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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.

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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.

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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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Statement: Washington’s Representatives must reject tax bill that would devastate the middle class and our state economy

Posted by Melinda Young-Flynn at Dec 02, 2017 11:28 AM |

From Misha Werschkul, executive director of the Washington State Budget & Policy Center, regarding the U.S. Senate passage of the GOP tax bill:

“Both the Senate and House tax bills are costly new giveaways to the wealthy and major corporations at the expense of working families, including tens of millions of low-income and middle-class Americans who actually would face a tax increase. Senator Patty Murray and Senator Maria Cantwell did the right thing for Washington state by voting against this dangerous bill. We now call on Washington’s 10 Representatives to stand with their constituents, demand a full conference process, and reject the final tax bill.

Both tax bills would explode deficits, strain our state budget, and almost certainly force cuts to everything from nutrition assistance for families to education, Medicare and Medicaid, and infrastructure. The Senate bill goes further, increasing the number of uninsured people by 13 million to pay for even larger corporate tax cuts. Both bills also eliminate the state and local income and sales tax deduction, which would only make matters worse by increasing pressure on our state budget, making it harder for state legislators to make investments in kids and strong communities. 

Small changes won’t fix the bills’ fundamental flaws. And the merged tax bill that comes out of a conference committee will be more of the same – offering nothing to most working families and ultimately hurting many. Instead of tax cuts that help those who need it the least, legislators should work to advance tax policies that invest in working families while ensuring that any tax bill is paid for by closing tax loopholes or other responsible tax changes.”

 

Media Contact: Melinda Young-Flynn, melinday(at)budgetandpolicy(dot)org 

 

                                                                                                               

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Governor’s initiative on economic security is a big win for Washington’s families

Posted by Julie Watts at Nov 29, 2017 03:15 PM |

Governor Inslee has created a new inter-agency work group on family economic security that is a big step in the right direction to help families move themselves out of poverty in our state. The work group will be tasked with developing a 10-year strategy for poverty reduction in Washington state, based on an intergenerational approach to addressing poverty.

Intergenerational approaches to poverty promote the economic well-being of whole families across generations so that children can thrive and reach their full potential. The approach is centered around coordinated support for families across five key areas: high-quality early childhood education; higher education and career pathways; asset building; health and well-being; and social capital.

Family economic security

Nationally, similar initiatives that focus on economic success of families, as opposed to a focus on children or adults alone or in silos – are gaining momentum and showing very promising results. In Colorado, Utah, Connecticut, Massachusetts, and Oklahoma – to name just a few states – early investment in intergenerational programs are paying off and are leading to living-wage careers for parents, better education outcomes for kids, and a low rate of return to social benefit programs. 

The governor’s directive to create this work group is an important step to help families move out of poverty. It is also an important step to grow the middle class so that more residents can benefit from economic growth. As more families move out of poverty permanently and contribute to economic activity, that will pay dividends for the state economy.

The directive was the result of bipartisan efforts advance intergenerational strategies to address poverty in Washington. The creation of the work group is a sign that Washington’s leaders are turning a new page on how we go about policy development on economic security. The initiative calls for broad participation by state agencies, stakeholders, employers, people who are in poverty, and other communities that have historically not been included in conversations on public policy. 

Advancing poverty reduction policies using an intergenerational approach has long been a priority of the Washington State Budget & Policy Center. We look forward to continuing to work with the governor and his staff as well as with legislators and other key stakeholders to develop specific data-driven policy recommendations to reach poverty-reduction goals. This is a monumental step toward ensuring that every child, parent, and grandparent in Washington is able to reach their full potential and thrive.

 

Updated State Revenue Projections Show Legislators Need to Do More in 2018 to Fulfill their Obligations to Communities

Posted by Kelli Smith at Nov 20, 2017 02:10 PM |
Filed under: State Revenue

The new Economic and Revenue Forecast Council report shows our state has $319 million more to invest over the current biennium than lawmakers previously expected. This small change will have a negligible effect on lawmakers’ ability to pay for K-12 schools per the Supreme Court’s McCleary mandate and to balance the books in the 2018 legislative session. Revenues are still just barely at Great Recession levels when we account for economic growth (see chart below) – and that’s despite this year’s historic increases in resources. While those increases were a step in the right direction, the Supreme Court still says the legislature’s school funding plan is about $1 billion short of fully funding schools. And legislators also can’t lose sight this session of other critical areas of the budget, such as early learning and behavioral health. 

