Poverty & Socioeconomic Distress in the North Central Region: Assessing Trends Linda Lobao, Mark D. Partridge, and Michael Betz, The Ohio State University

Poverty & Socioeconomic Distress in the North Central Region: Assessing Trends

Linda Lobao, Mark D. Partridge, and Michael Betz, The Ohio State University and

Richard Goe, Kansas State University

North Central Regional Center for Rural Development

April 11, 2013

Overview• Introduction• What are the historical patterns of poverty across

the U.S? • What are the national trends of poverty and

other distress in the 21st Century?• The North Central Region in the Great

Recession decade: which places fared better, which worse?

• Challenges for the North Central Region and

implications for policy

Introduction• Indicators of Populations’ Well-being• “Objective indicators” (measures collected from

government, census-type sources). Well-known, extensive data over the long-term collected, provides ability to track populations’ well-being. Used by numerous government agencies and to allocate funds (e.g. Appalachian Regional Commission Distress Index)

Key indicators: poverty, unemployment, household income

Introduction

• Indicators of Populations’ Well-being• “Subjective indicators” extensive literature on

various types of measures, an example

--“perceived” socioeconomic wellbeing, progress in standard of living over time

Introduction

•The importance of “objective” indicators for public policy, scholarly research, and ability to track trends make such indicators essential.

•We focus on three sets of measures with well-recognized importance and a long-history of use--poverty, unemployment, household income

IntroductionOur focus today– a descriptive study of change:• Document patterns and trends over time for

poverty, unemployment, household income.• Mapping the nation– and the 12 North Central

states –using county-level data.• Exploring “reasons” why some counties fared

better than others over the past decade.• Based on analyses—challenges and potential

policy directions for the North Central Region.

Historical Patterns of Poverty

• The historical north-south divide-- poverty rates historically higher and family income lower in the south

• Change has occurred over time—but even given post-1970s massive industrial restructuring, still better conditions in the north.

• Spatial clustering measures (Moran’s I) reflect this--following are maps for poverty

1969 1979

1989 1999

Historical Patterns: Family Poverty in Four Censuses

Historical Patterns: Family Poverty Clustering (Local Moran’s I)

Lobao, Betz, Partridge, and Goe (2013)Data Source: 1990 Census of Population

Lobao, Betz, Partridge, and Goe (2013)Data Source: 2000 Census of Population

The 21st Century: Poverty and Other Distress: The United States

• Poverty, income, and unemployment

• Trends over the decade with a focus on the Recession years

• A look first across the United States

Lobao, Betz, Partridge, and Goe (2013)Data Source: 2000 Small Area Income and Poverty Estimates



Lobao, Betz, Partridge, and Goe (2013)Data Source: 2000 and 2010 Small Area Income and Poverty Estimates




Lobao, Betz, Partridge, and Goe (2013)Data Source: 2000 and 2010 Bureau of Labor Statistics Local Area Unemployment Statistics


Lobao, Betz, Partridge, and Goe (2013)Data Source: 2007 and 2010 American Community Survey 3-year estimates

The 21st Century: Exploratory Analyses

Which places fared better, which worse?

Our analyses are informed by a large literature on “poverty and place” that identifies key reasons why some places are poorer than others: • (1) economic structure or employment quality, quantity,

and growth• (2) demographic attributes such as age, education,

ethnicity, gender, and family structure (reflect residents’ vulnerability to poverty)

• (3) agglomeration-geographic factors such as urban-rural location, distance from urban areas

Exploratory regression analyses– using mix of independent variables with focus on:

(1) Economic Structure:

Share of employment by industry-- manufacturing, mining, agriculture, services (professional versus food services)

Employment growth

(2) Demographic Attributes (residents’ vulnerability): age, education, ethnic composition, family structure

(3) Agglomeration Factors: distance from urban areas, size of place.

Findings for levels of poverty in 2010

Economic Structure:

Employment growth related to lower future poverty—importance of job growth for overall area well-being.

