Income Inequality has increased in Michigan and most States over the Past Two Decades

A new study has found that economic inequality increased in Michigan over the past two decades with increasing gaps between the wealthiest and poorest residents of the state.

A new report from the Center on Budget and Policy Priorities and the Economic Policy Institute has found that in most states the gap between the richest and poorest families has grown over the past two decades. The report analyzed inflation-adjusted Census data by measuring and comparing income trends among the highest-, middle-, and lowest-income families in three periods – the late 1980s, the late 1990s, and the mid-2000s. Since the late 1990s, the incomes fell for poor families while they grew for the wealthiest families. The report is one of the few to address disparities in income by state and as such offers unique insights into inequality in Michigan.

The summary for Michigan had the following key findings:

Michigan’s Richest Families vs. Poorest Families

* The richest 20 percent of families have average incomes 7.0 times as large as the poorest 20 percent of families.

* This ratio was 6.0 in the late 1980s.

* This growth in income inequality is the 31st largest in the nation.

* The very richest families — top 5% — have average incomes 11.5 times as large as the poorest 20 percent of families.

Michigan’s Richest Families vs. Families in the Middle

* The richest 20 percent of families have average incomes 2.4 times as large as the middle 20 percent of families.

* This ratio was 2.1 in the late 1980s.

* This growth in income inequality is the 28th largest in the nation.

Gains for Rich Families Outpaced Gains for Poor Families

Between the late 1980s and the mid-2000s:

* The average income of the poorest fifth of families increased by $1,465, from $16,469 to $17,934. This is an increase of $86 per year.

* The average income of the middle fifth of families increased by $4,186, from $47,573 to $51,758. This is an increase of $246 per year.

* The average income of the richest 5% of families increased by $66,799, from $139,094 to $205,893. This is an increase of $3,929 per year.

* The average income of the richest fifth of families increased by $26,689, from $99,576 to $126,264. This is an increase of $1,570 per year.

The report cites a number of economic trends and government policy reasons for this decline. Among those mentioned are higher-than-average unemployment, globalization, the shift from manufacturing jobs to low-wage service jobs, immigration, the weakening of unions, and the declining value of the minimum wage.

By focusing on state-level inequality, the report also highlights the steps that state governments can take to mitigate the problems associated with this inequality. While changing the policies that produce the inequality is often beyond the states’ control, they can adjust tax policies to rely more on income taxes than sales taxes and fees that effect low income families the most. The report also urges states to bolster their social safety nets by improving unemployment insurance systems, extending the amount of time that workers can receive benefits, raising the minimum wage and tying future increases to inflation, and improving support services such as transportation, child care, and health coverage.

Racial Gaps in Wealth, Education, Employment Remain in Detroit, Nation

A new study forty years after the 1967 riots in Detroit has found that racial gaps remain on a host of issues. Little progress has made on improving the status for people of color despite the recommendations of the now famous Kerner Commission.

The Detroit News has published excerpts of a new report finding that forty years after the famous Kerner Commission–appointed during the 1967 riots in Detroit–concluding that despite the many of the same racial disparities in poverty, education, crime, and unemployment persist. The Kerner Commission was reconvened last year and made metropolitan Detroit–the most segregated region in the United States–its first stop. Following visits to other areas effected by riots in the 1960s including Newark, NJ and Washington, DC, the Commission graded progress for African-Americans in the last forty years, giving a grade of “D+”.

The Detroit News reported the following:

* “Some employers still “steer” minority applicants into the worst jobs; real estate agents send them to less desirable neighborhoods and mortgage lenders accept fewer applications than those from similar whites.

* Unemployment and underemployment were the most important causes of poverty, yet African-American unemployment has remained twice as high as white unemployment during each of the four decades since 1968. About 37 million Americans live in poverty, while 46 million Americans are without health insurance.

* Educational disparities remain linked to funding. The wealthiest 10 percent of school districts in the United States spend nearly 10 times more than the poorest 10 percent.

