New Census data show that in 2017 Indiana continued to make incremental progress toward getting back to the trajectory our state was on before the recession. There truly is reason for modest celebration of significant declines in poverty overall and, for many different groups, significant increases in educational attainment and median household incomes. However, while we are making more progress on these measures than we have before the trends we laid out in our recent report 'The Status of Working Families in Indiana, 2018' hold true, we haven’t caught up with ourselves before the recession and we still haven’t recovered as well as some of our Midwestern neighbors. 

Three indicators in particular are troubling and show where Indiana should focus its efforts moving forward: our gender pay gap has widened AGAIN this year and was the 3^rd highest gap in the United States in 2017; housing insecurity among Hoosier renters remains shockingly and stubbornly high; and finally a decline in health insurance coverage should serve as a cautionary tale for the state not to restrict access any further.

Poverty: 

Indiana's poverty rate decreased significantly from 14.1% in 2016 to 13.5% in 2017, just a tick above the new U.S. rate of 13.4%. There are now 871,247 Hoosiers in poverty, down from 906,077 in 2016. This is great news, as we should all be working toward a goal of no Hoosiers in poverty. Indiana is now just a bit over a percentage point away from regaining our 2007 rate of 12.3% However, we still have further still to go to regain the 10.1% rate Indiana had back in 2000 when we were experiencing an economic peak. More progress needs to be made for Hoosier adults, whose poverty rate didn't drop significantly, and for Hoosier seniors, whose poverty rate remained flat at 7.7%.

Indiana’s rate of Child Poverty dropped to 18.4% in 2017 down from 19.5% in 2016 - but unlike poverty overall the Census says this decline is not statistically significant. While Indiana's drop in overall poverty in 2017 was significant, this seems to be driven by families with older children - those with kids under 5 did not see a significant change. This speaks to the needs for more supports for families with young children, including broader access to childcare or pre-K as well as childcare tax credits.

 

Source: census.gov

The new Census data from 2017 matches the trend in Indiana’s child poverty from our recent ‘Status’ report. Indiana’s child poverty rate used to be well below the U.S. and even the Midwest as recently as 2004, but spiked higher shortly thereafter and, at 18.4%, is now tied with the U.S., and is 2.7 points above the Midwest and 3.1 pts below the South.

Looking at Hoosiers in poverty by race we also see some indications of improvement, but also lasting disparities.  Hoosiers of color have seen the largest drops in poverty (1.6 points for African American, 3 points for Latinx, and 7.8 points[!] for Asian Hoosiers). However, most Hoosiers of color remain more than twice as likely to be in poverty than white Hoosiers.

We know from our research on the Indiana Self-Sufficiency Standard that poverty-level income itself is not nearly enough for Hoosier families to afford life’s basic costs, so we look at how many Hoosiers are living below 200% of the federal poverty guidelines as well. In 2017, Indiana's rate of low-income residents was 31.5%, with 2,034,305 Hoosiers now living below 200% of the federal poverty line. This is down from 32.4%, or 2,086,942 low-income Hoosiers in 2016. But the rate of nearly 1 in 3 Hoosiers unable to afford basic costs is still way too high. And despite continuing signs of improvement, the percent of low-income Hoosiers is still above pre-recession level of 29.6% in 2007. Since 2009, basic costs have increased 31.9% for Hoosier families with children while wages have increased only 6.3%.

Among these costs, housing insecurity is a particular concern, especially for the nearly 1 in 3 Hoosiers below self-sufficiency. In 2016, 46.1% of Hoosier renters paid more than 30% of household income on rent, a key measure of housing burden. And while this statistic of rental housing insecurity decreased to 45.7% in 2017, the Census Bureau did not deem this decrease as statistically significant.  Affordable housing continues to be a fervent need expressed by our communities, as three cities in Indiana are among the highest in the country for evictions, waitlists for public housing assistance are too long, and affordable housing is out of reach for many low-wage earners. Asset development and home ownership programs could be part of the solution. Hoosiers who own their home are much less likely to be housing insecure.  About 19% of those with a mortgage in 2017 paid 30% or more on housing costs, campers to 9.9% of those without a mortgage. Much less than renters!  The changes from 2016 to 2017 were mostly static.