Manufacturing and professional services (“higher quality” jobs)-- where higher in 2000, no significant relationship with poverty rates in 2010. (Differences from some past decades)

Mining—where higher in 2000, lower poverty in 2010.

Demographic Determinants: similar to past:

Education (higher % college educated in 2000 related to lower poverty in 2010)

Family structure (lower % single-parent households related to lower poverty)

Agglomeration Factors: Counties more distant from metro areas tend to have lower poverty rates (Differences from the traditional, past-penalty of rurality)

Findings for changes in poverty: where the recession hit hardest over years 2007-2010

Economic Structure: Employment growth: where strongest early in decade (2000-2007) greater growth in poverty. Manufacturing employment and food service employment: where greater —poverty growth. No significant relationship--professional services and poverty.

Demographic: Education—little effect; highly educated places generally did not fare better. Single parent male households--poverty growth. Age: younger--greater poverty; over age 65--less poverty growth.

Agglomeration Factors: larger metro counties experience greater growth in poverty*Other common determinants of poverty show little association with ability to weather the recession.

The 21st Century: Poverty and other Distress Across The North Central Region

• Poverty, income, and unemployment • Trends over the decade with a focus on

the Recession years• Which places fared better, which worse?

Means and Standard Deviations of Selected Variables for NCS and the Rest of the US

2000 2010

Variable NCS RUS NCS RUS

Poverty rate 10.43 14.79*** 14.17 18.16***

(4.04) (5.67) (4.91) (6.35)

Median household income 37,899 35,537*** 44,280 42,438***

(7,608) (9,483) (8,083) (11,710)

Unemployment rate 3.73 4.64*** 8.22 9.69***

(1.25) (1.75) (3.24) (2.95)

Change in poverty rate 2000-2010 3.74 3.38***

(2.37) (2.86)

Percent change in median household 17.65 19.53***

income 2000-2010 (10.46) (8.69)

Change in unemployment rate 4.49 5.05***

2000-2010 (2.67) (2.42)

Gini coefficient 2010 (ACS 3-year avg) 0.41 0.44

(0.03) (0.04)

N 1067 2069 1067 2069

*** statistically significant difference at the 1% level






The 21st Century The North Central Region

What we find for changes in poverty rates over 2007-2010

Places:

with greater employment growth had a relative decrease in the poverty rate

with greater dependence on manufacturing and professional services had higher growth in the poverty rate.

closer in distance to metro areas had relative growth in their poverty rates.

with a higher proportion of those with an associate degree had a relative decrease in the poverty rate

Little relationship with other common determinants of poverty used in studies and changes in the poverty rate from 2007-2010.





The 21st Century: Poverty and other Distress Across The North Central Region

In summary, during the recession: The western states within the North Central Region

tended to fare better.

Likely booms in commodity-based industries are visible in our data—points of prosperity for the present.

Counties where manufacturing employment was higher and counties closer to the larger cities fared worse.

The North Central Region: Challenges and Policy Implications

• Region continues to face longstanding, well-known challenges (lack of natural amenities; an “old industrial region” economy/ever consolidating farm-sector; boom-bust commodity cycle)


• Region as a whole may need place-based policy and human-capital investment in education– yet local government has declined across the U.S. (as indicated by employment).• There are no short-term fixes.• Less migration, so local “shocks” have more impact.

• Policy likely more effective on the positive side in remote locations.

• Small business development• Tax incentive schemes tend to be “lose-lose”

Lobao, Betz, Partridge, and Goe (2013)


• Trends over the recession decade improved the western part of the region, reducing the poverty gap.

• Banking on manufacturing and commodity industries needs to be given greater scrutiny as a development strategy in terms of building long-term sustainable communities.

Thank-you!

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Documents

Poverty & Socioeconomic Distress in the North Central Region: Assessing Trends Linda Lobao, Mark D. Partridge, and Michael Betz, The Ohio State University