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Our Failure To Invest In Infrastructure Is Actually Costing You Thousands

Crumbling Road

Just drive down the road and you will quickly realize that our roads and bridges are in dire need of repair. However roads and bridges are not the only part of our crumbling infrastructure that needs to be addressed before its too late. Our infrastructure includes water, wastewater, electricity, airports, inland waterways & ports, and rail.

Failure to act“Infrastructure is the backbone of the U.S. economy and a necessary input to every economic output. It is critical to every nation’s prosperity and the public’s health and welfare,” wrote the American Society of Civil Engineers in their new study, Failure to Act: Closing the Infrastructure Investment Gap for America’s Future.

“Each Failure to Act study demonstrates that deteriorating infrastructure, long known to be a public safety issue, has a cascading impact on our nation’s economy, impacting business productivity, gross domestic product (GDP), employment, personal income, and international competitiveness,” ASCE added.

Failing to properly invest in maintaining and rebuilding our infrastructure is costing Americans thousands of dollars a year and it is about to get worse.

“From 2016 to 2025, each household will lose $3,400 each year in disposable income due to infrastructure deficiencies.” ASCE warned that if this infrastructure gap is not closed, by 2025, households would lose $5,100 annually and the economy could lose over $4 trillion in GDP.

ASCE 3400 lossIf we do not make the needed repairs today, they will ultimately cost us more in the future. It is the Republican led budget austerity that is leading us down this dangerous path. Since 2002, spending on roads and highways alone has fallen 23%. That is millions of dollars lost in our GDP and thousands of jobs lost, every year, by not investing in our future.

“America is currently spending more failing to act on our investment gap then we would to close it. Inefficient infrastructure is costing every household $9.30 a day. However, if every family instead invested an additional $3 a day per household, we could close the infrastructure investment gap in 10 years,” added ASCE.

“By increasing the investment by $144 billion a year for the next 10 years at the federal, state and local levels, we can upgrade our infrastructure, and protect our GDP, jobs, families’ disposable income and our nation’s competitiveness.”

America cannot wait any longer. The time is now.

Take action by sending a message to your elected leader.

Share this post with the hashtag, #InfrastructureMatters


 

Related reading: Business and Labor Agree: Let’s Fix our Crumbling Infrastructure Now

The DOL To Double Overtime Rule Lifting The Wages Of An Estimated 12 Million Workers

Thomas Perez delivers remarks after President Barack Obama announced Perez as his nominee for Labor Secretary, in the East Room of the White House, March 18, 2013. (Official White House Photo by Pete Souza)

Thomas Perez delivers remarks after President Barack Obama announced Perez as his nominee for Labor Secretary, in the East Room of the White House, March 18, 2013. (Official White House Photo by Pete Souza)

12.5 Million Americans: the number of people that the Economic Policy Institute (EPI) estimates will be affected by President Obama’s changes to the overtime rule.

Today, the Department of Labor, under President Obama’s direction, will update the threshold for salaried workers who automatically qualify for overtime when they work more than 40 hours a week.

“We’re making more workers eligible for the overtime that you’ve earned. And it’s one of the single most important steps we can take to help grow middle-class wages,” said President Obama.

“New overtime protections mark a major victory for working people that will improve the lives of millions of families across America,” said Richard Trumka, President of the AFL-CIO. “We applaud the Obama Administration heeding the call for action to ensure working people get paid for all the hours we work. Taking this step to restore overtime is one of the many ways we are beginning to change the rules of our economy that are rigged in favor of Wall Street.”

“The fight for even stronger overtime protections and to raise wages for all working people continues. But today, millions of workers will receive a long overdue raise, healthier and more productive jobs, and more time to spend with our community and loved ones,” added Trumka. 

This simple rule change will have a significant impact on our local and national economy. The White House estimates this rule change will put $12 billion dollars into the hands of hard working Americans over the next ten years.

The DOL is lifting the threshold for salaried workers from just over $23,660 a year to $47,476. This means that if you are a salaried employee who makes less than $47,476 dollars you will now be entitle to overtime (time and 1/2) for every hour worked in a week above 40.

This doubles the current salary threshold while being responsive to public comments regarding regional variations in income by setting the salary threshold at the 40th percentile of full-time salaried workers in the lowest income Census region (currently the South). Tying the salary threshold to the lowest-wage region of the country has strong historical precedent in previous rulemakings.

This salary threshold will be reevaluated and updated every three years ensuring that if continues to meet the 40th percentile mark.

Employers have used this low salary threshold to cheat workers out of higher wages for decades. Many of these workers routinely work 50-60 hours a week and are paid a flat rate. In some cases salaried workers were putting in so many extra hours, without any additional pay, that their per-hour rate would drop below the federal minimum wage of $7.25 an hour.

Now employers will have to choose between raising the wages of salaried employees or keeping employees at their current salary but reducing the number of hours they work in a week. Reducing the number of hours worked would lead to job growth as employers will need to hire additional workers to fulfill their needs.

Check out this short video from the White House that explain the rule change and how it will effect individual salaried workers. 

EPI estimates that raising the overtime salary threshold will directly benefit a broad range of working people, including:

  • 6.4 million women, or 50.9 percent of all directly benefiting workers
  • 4.2 million parents and 7.3 million children (under age 18)
  • 1.5 million blacks, and 2.0 million Hispanics
  • 4.5 million millennials, defined as workers age 16 to 34 (who make up 28.2 percent of the salaried workforce but 36.3 percent of directly benefiting workers)
  • 3.6 million workers age 25 to 34 (who make up 22.9 percent of the salaried workforce but 28.7 percent of directly benefiting workers)
  • 3.2 million workers with a high school degree but not more education (who make up 15.5 percent of the salaried workforce but 25.3 percent of directly benefiting workers)

This is a monstrous step in the right direction to lift the wages of millions of Americans. The White House estimates that the new rule is expected to extend overtime protections to 4.2 million more Americans who are not currently eligible under federal law.

The new rule is slated to take effect on December 1st of this year.


Below are a couple of charts from the EPI that break down what industries will see the biggest boost from this new rule change and the number of workers impacted by the new rule, state by state.