* Poor African-Americans are three times as likely as non-Hispanic whites to live in deep poverty, below half of the poverty line.

* Minorities receive longer sentences than whites for the same crimes.”

The report calls for a series of recommendations including raising the minimum wage, passing laws that would require the Federal Reserve to take action when unemployment rises above 4%, passing laws to make it easier to form unions, increasing funding for job training and college scholarships for low income students, and making school funding more equitable.

Additional statistics from the report:

Poverty

* 37 million Americans live in poverty today, in the richest country in history.

* 46 million Americans are without health insurance, and 36 percent of the poor are unprotected.

* The child poverty rate has increased slightly, from 15 percent in 1968 to 17 percent in 2006.

* For young children (below 5 years old) the poverty rate is almost 21 percent today.

* The American child poverty rate is about 4 times the average poverty rate for Western European countries.

* Poverty has deepened for those who have remained poor. The proportion of the poor below half the poverty line was about 30 percent in 1975 and 43 percent in 2006.

* Poor African Americans are 3 times as likely and poor Hispanics twice as likely as non- Hispanic Whites to live in deep poverty, below half the poverty line.

* The poverty rate has declined for African Americans since the Kerner Commission, but poverty in African American female headed households with children under 18 was almost 44 percent in 2006.

* The Kerner Commission found that unemployment and underemployment were the most important causes of poverty, yet African American unemployment has continued to be twice as high as White unemployment during each of the 4 decades since 1968.

* The employment prospects of the nation’s out-of-school 16-24 year old men have declined considerably since 2000. The problem is especially acute for young African American men. Among high school drop outs aged 19, only 38 percent of African Americans are employed, compared to 67 percent of Whites.

Inequality: Income and Wealth

* The top 1 percent of the population (300,000 Americans) now receives as much income as the lower one-half of the population (150 million Americans).

* Since the late 1970s, the real after tax income of those at the top of the income scale has grown by 200 percent, while it has grown by 15 percent for those in the middle and 9 percent for those at the bottom.

* A recent Brookings Institution study on mobility found that 68 percent of White children from middle income families grew up to surpass their parents’ income in real terms. But that share was only 31 percent for middle income African American children – demonstrating downward mobility.

* America has one of the highest levels of income inequality in the industrialized world.

* In terms of wealth, America is the most unequal country in the industrialized world.

Inequality: Wages

* Over the last 40 years, America has had the most rapid growth in wage inequality in the industrialized world.

* Since the 1970s, productivity has increased significantly in America, but wages have increased little in real terms. Corporations are not sharing profits with workers, as had been more the case, for example, in the late 1960s. From November 2001 through July 2006, worker wages grew at an annual rate of 1.6 percent, while profits grew at an annual rate of 14.4 percent.

* In the 1960s, the average CEO earned about 40 times more than the average worker. Today, the average CEO earns about 360 times as much.

* Among full time workers, Whites earn over 22 percent more than equivalent African American workers and almost 34 percent more than equivalent Hispanic workers.

Inequality: Education

* In science achievement tests in 2003, American students ranked 20th out of 40 countries.

* Large disparities remain in America between the educational achievement of White and Asian American high school students compared to Latino and African American high school students.

* American educational disparities remain linked to funding disparities. The wealthiest 10 percent of school districts in the U.S. spend nearly 10 times more than the poorest 10 percent.

* In the U.S., the highest performing students from low income families now enroll in college at the same rate as the lowest performing students from high income families. In other words, the smartest poor kids attend college at the same rate as the dumbest rich kids.

* The American educational system allocates more unequal inputs and produces more unequal outcomes than most other industrialized nations.

Racial Injustice

* The likelihood for the death sentence is greater for minorities than Whites. Minorities receive longer sentences than Whites for the same crimes. Sentences for crack cocaine, used disproportionately by minorities, have been much longer than sentences for powder cocaine, used disproportionately by Whites.

