The Midwesterner: Bad news and a silver lining

By Richard C. Longworth

The US Census Bureau is out with its latest figures on income and poverty in the United States. The report makes glum reading for the country as a whole and for the Midwest in particular.

The quick headline is that income has slipped and poverty increased everywhere since the recession began in 2007, but that's not exactly news. The real news is that average Americans — the persons in the middle, where the middle class lives — are worse off than they were ten years ago, and almost exactly where they were thirty years ago.

In other words, a whole generation of Americans has seen no increase in its standard of living.

For anyone wondering whatever happened to the American middle class, the answer lies in the dry statistical columns of this report [PDF].

Among the highlights:

• Between 2007, when the recession began, and 2010, when the survey was taken, median household income in the United States (adjusted for inflation) fell 6.4 per cent.
• But the decline in median household income fell 7.1 per cent between 1999 and 2010. That means that the median household's income had been absolutely flat — in fact, had declined a bit — in the first seven years of the decade, even before the recession began.
• In fact, median wages are about where they were in 1989; that means 21 flat years.
• No part of the country escaped the recession unscathed, but the Midwest got hit hardest. Median income in the Midwest fell 8.4 per cent between 2007 and 2010. In the West the drop was 6.7 per cent and in the South 6.4 per cent. The Northeast, another old industrial area, is often compared to the Midwest, but its decline was smallest, at 3.1 per cent.
• The gap between men's and women's wages has been closing over the years but, at least for now, has stalled. The Census Bureau says women earned 77 per cent as much as men at the median in 2010, about the same as in 2009.
• The official poverty rate is 15.1 per cent, the highest since 1993, while the total number of Americans in poverty, 46.2 million, is the biggest since the government started tracking poverty more than 50 years ago. The South, as usual, has the highest poverty rate, at 16.9 per cent. The Midwest's rate was 13.9 per cent, slightly below the national average; that means 9,148,000 Midwesterners living in poverty.
• The poorest cities in the nation are clustered in the Midwest. Flint, Michigan, has the second highest poverty rate, at 41.2 per cent, just behind Reading, Pennsylvania, at 41.3 per cent. Among cities with at least 200,000 persons, the nation's highest poverty rates are in Detroit, at 37.6 per cent, San Bernardino, California, at 34.6 per cent, and Cleveland, at 34 percent.
• If there's a relatively bright spot for the Midwest, it may be that the region is recovering faster than the rest of the nation, especially the West and the Sun Belt states; the unemployment rate in the region is no longer the highest in the nation. But there's a cloud to this silver lining: in most of the nation, including the Midwest, unemployment is rising again, after dipping in 2010.

Some definitions: The Census Bureau defines the Midwest as the 12-state region including the eight Upper Midwest states, plus the four Great Plains states. And "median" means the person right in the middle of the population, with 50 per cent above and 50 per cent below. It's a more accurate measure than "average," which can be skewed by extremes. Bill Gates and a 7-11 clerk average out at hundreds of millions of dollars each.

Two industries have been hardest hit by the recession: housing and heavy industry. The housing bust explains the income declines in the West, and industrial layoffs and outsourcing explain income declines in the Midwest.

But unemployment rates in other parts in the country are catching up with Midwestern woes. The West now has the highest unemployment rate in the nation, probably because of the housing crisis, while six of the 10 states within the highest unemployment rates are in the South, according to new figures from the Bureau of Labor Statistics.

Ever since the recession began, Michigan has had the nation's highest unemployment rate, of 13 per cent or more. Now that's down to 11.2 per cent — still high, but not as bad as Nevada with a 13.4 per cent rate, or California, with 12.1 per cent.

Illinois, with a 9.9 per cent unemployment rate, is still worse than the 9.1 per cent national average. But all the other Midwestern states are below the national average.

It's much too early to say whether this stronger showing, at least in relative terms, means anything important.

On the one hand, the South, with seven states above the national average, was hit as hard as the West when the housing bubble burst. But it also inhaled much of the Midwest's heavy industry during the Sun Belt/Rust Belt days. Now that industry is declining or shedding jobs, the South may have more to lose, compared to a slimmed-down Midwest.

A Southern decline doesn't necessarily mean a Midwestern recovery. Things can be bad down there without being good up here. But there are signs that some Midwestern cities may be turning the corner. An analysis by the Brookings Institution, a Washington-based think tank, reported that Ohio Rust Belt cities like Youngstown and Akron are recovering faster than cities like Colorado Springs or Tucson, which boomed before the housing bust.

This post was originally published at The Midwesterner.

29 September 2011