely threatened by the failure to enact enough new, sustainable revenue sources to protect long-term investments and economic security in the years to come. The adoption of a capital gains tax on the wealthiest Washingtonians in particular would have provided several million dollars a year to meet important needs and take a step toward making taxes more equitable.

This is Part 6 in our "Progress in Focus" series of blog posts highlighting the individual sections of the Progress Index. To read our additional recommendations for how to support a thriving Washington economy, visit the Economic Security section of our Progress Index. See our previous posts: 

Part 5: Healthy People

Part 4: Healthy Environment

Part 3: Good Jobs

Part 2: Education

Part 1: Revenue

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