* There is continuing evidence from distinguished scholars that some employers “steer” minority applicants into the worst jobs regardless of their qualifications; that many real estate agents steer minorities to less desirable locations, compared to Whites; and that lenders treat minorities differently from Whites in terms of percentage of mortgage applications accepted.

* School desegregation proceeded rapidly in America from the 1960s to the 1980s and then was dramatically reversed by the courts.

* Residential segregation declined overall for African Americans in the 1990s but it rose for African Americans below age 18.

* Hispanic residential segregation increased in many major metropolitan areas from 1980 to 2000.

* Overall levels of residential segregation remain high for African Americans and Latinos.

Crime

* The percent of Americans reporting fear of walking alone at night has increased from about 31 percent in 1967 to about 38 percent in 2006.

* The most accurately reported crime is homicide. The homicide rate in the 1960s was roughly the same as it is today (5.1 per 100,000 in 1960, 6.2 in 1967 and 5.7 in 2006).

* This is so in spite of an eight fold increase in the total population of persons in prisons and jails since the late 1960s. Well over 2,000,000 persons now are in American prisons and jails. America has the highest reported rate of incarceration in the world.

* African American men aged 25 to 29 are almost 7 times as likely to be incarcerated as their White counterparts.

* Today, the rate of incarceration of African American men in the U.S. is 4 times higher than the rate of incarceration of African American men in South Africa during the pre-Nelson Mandela apartheid government.

* A prison-industrial complex has developed. The states collectively now spend more on prison construction than on construction for higher education.

* A disproportionate number of ex-offenders return from prison to a small number of heavily impacted communities.

* The national recidivism rate for persons released from prison is over 67 percent.

* The late 1990s decline in violent crime has recently reversed in many cities, based on a report by the Police Executive Research Forum.

Magazine Chooses the 25 Most Powerful People in Grand Rapids

Grand Rapids Magazine recently determined who the 25 most powerful people are in Grand Rapids. Not surprisingly, the list was overwhelming male, white, and wealthy.

In the December 2007 issue of Grand Rapids Magazine–a publication whose masthead says it is dedicated to “Celebrating City Life”–there was a feature article written by Curt Wozniak on the “25 Most Powerful People in Grand Rapids.” Not surprisingly for a magazine whose readership demographics are solidly upper class–91% have college degrees, 93% own their own homes, average income is $128,800, and average household net worth is $718,700–the story read like a who’s who of the white male elite in Grand Rapids.

Even before one considers the particular names on the list and what was left out of the short biographies included in the articles, there are significant problems with the methodology. The article lacks a clearly defined method for defining who is powerful, and more importantly, what constitutes power. In his opening paragraph, Wozniak sums up his criteria by saying:

“If they called a meeting, you would attend; if they offered a bit of advice, you would likely take it. If your organization is looking for extraordinary leadership, you would call upon them. Mayors, governors and presidents call them.”

Essentially, Wozniak’s definition is more about mystique than any clearly defined criteria. In an introduction to the issue that appears earlier in the magazine, Carole Valade elaborates more on the purpose of the issue. She explains that it the goal was to identify who the “current leaders” are in Grand Rapids, or “those who make a difference and ‘get things done'” in the West Michigan community.

It is never explained what is meant when she asserts that they are people who “get things done,” and indeed in the brief biographies of each of the twenty-five people, it is never explained. Wozniak says that the twenty-five “share the characteristics of inventiveness, leadership–and fundamental reinvestment in this community.” Indeed, the biographies do focus extensively on philanthropy, but there is little discussion about how these people generated their wealth, how they conducted themselves as CEOs or business leaders, or how their philanthropy has in some cases–particularly with the DeVos family–been used not only for “reinvestment” in the West Michigan community, but to advance a rightwing political ideology. Similarly, there is no discussion about how these people–some of whom like the DeVos family—have made significant financial contributions to politicians, a way of essentially buying access.

