Poverty rises even as economy turns

One trend belies the notion that a rising economy lifts all boats: Michigan’s growing poverty rate.

Michigan’s economy bottomed out near the end of 2009, and employment and incomes have been creeping upward ever since.

But so has poverty.

The share of Michigan residents living in poverty jumped from 13.5 percent in 2009 to 16.8 percent in 2010, the latest available Census Bureau data.

Michigan had a higher poverty rate that year than any of the surrounding Great Lakes states. The state’s poverty rate in 2010 was the highest since 1984.

“Here, as elsewhere, when we say the economy is recovering from the recession, that recovery is not spread evenly, said Charles Ballard, a Michigan State University economist. “People at the bottom are not doing very well.”

Michigan’s efforts to reduce poverty were rated “poor” by the 2012 Michigan Scorecard, as they were in 2010 and 2008.

Contrary to the popular notion that poor people are sitting at home collecting welfare checks, 41 percent of those living in poverty worked during 2010, according to the Michigan League for Human Services. And many more could not find jobs in a weak economy.

Child poverty is particularly alarming. Nearly a quarter of all children in the state were living in poverty in 2010.

More than 31,000 children are homeless and more than 700,000 are receiving food assistance, according to a December report on poverty by the Michigan League for Human Services.

Child poverty has touched every region of the state. Oakland, long the state’s wealthiest county, saw its child poverty rate jump by more than 50 percent between 2006 and 2010, according to census data compiled by the League.

At the same time, the state has cut assistance to the poor.

Gov. Rick Snyder signed legislation in September that enforced a strict, 48-month limit on cash assistance benefits.

“We are returning cash assistance to its original intent as a transitional program to help families while they work toward self-sufficiency and also preserving our state’s integral safety net for families most in need,” Snyder said in signing the bill. “Affected recipients are able-bodied and have had at least four -- some as long as 14 or more -- years to transition to independence.”

Bridge Magazine reported earlier this year that as many as 16,000 families already have reached the 48-month cap and have been kicked off welfare. An estimated additional 7,130 families will be dropped from cash assistance in the fiscal year ending Sept. 30.

Snyder and the Republican-controlled Legislature also cut the state’s Earned Income Tax Credit -- seen by many as an effective poverty-fighting tool -- from 20 percent of the federal credit to 6 percent this year.

And Snyder signed legislation last year that cuts payment of unemployment benefits from 26 weeks to 20 weeks, the shortest benefit period of any state in the country.

Last year the state said those with vehicles valued at more than $15,000 could not receive food stamps. But it later reversed the decision, exempting one vehicle per family from the restriction so that food stamp applicants could get to work, school and job interviews.

Still, “much of the social safety net has been reduced,” Ballard said.

Republicans said the state’s previous welfare and unemployment benefits were too costly and served as a disincentive for those receiving them to work.

But advocates for the poor say the new standards are punitive and are actually slowingMichigan’s economic recovery.

“Poverty has a huge impact on the ability of Michigan’s economy to recover,” Melissa Smith, the Michigan League’s senior policy analyst. wrote in the December poverty report. “When people have less disposable income, consumer spending goes down, forcing businesses to lay off workers or shut down entirely.

“This means less revenue for the state as incomes decrease and the tax base shrinks,” she wrote.

Rick Haglund has had a distinguished career covering Michigan business, economics and government at newspapers throughout the state. Most recently, at Booth Newspapers he wrote a statewide business column and was one of only three such columnists in Michigan. He also covered the auto industry and Michigan’s economy extensively.

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Gene Markel
Thu, 05/17/2012 - 1:14pm
Since the 1960s 4 out of 5 manufacturing jobs have been lost to automation and robotics. Those jobs are not coming back. This is one reason Michigan has lost population and entry level jobs for those without some post secondary education are almost non-existent. With these conditions Michigan will have a very difficult time providing help for its citizens from welfare to employment and family stability. Can Michigan train and bring business to the state that can provide employment ?