2016 Poverty and Income in the United States

By Katie Thomas, Project Associate 

Last week, the U.S. Census Bureau released 2016 data on income and poverty in the United States. These estimates are intended to gauge the overall well-being of the country. The high-level summary of statistics reveals that the median household income was $59,039 in 2016 and that there was a real over-the-year increase of 3.2 percent. At the same time, the poverty rate fell by 0.8 percentage points with roughly 2.5 million fewer people living in poverty than there were in 2015. Combined, the two measures are positive outcomes and indicate that residents, on average, are better off than they were the previous year.

A deeper dive into the data reveals some more interesting findings. For example, the main reason that household incomes have increased is due to the fact that there were simply more people working in 2016 than there were in 2015. With an unemployment rate of less than five percent and the number of jobs continuing to grow, individuals are finding employment. The Census estimates that last year there were 1.2 million more people with earnings and 2.2 million more individuals working full-time, year-round. This suggests that in addition to more people finding jobs, there was also an increase in the number of workers that were able to find full-time employment as opposed to part-time work. As a result, the adage that a job is the best antipoverty program proves true with fewer people living in poverty in 2016.

Household Income at Select Percentiles*

Source: United States Census Bureau

*Income in 2016 CPI-U-RS adjusted dollars.

So, what are some of the issues highlighted in the report? For one, income inequality continues to be a challenge. When adjusted for inflation, household income for the bottom tenth of households was roughly eight percent less than it was in 2000. At the other end of the income spectrum, household income at the 95th percentile was 11.3 percent higher than it was in 2000. More recent trends do indicate that income growth over the past five years has been more equitable among the top 90 percent of households but still show a growing gap for the poorest of households.

Secondly, despite healthy growth in the labor market and household income, wage growth remains stubbornly slow. Typically, the main source of income for low-income households is through wages, whereas higher income households also tend to acquire income through investments and other sources. As such, the nation’s slow wage growth is more acutely felt by individuals at the lower income levels. As of August 2017, the Bureau of Labor Statistics reported that average hourly earnings had increased by 2.5 percent over the previous 12 month period. Wage growth of 2.5 percent outpaces inflation, but just barely. When wages grow at a faster pace than inflation, workers see their standards of living raise and employees at all income levels and wage rates are able to benefit from the overall economic growth.

Additional data with a breakdown of income and poverty by race and Hispanic origin, geographic regions, gender, age, and other characteristics can be explored in the report. For local level data, 2016 income and poverty statistics for school districts, counties, and states is expected to be released in December 2017. For now though, 2015 estimates are available at their website. The Census Bureau provides an interactive data and mapping tool that is pretty user-friendly and can be explored here.

The recent income and poverty report by the Census Bureau shows that progress is being made but there is still more work to do. Additionally, it highlights the importance of having quality data available to be able to gauge the economic well-being of the population. As the next decennial census of the U.S. population is gearing up for 2020, federal budget uncertainty regarding funding for the census have unfortunately raised concerns about the Bureau’s ability to conduct a reliable count of the population and its characteristics. The decennial census, especially, is critical as all of the following decade’s data will use the 2020 Census as the baseline for future surveys. Also, among other uses, the decennial census provides vital data to measure the effectiveness and progress of the many programs and projects that rely on its data, in addition to helping policymakers and elected officials make informed decisions.

The U.S. Government Accountability Office (GAO) – an independent, nonpartisan agency that works for Congress – put the 2020 Decennial Census on its list of High Risk areas, or federal programs that are “vulnerable to waste, fraud, abuse, and mismanagement, or that need transformative change.” Ultimately, it is critical that the Bureau have the proper funding so that it can hire the necessary workers and implement the essential IT systems and other innovations that are needed to produce a cost-effective and reliable enumeration. Fortunately, there’s still time to save the 2020 decennial Census, but that will depend on if our elected officials make funding for the Census a top priority. It’s certainly something to keep an eye on in the coming weeks as Congress negotiates the 2018 federal budget.

District Revitalization Versus Stabilization

By Alex Pearlstein, Vice President

Imagine you had a job where the more successful you were, the more you were criticized. If you accomplished your assigned mission and had the metrics to prove it, but suddenly the rules of the game changed in midstream. Such is the fate of the local economic developer charged with revitalizing underinvested commercial districts. The more success he or she has, the greater the likelihood of a backlash under the guise of the “g” word: gentrification – a process as old as cities themselves. No less a source than The Onion has satirized on this trend. In the article “Decaying City Just Wants to Skip to Part Where It Gets Revitalized Restaurant Scene,” pretend residents wanted “the city’s accelerated revitalization process to then stop just before they are priced out of their current apartments.”

There is no way in the course of one blog to fully summarize or address the thousands of column inches dedicated to the “g” word issue, especially as there has yet to be a definitive study as to its real effects. However, as housing affordability challenges have come to the fore in destination communities and mid-priced cities alike, there must be an honest conversation in the economic/community development world about the long-term goals of urban revitalization. This is especially true as cities like Detroit and Birmingham (where I now live) are seeing a backlash against reinvestment in high-profile districts. These are cities that have spent billions of dollars trying to catalyze this self-same revitalization. 