So, who are the twenty-five? Before we list them and summarize what Grand Rapids Magazine had to say and a bit of what they left out, it is important to note that all of these individuals could–and arguably should–be the subject of lengthy articles exploring their philanthropy, their political contributions, and how they made their money. But in the mean time, we are just making a few quick observations to generate thought:

Peter WegeThe Grand Rapids Magazine praises Peter Wege for his funding of environmental causes, mentioning specifically grants for “green buildings” as well as his involvement in the Healing Our Waters Coalition for U.S. legislators working to restore the great lakes. There is no mention of his political contributions to federal candidates or any larger review of his philanthropy. It says that he was a former vice chairman of Steelcase Inc., but says nothing about what the company did or does.

Arend “Don” Lubbers – The former president of Grand Valley State University (GVSU) is included for his work as president of GVSU from 1969 to 2001. There is no real discussion of what he did as president–no discussion of controversy–just that he oversaw growth.

Fred Meijer – The chairman emeritus of Meijer Inc. is included because of his philanthropy, summed up in his quote “Anything you do in the community, you do it for yourself–for the satisfaction–but the people who really get the benefit are the future generations.” There is no mention of the fact that Frederick Meijer has been a consistent financial supporter of Republican political candidates.

David Frey – Frey–who worked for Union Bank that in a series of mergers was absorbed into NBD, Bank One, and Chase is described as looking “the part of a conservative banker.” Included because of his involvement in the Grand Action Committee–a group of local elites who have been involved development projects in downtown Grand Rapids–there is nothing said about his contributions to Republican political candidates and causes.

Rich DeVos – Of course, no list would be complete with out Richard DeVos. Included because of his involvement in downtown development projects such as DeVos Hall and “the Medical Mile,” there is no mention of the role that DeVos has played on the national level in developing the new right–particularly the religious right–or in his use of philanthropy as a means of advancing his political ideology.

David Van Andel — David Van Andel–who is the chairman and CEO of the Van Andel Institute–is included because of his efforts in running the Institute and bringing life sciences development to Grand Rapids. There is no discussion of his political contributions or his family’s funding of rightwing political groups.

Jim Brooks – Jim Brooks, who was a CEO of the Holland-based Beverage America, is included for his efforts at stimulating economic development along regional lines through the West Michigan Strategic Alliance. There was nothing really said about what exactly this group does. Brooks has also provided financial support to Congressman Pete Hoekstra.

Kate Pew Walters – One of only three women included, Pew Walters is included for her role in raising money for the new Grand Rapids Art Museum. She describes her self as being “a little left politically,” but is able to work with folks–such as Doug DeVos–who are more aligned with the right. She is also on the board of Steelcase and chairs the Steelcase Foundation. There is no discussion of what the foundation funds.

Peter Secchia – The retired CEO of Universal Forest Products and former US Ambassador to Italy is quoted saying that he doesn’t like the word power – “That’s a bad word. I don’t think I have any ‘power.'” However, the biography then talks about how he gets calls from Karl Rove and has been involved in planning visits by President George W. Bush to Grand Rapids. Certainly, that implies “power” and a level of power that has largely been attained by his political contributions and connections.

Terri Lynn Land – A Republican who is currently Secretary of state, Land is included for her work in both establishing the Van Singel Fine Arts Center in Byron Center and as chair of the county Republican Party.

Harvey Gainey – Gainey–who has been involved in the Broadway Theatre Guild–is the chairman of Gainey Corp. and is a supporter of the religious right. Of course, nothing was said about that.

Dick Haworth – The chairman of the board at Haworth Inc., he is included for his business successes–primarily in growing his company into an internationally known office supply manufacturer.

Dick DeVos – The former governor and former CEO of Amway–who is currently the president of Windquest Group and a co-chair of Grand Action–is included because of his philanthropy at the local level. Not included is his substantial support for the Republican Party and his use of philanthropy to advance his rightwing political agenda.

John Wheeler – Wheeler–the CEO of Rockford Companies, a construction firm–is praised for his efforts in redeveloping downtown. There is nothing said about how much money he has made off these projects or what he has used his money for.