In New Hampshire, over 54,000 workers will be directly effected by this new rule change.  Texas, Florida and California will see the biggest increases with over 1 million workers benefiting from this change.

Leo W Gerard: Failure of Korean Trade Deal Voids TPP

On the fourth anniversary of the Korean trade deal, its lofty promises have been revealed as putrid pie in the sky:  More jobs lost. No exports gained.

Just like NAFTA, just like China’s entry into the World Trade Organization (WTO), free traders swore that the Korean deal would shower jobs and economic prosperity down on America.

It didn’t happen. Actually, the exact opposite did. In all three cases, the schemes enticed corporations to close American factories and offshore work. That enriched CEOs and shareholders. But it impoverished millions of American workers and bankrupted communities.

Now, a backlash is evident in the groundswell of support for insurgent presidential candidates on both the left and right who denounce these failed free trade policies. This is an uprising against a quarter century of Washington, D.C., based free-trade boosterism. Its first victim should be the proposed Trans-Pacific Partnership (TPP), a massive scheme between the United States and 11 Pacific Rim countries.

EPI chart

“It’s gonna be great!” That’s what the TPP groupies keep saying. Just like the NAFTA junkies did. Remember when the free traders breathlessly said letting China in the WTO would open up its market of a billion consumers to U.S. manufacturers? Instead, tens of thousands of American factories have closed and China is selling its iPhones, televisions and steel to American consumers.

The deal with Korea is the most recent example of just how badly free traders hurt American workers and communities. The promise from free trade promoters was that the Korean deal would expand U.S. business opportunities and “support” 70,000 American jobs. The U.S. International Trade Commission estimated exports to Korea would rise by at least $10 billion.

None of that happened. U.S. exports to Korea have been flat for the entire four years. Meanwhile, imports from Korea rose 26.8 percent. As a result, the U.S. trade deficit with Korea more than doubled in just four years.

That means American workers lost jobs. Instead of Americans manufacturing commodities, Koreans did. Then the goods were shipped to the United States duty free under the deal that was supposed to be so great for American workers.

Robert E. Scott, senior economist and director of trade and manufacturing policy research at the Economic Policy Institute, calculated that in just four years, thattrade deficit with Korea cost 95,000 Americans their jobs, mostly in manufacturing.

Free traders bragged at the time the Korean deal was signed that it would finally give American car and parts manufacturers access to the Korean market. And if an increase of less than $1 billion worth of vehicle and parts exports to Korea over four years is access, then it’s a success. By contrast, imports of Korean cars and parts to the United States increased by $10.6 billion over the same period. Frankly, that’s ten times more successful. For Korea.

That’s not the kind of news that devastated former car and car part manufacturing towns like Flint and Ypsilanti, Mich., want to hear after that 70,000-job promise made by those Korean free trade deal pushers. It’s certainly not good news either to devastated steel towns like Duquesne and Monessen, Pa., where the metal for cars and car parts was once forged.

The abject failure, the upside-downness of the Korean deal, is illustrated by these two statistics: The U.S. trade deficit with all nations over the past four years declined slightly, by 5 percent. At the same time, the trade deficit with Korea surged up 115 percent.

Clearly, something is very, very wrong with the Korean deal. And with NAFTA, which is still sucking manufacturers like Carrier over the border to Mexico, a corporate desertion announced in February that will cost 2,100 American workers their jobs at two Indiana plants.

And, similarly, clearly something is wrong with China’s entry into the WTO, considering that U.S. Steel Corp. just filed a petition with the U.S. International Trade Commission asking it to outlaw all Chinese steel because of numerous violations, including five Chinese military officials hacking into the corporation’s computers to steal trade secrets.

All of the free trade schemes had the same bad effects. But each time a new one is proposed, like the TPP, its cheerleaders say, “No, no, trust me, this one is the one. This time it’s going to be great!”

Dean Baker, co-director of Center for Economic and Policy Research (CEPR), and CEPR economist David Rosnick suggested a reason for this. The free traders keep using the same rosy, but broken model to predict results from proposed trade deals.

That rosy model claims that gains to the U.S. economy from the TPP would be 0.5 percent of GDP when the impact of the agreement is fully realized in 2030. By contrast, another model by different economists found that the deal would cause a loss in GDP of .54 percent by 2025 and cost the United States 448,000 jobs. Frankly, based on experience from NAFTA, China and the Korean deal, the second, less-perky model seems much more realistic.

And that’s what Baker and Rosnick pointed out. They compared the projections from the rosy model to what actually happened. They found the model failed, both for Korea and NAFTA. That raises serious questions about why anyone is using it to predict rosy results for the proposed TPP deal.

The first step toward achieving trade deals that work for American workers is admitting that what’s going on now has failed. The process is flawed beginning with who sits at the bargaining table – that would be corporate lobbyists, not laid-off auto workers from Flint. Every one of the TPP’s 5,544 pages should be shredded. Then negotiators, including all stakeholders, can concentrate on seeking fair deals under which American workers, American communities and American businesses all prosper.

Daniel Weeks: Time To Put New Hampshire Back On (The) Track

Dan Weeks 3

Daniel Weeks

Sixty years ago, America embarked upon the “greatest public works project in the history of the world.”  The Interstate Highway System did not simply move people from A to B. It knitted our population centers together, facilitated untold commerce and economic development, and generated hundreds of thousands of jobs.

My great-grandfather Sinclair Weeks, a conservative businessman from New Hampshire, was charged with implementing the Interstate Highway System as Secretary of Commerce under President Eisenhower. Although few men of his generation were more committed to the principles of American free enterprise than he, Secretary Weeks, a lifelong Republican, recognized that private enterprise and public investment went hand-in-hand. No private business would ever undertake a project of such magnitude, in which the costs were concentrated and benefits diffuse, for it could never mobilize the necessary resources or justify the arrangement to shareholders. That was the job of government acting as a democratic embodiment of the public will.

The lesson is simple: It is the business of American business to responsibly and ethically advance the bottom line. It is the business of democratic governments to make the smart investments in infrastructure, education, public health, and more that lay the very foundation for economic growth – not just sixty years ago but today. When public and private sectors do their job, people thrive.

