Women's Equality Day: Hoosier Women Can't Wait 43 More Years

See full 'Status of Women in Indiana' infographic here

By Jessica Fraser

As the annual commemoration of Women’s Equality Day approaches this Wednesday August 26th, I thought it was an appropriate time to take stock of how women are faring in Indiana and to highlight the policies that should be enacted to improve equality for Hoosier women. The answer is that economically speaking Hoosier women are not equal. In the pay gap alone, if nothing changes it will be 43 more years before women enjoy parity with men.

• Women outnumber men in both poverty and extreme poverty and their ranks are increasing at a faster clip than are men’s. From 2012 to 2013, the number in poverty increased by 4.4% (from 544,799 to 568,598 women), while the number of men increased by only 0.2% (from 445,526 to 446,429 men). 

• Industries that typically pay low wages are dominated by female workers. Most notably office and administrative support staff (28% more women than men) which pays on average less then $15.00 per hour. Women also make up more of the service sector jobs with an average wage of $12.65 per hour.

• Women earn just $0.73 cents to their male counterparts (the 6th largest gender gap in the U.S.). Because 2/3rds of minimum wage workers are women, raising the wage (and the tipped wage) is a good step towards equal pay. This gap is felt by women in all income quintiles.

Male/Female Hourly Wage Gap, by Percentile, Indiana, 2007 ‐ 2013 (2013 Dollars)

Source: Economic Policy Institute analysis of Current Population Survey data

• Women are less likely to be unemployed, but once unemployed are more likely to experience long-term unemployment. On average, it takes women 2 weeks longer to find work than it takes men.

• The poverty rate for female-headed households is much higher than for all families. Strengthening the social safety net in a way that values all types of families is the appropriate response to this disparity. 

Female-headed Household Poverty vs. All Families Poverty, 2013

Source: U.S. Census Bureau, 2013 American Community Survey Poverty by Family Type

Eight Policies That Can Help Close Gender Disparity Gaps: 

1) Eliminate the childcare benefit cliff – a $0.50 raise can result in a loss of childcare – to encourage work and restore the most basic incentive for upward mobility – that a raise equals an increase in net resources.

2) Continue efforts to eliminate the Child Care Development Fund (CCDF) waitlist of nearly 8,200 children in nearly 5,000 families

3) Eliminate antiquated TANF and SNAP asset tests to promote savings behavior, encourage self-sufficiency and create administrative efficiency.

4) Tie TANF eligibility and benefits to inflation and need to maintain real value of benefits for low-income parents. 

5) Increase investments in Individual Development Accounts (IDA) - This will enable Hoosiers of modest means to save money and build financial assets to purchase a home, to pay for postsecondary education expenses, or to start a small business. 

6) Provide Paid Sick and Family Leave - The United States is the only industrialized nation that does not guarantee working mothers paid time off to care for a new child. In Indiana, 48% of the private sector workforce does not have access to paid sick days.

7) Raise the Minimum Wage - From our recent blog post, 15 Reasons to Raise Indiana's Minimum Wage: 20% of female workers in Indiana would be directly affected, according to a GovBeat analysis of an Economic Policy Institute report.

8) Provide supportive services for low income adults pursuing postsecondary education- Higher education for low-income families is a critical path to prosperity for many families. It’s an imperative for Indiana’s economy too as continued growth hinges on maintaining a skilled workforce. Adult learners need greater access to financial aid and supportive services such as child care and transportation if they are to succeed in higher education. 

Women across the nation won the right to vote 95 years ago; this was a huge victory for women’s equality. That doesn’t mean there aren’t more battles to be won… Hoosier women still have some fights ahead of us if we are to achieve full equality.
Tuesday, August 25, 2015

#RaiseTheWage, Marion County!

By Derek Thomas

Last week, the Institute, a member of Raise the Wage Indiana, was invited to speak at the ‘Indianapolis Municipal Candidates Forum on Living Wages’ at the Indianapolis Central Library. The goal was to educate the candidates and community on the struggles of low wage workers and illustrate the need for a living wage. Here’s a copy of the presentation:

Work is the key to economic self-sufficiency, but simply having a job is not enough; Hoosier families and communities need quality jobs that pay well enough to meet a family’s most basic needs, such as childcare, housing, food and transportation.

