Working poor in state left behind

Despite approval of a $700 billion bailout for the financial sector, the national and international securities markets are seesawing on continued fears of an economic meltdown. Banks are refusing to lend to sound businesses or to each other, threatening to bring daily operations and plans for expansion throughout the economy to a grinding halt.

At the state level, it is clear that many regions in the U.S. are slipping into recession, and the only remaining question is how deep and how long the coming national recession will be. The U.S. shed 160,000 jobs in September, the worst monthly job loss since early 2003 when the country was still fighting its way back from the last recession. Consumer spending is down. State revenues are falling. Clearly, near and midterm economic prospects do not look good. Among the people most likely to suffer as the economy heads south are Maine’s low-income working families.

Addressing these issues, the Working Poor Families Project – a national initiative aimed at strengthening state policies that promote economic advancement and success for low income working families – has just released an updated report offering a state-by-state breakdown of the 42 million Americans in working families who are struggling to get by. In “Still Working Hard, Still Falling Short,” the project examines how the status of low-income working families has changed between 2002 and 2006. The picture this new analysis draws is not reassuring.

Since 2002, important measures of family well-being and opportunities for economic advancement reveal troubling changes. Nationally, another 350,000 working families joined the ranks of those struggling to make ends meet on a bare-bones budget of less than 200 percent of the federal poverty level. In Maine, the percentage of working families that no longer can afford this minimal needs budget grew from 23 percent to 27 percent, increasing by some 4,300 families.

As troubling as this growth is in the number of Maine’s working families living in poverty and near-poverty, there is a deeper, and perhaps a more disturbing story hidden in the numbers. Of the 10 key measures outlined in this new report, not one of them showed improvement for Maine’s low-income working families. Whether looking at income levels, affordability of housing, educational attainment, health care coverage or other measures, every indicator for Maine showed either a lack of progress or an outright deterioration in conditions. Across a wide sweep of indicators for social well-being, Maine’s low-income working families are still falling short.

Stagnant or declining income and opportunities for tens of thousands of Maine’s working families would be problematic under any set of economic conditions, but it is inexcusable during a period of steady economic growth. Contrary to the mantra that Maine’s economy perennially fails to prosper and hence cannot deliver rewards to workers, between 2001 and 2007 Maine’s economy grew by 10 percent, adjusted for inflation. Moreover, Maine’s workers significantly increased their real productivity, meaning that Mainers are working smarter and producing more. Somehow, however, the gains are not trickling down to many of Maine’s hardworking families.

As the new report emphasizes, states can play an important role in building opportunities for the economic advancement and success of all workers. The authors of “Still Working Hard, Still Falling Short” underscore the importance of investing in skills development for adult workers, thereby benefiting both lower income individuals and laying the groundwork for long-term growth of the state’s economy.

It is just as important to ensure that families putting in more than full-time work effort – as do the overwhelming majority of these working families – are not consigned to lives of poverty. State policies concerning wages, taxes, and access to health care provide critical tools to policymakers, tools that can help Maine families get a foot up on the economic ladder to middle-class incomes and real security.

Maine has made important steps in each of these areas, but more can and should be done. State budgets will be tight and there we will be a need to consider carefully how we allocate our limited resources. Nevertheless, those who were excluded from the benefits of the economic growth they helped foster over the last five years should not be pushed to the back of the line now that times are tough.

With the right investments, here in Maine and throughout the country, maybe the Working Poor Families Project’s report in 2012 can be titled, “Still Working Hard, Finally Getting Ahead.”

Kurt Wise is a fiscal policy analyst with the Maine Center for Economic Policy.