That is sadly not the case with the New Hampshire legislature and Executive Council today. Following the House’s lead, the NH Senate is poised to block the biggest investment in infrastructure development and economic growth for the state in a generation: commuter rail. In spite of near-unanimous private-sector support and the approval of 74% of Granite Staters, Republicans in the legislature and Executive Council appear determined to reject $4 million in federal funds to enter the development phase of the Capitol Rail Corridor, as recommended by the Department of Transportation (DOT) and the Governor in the Ten Year Transportation Improvement Plan. No state taxpayer funds are in question at this stage.

Consider the costs and benefits of the rail proposal for our state. According to the Capitol Rail Corridor Study, a detailed analysis conducted over two years by the NH Rail Transit Authority under DOT, extending the Lowell-Boston rail line to Nashua, Manchester airport, and downtown Manchester would cost the state between $5-$10 million per year or approximately one-tenth of one percent of the state budget. In return for that investment, New Hampshire would leverage hundreds of millions of dollars in federal funds and spur the development of 3,620 rail and real estate construction jobs, 5,600 permanent jobs, 3,600 new residential units, and nearly 2 million square feet and $750 million worth of new commercial development by 2030.

The mandate from New Hampshire businesses could not be more clear. Facing a rapidly-aging population and increasing out-migration of our youth, the state’s leading Chambers of Commerce and businesses large and small have called for commuter rail to help fill vacant jobs and spur economic growth. Their voices, and those of the vast majority of residents across the state who support the project, should not be disregarded by the legislature and Executive Council.

The Capitol Corridor rail proposal is also about preserving New Hampshire’s vaunted quality of life. For the tens of thousands of Granite Staters who make the daily commute for work into Massachusetts, and thousands more Massachusetts residents who commute into southern New Hampshire, rail would provide a convenient, cost-effective, and environmentally-sustainable alternative to the region’s congested highways. And with half the state’s population residing in the Greater Manchester-Nashua region, rail would serve an estimated 700,000 weekday commuters per year.

A project of such magnitude requires careful thought and planning to ensure that precious public resources are well spent. That is why the state legislature is not being asked to commit to rail as yet. Rather, the proposal now before the Senate in the Ten Year Transportation Plan and HB 2016 is for project development alone, including financial planning, preliminary engineering, and environmental permitting required to leverage federal funds.

For the sake of our state’s economic and environmental health, our evolving work force, and our quality of life, I urge Republicans in Concord to return to their party’s proud tradition of infrastructure investment and accept the $4 million in non-state funding for the Capitol Corridor. Together, we can put New Hampshire back on (the) track.
Daniel Weeks, a 12th generation Granite Stater, is the former Executive Director of Open Democracy and a candidate for Executive Council in District 5.

 

New Report Shows New Hampshire Workers Are Continuing To Lose Ground

New Report Examines New Hampshire Economy, Finds Wages for Many Workers Losing Ground    

CONCORD, NH – The New Hampshire Fiscal Policy Institute (NHFPI) today released a new report, The State of Working New Hampshire, which finds that while the Granite State economy appears to be flourishing by some measures, the benefits are not being felt by everyone. 

“A well-functioning economy should ensure that the workers contributing to it share in the gains they have helped to produce,” said NHFPI Executive Director Jeff McLynch. “Yet wages for the typical New Hampshire worker have not regained ground lost during the recession. Those workers – and the financial anxiety they face – should be the focus of policymakers’ efforts to shape the New Hampshire economy in the years ahead.”

The State of Working New Hampshire examines short- and long-term trends in employment, workforce demographics, wages, and incomes. Key findings include:

New Hampshire’s workforce is aging in character and stagnating in size. More than 25 percent of the state’s workforce is over age 55; in 2015, only Maine and Vermont had larger shares of the workforce in this age category. As increasing numbers of workers retire, there may not be enough younger workers to replace them, which raises concerns for the future of the workforce.

While employment is expanding in terms of the number of jobs, the quality of these new jobs has declined. An analysis of New Hampshire’s major employment sectors from 1990 to 2015 finds a steady shift away from higher wage manufacturing jobs toward lower wage service sector positions. Employment gains are found largely in the health care, social assistance, administrative support services, and hospitality industries, which traditionally offer lower wages on average.

Economic output for New Hampshire is expanding, but income for the typical household has declined. The state’s median hourly wage fell nearly 7 percent between 2007 and 2015. While New Hampshire has one of the highest median wages in the country, it experienced one of the steepest declines among all states since the onset of the recession.

Since 1990, New Hampshire has experienced uneven wage growth, which has grown increasingly more pronounced over time, particularly for workers on the lower end of the wage distribution. After adjusting for inflation, a worker in the top fifth of the distribution saw wages grow by 11 percent, while the hourly wage for a worker in the bottom fifth is now 7.4 percent lower overall.

As NHFPI explained in its earlier report, Taking the Measure of Need in the Granite State, the official poverty threshold understates the degree of economic insecurity in New Hampshire and elsewhere, as a family of three is considered “not poor” if it earns a collective income of $20,000. Of the roughly 77,900 working age adults living in poverty in New Hampshire, around 54 percent were employed full-time or part-time in 2014, and one-third of these adults – around 28,900 individuals – had attended college at some point in their lives. 

“As we consider public policies that will bolster employment and enable individuals to engage in the workforce more readily, we should be mindful of the fact that some jobs simply may not pay enough for workers and their families to achieve economic security,” said McLynch.

 

Learn more in NHFPI’s report, The State of Working New Hampshire, available online here 

The New Hampshire Fiscal Policy Institute is an independent, non-profit, non-partisan organization dedicated to exploring, developing, and promoting public policies that foster economic opportunity and prosperity for all New Hampshire residents, with an emphasis on low- and moderate-income families and individuals. Learn more at www.nhfpi.org.

New AFL-CIO Trade Video Warns That TPP Would Double Down on NAFTA’s Economic Devastation

“We can’t have another NAFTA. There’s too much at risk. It’s too important. What happens if TPP passes? There will be another generation of people that can’t find work.”