Household Income and Pay Gaps: 

Like the U.S. overall, median household incomes increased significantly in Indiana, from $53,342 in 2016 to $54,181 in 2017. But the gap between the average Hoosier's and the median American's income also increased, from $5,478 to $6,155. And while Indiana’s income increase of $753 is undoubtedly good for working families, it didn’t keep pace with the increase of $902 for the average Midwest state.

Household income is another area where the new 2017 Census data matches the trends we found in our ‘Status’ report. Indiana's median household incomes, which were higher than Midwest average at the turn of the 21st century, now at $54,18 are $4,211 below the Midwest and just $220 above the average of Southern states. Indiana's median household income of $54,181 in 2017 was 34^th-hisghest among 50 U.S. states, up from 35th in 2016, and 10^th-highest of 12 Midwest states, up from 11^th.

Even with 2017’s laudable gains, Hoosier households are still $2,052 shy of their pre-recession levels ($56,233 for 2007, adjusted for inflation to 2017 dollars). And Indiana would need 6 years at its current pace of income growth to catch up with the Midwest average – assuming the rest of the region saw no increase over that time.

Hoosiers’ individual earnings also increased in 2017, but so did the gender wage gap. Indiana's median earnings increased significantly from $31,233 in 2016 to $32,069 in 2017, and are now just $321 shy of our pre-recession 2007 level of $32,390 (in 2017 dollars). However, this increase was driven by lopsided gains, and while the earnings for full-time, year-round men increased significantly by $876, the increase of $354 for women was not significant. Indiana now has the third-highest gender wage gap in the U.S. at $13,615, behind only Louisiana and Utah. This is up from 6th-highest in 2016 at $12,717, and 12th-highest in 2015 at $11,339.

And while Hoosiers of varying racial and ethnic groups saw increases in individual earnings, the increases did not close overall income disparities. From 2016 to 2017, African American Hoosiers gained $2,098 in median earnings, Latinx Hoosiers gained $1,374 and white Hoosiers gained $1,654. Overall, the typical Hoosier 16 or over gained $1,163 for a total of $32,069 in median earnings. However, even after these gains, African American Hoosiers remained $6,367 below the state average, Latinx Hoosiers remained $6,386 behind, and white Hoosiers remained $1,409 ahead.

Health Insurance Coverage: 

We were concerned to see that Indiana's rates of health insurance coverage decreased and uninsured rates increased slightly in 2017 after years of gains. The child uninsured rate increased from 5.9% to 6.3%, and the uninsured rate for working-age population of 19-63 increased from 12.3% to 12.8%.  This is a warning sign that perhaps now is not the time to make big changes to the way Indiana covers the healthcare needs of low-income Hoosiers.

With 8.2% of Hoosiers without health coverage in 2017, Indiana has the 24th-highest rate of uninsured in the U.S. & 5th-highest of 12 Midwest states. Indiana was also 5th in the Midwest in 2016, but 23rd-highest in the U.S. that year. At 6.3%, Indiana had the 11th-highest rate of children without health insurance in 2017, and 2nd-highest in the Midwest. While Indiana was also 2nd-highest in the Midwest in 2016, this is an improvement from 10th-highest in the U.S. that year.

Educational Attainment:  In 2017, Indiana saw statistically significant increases in Hoosiers with Associate Degrees, and Bachelor's degrees, and significant declines in the rate of Hoosiers who only have a high school degree or less!  These are promising gains for Hoosiers looking to increase their educational attainment, and for employers who increasingly demand a higher-skilled workforce.

The safety net:

New Census data shows that fewer Hoosier households were enrolled in SNAP over the past year - down from 10.8% in 2016 to 9.3% in 2017.  SNAP is designed to respond to need, so as Indiana saw earnings rise, it makes sense to see a decrease in households using nutrition assistance. However, in 2017 8.7% of households who were NOT receiving SNAP were below the poverty level. This may mean Indiana is still not reaching the Hoosiers most in need those SNAP was intended to serve.

Furthermore, Indiana saw a non-significant decline in the rate of Hoosiers in deep poverty (below 50% of FPL). We are calling on the General Assembly to make much-needed changes to our state’s Temporary Assistance for Needy Families program so that it can better serve our most vulnerable citizens.

