New Data: Income Down, Poverty Up in Kentucky, Indiana

“New Data: Income Down, Poverty Up in Kentucky, Indiana”

By Chris Otts

Nearly One-Third of Kentucky Households Had Less than $25,000 in Income in 2010


Nearly One-Third of Kentucky Households Had Less than $25,000 in Income in 2010

Erosion of middle class highlights need for investment to address unemployment

Median household income fell in Kentucky in 2010 and a growing share of the state’s households earn incomes between $10,000 and $25,000 according to new Census data released today. 32.4 percent of Kentucky households had incomes less than $25,000 last year.

“Ongoing high unemployment is putting a middle class standard of living out of reach for an increasing number of Kentuckians,” said Jason Bailey, director of the Kentucky Center for Economic Policy. “Spurring job growth through targeted investment is critical to helping solve this problem.”

22.1 percent of Kentucky households made between $10,000 and $25,000 a year in 2010 compared to 20.2 percent in 2008. Median household income declined and is now $2,427 a year less than it was in 2006.

Real incomes are declining due to persistent unemployment as well as challenges with the quality of jobs available in Kentucky. The data show that a smaller share of Kentuckians work in construction and in manufacturing than in 2007–traditional sources of middle-class incomes for Kentucky families–while a larger share work in retail trade.

Without the support of key safety net programs, the income problem would be even worse. 16.6 percent of Kentuckians in 2010 received Supplemental Nutritional Assistance Program (SNAP) benefits, up from 12.4 percent in 2007. Nearly one-third of Kentuckians received health insurance through a public source, an increase over the previous year.

“In a few months Kentucky will craft a new state budget while Congress is making important decisions about the federal budget,” said Bailey. “It is essential that they both protect services that help Kentuckians weather the storm and make investments that inject much-needed demand in a weak economy.”

“The news in Kentucky highlights a big disconnect: a crumbling bridge and other inadequate infrastructure in the neighborhood of construction workers in need of a job,” said Bailey. “There is work to be done and people willing to do it. We are missing the public action needed to make that work happen.”

Tough times are hitting certain groups of Kentuckians particularly hard. Kentucky as a whole had a 19.0 percent poverty rate in 2010. While whites had a 17.0 poverty rate, African Americans had a 33.6 percent rate and Latinos a 33.4 percent rate.

The data come from the Census Bureau’s American Community Survey (ACS) one-year estimates for 2010. The Census considers the ACS its most authoritative estimate of state poverty rates and income levels.

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The Kentucky Center for Economic Policy is a non-profit, non-partisan initiative that conducts research, analysis and education on important policy issues facing the Commonwealth. Launched in 2011, the Center receives support from grants and individual donors and is a project of the Mountain Association for Community Economic Development (MACED). 

Census Shows Shrinking Middle Class in Kentucky

Census Data Paint Bleak Economic Picture in Kentucky

17.4 Percent of Kentuckians in Poverty

Restore Employer Funding for Jobless Benefits

New Census Data: Poverty and Uninsurance Rates Remain High in Kentucky

New Census Data: Poverty and Uninsurance Rates Remain High in Kentucky

Numbers Underscore Need to Spur Job Growth and Implement Health Reform Law

An estimated 17.4 percent of Kentuckians live below the poverty line according to preliminary Census data released today, a substantial increase from 12.3 percent ten years ago. Census also reported that 640,000 Kentuckians lack health insurance.

“These numbers reflect our continued high unemployment as well as the inadequacies of our health care system,” said Jason Bailey, director of the Kentucky Center for Economic Policy. “They highlight the need to jump-start job creation and recommit to moving forward on health care reform.”

One in seven Kentuckians lacked health insurance in 2010 in large part because of the long-term erosion of employer-sponsored health care. While 65 percent of Kentuckians had employer-based care in 2000, only 57 percent do today.

Government investment in health care through Medicaid has played a huge role in keeping the coverage gap from being even larger. Medicaid covered nearly one in five Kentucky residents in 2010, up from about one in ten Kentuckians in 2000.

The steady decline of employer-sponsored coverage and the protective role of Medicaid illustrate the critical importance of implementing the new federal health law. Once in effect in 2014, an additional 32 million people nationwide—including an estimated 480,000 in Kentucky—will gain coverage under Medicaid or through health insurance exchanges as part of the new law.