(Washington, DC) – Today, the AFL-CIO released a video showing first-hand the devastating economic impact the Trans-Pacific Partnership (TPP) could have on communities across the country.

Last week United Steelworkers President Leo Gerard testified at a USTR hearing examining overcapacity in the global steel market and its impact on U.S. steelmakers. There is evidence that foreign governments are subsidizing cheap steel and selling it in the U.S. at unfairly low prices. Countries are able to dump their cheap steel in U.S. markets because they are undervaluing their currency when setting prices.

“Currency manipulation is at the heart of this issue, and the passage of the TPP – which doesn’t address this global problem – could kill American manufacturing for good,” said Gerard. Like NAFTA, it offers no protection for American manufacturing or American workers. U.S. trade policy has not worked for working people or our communities which has led to broad opposition to the TPP. It must be defeated.”

“We know the TPP is a job killer.” said AFL-CIO President Richard Trumka. “Our trade agreements should help to create good jobs in America, and enable regular working people to succeed by working hard to get ahead. The TPP fails this goal miserably.”

“I’ve seen too many people have their lives destroyed because the jobs went away,” said Allegheny County, Pennsylvania, Council Member Dewitt Walton. “We can’t have another NAFTA. There’s too much at risk. It’s too important. What happens if TPP passes? There will be another generation of people that can’t find work.”

Allegheny County which is featured in the video is one of hundreds of local and state governments that have passed or introduced resolutions opposing TPP.

This video is the second in a series examining the real human impact of trade agreements like the TPP. Watch the first video on how the TPP could put the lives of cancer patients in danger.

Granite State Rumblings: Reauthorizing Medicaid Expansion And Making Ends Meet In NH

I could not have said this any better. Thank you Jeff McLynch for this excellent piece in Sunday’s Concord Monitor.

My Turn: Much further to climb on journey to economic stability

By Jeff McLynch

For the Monitor

If you’ve ever been out for hike, you know it can happen. You’ve been trudging along for a few hours and the top of the mountain finally seems within reach. Yet, after climbing farther, you realize it was only a false summit hiding the true peak; you’ve actually still got a long way to go to reach your goal.

When it comes to ensuring greater economic security, New Hampshire has a false summit problem, too. At 9.2 percent, New Hampshire’s poverty rate was the lowest in the nation in 2014, the most recent year for which such data is available. However, because of flaws in the way the federal government measures poverty, that relatively positive news hides just how much further New Hampshire must go before everyone in the Granite State can truly make ends meet.

Consider that, in 2014, the income level at which a single person was no longer considered poor in our country was just over $12,300. For a family of four, the corresponding threshold was a little more than $24,000. All it takes is a moment’s reflection on the expenses we incur in our own lives each day to appreciate just how low those thresholds are – and by extension, how inadequate federal poverty statistics are for understanding what it really takes for Granite State families just to get by.

Analysts at the Economic Policy Institute, a Washington, D.C.-based think tank, have devised an alternative measure of need that provides a more comprehensive assessment of the incomes families need to be able to secure life’s necessities. Referred to as a “basic family budget,” this measure seeks to remedy the two principal shortcomings of the federal poverty threshold. It reflects not only the actual costs families encounter in purchasing basics like food, clothing, shelter, health care and child care, but also geographic variations in those costs.

EPI’s findings for New Hampshire are revealing. Under its basic family budget calculations, a single person living in the Concord area needs an income of close to $31,600 per year to be able to afford rent, groceries and other essentials. That’s more than 2½ times the income at which the same person would be considered poor. The gap is even larger for families. The basic family budget for a two-parent, two-child family in the Concord area amounts to about $67,932 – almost three times the official poverty level.

EPI’s research also underscores how much more expensive it can be to live in the Granite State than in other places across the country. For example, EPI devised basic family budgets for 618 distinct communities across the country. For a family of three, only about one out every five of those communities had a higher cost of living than in Concord and other parts of the state.

In its new paper, “Taking the measure of need in the Granite State,” (see Growing Up Granite below), the New Hampshire Fiscal Policy Institute explores EPI’s basic family budget findings for four key family types in various regions of the state and builds upon the data to try to understand whether jobs here in New Hampshire allow families to meet their basic needs.

To be sure, wages and salaries can be higher here in New Hampshire than elsewhere, but it’s likely that a significant share of the jobs available in the state leave workers unable to achieve a modest standard of living. Based on EPI’s research, as well as data from the Occupational Employment Statistics survey, NHFPI estimates that about one-third of all jobs in New Hampshire pay less than what a single person would need to reach his or her basic family budget; as many as two-thirds of all jobs fail to pay enough for a single parent with one child to do so. Indeed, the typical wage in some of the most common jobs in the state – whether retail sales positions, waiters and waitresses, janitors, or cashiers – simply is insufficient to enable workers to secure even just the basics.

Unfortunately, a single solution to the challenges facing working Granite Staters does not exist. Rather, in the years ahead, the task before policymakers will be to identify and to implement a combination of reforms to help families make ends meet, both by bolstering incomes and by bringing the costs of basic necessities within closer reach. That kind of comprehensive strategy should aim to help people acquire the skills and education they need to find and to keep a job, remove barriers to full participation in the workforce, and ensure that everyone receives a fair day’s pay for a fair day’s work.

The journey toward economic security is an endless climb for far too many Granite Staters. They work tirelessly each day, but remain unable to meet their most immediate needs, much less achieve their longer-term financial goals – saving for retirement, sending their kids to college or purchasing their own home. New Hampshire’s future will depend upon our ability to clear the path and ensure that economic stability remains achievable and within reach.

(Jeff McLynch is Executive Director of the New Hampshire Fiscal Policy Institute in Concord.)

GROWING UP GRANITE

Taking the Measure of Need in the Granite State
NH Fiscal Policy Institute

New Hampshire’s poverty rate of 9.2 percent was the lowest in the nation in 2014.  While that distinction should inspire some pride, it should not engender complacency, for, as a means of assessing economic security, official federal poverty statistics often come up short.  Indeed, economists and other analysts have long understood that the federal poverty threshold does not accurately reflect the level of income required to secure basic necessities, particularly in a state like New Hampshire, where the cost of living tends to be higher than in many other parts of the country.