Conclusion:

In conclusion, in 2017 Indiana saw further incremental improvements that track the ongoing national recovery. But even these uneven gains are leaving too many vulnerable residents behind, including women, Hoosiers of color, and low-income working families. As median incomes fall further behind our Midwestern peers and Hoosier women now face the 3^rd-highest gender pay gap in the nation, Indiana can’t afford to keep waiting for piecemeal efforts to kick in. To truly catch up and become a leader in the Midwest and the U.S. again, Indiana needs its policymakers to take bold steps to improve wage and job quality, strengthen protections, and increase economic mobility for all Hoosier families.

Here at the Indiana Institute for Working Families, we have been researching, thinking about, and advocating for Temporary Assistance for Needy Families (TANF) for over a decade. As the program turns 22 today, it seems to be a good time to talk about the purpose of the program, how its falling down on the job here in Indiana, what needs to be done to reform the current program in our state, and how the next congress could create a better program as it tackles TANF’s reauthorization.

States are given block grants that require maintenance of effort (kind of like a match) and guidelines for the use of the funds. However, states have broad flexibility on how TANF funds (both federal and state maintenance of effort) are spent. Additionally, accountability for spending is limited to how much was spent in which category and the amount of time TANF participants spend in “work participation.”  The fact that these accountability measures are input-driven and not outcome-driven has led to a policy of not just “work first” but ANY work first. For most TANF recipients who experience numerous barriers to work, this mentality is in direct contrast to the stated goal of achieving self-sufficiency.  The only thing these approaches to work participation seem to be achieving is getting families to earn enough to be off of TANF, but not nearly enough for self-sufficiency –OR – they simply bide time until a recipient hits the time limit and leaves TANF no more prepared for work than when they started.

Extremely low eligibility guidelines, asset tests, job search requirements before enrollment, and work requirements after enrollment have led to a steep decline participation and subsequently in the amount of TANF spending going to cash assistance and other core services. Meanwhile, the state increasingly claims funds as “maintenance of effort” that are spent on populations other than our state’s actual TANF participants.

For this upcoming legislative session, IIWF plans to continue our efforts to reform TANF policy at the state level. For the past two years we have supported legislation that would raise and index Indiana’s eligibility levels and guidelines (SB 527-2017 and SB 79-2018). This upcoming session we will be supporting State Senators Jon Ford (Terre Haute) and Mark Stoops (Bloomington) in a similar effort. When these measures pass, more Hoosiers will have access to the core and supportive services that TANF can provide.  IIWF has put together a short video that explains TANF and the changes that state can make to transform TANF into a program that works!

In The new gilded age: Income inequality in the U.S. by state, metropolitan area, and county, a new paper published by EPI for the Economic Analysis and Research Network (EARN), Mark Price and Estelle Sommeiller detail the incomes of the top 1 percent and the bottom 99 percent by state, metropolitan area, and county.

“Rising inequality affects virtually every part of Indiana, not just large urban areas or financial centers,” said Andrew Bradley, Senior Policy Analyst for the Indiana Institute for Working Families, Indiana’s EARN member organization. “It’s also a persistent problem throughout the country—in big cities and small towns, in all 50 states. While the economy continues to recover, federal and state policymakers should make it a top priority to grow the incomes of working people while ensuring Indiana’s economy serves the lives of all Hoosiers, not the narrow interests of corporate profits and the gilded few."

Price and Sommeiller lay out the average incomes of the top 1 percent, the income required to be in the top 1 percent, and the gap between the top 1 percent and the bottom 99 percent in every county and state as well as in 916 metropolitan areas. The authors found that in 2015, the top 1 percent took home 22.03 percent of all income across the U.S., while the top 1 percent took home 14.9 percent of all income in Indiana.

A series of accompanying fact sheets detail income inequality by state. Key findings include:

• The top 1 percent earned 17.3 times more than the bottom 99 percent in Indiana—making Indiana the 39th most unequal in the country.

• The average annual income of the top 1 percent in Indiana was $804,275. To be in the top 1 percent in Indiana, one would have to earn $316,756.

• Inequality grew sharply in the post-war years in Indiana. From 1945 to 1973, the top 1 percent captured 5.7 percent of overall income growth in Indiana. But since 1973, the top 1 percent has captured 72.4 percent of Indiana’s income growth.