“For too many Kentuckians, a middle class standard of living is out of reach because they lack jobs and health coverage,” said Bailey. “We need investments in infrastructure, education and other areas that can put people back to work. And we need protection for Medicaid and action to put the new health law into place.”

The state figures from the Census Bureau’s Current Population Survey are preliminary. They are the only data currently available on state poverty and health insurance trends through 2010. On September 22, the Census Bureau will release more definitive 2010 data as part of the American Community Survey, which is a larger review.

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The Kentucky Center for Economic Policy is a non-profit, non-partisan initiative that conducts research, analysis and education on important policy issues facing the Commonwealth. Launched in 2011, the Center receives support from foundation grants and individual donors and is a project of the Mountain Association for Community Economic Development (MACED).

Op-Ed: Persistent Unemployment and Stagnant Wages Mark Labor Day 2011

Published in the Owensboro Messenger-Inquirer on September 5, 2011.

Coming over two years after the recession officially ended, Labor Day 2011 should be a time to celebrate a return to growth and prosperity.

But the reality is much different across Kentucky, as jobs are hard to come by and workers’ paychecks aren’t getting any bigger.

To make matters worse, the lingering effects of the economic downturn only deepen troubling trends in income and the loss of blue-collar jobs that were the reality for working Kentuckians even in so-called good times prior to the recession.

As the conversation in Washington bypasses the central topic of jobs, the tough times facing working Kentuckians threaten to persist for years to come without further action.

There are three big headlines in the state of working Kentucky this Labor Day:

Slow Job Growth against Big Job Needs

Because so many jobs were eliminated during the recession, the Kentucky economy has a long swim ahead until it reaches shore. Right now, it’s only treading water.

Over the last year, the state has added 2,300 jobs a month on average. But Kentucky needs 4,500 jobs a month every month for three straight years to get employment levels back to where they were pre-recession and catch up with growth in population.

Of those who have lost their job in Kentucky, over one-third are among the long-term unemployed—those who have been without a job for more than six months. All measures of what is called underemployment are also up across the state, including people who are so discouraged they have stopped looking for work and those who are working part-time but would rather work full-time.

Industries with jobs traditionally accessible to Kentuckians without a college education were especially hard hit in the recession. Kentucky now has one-third fewer manufacturing jobs than it had in 2000. Around a quarter of construction jobs have been eliminated in the last three years.

Stagnant Wages and Dwindling Job Quality

High unemployment contributes to stagnant wages, as employers know workers can’t just switch jobs if they don’t get a raise. Yet flat wages were a problem in Kentucky even before the recession. Adjusting for inflation, wages for the median Kentucky worker (at the median half make more and half make less) are only one percent higher in 2010 than they were in 1979 despite huge productivity gains over those years. Employers simply haven’t shared those gains with workers.

For lower wage workers, the problems are worse. Their wages have actually declined when inflation is figured in. The share of the workforce making poverty wages has increased since 2000, and is now about one-third of workers.

At the same time, job quality is eroding as health insurance, retirement and other benefits continue to be reduced.

Persistent Inequality between Kentuckians

Meanwhile, disparity between Kentuckians based on race, age and gender remains.

The recession hit African Americans and Latinos in Kentucky particularly hard. Despite similar or even higher levels of participation in the labor force compared to whites, African Americans and Latinos have much higher levels of unemployment and underemployment. One out of every five African Americans in Kentucky is unemployed.

Young workers under age 24 also have had a steep increase in unemployment. Kentucky faces the prospect that thousands of young people may be forced to delay the start of their careers, damaging their long-term financial success.

And the gender gap remains—median female wages in Kentucky are about 20 percent lower than men’s. The gap has been slowly closing over the past thirty years, but partially because men’s wages have languished.

These three trends—slow job growth, stagnant incomes and persistent inequality—reinforce each other and add up to a time of serious economic distress for families across the Commonwealth.

These problems won’t just fix themselves. To really move forward, we need the federal government to play a stronger role in spurring demand and creating jobs. That means investment in infrastructure, help for still-struggling state budgets, extension of assistance programs to low-income Americans and investment in public jobs programs.

Otherwise, we will likely be telling the same story for many Labor Days to come.

Jason Bailey is director of the Kentucky Center for Economic Policy.