Research by the Economic Policy Institute has produced a more robust measure of need, referred to as a “Basic Family Budget,” that more fully captures the cost of acquiring essential goods and services, from housing and health care to clothing and child care.  In some instances, depending upon a family’s size and place of residence, their Basic Family Budget is three times as great as the federal poverty threshold, underscoring that many Granite State families, while not poor by official statistics, still struggle each day to make ends meet.

This Issue Brief describes the federal poverty threshold, examines some of its shortcomings, and explains the notion of using the Basic Family Budget calculation as an alternative measure of need.  It also attempts to assess the degree to which various jobs in New Hampshire pay wages that are high enough to allow Granite State families to meet their basic needs.

Official Federal Measure Shows Poverty Low but Rising in New Hampshire

gsrmarch16_1

In 2014, 118,000 New Hampshire residents lived in families with incomes below the official federal poverty threshold, according to estimates from the US Census Bureau.[i]  This number amounts to 9.2 percent of New Hampshire’s population, the lowest share of any state’s population to be considered poor.  However, the issue of Granite Staters not earning enough for basic needs has steadily become more pervasive, with the number of New Hampshire residents living in material deprivation in 2014 almost twice what it was in 2000.  Consequently, as the graph below depicts, the share of Granite Staters living in poverty remains considerably above the 5.3 percent rate that held at the turn of the century.

Each year the Census Bureau publishes figures by family type that are known as poverty thresholds.  Essentially, if a family’s income is less than the dollar amount of the threshold for its household type, all the members of that household are considered to be living in poverty.  Below is a subset of the official federal poverty thresholds for 2014.

When the federal poverty threshold was created in the 1960s, research on household consumption patterns revealed that a family of three or more spent about one-third of its budget on food.  Consequently, the official poverty thresholds were created by multiplying the cost of a minimum food diet by three.  The only adjustments to those original figures that have been made over time are to account for the general increase in all consumer prices, better known as inflation.

Shortcomings of the Federal Poverty Threshold

Given this information, the federal poverty thresholds suggest that a single person who earns $1,050 per month does not live in poverty.  The same holds for a married couple with one child who earns $1,600 per month.  gsrmarch16_2Nevertheless, given the costs people face today, these numbers instinctively feel inadequate, an intuition that is borne out when one examines existing data on household expenditures.  According to the US Department of Housing and Urban Development, a modest efficiency apartment in New Hampshire for a single person has a price tag of around $750 per month.[ii]  For a family of three, a two-bedroom apartment costs nearly $1,100 per month.  Based on these costs, shelter would constitute two-thirds of a poverty-level budget for each household, leaving little room to purchase food, clothing, health care, and transportation.

These examples demonstrate that the federal poverty threshold may not accurately capture the degree of economic insecurity individuals and families face. Supporting this conclusion, the Census Bureau concedes that the poverty thresholds are “…a statistical yardstick, not a complete description of what people need to live.”[iii]  One weakness of the federal poverty threshold is the assumption that households spend one-third of their budgets on food; current data show that number is closer to 12 to 13 percent.[iv]  Additionally, the federal poverty threshold does not account for geographic differences in housing and other costs, treating disparate places like New York City and Jackson, Mississippi equivalently.  Lastly, the official measure defines “family resources” only as cash income, such as wages, Social Security benefits, and investment income.  It does not add to a family’s resources non-cash governmental benefits (for example, SNAP or housing subsidies) or tax credits like the Earned Income Tax Credit.  It also does not subtract from a family’s resources such necessary expenses as out-of-pocket medical expenditures or commuting costs.

In response to these shortcomings, Congress requested that the National Academy of Sciences convene a panel to examine the federal poverty threshold in greater depth.  That panel produced a report in 1995 with a number of recommendations, which eventually led the Census Bureau to create what is called the supplemental poverty measure.[v]  This method did not replace the official measure, but rather exists to provide alternative figures for comparison purposes.  Unlike the official poverty threshold, the supplemental measure uses current data on household expenditures to approximate what it takes to purchase basic necessities, such as food, clothing, shelter, and utilities.  Moreover, the supplemental poverty measure accounts for geographic differences in housing costs, meaning that its dollar thresholds vary from state to state, whereas the official poverty thresholds are identical for the 48 contiguous states.  Finally, the supplemental measure adds non-cash governmental benefits and federal tax credits to a household’s income and subtracts out necessary expenses in order to capture the resources available to a household.

As of 2014, for twenty-six states, the poverty rate under the supplemental measure was lower than the official rate, meaning that the official measure is overstating poverty.[vi]  In eleven states, no statistically significant difference was found between the two measures.  In thirteen states, including New Hampshire, the supplemental measure found more people living in poverty.  Looking more closely at this final pool of states, two patterns emerge.  First, most of these places, such as California, Alaska, Hawaii, and the Northeast region, have above-average housing costs, which is not captured by the official poverty measure.  Second, the populations of the Northeast and Florida are older than the rest of the country.  This is germane because the supplemental measure deducts insurance premiums and out-of-pocket medical expenses (such as co-pays for prescriptions or doctor’s visits) from available financial resources.  Because this category of expenses tends to be significant for older people, subtracting them results in an increase in measured poverty for those 65 years old and over.[vii]

Basic Family Budgets: A Better Measure of Need

While the supplemental poverty measure is a meaningful improvement over the official method, it has its own limitations.  First, with the exception of housing, the supplemental measure does not reflect geographic variability in its estimates of costs that households encounter every day.  Second, the supplemental measure only provides information “at the national level or within large subpopulations,” meaning that it does not capture differences within states.[viii]  Finally, child care costs are not adequately measured.  Rather than surveying child care providers to approximate market-based rates, the supplemental measure uses information from working parents on what they spend on child care.  This distinction is important since many low-income families who are unable to afford market rates have to rely on alternatives for care, such as a relative or neighbor.