• Inequality has grown more in Indiana than in the Midwest or the United States over the past 45 years. From 1973 to 2015, the top 1 percent have captured 72.4 percent of Indiana’s total income growth, compared to 71.5 percent for the Midwest and 65.4 percent for the U.S. That left the bottom 99 percent of Hoosiers with just 27.6 percent share of income growth, compared to 28.5 percent in the Midwest and 34.6 across the U.S.

• The most unequal metro area in Indiana is Warsaw, where the top 1 percent makes an average of $1,353,969, 27.3 times more than the bottom 99%, who make an average of $49,675. The most unequal county in Indiana is Dubois County, where the top 1 percent makes an average of $1,664,967, 30.2 times more than the bottom 99%, who make an average of $55,196.

The General Assembly is about to green-light a measure that will cut credits and raise taxes on low income working families by $5 million by 2027, but it doesn’t have to be that way. The Earned Income Tax Credit (EITC) is a widely utilized, and extremely successful, tax benefit for low income individuals that was originally created in the 1970’s and then expanded during President Ronald Reagan’s tax reform efforts of the late 1980’s.  In Indiana, working families with children that have annual incomes below about $40,320 to $54,884 (depending on marital status and the number of dependent children) are eligible for both a federal and state EITC.  The state credit is simply the amount equal to 9% of their federal credit.  That percentage is set statutorily by the General Assembly, and while the state credit is a percentage of the federal credit, the credits themselves are not officially coupled (this is important and you’ll see why below). 

The reason the EITC is so successful is that it is fully refundable.  This means that the credit, which incentivizes work, can wipe out a family’s tax liability, and if any credit remains will be provided to the taxpayer in the form of a tax return.  This extra money in a family’s pocket is often used for emergency expenditures, school supplies, household needs, etc., which can be the difference between making it and falling off a fiscal cliff for low income Hoosiers.  Nearly one hundred percent of the dollars refunded to eligible families are pumped back into our local economy, and the program itself has been supported by leaders of both parties including President Obama and Speaker Paul Ryan who together supported an expansion of the program as part of our economic recovery from the Great Recession.

Unfortunately, Hoosiers who use the program are on the verge of seeing a huge tax increase with the recent passage of the federal tax bill, combined with the passage of House Bill 1316 during the special session of the General Assembly this week.  Tucked into the federal legislation was a new way of calculating cost of living adjustments for the federal EITC. This new method, called Chained CPI, will constrain these adjustments so that they grow at a far slower rate than normal inflation.  Among the various provisions of HB 1316, which was drafted in large part to protect some of Indiana’s biggest and most important companies from seeing large increases in their state tax liabilities as we reconcile our tax code with the federal legislation passed by Congress earlier this year, is a provision that will require Indiana to coincide with the use of Chained CPI.  The end result of both the federal and state legislation will be a large tax increase on low income Hoosiers who claim the EITC.  The Institute on Taxation and Economic Policy (ITEP) projects that in 2019 recipients will lose $12 million in federal EITC and $700,000 in state EITC returns.  The burden on Hoosiers continues to grow exponentially and by 2027 they are projected to lose at least $86 million federally and $5 million more from the state EITC.  Although the state and federal governments view any EITC expenditures not received by taxpayers as savings, make no mistake, it is a tax increase on low income working Hoosiers, and a big one at that.  $91 million big.    

But there are other options that Indiana isn’t considering. Because Indiana’s credit is not officially coupled with the federal credit, as mentioned previously, we do not have to utilize this new method of calculation for the State’s EITC.  Federally, low income working Hoosiers are already projected to lose tens of millions of dollars.  There is little we can do about that unless we can convince Congress to amend or repeal its most recent tax legislation.  But, we can do something locally with regards to the state EITC. Another $5 million out of the pockets of low income working Hoosiers, and local economies, is real money that cannot be ignored.  Unfortunately we at the Indiana Coalition for Human Services were not able to convince lawmakers to remove this provision from HB 1316, but it is our hope that we can work with them over the summer and fall to find a solution to this problem, just as Indiana’s largest employers were able to find solutions to their tax liability problems in this legislation.  We believe there are a number of options that are worthy of consideration, and we look forward to the opportunity to make our case.