Fred Keller – As CEO of Cascade Engineering, Keller is included because he has worked to advance sustainable business principles. The article cites Cascade Engineering’s work with International Aid as an example of its commitment to social issues.

Doug DeVos – DeVos is currently co-president of Amway with Steven Van Andel and is included largely because of his role in running Amway. There is no discussion of his, his family’s, or Amway’s involvement in politics.

Steve Van Andel – As co-president of Amway, Van Andel is praised for his work ethic and role in running Amway, as well as his involvement on various boards in West Michigan.

Mike Jandernoa – Jandernoa–a somewhat lesser known figure on the list–is a former CEO of Perrigo and former accountant at Seidman & Seidman (now BDO Seidman) who worked with influential clients such as Amway and Old Kent Bank. He is now a board member of the Michigan Economic Development Corp, a supporter of the anti-casino “23 is Enough” coalition, and a supporter of Catholic schools.

Betsy DeVos – Betsy DeVos was included for her philanthropy and former role as a political leader. However, there is little substantive mention of her involvement with the national religious right or her financial contributions to rightwing political causes. There is also no mention of her being the child of Edgar and Elsa Prince of Holland who have their own history of supporting the religious right and Republican causes.

Peter Cook – Peter Cook is included for his philanthropy, but there is nothing said about what Cook’s philanthropy has funded beyond projects in Grand Rapids. He has also funded religious right organizations.

Sam Cummings – Cummings is included for his role in developing Grand Rapids through his Second Story Properties, but there is nothing said about how he has benefited financially from these projects or whether or not his projects have been aided by tax breaks.

Richard Lacks Jr. – As CEO of Lacks Enterprises, Lacks is included for his role in building the Lacks Cancer Center. Little else is included about him.

J.C. Huizenga – Huizenga–who founded National Heritage Academies–is included because of his success in opening fifty-five charter schools in six states. His biography does mention his role in Teach Michigan–a rightwing effort to legalize charter schools in Michigan–but there is little said about how charter schools fit into a larger rightwing project of privatizing public services and challenging public schools.

Dan DeVos – DeVos is included for his efforts in bringing sports to Grand Rapids, including the Grand Rapids Griffins and the Grand Rapids Rampage. The two teams are touted as beneficial to Grand Rapids in the article, although there is no attempt to verify that idea.

Reading through the list, it is obvious who is missing. There are only three women and no people of color. There are no community organizers, no teachers, and none of the countless people who work to improve Grand Rapids on a daily basis–from block captains to mentors–who will not be recognized because they do not bear the names of the elites and do not have wallets overflowing with cash.

Beyond who is missing, the article–perhaps unintentionally–cultivates the idea that to have power, one must have money and existing status. Nowhere is there any mention that people can build power with their friends, their neighbors, or others in their community by working together, instead, power is seen only something that one can have if they are a rich, white, and male, and if they have other rich, white, and male friends.

Report: Michigan Failing to Meet Health Goals for Children

A new report has found that the state of Michigan is only meeting three of eighteen goals for children’s health and economic well-being and is making only minimal progress towards attaining the additional fourteen goals.

A new “Kids Count” report for 2007 offers a sobering assessment of the health and economic wellbeing of children living in the state of Michigan. The report, which was compiled by the Michigan League for Human Services and Michigan’s Children, concludes that Michigan has made “limited progress” and “will fail to meet many national standards for healthy children, families and neighborhoods” if more aggressive action is not taken. Michigan has met only three of eighteen goals identified by the Healthy People (HP) 2010 initiative aimed at improving the health of children across the nation and setting policy goals and has made only minimal progress on fourteen of eighteen indicators.

In meeting those three goals, Michigan immunized 80% of its toddlers, has a teen pregnancy rate of 23 per 1,000 teenagers compared to the goal of 43 per 1,000, and reported only 30% of its high school students being involved in a physical fight over the past year compared to a goal of 32%. However, the progress is overshadowed by many problems, particularly when it comes to race. Significant racial disparities remain, with African-American children being three times as likely as white children to live in poverty. Additionally, they have triple the rate of infant mortality and double the death rates for young and elementary age children, hospitalization for asthma, and low-birth weight.