Given the supplemental measure’s constraints, researchers have attempted to construct more robust standards of need that reflect what it takes to achieve economic security and independence.  One such effort is the Family Budget Calculator compiled by analysts at the Economic Policy Institute (EPI), a nonpartisan think-tank based in Washington, DC.[ix]  Their objective is to estimate the “income necessary for families to secure an adequate but modest living.”  To achieve this, they identify the most basic expenses households incur: housing, food, transportation, health care, child care (if applicable), taxes, and other necessities (such as clothing).  From there, they price each expense as locally as possible for ten different family types, ranging from one adult with no children to two adults with four children.[x] These Basic Family Budget calculations are done for sub-state regions within all 50 states.

Driven mostly by geographic definitions from the Department of Housing and Urban Development, under EPI’s analysis, New Hampshire is divided into eight geographic areas.  Each is shown below along with a sample of towns, cities, and counties within each area.[xi]

gsrmarch16_3

In the following table, annual budgets for four family types are shown for each area of New Hampshire, along with the official poverty thresholds as a percentage of EPI’s Basic Family Budget.  What is evident is that the federal poverty threshold is far beneath the income necessary for any family to attain an adequate living standard in the Granite State.

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A closer examination of EPI’s research reveals that health care, rent, and child care (for families with children) are the largest costs households face, rather than food, as assumed by the official poverty thresholds.  For instance, the figure below shows a Basic Family Budget for a two adult, one child family in Manchester, the state’s largest city.  As it illustrates, health care costs constitute 14 percent of their budget, rent comprises 20 percent, and child care makes up 16 percent.

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In addition to varying by family type, the costs of many basic necessities vary by geography, and, as noted above, those costs are often higher in the northeastern part of the United States.  The table below provides a helpful depiction of such variation.  Again, EPI estimates that a two adult, one child family in Greater Manchester needs an annual income of nearly $63,000 to secure a modest standard of living, a figure that ranks in the top fifth of the 618 family budget areas analyzed by EPI.  In other words, for a two adult, one child family, Greater Manchester is a more expensive place to live than 80 percent of US communities, outpacing such cities as Little Rock and St. Louis.  Greater Manchester’s comparatively high ranking is primarily due to higher costs for housing and child care.  More specifically, at $12,624 per year, housing costs for a two adult, one child family in Greater Manchester are among the top quarter of areas examined by EPI.  Likewise, annual child care costs of $9,826 for a two adult, one child family in Greater Manchester are roughly 10 percent higher than child care costs in Pittsburgh, which represented the 75th percentile of such costs in EPI’s analysis.

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Many Jobs in New Hampshire Leave Workers Unable to Achieve an Adequate Standard of Living

While estimates of the number and share of New Hampshire households with incomes below the federal poverty threshold are produced by the Census Bureau each year, comparable figures for the degree to which Granite Staters are unable to meet their Basic Family Budgets are not yet available.  Nevertheless, NHFPI has attempted, based on state occupational data, to approximate how many jobs in New Hampshire pay wages that are high enough to allow Granite State families to meet their Basic Family Budget.

gsrmarch16_7

As explained in greater detail in the methodology section following the conclusion of this Issue Brief, NHFPI examined data from the Occupational Employment Statistics (OES) survey on the distribution of wages paid in each of 603 different occupations in New Hampshire.  It then compared those wages to Basic Family Budgets for four key family types, and, using several simplifying assumptions, arrived at an estimate of the number of jobs in New Hampshire that pay above or below those budgets.  Accordingly, as summarized in the table above, NHFPI finds that:

  • Roughly 64 percent of New Hampshire jobs pay enough for a single, childless adult to attain an adequate standard of living, as measured by EPI’s Basic Family Budget.
  • Only about 30 percent of New Hampshire jobs pay enough for a single parent with one child to attain an adequate standard of living.
  • Approximately 64 percent of New Hampshire jobs pay enough for two working adults with one child to attain an adequate standard of living.
  • Roughly 56 percent of New Hampshire jobs pay enough for two working adults with two children to attain an adequate standard of living.

A review of the overall distribution of wages among all New Hampshire occupations provides a rough corroboration of these findings.  In particular, according to the OES survey, 25 percent of all occupations pay $24,230 or less, 50 percent pay $36,420 or less, and 75 percent pay $56,800 or less.  In turn, Basic Family Budgets for a single parent with one child range from about $51,600 to $61,600 – that is, ranging from just below to slightly above the 75th percentile wage.  In comparison, NHFPI estimates that nearly 70 percent of occupations do not pay enough for a single parent with one child to make ends meet.  Similarly, Basic Family Budgets for a single, childless adult range from $28,900 to $37,700, a span squarely above the 25th percentile wage but generally below the 50th percentile mark, largely consistent with NHFPI’s finding that about 36 percent of occupations pay less than the level needed for a single person to achieve an adequate standard of living.

To illustrate further the general finding that many jobs in New Hampshire do not pay enough for families and individuals to achieve an adequate standard of living, the table below compares the Basic Family Budget for the Strafford County-Great Bay Region for four main family types with the median wage for the 20 most common occupations in New Hampshire.  Check marks (P) indicate scenarios in which a particular median wage equals or exceeds the Basic Family Budget for that family type.  So, for instance, retail salespersons constitute the most numerous occupation in New Hampshire; the most recent data show that the median annual wage for such a job is $22,080.[xii]  That wage, in turn, is insufficient to meet the Basic Family Budget for each of the four main family types in the Strafford County-Great Bay Region.  Alternatively, there are 12,390 registered nurses in New Hampshire.  Their median annual wage is $63,820, a level of pay that exceeds those four Basic Family Budgets.

gsrmarch16_8

Such comparisons should not, of course, be taken as definitive.  Median wages simply convey the “typical” wage for that occupation; there can be significant variation in wages even within a single occupation.  Consequently, some workers in an occupation with a comparatively low median wage may still be able to reach their Basic Family Budget.  In addition, the table above is obviously not a comprehensive catalogue of the types of employment available in New Hampshire.  High wage and low wage occupations alike are left out of this listing, along with the prospect of out-of-state employment.  Nevertheless, such comparisons do help to highlight the mismatch between the wages many workers earn and the costs they face for putting food on the table and a roof over their heads.

Conclusion

Whether in the private sector or in the public sphere, statistics can have great value, but they can also fail to depict completely the situations or trends they are intended to illustrate.  New Hampshire’s comparatively low poverty rate is an excellent case in point, as it stands at odds with the economic anxiety many Granite State families continue to experience.  A more robust assessment of basic needs, as embodied in the Economic Policy Institute’s Basic Family Budget calculation, offers a clearer understanding of how much further working families must go in the Granite State just to get by.  In the years ahead, the task before policymakers will be to identify and to implement a combination of reforms to help people make ends meet, both by bolstering incomes and by bringing the costs of basic necessities within closer reach.

For Methodology and Sources click HERE

A Significant Percentage Of NH Jobs Do Not Pay Enough To Meet A “Basic Family Budget” Threshold

New Report Examines Cost of Making Ends Meet in the  Granite State, Finds Many Jobs Lack Pay Sufficient to Achieve Economic Stability

NHFPI logo -Color-with-TagCONCORD, NH – New Hampshire’s official poverty rate of 9.2 percent was the lowest in the nation in 2014, but a new analysis underscores the failure of official poverty measures to present an accurate picture of the numbers of people struggling to make ends meet. The New Hampshire Fiscal Policy Institute (NHFPI) today released a new research paper, Taking the Measure of Need in the Granite State, which examines the shortcomings of the traditional poverty measures and offers a more comprehensive method of assessing what it takes to get by in the Granite State.

“The official poverty rate stands at odds with the economic anxiety many Granite State families continue to experience,” said NHFPI Executive Director Jeff McLynch. “Traditional measures fail to account for New Hampshire’s high cost of living, which leaves even greater numbers of working families struggling to pay for necessities and puts financial stability far out of reach.” 

In Taking the Measure of Need, NHFPI examines the level of income necessary to secure basic necessities using the Basic Family Budget concept developed by the Economic Policy Institute, a Washington, DC-based think tank. The Basic Family Budget approach accounts for regional price differences and attempts to assess the true cost of achieving a modest standard of living. This method reflects costs for housing, food, transportation, healthcare, child care (if applicable), taxes, and other necessities, such as clothing, in a particular area for various family types. 

The cost of living in Manchester illustrates the stark difference between the federal poverty measure and actual cost for basic needs. The official federal poverty threshold for a two adult, one child family is $19,055. Under the Basic Family Budget approach, the same family living in Manchester would need an income of $62,684 to afford a modest standard of living, a number that is more than three times the official poverty threshold. In fact, EPI’s Basic Family Budget assessment finds Manchester ranks among the most expensive places to live in the country. 

NHFPI’s research also finds that a sizeable percentage of jobs fail to pay enough for many families to achieve a modest standard of living in the Granite State.

“New Hampshire’s low unemployment rate obscures the fact that many of the jobs that are available do not pay the level of wages required for families to make ends meet,” said Jeff McLynch. “This mismatch leaves many working families with difficult choices, deciding whether to put food on the table or pay the rent, one car repair away from financial disaster. They work tirelessly each day, but remain unable to meet their most immediate needs, much less achieve their longer-term financial goals – saving for retirement, sending their kids to college, or purchasing their own home.” 

Preliminary NHFPI estimates suggest that a substantial share of jobs in the state do not pay enough for families to afford to make ends meet. Based on New Hampshire Office of Employment Security wage data, roughly 64 percent of occupations in New Hampshire likely pay enough for a single person to afford their Basic Family Budget, while only about 56 percent pay enough for a two-worker family of four to do so. More importantly, only 30 percent of occupations pay enough for a single parent with one child to afford a modest standard of living.

Learn more in NHFPI’s paper, Taking the Measure of Need in the Granite State, available online at:  http://www.nhfpi.org/research/state-economy/taking-the-measure-of-need-granite-state.html 


The New Hampshire Fiscal Policy Institute is an independent, non-profit, non-partisan organization dedicated to exploring, developing, and promoting public policies that foster economic opportunity and prosperity for all New Hampshire residents, with an emphasis on low- and moderate-income families and individuals. Learn more at  www.nhfpi.org. 

Investing in the Care Economy: A Pathway to Growth

A new study released today by the International Trade Union Confederation (ITUC) shows that investment into the care economy of 2% of GDP in just 7 countries would create over 21 million jobs and help countries overcome the twin challenges of ageing populations and economic stagnation. 

http://www.ituc-csi.org/CareJobs
 Care economy

The report which analyzed the employment growth potential in the care economy in Australia, Denmark, Germany, Italy, Japan, the UK and the USA, also demonstrates how investing in care narrows the gender pay gap, reduces overall inequality and helps redress the exclusion of women from decent jobs. The G20 has set a target to increase women’s participation in the workforce by 25% in the coming years. This can only be achieved when the care sector is properly funded. 

The report cites additional evidence from South Africa and Turkey showing that the economic stimulus from care investment is not limited to the world’s richest countries. 

Sharan Burrow, ITUC General Secretary, said: “This study shows how sustained investment in care is not only vital to societies, it also provides an indispensable motor for economic growth and an antidote to the destructive impact of failed austerity policies. Most of the burden of service cuts has been borne by women, which has in turn depressed household incomes at a time when boosting purchasing power and economic demand is crucial to restoring global prosperity. The care sector itself has high rates of precarious work and low pay, and it is essential that workers in this sector have the full protection of labour legislation in line with international standards.” 

Economists from the Women’s Budget Group carried out advanced modelling of the employment impact of investing the equivalent of 2% of GDP into the “social infrastructure” of education, health and social care services. They found that: 

  • It would increase overall employment by between 2,4% and 6.1% depending on the country;
  • between 59% and 70% of the directly-created jobs would be taken up by women; and,
  • the employment multiplier effect from these new jobs would also increase overall male employment, by between 1.4% and 4% in different countries.

“Some governments have acted to lift investment in physical infrastructure projects, to stimulate growth and overcome decades of underinvestment. We now have clear empirical evidence of the economic and social benefits of investing in care as well. Governments should look to this rather than sticking with an austerity agenda which was based on deeply flawed analysis from the outset,” said Burrow.