The revenue growth from the latest revenue forecast won’t come close to filling the $1 billion McCleary gap, let alone ensure other areas of the budget are fully supported. Lawmakers can’t continue to ignore the reality that our tax code still isn’t built to support the needs of our state. They must take action to ensure that we have adequate revenue to fund schools and other community investments, and that starts with cleaning up the tax code.

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Nov_2017_revenue_forecast

 

The good news is that our legislature has an opportunity in January to make meaningful progress on McCleary in the right way, by its 2018 school-year deadline, in a way that also supports strong investments in our communities into the future. If lawmakers can get real about fixing our upside-down tax code – one in which Washingtonians with low and middle incomes pay up to seven times more in state and local taxes as a share of their income than the wealthiest 1 percent – then our state will not only benefit from a tax code that better reflects our values, but it can also have more resources to support thriving communities.

Lawmakers can take steps next session to start building on the progress they made earlier this year. They should prioritize implementing common-sense, lasting fiscal policies – not short-sighted, one-time fixes. These are a few policies they can begin work on as soon as they get to Olympia in January: 

  • Eliminating the 1 percent property tax revenue cap that threatens resources for our schools; 
  • Making a tax on sales of real estate more equitable by reducing the tax rates on the sale of lower-valued properties and increasing the rates applied to properties that sell for more than $1 million; and
  • Closing the tax break on capital gains, which would both begin to rebalance our tax code and bring in much-needed revenue to close the gap on McCleary

By taking these steps, lawmakers can set up a bright future for Washington state by ensuring that our state can invest in the things we all value: excellent schools, of course, but also things like child care, long-term care for seniors and people with disabilities, and mental health and homelessness supports. Our state’s challenges are surmountable, and solutions are within reach if lawmakers get serious about reforming our tax code so that it provides for the well-being of all Washingtonians.

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Supreme Court’s McCleary Decision Shows that Lawmakers Should Clean Up Tax Code to Invest in Schools

Posted by Kelli Smith at Nov 15, 2017 03:55 PM |
Filed under: State Revenue, Education
Statement by Misha Werschkul, executive director:
 
The Washington State Supreme Court has made it clear that the legislature must take more steps to fulfill its McCleary mandate to amply fund schools. Although lawmakers did smartly enact some new investments as part of their school funding plan this past session, the court has determined that the legislature must do more to set up every kid and every classroom for success by the 2018-19 school year. The way to strengthen investments in K-12 schools while supporting investments in other priorities that strengthen our communities – like behavioral health, health care, and early childhood education – is to clean up our tax code, not rely on more short-sighted, one-time fixes.

The Budget & Policy Center continues to recommend common-sense reforms that would clean up the tax code, such as: eliminating a harmful property tax limit that arbitrarily restricts resources available for schools (see our amicus brief to the Supreme Court on the topic); making the real estate excise tax more equitable; and closing the tax break on capital gains.
 

Ultimately, lawmakers must take steps to invest in our schools and our communities during the 2018 legislative session. The court has given the legislature until the end of the session to ensure that students, classrooms, and teachers have what they need on the first day of classes in 2018. The solutions are within reach if lawmakers get serious about cleaning up the tax code.

Three Reasons Why the House GOP Tax Plan is Bad for Washington State

Posted by Kelli Smith at Oct 30, 2017 03:20 PM |
Filed under: Federal Issues

Republican leaders in Washington, D.C. have introduced a harmful plan to give large tax cuts to the wealthiest few while jeopardizing funding for health care, education, and other investments that benefit working families. Take a look at our latest fact sheet to see how the plan would negatively impact Washingtonians with low and middle incomes.

This fact sheet was updated on November 15, 2017.

