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A recently released report into income and poverty in Indiana has concluded that the continuing recovery from the great recovery has not benefitted most Hoosiers. The report, entitled ‘No Progress’, from the Indiana Institute for Working Families, there has been no significant change in the poverty rate for the state, since the recession supposedly ended last year, and average incomes have actually continued their decade long decline. The decline in wages and the increase in poverty over the last decade in Indiana has surpassed both that of the country as a whole and that of our neighboring states.
Furthermore, the state unemployment rate has been above the national average for one full year. Indiana’s high unemployment rate is at least partly attributed to the continuing barriers in the way of people attaining post-secondary educational training. Obstacles to educational attainment continues to be a barrier to high-wage growth.
The Daily Local News spoke to Derek Thomas, Senior Policy Analyst with the Institute. He first talked about poverty in Indiana.”Since 2000, Indiana saw a 58.7 percent increase, that’s the fifth largest in the U.S. In 2007, the poverty rate was 12.3 percent.”Currently, fifteen point six percent of Hoosiers live in poverty. It is much worse for younger residents, with over twenty-two percent of all state children living in poverty, and twenty-seven point two of children under five years of age in poverty.
The study next looked at income in the state. It found that Median Household Income in Indiana is over six percent below what it was when the recession began in 2008. The decline in income since the year 2000 has been the fourth largest in the country, similarly the worst among our neighbors except for Michigan.
This poverty and low income is exacerbated by the relatively low educational levels of Hoosiers. And, the percent of state adults with secondary and post-secondary degrees has not improved significantly over the last year. The institute has suggest several policy measures that could quickly alleviate some of these social-economic problems.
“First of all, we recommend the incretin the earn and income tax credit. It’s a federal credit for low to moderate working family. The credit reduces the tax burden. So, it offsets pay roll and income taxes. It’s also refundable, meaning if the credit exceeds the tax, the credit will given it back to the family.”
The second recommendation was for Indiana to enact a $25,000 tax floor, where a family of four earning less than this amount would not be charge income tax. Currently, Indiana is one of only 15 states that tax people below the federal poverty level of 23 thousand for a family of four and 11 thousand for an individual. The third recommendation is for the state to address the so-called cliff effect of work support programs, which Thomas explains for us, using the example of Indianapolis.
“In Marion County, a single-parent of two children, for example, post from 15 dollars per hour that parent losses about more than 8,000 dollars in childcare benefits. In this single parent family raises two children, childcare is important. Works program, means that you are only eligible for childcare if you are working. But what happens is that once you reach the certain address hold, the top level of eligibility lose it all.”
Consequently, employees would be hesitant to seek such an modest pay increase which creates a so-called poverty trap, impeding people’s socio-economic upward mobility. The report also recommends an increase in the minimum wage and indexing it to the cost of living index, and making it easier for Hoosiers to access higher education institutions and staying there until completion of their program.
Thomas concludes saying state policy makers should pursue these remedies.”We are optimistic that the message that self-deficiency is something that everyone embraces.”
Almost half of Hoosier children are low income, defined as below 200% of the official national poverty threshold. These poverty rates are the fifth worst in the nation and worse than all neighboring states except for Michigan, the home of bankrupt Detroit. The full report can be viewed on-line at: www.incap.org/2013povertyday.