Tuesday, February 10, 2015

Ferguson and Carpenter Tackle Idaho's Embattled Middle Class at City Club Forum

Posted By on Tue, Feb 10, 2015 at 4:49 PM

click to enlarge Left to right: United Way of the Treasure Valley President and CEO Nora Carpenter, economist Mike Ferguson and City Club of Boise moderator Dick Gardner - HARRISON BERRY
  • Harrison Berry
  • Left to right: United Way of the Treasure Valley President and CEO Nora Carpenter, economist Mike Ferguson and City Club of Boise moderator Dick Gardner
Economist Mike Ferguson needed more time with the microphone. 

At the City Club of Boise's panel discussion "The Disappearing Middle Class," which took place at The Owyhee Feb. 10, moderator Dick Gardner repeatedly had to interject to wrest the microphone from the recently retired executive director of the Idaho Center for Fiscal Policy. As plain spoken as Ferguson can be, none of his analysis of the forces eroding the Gem State's middle class was as simple as a sound bite. 

Broadly speaking, Ferguson said that those forces are tax policies, labor policies and corporate governance. And while the economy has, in many respects, rebounded in the wake of the Great Recession, working families have been losing ground against the interests of capital since the 1970s, he said.

"More of the rewards of our economy are going to non-labor elements," Ferguson told the crowd.

Between the end of World War II and about 1975, real compensation per hour and real output per hour increased roughly in tandem. In other words, American wages and productivity were proportional. But between 1970 and 2005, output increased by 113 percent while compensation increased by only 51 percent. Between 2005 and 2014, output increased by 13.7 percent while compensation increased 2.5 percent. 

Ferguson also noted that, according to the U.S. Department of Commerce's Bureau of Economic Analysis, Idahoans were making about 80 percent of the national average per capita personal income, down from almost 95 percent of the national average in the mid-1970s. Since 2010, Idaho has consistently ranked among the five lowest states for per capita income. 

"What we see is Idaho scraping the bottom of the barrel," he said. "We've lost ground. We're pulling up the rear."

Ferguson admitted that the numbers are hard to put into context. There to humanize the toll that low wages in Idaho have had on working families was United Way of Treasure Valley President and CEO Nora Carpenter. United Way recently published its Community Assessment 2014, which concluded that the percentage of schoolchildren in Ada County who qualify for free or reduced-price school lunches rose by 17 percent while the number of kindergarteners scoring "at benchmark in the Idaho Reading Indicator decreased by 2.7 percent. 

Carpenter warned that the Treasure Valley is at risk for developing "Zip Code Syndrome," in which wealth and poverty pool geographically. During United Way's Community Assessment process, Carpenter said that "transportation is a barrier to everything." Infrastructure investment and economic development patterns in the Treasure Valley are making commutes longer and communities less complete or sustainable, she said. 

At the same time, middle-class families are landing in a "donut hole" between access to social services and financial security. 

"I earn too much, but not enough," Carpenter said was a common refrain among families and individuals struggling to make ends meet.

She gave the example of "Crystal," an educated single mother making $15 an hour with modest employment benefits who, despite being fully employed, struggles to manage her time and feed her family. Families like Crystal's need flexibility, and they find it in unlikely—and often risky—places like health care.

"The real bubble is health. That's where people choose not to spend," Carpenter said. 

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