Sunday, September 18, 2011

Poverty and Unemployment in Indiana

The Governor continues to defend his economic record in Indiana. In an interview today (9-18) from CBS online, Daniels’ primary claim is the title of the article: “Americans Ought to be Scared.” His belief is that the American Dream will be destroyed if we don’t “change things,” that no longer will we be able to “start with nothing and rise to the top.” I take issue with Daniels on two counts—that his methods will lead us back to the American Dream, and his faulty belief in the likelihood of the American Dream, which hasn’t ever been how the majority of U.S. residents experienced life.

First, Daniels does not seem to be performing at a rate comparable to our neighbors. My analysis of BLS unemployment rates since 2009 indicate that our employment rates have declined at a slightly faster rate than the Midwestern average, generally a good sign (this is the "rate of decline"). Despite this, the unemployment rate itself remains above the national and Midwestern averages (see Table 1), topped only by Kentucky and Michigan.

Unfortunately, broader poverty and inequality measures show a far worse pattern. The first, childhood poverty, is nothing less than shocking—26.3% of Hoosiers under 17 are in poverty. The Midwest average is 20% and the national average is 22%. Indiana rates, like those around the country, have increased, but our rates have increased more than 2x Midwestern rates since Daniels took office in 2005 (see Table 2). In an similar trend, Hoosier elderly poverty rates have increased since Daniels’ tenure, even though both national and Midwestern averages have decreased (see Table 3)! One might ask how rates of unemployment are declining, while poverty rates are increasing? The answer is the same reason why unemployment in the South has trended low, but poverty trends very high—corporate incentivization policies have not been attracting high-paying professional jobs. Rather, the jobs Daniels is attracting are low-paying jobs that cannot sustain a family. The data indicates that Daniels’ privatization agenda continues to fail Hoosiers.

To my second claim, a critique of the “American Dream,” it is a consistent finding in the social sciences that it is incredibly difficult to move out of the socio-economic condition into which you are born. Each class—poor, working, middle, upper—are far more likely to remain where they are than move up or down. The middle class has the most “social mobility.” Specifically, the middle class has the best chance of moving either up or down. On the other hand, around 2/3 of those born into poverty will remain in poverty, and 2/3 of those born into wealth will remain wealthy. Only about 7% of children born into poverty make it to “the top” (specifically, 7% of white males—females and racial minorities are far less likely to move up). Clearly, that means upward mobility can happen—just look at Brittney Spears. However, it also indicates those are extreme and isolated circumstances—not simply a matter of “any” child deciding to work hard and make it. Structural forces create significant barriers that seem to prevent mobility, regardless of internal motivation and aptitude.

Daniels is right about one thing—we should be scared. Not of the capacity of Hoosier families to pull out of troubled times, but of Daniels’ neoliberal agenda of privatizing public goods and attracting low-paying jobs…

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