Unfortunately, the Indiana Legislature has hamstrung local communities by denying them the ability to raise living standards based on their varying needs, through preemption laws. Indiana’s preemption, however, does not apply to city and county employees, recipients of economic development subsidies and contractors.  This means cities and counties can begin to require living wages for employers that rely on taxpayers to carry out their initiatives.

WHAT IS A LIVING WAGE IN MARION COUNTY? Unbeknownst to most, Indiana has its own living wage calculator: it’s the Institute’s Self-Sufficiency Calculator, which measures the cost of a family’s most basic needs for 70 different family types in all of Indiana’s 92 counties. For example, for a family of three in Marion County (one adult, one preschooler and one schoolage child), the self-sufficient hourly wage is $19.95. For this family, childcare is nearly a third of cost of the family’s basic needs (Table 1). Even for a single childless adult who doesn’t require childcare or more than one bedroom, the living hourly wage is $9.78 – 35% higher than the paltry federal minimum of $7.25.

POVERTY: Nearly half (46.1%) of Marion County residents are low-income, or not economically self-sufficient. After a 63% increase from 2007 through 2013, 11.2% - or 96,328 – of Marion County residents are now in extreme poverty (less than $10,045 annually for a family of three) (Table 2). Poverty discriminates, too. More than 1/5th of women are in poverty, and poverty among African Americans – nearly one-third of the total population - continues to grow (Table 3).

INCOMES: Incomes for low- and middle-income Marion County residents have declined by 20% for the bottom quintile and 0.4% for the middle quintile, while incomes for the top 5% have soared by 34% (Chart 1). Median family incomes have declined significantly (16.4%) for families with children below 18 years of age (Chart 2).

JOBS MARKET: Half of Marion County jobs are in industries that typically a wage below what a family of three requires for economic self-sufficiency, as do the top 3 fastest growing industries (from December 2013 through December 2014) (Chart 3 and Table 4).

My colleague, Andrew Bradley, laid out a Good Jobs Economic Development Strategy for Indiana, in which he cited MIT organizational management expert Zeynep Ton’s proven "Good Jobs Strategy". Her research shows that employers who treat their employees as investments, including offering a family-sustaining wage, can be just as profitable for firms, if not more. This, in turn, attracts skilled workers; just ask Andy Peterson, the head of North Dakota’s Chamber of Commerce. When talking about how middle-skills are getting more expensive in an era of decreasing unemployment, his words of advice to companies were simple: “pay your employees more!”

Cities and counties in Indiana must take the lead by raising wages on taxpayer-funded initiatives - as Hamilton County has done - to remain competitive. By doing so, local officials will exert pressure on the state legislature to raise the minimum wage and/or repeal the paralyzing preemption laws so that counties can take the lead on a ‘good jobs economic development strategy’.

TABLE 1: Monthly Income Required for Self-Sufficiency, Marion County, One Adult, One Preschooler, and One Schoolage Child
Data is from 2008. Adjusted for inflation = $45,833 in 2015 dollars
The Calculator uses 2008 data, reflecting the cost of basic needs, pre-recession. Generally, wages have declined, while the costs of most goods have not. Stay tuned for an update announcement. See our Self-sufficiency Standard here: http://www.indianaselfsufficiencystandard.org

TABLE 2: Ratio of Income to Poverty, Marion County, 2007 – 2013
Source: American Community Survey

TABLE 3: Characteristics of Poverty, Marion County, 2008 – 2013 

Source: American Community Survey

CHART 1: Income by Quintile, Marion County, 2006 - 2013
Source: American Community Survey

CHART 2: Median Family Income by Family Type Marion County, 2008 - 2013
Source: American Community Survey