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 House GOP tax plan 11 15 2017

KIDS COUNT Report: Barriers to Opportunity Prevent Children of Color and Immigrant Children from Reaching Their Full Potential

The United States and Washington state are stronger when we harness the talents and drive of all people – including children – who will help build the nation’s future. For our country and state to reach our full economic, democratic, and moral potential, all children must have the opportunity to grow, develop, and thrive. A new Annie E. Casey Foundation report shows that too many young people of color are still facing barriers to a bright future, however. While there have been modest gains in terms of the well-being of kids of color in Washington state over the last three years, the report notes that families of diverse backgrounds, including immigrant families, struggle against barriers to success. Policymakers must enact policies to level the playing field for all kids.

2017_AECF_Race_for_Results

The Casey Foundation report, 2017 Race for Results: Building a Path to Opportunity for All Children, measures children’s progress on the national and state levels in key education, health, and economic milestones by racial and ethnic groups. It shows that, in Washington state, Latino children, Black children, and American Indian children have lower overall scores of wellness compared to White and Asian and Pacific Islander children. Specifically, the report uses a composite score of child wellness based on a range of data indicators – with 1 being the lowest score and 1,000 being the highest. Latino, Black, and American Indian children scored 401, 456, and 459 respectively, while White children and Asian Pacific Islander children scored 719 and 756.

The 2017 Race for Results report also highlights the fact that children in immigrant families face some notable barriers:

  • Two-thirds of Washington children in U.S.-born headed households live in households with a basic-needs income or greater (above 200 percent of the federal poverty level, or $40,320 for a family of three 2016), while just one in two children in immigrant families have an income sufficient to meet their basic needs. That income gap is larger in Washington than at the national level.
  • Children in immigrant families are less likely to grow up with a head of household who has at least a high school diploma.

More than 440,000 (28 percent) of Washington’s 1.6 million kids are children in immigrant families. Four out of five of immigrant children are children of color. Despite the challenges they face, children and young adults in immigrant families are also doing well on some measures:

  • Black and Asian Pacific Islander 3- and 4-year olds in immigrant families have the same or higher rates of enrollment in nursery school, preschool, or kindergarten than the Washington state average overall (60 percent).
  • Young adults aged 19 to 26 in immigrant families also tend to be working or enrolled in a degree, training, or certificate program at the same rates as their U.S.-born peers.
  • Black, White, and Asian Pacific Islander young adults in immigrant families are more likely to have an associate’s degree or other advanced degree.

The report underscores the formidable risks to healthy child development in immigrant families and for children of color that are caused by issues such as lack of access to living-wage jobs, limited educational opportunities, and family separation. These risks are further exacerbated by policies that limit resources and restrict access. Immigrant families are also facing policy proposals that threaten the residency status of 800,000 young people who have been granted a reprieve from fear of deportation through the Deferred Action for Childhood Arrivals (DACA) program. Washington state is home to 19,000 of the 800,000 DACA recipients.

All children need to reach their full potential if we are to reach ours as a nation. This means lawmakers must break down systemic barriers to opportunity placed in front of many children of color and immigrant children. With regard to immigrant children in particular, much of this country’s future success depends on how we equip immigrant families with the tools and skills that enable them to contribute to local economies – as immigrants have done since the founding of this country. The 2017 Race for Results report makes several recommendations to maximize children’s access to opportunity:

  • Keep families together. Immigration authorities and family courts can protect kids from adverse experiences by exercising discretion in choosing whether to separate parents from their children.
  • Help kids in communities of color, both immigrant and U.S.-born, to meet key developmental milestones. Policymakers can do more to link eligible families to quality early learning led by culturally competent teachers. More states, universities, and colleges can help qualified students pay for college without regard to immigration status.
  • Increase economic opportunity. Among the actions state policymakers can take is to increase access to occupational licenses and credentials to income-earning parents who entered their professions in foreign countries, boosting the prospects for higher household income.

To read more about how Washington’s kids are progressing on key milestones across racial and ethnic groups compared to the nation and other states, read the full 2017 Race for Results: Building a Path to Opportunity for All Children report and our KIDS COUNT in Washington press release.

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