No decline in Michigan poverty since the Great Recession

No decline in Michigan poverty since the Great Recession

By Debra Watson

<> on October 11, 2012 in Camden, New Jersey.

Despite a drastic fall in the official unemployment rate for the state the same percentage of Michigan households are living below the poverty line today as did after the onset of the Great Recession in December of 2007.

According to new income and poverty statistics from the US Census Bureau released in early December, Michigan’s poverty rate was 16.3 percent at the end of 2016, the same annual rate calculated as an average for the five-years from January 2008 through December 2012. The current rate is not much lower than the peak annual poverty rate of 16.9 percent reported for the five-year period of 2010-14.

Unemployment has been below five percent in the state since the end of 2015, down from a post-recession peak of 14.5 percent in 2009. However, this month Michigan unemployment ticked up slightly, to 4.5 percent.

The proliferation of low-paying temporary and part-time jobs in the auto industry, a process enshrined in the sellout contract imposed by the UAW in 2015, has been a key factor in the general decline in living standards in Michigan. According to data recently reported by the Michigan Department of Technology, Management and Budget wages in manufacturing jobs in the state are down by $2.00 an hour, from a high of $22.73 before the crash.

Manufacturing wages in Michigan are down by $2.00 an hour, from a high of $22.73 before the crash

Behind the apparent contradiction between declining unemployment rates and the ongoing high official poverty level is the massive and increasing income and wealth inequality in the US. As Karl Marx established over a century ago, poverty at one pole of society is complemented by obscene levels of wealth at the other. The three top American plutocrats, Amazon’s Jeff Bezos, investor Warren Buffett and the co-founder of Microsoft, Bill Gates, now own more wealth than the bottom half of the US population, 160 million people.

Like Trump’s glorification of the ever-rising bubble in the stock market, Obama pointed to job growth when characterizing his administration as “the best time to be alive.” Michigan’s Republican Governor Rick Snyder and the Democratic Mayor of Detroit Mike Duggan have incessantly boasted of the declining unemployment and job creation as signals of a recovering economy.

Unsurprisingly, the Wall Street Journal recently touted that Michigan had “increased sharply” its “capital investment and hiring.” The paper praised policies that repealed personal-property taxes for manufacturers and right-to-work legislation, policies taken from the Republican playbook and implemented in the state.

The latest Census figures demonstrate that poverty remains a chronic condition in Michigan despite this supposed resurgence in the state’s economy. Even so, the official poverty rate grossly underestimates the depth of economic want.

In the US the official poverty level is not measured as a percentage of median income, as it is in many other developed countries, but on a far narrower measure related to food costs. Poverty for a family of three is pegged at a derisory $20,000 a year, far below sixty percent of Michigan’s current median household income of about $52,400 and drastically below the amount needed to support a family.

Sustained high rates of poverty over nearly a decade have had devastating personal implications. A family’s meagre resources can dwindle as successive years’ income deficits are never offset with rising income. They have had an equally devastating societal impact.

The five-year Census Bureau American Community Series (ACS) rolling averages from the December report supplement annual poverty and income statistics released by the Census’ Current Population Series in September. The greater sample sizes in the five-year averages allow for more accuracy and sufficient data to communities with smaller populations.

There are smaller communities in the state where there are indications poverty has increased dramatically. The large increases in poverty in these small communities indicate how a relatively small economic disruption can have a huge effect on living standards for a village or town.

For example, some villages in the Upper Peninsula with populations in the hundreds saw double digit increases. In Baldwin, which is located toward the middle of the state’s lower peninsula, poverty increased from a third of its one thousand plus residents in poverty in 2008-2012 to well over half now……more here