CHART 3: Employment and Wages, 4th Quarter 2014
Annual self-sufficiency wage of $45,833 (single parent with two children) = $881/week (purple line) 
Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages, 4th Quarter 2014

Wednesday, August 19, 2015

Indiana Needs a ‘Good Jobs’ Economic Development Strategy to Close Skills & Income Gaps

By Andrew Bradley

Indiana faces an economic development conundrum and will need a new strategy to solve it. While the state is now down to a 4.9% unemployment rate, we also have record numbers of impoverished and low-income Hoosiers. At a time when Indiana is nearly full-up with low-wage work, in order to move our economy forward the state will need an economic development strategy based on growing ‘good jobs’, because not just any job will cut it anymore.

At the economic development committee meeting of last week’s Council of State Governments (CSG) convention of Midwestern state legislators, I was asked to talk about the status of Indiana’s middle-skill jobs, those that require more than high school but less than a four-year degree. I told them that while 54% of Indiana’s jobs require middle-skills, only 47% of Hoosiers currently have the skills to qualify. This is in part because of Indiana's low educational attainment rate, as only 34.7% of the state's working-age adults have at least a two-year degree. Compounding the problem, the Hoosiers who need to skill-up the most are those who can afford to the least. Indiana leads both the CSG’s Midwestern states and the U.S. average with 34% of working families who are considered low-income, and nearly half (45%) of those low-income Hoosier families have no post-secondary education at all, according to Working Poor Families Project data indicators.

When deciding where to invest tax dollars for economic development, here are three things Indiana’s policymakers should keep in mind:

1. MIT organizational management expert Zeynep Ton’s proven "Good Jobs Strategy" shows that employers who treat their employees as investments, not only with a family-sustaining wage but also with a career ladder of increasing responsibility and empowerment on the job, can be just as profitable - or more. Take for example Andy Peterson, the head of North Dakota’s Chamber of Commerce. When talking about how middle-skills are getting more expensive in an era of decreasing unemployment, his words of advice to companies were simple: “pay your employees more!”

2. You can’t climb a ladder on a shaky floor: According to the Aspen Institute, employees without stability at work won’t be able to gain the skills that employers increasingly demand. Policymakers have choices to both ‘raise the floor and build ladders’ with policies that encourage stable scheduling; provide adequate benefits and flexibility; and allow greater employee responsibility & voice. A policy choice example is removing barriers to work and skills training by supporting high quality child care.

3. Ask the right questions about skills and income – and demand answers! If a company proposes an ‘average’ wage, be sure it’s a high median wage distributed throughout the workforce and not a mean wage skewed by only high executive pay. If a company is asking for applicants to have a certain level of educational attainment, make sure they are actually utilizing those skills and provide a training plan for applicants to get them. An example of a good skills plan is the announcement this month of an employer locating to East Chicago that has training through Ivy Tech for local applicants built into the city, regional, and state economic development package.

To move past the low-unemployment/low-wage quagmire, Indiana needs an economic development strategy that combines raising the floor and building ladders to career pathways for every new job. Instead of trying to build a workforce by picking off low-wage jobs from our neighbors, imagine how strong Indiana’s economy would become for all Hoosiers by encouraging economy-boosting 'Good Jobs' statewide.

Tuesday, July 21, 2015

Unleashing Entrepreneurial Opportunities For All Hoosiers

By Derek Thomas

This blog post was prepared for the Indiana Assets and Opportunity Network. A collaboration between the Indiana Institute for Working Families (IIWF), Indiana Association for Community Economic Development (IACED) and Local Initiatives Support Corporation (LISC).

Included in a recent report from the Indiana Chamber of Commerce – ‘Indiana Vision 2025: A Plan for Hoosier Prosperity – was the Kaufman Index, a measure of entrepreneurship in the U.S. According to the Index, Indiana ranked 44th in 2015, up from 48th in 2014. Just 0.23% of the Hoosier adult population becomes an entrepreneur in a given month (that’s 230 out of every 100,000 Hoosier adults). The top state is Montana with a rate of 0.54%. Vermont, Alaska, New Mexico and California round out the top five, and nearly half of U.S. states have a rate of 0.30% or greater.