Overall, Michigan made limited progress on most (14 out of 18) indicators. In the “Maternal/Infant” care area, Michigan met none of the goals and continues to be below the national goal in having prenatal care in the first trimester while exceeding the goals by having more preterm and low-birth weight babies along with a higher infant mortality rate. In the “Young Children” area, Michigan failed to meet the goals by substantial margins most areas–percentage of children with lead poisoning, child deaths ages 1-4, and hospitalization for asthma 0-4–while meeting the goal for fully immunized toddlers. With the exception of goals for teen pregnancies and physical fights, Michigan failed to meet goals in the “Adolescent” category including “vigorous exercise” and being “overweight.”

Numbers specific to Kent County show that 15.1% of children in Kent County live in poverty, which is less than the Michigan-wide number of 17%. This number has increased since 2000, an increase that was attributed to a shift from well-paying manufacturing to service industry jobs in the Grand Rapids Press. Infant mortality also increased in Kent County, reaching 8.2%. Almost a fourth of children in Kent County receive adequate pre-natal care. In addition to health indicators, the report places the average cost of childcare at $513 per month, or 16.4% of the average wage.

Profiles for other counties in West Michigan are also available online: Allegan, Barry, and Ottawa.

New Study Shows Limited Economic Mobility for Black Families

A new study titled “The Economic Mobility of Black and White Families” by the Pew Charitable Trusts has found that the economic mobility of African-American families is limited. The study is based on a study of family incomes from the 1960s to the 2000s and finds that there are significant gaps in family incomes between African-American and white families. The report concluded that “In every income group, blacks are less likely than whites to surpass their parents’ family income and more likely to fall down the economic ladder.” Among the findings in the report:

  • There was no progress in reducing the gap in family income between blacks and whites. In 2004, median family income of blacks ages 30 to 39 was only 58 percent that of white families in the same age group ($35,000 for blacks compared to $60,000 for whites).
  • Only 31 percent of black children born to parents in the middle of the income distribution have family income greater than their parents, compared to 68 percent of white children from the same income bracket. Odds of exceeding parental incomes are better for black children from other income groups, but are still substantially lower than those of white children in the same circumstances.
  • More than one third (37 percent) of white children born to parents in the middle income group move up to the fourth or fifth quintile, compared to only 17 percent of black children whose parents have approximately the same levels of income.
  • Startlingly, almost half (45 percent) of black children whose parents were solidly middle class end up falling to the bottom of the income distribution, compared to only 16 percent of white children. Achieving middle-income status does not appear to protect black children from future economic adversity the same way it protects white children.
  • Black children from poor families have poorer prospects than white children from such families. More than half (54 percent) of black children born to parents in the bottom quintile stay in the bottom, compared to 31 percent of white children.

Unfortunately, the report fails to look at institutional racism and its many manifestations, whether they be restricting access to certain careers, educational institutions, or sending more African-Americans to prison. Moreover, an article from IPS News on the study cites criticism directed towards the report for its assumption that African-American and white children start from the same point with the same opportunities.

Poverty Widespread in Michigan according to New Census Numbers

New numbers from the United States Census Bureau show that poverty is widespread in Michigan. Since 1999, the overall percentage of people living in poverty in Michigan has increased by 3%. At the same time, poverty levels have increased in cities in Michigan, with Flint’s at 34.1%, Kalamazoo’s at 33.4%, Lansing’s at 27.9%, and Grand Rapids’ at 23%. Kalamazoo and Flint are among the ten cities with the highest poverty rates in the nation, while Detroit has the most people living under the poverty level–32.5%–of any major city in the United States.

Poverty in Michigan is coupled with a high unemployment rate in the state. Michigan’s unemployment rate currently the highest in the United States at 7.2%. Additionally, 10.6% of Michigan’s population is without health insurance.