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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

September 4, 2014 at 9:47 AM

Low income ask, ‘What recovery?’

A report from the Federal Reserve found that last year 60 percent of Americans described their situation as “doing OK” (37 percent) or “living comfortably” (23 percent). That in itself makes for a highly conditional recovery. But lower-income Americans are especially continuing to suffer from the Great Recession and the economic toxins that preceded it.

For example, 25 percent of households making $25,000 or less were finding it difficult to get by and 35 percent were “just getting by.” Those making $25,000 to $49,000 totaled close to 50 percent in those responses. Median household income in 2012 was $51,017, meaning that half of all households make less than that number. Adjusted for inflation, that number is about $7,000 below where it stood in the late 1990s.

Also, most of the jobs created since the end of the recession are low paying.

The same dynamic appears when the survey asked where people stood compared with 2008 (and this was coming off the worst period for job creation since the Hoover administration). Thirty-four percent were “somewhat” or “much: worse off. But about 45 percent of the lowest-income cohort fell in these responses. Only 4 percent of households earning more than $100,000 were much worse off.

Meanwhile, the Recession increased the number of people on welfare, the infamous “47 percent” of takers, right? Not exactly. Remember that welfare was abolished under President Bill Clinton, replaced by the short-term and much less generous Temporary Assistance to Needy Families (TANF). The only “welfare queens” left are rent- and subsidy-rich corporations.

A new Census Bureau report shows that total TANF recipients didn’t change much from 2011 to 2012 (although, because the aid is temporary and highly limited, these are not necessarily the same people, compared with the welfare cohort under the old Aid to Families with Dependent Children program). Nationally, it was about 3.3 million people.

In Washington state, however, TANF participation was 4 percent of the total households, compared with 2.9 percent nationally. It was 4.2 percent in Oregon; 3 percent in Idaho, and 6.6 percent in Alaska. States are given wide latitude in distributing TANF, so the 2.3 percent in Arizona doesn’t mean the Grand Canyon State has a better economy than Washington; quite the opposite.

Those who received TANF over 12-month periods from 2000 to 2012 rose from 2.6 percent to 2.9 percent. In Washington, it went from 3.5 percent to 4 percent.

The takeaway is that this highly limited part of a diminished safety net wasn’t radically affected by the difficult aughts and the Great Recession. The idea behind the Clinton/GOP Congress changes was to provide heavy incentives to find work, which made sense amid the abundance of jobs in the late 1990s. Now, jobs are more scarce.

On the other hand, the number of people receiving Social Security disability (SSDI) rose from 4.9 million in 1999 to 8.9 million in 2013. The average SSDI payment is $1,148 a month.


 

Thursday Reading: What makes people poor | NY Times


 

Today’s Econ Haiku:

“Tough as nails” Durkan

Let Kerry Killinger slide

Hammered rule of law


 

Comments | More in Income/living standards

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