These measures are consistent with ‘Businesses and Jobs indicators released by the Indiana Assets and Opportunity Network. Created by Washington D.C.-based Corporation for Enterprise Development (CFED), the 15 measures are concerned, holistically, with both ownership and job quality: Indiana ranks 38th. Among other factors, only 1.37% of Indiana residents own their own small business.

In its press release, the Chamber cites a “significant decline in venture capital invested” from 2012 to 2014. Indeed, “in terms of venture capital funding, [Indiana is] 36th with per capita spending levels far below the national average,” according to a recent op-ed from Indiana University President Michael A. McRobbie, in which he cites the role that universities play in creating a stronger Indiana by attracting research dollars.

There are, however, additional ways that policymakers can create a business-friendly environment for all would-be entrepreneurs through programs such as individual development accounts (IDA) and self-employment assistance (SEA).

INDIVIDUAL DEVELOPMENT ACCOUNTS (IDA): IDAs are matched savings accounts that enable low- to moderate-income individuals to save money and build financial assets for the specified purposes of purchasing a home, paying for postsecondary education expenses, or starting a small business. Matched savings are exchanged for core financial literacy training and goal-specific training around growing assets for would-be entrepreneurs, homeowners, or students. Small business training helps recipients develop target markets; write a business plan; develop a marketing plan; and learn about small business loans and other resources for entrepreneurs. The program has a rich and successful history in Indiana. Aside from its high savings rate, 128 of the 5,657 (2.3%) accounts opened from 2009 – 2012 resulted in business start-ups, according to Indiana Housing and Community Development Authority.

SELF-EMPLOYMENT ASSISTANCE (SEA):  By removing regulatory barriers from Indiana’s unemployment insurance system, policymakers can help to unleash entrepreneurship for laid-off workers. Unlike traditional unemployment insurance in which benefits are exchanged for work-search activities, SEA participants are required to take part in entrepreneurial training (perhaps using IDA training as a vehicle?). Currently, only seven states in the U.S. have the program, but its success secured SEA a home in the bipartisan Middle Class Tax Relief and Job Creation Act. The Hamilton Project cites evidence from the “Massachusetts SEA program [that] strongly suggests that receipt of unemployment benefits combined with enterprise training can help the unemployed transition into productive employment, and can do so cost-effectively.”

Monday, July 6, 2015

Indiana's Unemployment Rate Drop - All That Glitters is Not Gold

By Derek Thomas

On the face of it, April brought some great news for job growth in Indiana. The state's unemployment rate declined significantly - down 0.4% from March to April. The current 5.4% rate is the lowest it's been in Indiana since June 2008. Trade, Transportation and Utilities employment made up the bulk of the month-to-month growth (6,400 of the 11,600 jobs added) and the state's workforce is nearing an all-time high. 

All that glitters, however, is not gold. 

First, economists are typically cautious about relying on a single month-to-month changes, as these numbers can be volatile and are subject to revisions. Instead, a three-month change is usually a better indicator.

Second, it's also important to look at the Labor Force Participation Ratio (LFPR)—the ratio of the civilian labor force to the total non-institutionalized civilian population 16 years and older—as a useful tool in determining the overall health of the labor market. A low LFPR means there is slack in the labor market, which puts downward pressure on wages, and holds back growth in household incomes.

With that said, here is some context to yesterday's news:

From February to April, Indiana saw a .5% decline in the unemployment rate, from 5.9% to 5.4%. That's the 5th largest decline in the nation in that time period. 

Yet, during that same time period, 18,800 Hoosiers dropped out of the labor force (more than the 16,600 jobs added from February to April). As a percent of the labor force, that's the second largest exodus from the labor market in the U.S. during that time period - just behind Wisconsin. This means that the unemployment rate decline can be explained - in part - by the number of Hoosiers leaving the labor force. Workers are only counted in the unemployment rate if they are actively seeking work. If someone finds no success in the job market, gives up the job search, and leaves the labor force, the unemployment rate goes down - but not for good reasons.

That brings us to the third and final point, which helps to illustrate declining LFPR; while the state is reaching employment levels (total nonfarm employment) not seen since the summer of 2000, the population of adults in Indiana (16+) has grown by more than a half-million during that time period. In other words, Indiana has added jobs, but not nearly enough to keep up with population growth.

Worse yet, the jobs that the state is adding are low-paying jobs. A recent report from the Indy Star - Economic Gaps Growing Among Hoosiers - encapsulates the conundrum that is the state's insistence on low road growth strategies: "As the state economy grows and state leaders say pro-business policies have created more than 57,000 new jobs last year alone, poverty is on the rise. That's right. More jobs, yet more poverty."

Following a decade of low-road growth strategies, there's good reason to be skeptical of the outcomes. One month's questionable improvement in the unemployment rate is no reason to pop the champagne. To raise the standard of living for hundreds of thousands of Hoosiers, Indiana lawmakers should give sincere consideration to policies that create good jobs, meaningfully increase economic security, and expand opportunity.

Thursday, May 28, 2015

A Stark Divide Among Low-Income Working Families

By Derek Thomas and Kevin Rogozinski

As concerns over racial disparity emerge around the nation, a timely report from the Working Poor Families Project finds a sharp divide among low-income working families. According to the research, working families headed by racial and ethnic minorities were twice as likely to be poor or low-income as working families headed by whites.

Racial and ethnic minorities will make up a majority of the U.S. population and workforce in little more than a generation, and a disproportionately high percentage of them will be low-income. These persistent trends pose critical challenges for Indiana and the nation – challenges that should be addressed by lawmakers.

Kathy Young's slide illustrates one of the ironies of Indiana's celebrated economic recovery. As the state economy grows and state leaders say pro-business policies have created more than 57,000 new jobs last year alone, poverty is on the rise. That's right. More jobs, yet more poverty. And a disproportionate number of those new poor are black and Hispanic.”
Read more on the ‘Economic gaps growing among Hoosiers’ – Indy Star, April 2015

Low-income working families with total income less than 200% of the federal poverty line (FPL) – $48,500 for a family of four – now constitute a third of all U.S. working families and 34% of all working families in Indiana. That’s 10,572,700 families nationally and 237,295 families just in Indiana. Within those low-income working families in Indiana, there are 541,480 children, equal to 39.2% of all Indiana children in working families – a larger share than all neighbor states and the U.S. average.

Minorities already make up a majority of low-income working families, and their disproportionate representation in the ranks of low-wage workers is growing in Indiana. According to WPFP’s data, 22.1% of working minority families are below the official poverty line ($24,250 for a family of four). That number – like overall poverty in Indiana – continues to swell, even as families in peer states experience improvements. 

Source: Working Poor Families Project
As above, the share of working minority families that are low-income (less than 200% FPL) is higher than surrounding states; 53.4% of working minority families in Indiana are low-income compared to 28.2% of working white families. 

                                                                               Source: Working Poor Families Project
The split isn't surprising: in 2013 38.1% of minorities are in low wage jobs compared to 22.4% of whites. 

This stark and growing racial and ethnic divide among working families weakens not only Indiana and national economies, but also the social fabric of communities everywhere.

The gap is likely to persist unless lawmakers take a
two-pronged approach towards reducing economic inequities, the research concludes. This approach includes simultaneously increasing access to education and training for low-income workers and enacting policies that make work pay.

By increasing access to financial aid for part-time and adult students, and extending access to Medicaid to 350,000 Hoosiers, Indiana has taken a step in the right direction. Nevertheless, the research warns that for an Indiana in which “younger workers and their families are able to move into the middle class and replace retiring baby boomers”, meaningful progress is required. Among the recommendations for state lawmakers:

- Raise the minimum wage
- Provide guaranteed paid sick leave
- Strengthen the state Earned Income Tax Credit
- Increase access to affordable childcare
Wednesday, May 20, 2015

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