The evidence in the report shows that investment of 2% of GDP would create:

  •  13 million jobs in the USA
  • 3.5 million jobs in Japan
  • 2 million jobs in Germany
  • 1.5 million jobs in the UK
  • 1 million jobs in Italy
  • 600,000 jobs in Australia
  • 120,000 jobs in Denmark.

“Cuts in public care services have had a double impact on women. They are finding it harder to get decent jobs, and in most countries the pressure on social investment means that it is mainly women who end up filling the gap as unpaid carers. This in turn keeps them out of the paid workforce for even longer and pulls apart the fabric of households and communities. Our new study confirms that the right kind of investment can turn this social crisis around, and we call on governments to take up the challenge and break from their obsession with simply keeping the financial sector happy. The evidence from these seven countries reinforces the huge jobs and growth potential in the care economy worldwide,” concluded Burrow.

 

The ITUC represents 180 million workers in 162 countries and territories and has 333 national affiliates.

Leo W Gerard: When a Coin Drops in Asia, Jobs Disappear in Detroit

Former Factory Closed (Image Michael Coghlan)

Former Factory Closed (Image Michael Coghlan)

Last year, free trade hammered Michigan’s 11th Congressional District, located between Detroit and Flint, killing manufacturing, costing jobs and crushing dreams.

It’s not over, either. Another 11th District company, ViSalus Inc., told the state it would eliminate 87 jobs as of last Saturday, slicing its staff by nearly 400 since 2013 when ViSalus was the second-largest direct sales firm in the state.

The numbers are staggering. The Economic Policy Institute (EPI) released a reportlast week showing that America’s $177.9 billion trade deficit in 2015 with the 11 other countries in the proposed Trans-Pacific Partnership (TPP) trade deal caused 2 million job losses nationwide.

This trade deficit reduced jobs in every U.S. congressional district except two, EPI said, but Michigan’s 11th had the ignoble distinction of suffering more as a share of total employment than any other district in the country. It was 26,200 jobs. Just in 2015. It was tech workers in January and teachers in July and tool makers in August and auto parts builders in October.

Manipulation of money killed those jobs. It works like this: Foreign countries spend billions buying American treasury bonds. That strengthens the value of the dollar and weakens foreign currencies. When a country’s currency value drops, it acts like a big fat discount coupon on all of its exports to the United States. And it serves simultaneously as an obscene tax on all U.S. exports to that country.

Among the TPP countries, Malaysia, Singapore and Japan are known currency manipulators, and Vietnam appears to be following their example. EPI found that currency manipulation is the most important cause of America’s massive trade deficits with TPP countries. Trade deficits mean products are shipped to the United States rather than made in the United States. The math is simple. A drop in Asian currency means a drop in U.S. jobs.

EPI looked at what types of imports the 11 countries sent the United States last year to determine what types of industry and jobs America lost as a result. The overwhelming majority was motor vehicles and parts. That’s why Michigan was the biggest loser of all of the states. The auto sector was followed by computer and electronic parts ­– including communications, audio and video equipment – and primary metals – including basic steel and steel products.

In addition, EPI found job losses in industries that serve manufacturers, like warehousing and utilities, and services like retail, education and public administration.

Each of these kinds of losses occurred last year in Michigan’s 11th district, located in the heart of America’s car manufacturing country in southwestern Oakland County and northwestern Wayne County, where Detroit is parked just outside the district’s lines.

In January, in Michigan’s 11th, Technicolor Videocassette of Michigan, Inc., a subsidiary of the French multimedia giant Technicolor SA, laid off 162 workers in Livonia. That same month, what was once a vibrant chain of cupcake stores called Just Baked shuttered several shops, putting an untold number of bakers and clerks in the street, some with last paychecks that bounced.

In February, the Sam’s Club store in Waterford closed, throwing 122 in the street. Waterford municipal official Tony Bartolotta called it another “nail in the coffin” for the township’s east side.

In April, Frito-Lay told 17 workers that they’d lose their jobs later that year when it closed its Birmingham warehouse.

In July, 231 teachers in the Farmington Public Schools learned they would not have work in the new school year. One of them, 25-year-old Val Nafso, who grew up in Farmington, told the Oakland Press, “I hope things change where people who are passionate about teaching can enter the profession without 1,000 people telling them “Don’t do it…get out now.”

In August, DE-STA-CO, a 100-year-old tool manufacturer, told Michigan it would end production in Auburn Hills, costing 57 workers their jobs.

In October, Waterford laid off 39 firefighters. The township had received a $7.6 million grant in 2013 to hire them, but just couldn’t come up with local funds to keep them. That happens when factories close and bakeries shut down. Township officials told concerned residents they’d looked hard at the budget, “We started projecting out for 2017 and it flat lined,” Township Supervisor Gary Wall told them.

Later that month, FTE Automotive USA Inc., an auto parts manufacturer, told Michigan it would close its Auburn Hills plant and lay off 65 workers.

In the areas around Michigan’s 11th, horrible job losses occurred all last year as well, which makes sense since EPI found 10 of the top 20 job-losing districts in the country were in Michigan.

Ford laid off 700 workers at an assembly plant in Wayne County in April. GM eliminated a second shift, furloughing 468 workers at its Lake Orion Assembly Plant in Oakland County in October.

Auto supply company Su-Dan announced in September it would close three factories in Oakland County by year’s end, costing 131 workers their jobs.

In October, a division of Parker Hannifin Corp. in Oxford, Oakland County, that manufactured compressed air filters told its 65 workers they wouldn’t have jobs in 2016. “There’s a lot of people there that are paycheck to paycheck, and it’s going to hurt them,” Michelle Moloney, who worked there 25 years, told a reporter from Sherman Publications.

The threat of the TPP is that it does absolutely nothing to stop this job-slaughter. Lawmakers, public interest groups, manufacturers, and unions like mine all pleaded with negotiators to include strong provisions in the deal to punish currency manipulators. They didn’t do it.

They included some language about currency manipulation. But it’s not in the main trade deal.  And it’s not enforceable.

Swallowing the TPP would be accepting deliberately depressed currency values in Asian trading partner countries and a permanently depressed economy in the U.S. car manufacturing heartland.

It’s the TPP that should disappear. Not Detroit.

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