Wednesday, September 29, 2010

Michigan Sees Sharpest Income Plunge in Nation

September 29, 2010

Michigan sees sharpest income plunge in nation

The Detroit News

For most families in Michigan, the long-running recession has meant a simple, unrelenting truth: living with less. And census data released on Tuesday shows how much less -- the state's median household income fell by more than $12,000 over the last decade -- the equivalent of trimming $1,000 from a family's monthly budget.

The drop was stunning in both its size and its singularity: No other state came close to losing the estimated 21.3 percent of its median income between 2000 and 2009, and no state endured the 6.5 percent drop seen from 2008 to 2009.

"When you ask about what have we cut, it's what haven't we cut," said Carrie Brickner, 45, a Metro Detroit freelance television producer. Her family's income bottomed out in 2009 after her husband, Steve, 54, an electrician, got laid off in December 2008. He hasn't had steady work since.

Census data from the 2009 American Community Survey also showed the crushing losses of the auto industry helped to stoke a rise in poverty that was unmatched in the nation. The percentage of the population living below the poverty line -- estimated at $22,000 for a family of four -- hit 16.2 percent in 2009, up nearly 6 percentage points since 2000.

Dana Johnson, chief economist for Comerica Bank, thinks the scope of the income losses alters how we view the economic carnage. He no longer says Michigan was in a one-state recession.

"Michigan was in a one-state depression, it lasted so long," he said.

For the Brickners, the income loss has been felt by them and those they used to help. Carrie Brickner said vacations are out -- unless you count the eight weeks her husband spent in the family camper while he worked as a temporary electrician in West Virginia -- and the family of three is living on $50 a week in groceries. But what hurts most, she said, is their newfound inability to be charitable.

"We took care of other people," she said. "We've lost that ability."

Johnson and others believe Michigan may have hit the bottom. Since soaring to a peak of 14.9 percent in March, the jobless rate fell to 12.9 percent in August. Realtors have expressed hope that the housing market is recovering, and Johnson said economic indicators show steady improvement.

Nationwide, median household income was down 2.9 percent from 2008 and 6.6 percent from 2000.

Liz Boyd, spokeswoman for Gov. Jennifer Granholm, said the income drops were "not surprising" given the loss of nearly 1 million jobs over the decade, many in the auto industry.

Granholm, speaking Tuesday at a conference on manufacturing in Washington, D.C., said Michigan was creating more than 60,000 new jobs through green programs -- many partially funded by federal grants.

She said the census report is why she is working to expand the state's economy.

"It's all auto and manufacturing related and exactly why we're trying to do what we're trying to do to diversify," Granholm said

A sustainable recovery will require a radical change in the state's economy, said Boyd, Johnson and Kurt Metzger, director of Data Driven Detroit, a nonprofit agency analyzing and collecting data to help city leaders better plan for the future. And the revamped economy will need to rely on industries more heavily tied to higher education.

Most states with higher incomes have more educated work forces. For Michigan, it's high-paying, lower-skill manufacturing jobs that obscured the need to create knowledge-based economies, Metzger said. Ranked 16th in income in 2000, the state had plummeted to 35th by 2009, now nearly matching its rank in terms of higher education.

"Our income did not represent the tie between income and education," he said. "We got away with murder."

Additional Facts

The information in this story is gleaned from the Census Bureau's 2009 American Community Survey (ACS), an annual survey of 3 million households that provides a social, demographic and economic snapshot of the nation. It is different from the 2010 decennial Census taken this year that will provide population numbers for the nation. The first set of that data will be released by the end of the year.

In addition to providing information on states, the ACS provides insights into all geographies -- cities and counties -- with more than 65,000 people.

No comments: