Poor families see income growth gains

by

Published: April 3,2000

The rich are getting richer and poor families in Mississippi have seen an even greater percentage of income growth than the rich during the last decade. Coming in last on the increasing prosperity meter is the middle class.

A study released by the Economic Policy Institute and the Center for Budget and Policy Priorities indicated that between 1988 and 1998, incomes of Mississippi’s poorest families grew by 26%. Incomes of the state’s richest families increased 18% compared to only 11% growth for middle income families.

The two organizations based in Washington, D.C. are nonprofit, non-partisan organizations that favor changes in tax laws and other federal policies to benefit low- and moderate-income families.

The study broke down families into five income groups. The lowest income group had an annual income of less than $17,000. The second highest group made between $17,000 and $28,845 annually. The middle group’s income was between $28,845 and $42,110, and the fourth group’s income was between $42,110 and $62,782. The highest income families had incomes above $62,782.

Jane Boykin, president of the Mississippi Forum on Children and Families, said the study shows job creation in Mississippi has been healthy and has created more income for all sectors of the population. She said many poor adults in the state had reached adulthood without the employment opportunities that have been created in the 1990s due to a large increase in service-sector jobs.

“One of the things we’re seeing is more of our people moving off welfare and just a general overall availability in jobs that don’t require a high level of skill or higher level of education,” Boykin said. “We’re able to get people work experience and get them in the system.”

While poor people had the greatest percentage of increase in income, they also have the most distance to go to reach prosperity. While the rich had a lower percentage increase, it translated into much greater dollar income. The 26% increase for the poorest families translates into $2,120 per year while the 18% increase for the wealthiest families amounts to $16,260 per year — nearly equal to the entire yearly income of the poorest families.

Middle-income families had the least percentage of growth, and many middle-income families may find it hard to get by. Boykin said increasing middle-class income should be a priority.

“Income has not risen along with the cost of housing, the cost of groceries and cars,” Boykin said.

State economist Dr. Phil Pepper notes that the study shows that when you look at income over a 20-year period, the poorest families didn’t fare as well as in the last 10 years. The poorest families are also less likely to get ahead in the years to come.

“There are some forces that promote the better-off people getting better off,” Pepper said. “Better-educated people are seeing faster increases in their income. With foreign competition for low-skill jobs, some of the rural areas have lost a lot of jobs. So there is a lot of pressure to hold those lower salaries flat. When you get to the higher, more skilled areas, wages are going up faster.

“My expectation for the future is that the poorer families aren’t going to fare as well as the richer families. I can see where we would begin to see the richest fifth in the state have income growth percentages that begin to exceed the poorest fifth. At the same time, the increase in the minimum wage could have an impact on the income of this lowest fifth.”

Pepper said the study indicates income but not overall wealth. The most well-to-do families are likely to have investments in the stock market, in homes and elsewhere. Also, some of the lower income people may be better off than it might appear if they are retirees whose homes are paid for and who don’t have expenses such as putting a child through college. Younger people with large mortgages and educational costs for children may be having a tougher time making ends meet than retirees with lower incomes.

Pepper believes the key to increasing prosperity for all Mississippians is upgrading workplace skills. Many state residents don’t have the skills needed to get higher paying jobs, and industry often can’t find people with the skills needed. Skills upgrade training in needed to bridge the gap between the needs of industry and the desire of people in the state for higher-paying jobs.

“Only 15% of people in Mississippi over 25 years old have a college education,” Pepper said. “A large segment of the population probably needs to be upgrading skills and education throughout their lives rather than getting a job and thinking that is all they ever need to do. The world changes faster all the time. Look at technology changes in the past 10 years, and think what it will be like in the next 10 years. And the workforce is going to have to change to adapt to that.”

As a general rule the state focuses on educating 5- through 24-year-olds. But there are 1.3 million Mississippians in the workplace, and a million of those workers will still be in the workplace 10 years from now. Pepper believes that more attention should be focused on upgrading the skills of the existing workforce. People need to be educated about the opportunities in the workplace, and that those opportunities will be lost without upgrade training.

“This will affect how fast their income goes up,” Pepper said. “A lot of these people in the workplace fall in the middle income group that has shown the least growth in income.”

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

[RSS Feed] [del.icio.us]



To sign up for Mississippi Business Daily Updates, click here.

POST A COMMENT

 

Top Posts & Pages