In Birmingham, the same city government that funded the new and renovated parks and minor league baseball stadium that spurred reinvestment is now empaneling (without supportive data) an “anti-displacement” task force. The reality in Birmingham – like in Detroit – is that only a very small fraction of the city is seeing reinvestment. Well over 90 percent of these communities is still suffering from high poverty and crime rates, underperforming schools, vacancies and blight, and widespread depopulation. 

At the core of the debate over urban reinvestment is the question of who benefits: existing residents or those who start new businesses, work at those businesses, and become new residents. Because history has shown that these two groups are typically not the same. I have yet to see a district “Brookyn-ization” that has successfully navigated this issue; if a case study exists, I’m not aware of it. 

In fact, cities churn; they just do. Neighborhoods rise and fall, residents and businesses move out and others move in; that’s just the effect of the free market. As such, what I’m referring to in this post is government’s role in the revitalization process. You can retroactively try to engender affordability, as a local researcher just described for Atlanta, or proactively implement measures favoring existing residents.

The conundrum becomes, do you presuppose that reinvestment will occur (even in places that have not seen revitalization for decades) and build in anti-displacement policies on the front end or wait until reinvestment occurs and reactively implement resident protections? The challenge becomes that preemptive anti-displacement policies increase the cost of investing in neighborhoods that may not have any appeal for private dollars (hence the need for revitalization incentives). And pro-affordability measures require a tremendous public outlay in an era of ever-diminishing budgets. This is why I find the whole issue so frustrating; cities are forced to simultaneously catalyze investment and prevent against its impacts.

I think a more logical process is to differentiate between neighborhood REVITALIZATION and STABILIZATION and implement policies accordingly. In essence, these are “place” versus “people” strategies. For the sake of argument, let’s say revitalization leads to greater neighborhood desirability and higher housing costs and that current residents are at a disadvantage to benefit from these changes because they have 1) lower incomes and 2) a less robust skill set for higher-wage jobs that would raise their incomes. In this scenario, enabling existing residents to capture the benefits of their revitalizing neighborhood without implementing anti-displacement policies requires upskilling them for more lucrative employment. In some cases, this is a GENERATIONAL process; the lifecycle of a commercial district exists in months and years.

So I propose that governments assess – somewhat akin to a zoning process – what commercial districts and adjacent neighborhoods warrant the revitalization versus the stabilization designation. Revitalization zones would implement place-based strategies such as destination amenity development, investment tax credits, forgivable small business loans, streetscaping and other aesthetic improvements, and additional tactics that have demonstrated results in spurring reinvestment. Property values and taxes, rents, and other market-driven metrics will not be mitigated and district revitalization will be allowed to proceed unhindered. While displacement may occur, the tax-base enhancements, destination appeal, and talent attraction benefits of the district will not be challenged.

Stabilization zones will receive more nuanced attention consistent with holistic programs such as HUD’s Choice Neighborhoods initiative, which is “designed to catalyze critical improvements in neighborhood assets, including vacant property, housing, services and schools.” Efforts will focus less on attraction of outside investment and more on uplifting the prospects of existing district residents.

Whether or not the revitalization vs. stabilization designation is politically palatable would remain to be seen. It might be more viable in some communities rather than others. But absent major innovations in reinvestment policy or workforce training, I don’t see a diminishing of the “g” word’s divisive impacts on urban areas and economies.

Implementing Amidst Skepticism

In 2013, Market Street Services was retained by a collaborative group of leaders and organizations in Macon-Bibb County, Georgia to facilitate a community and economic development strategic planning process. This process came to be known as One Macon.

It didn’t take long for public education to emerge in the public input phase as the community’s greatest competitive challenge and its most divisive issue. As our Competitive Assessment noted:

“When asked about the biggest challenges in Macon-Bibb, one input participant said, ‘1A and 1B are race and education.’ This sentiment succinctly summarizes a clear picture that emerged throughout the input process: the K-12 education system is one of the largest and most important challenges in Macon-Bibb, and the issue is inseparable from larger issues of race and class. In the eyes of many input participants, Macon-Bibb’s K-12 education system is better described as two systems divided along racial and socioeconomic lines. According to focus group participants, one is private, predominantly white, and performing at a high level; the other is public, predominantly black, and badly struggling.”

In the 2011-12 school year, the graduation rate in all Bibb County Schools was 52.3 percent. This was the fifth-worst rate among the state’s 179 traditional school districts and 17.5 percentage points below the state average for all systems (69.7). On the ACT, a national standardized test for college admissions, Bibb County students scored an average of 17.3 in the 2010-11 school year, nearly four points lower than the national average (21.1). Furthermore, while others made progress, the average score in Bibb County Schools dropped by 1.1 points between the 2005-06 and 2010-11 school years.

The leadership of the One Macon process, embodied by a Steering Committee of community leaders, quickly prioritized education in the strategic planning process; “Schools” accompanied “Jobs” and “Places” as one of the three pillars of the One Macon strategy. Throughout 2013, the Steering Committee reviewed a series of best practices and potential recommendations, and ultimately determined that The Leader in Me, a leadership program targeting elementary schools (and subsequently middle schools), was an appropriate fit for Macon-Bibb County. The program and its early success stories – notably A.B. Combs Elementary in Raleigh, North Carolina – have been well-documented, and the program is now being implemented in more than 3,000 public, private, and charter schools around the world. To help secure funding, establish a pilot of The Leader in Me program, and advance a series of other collaborative education initiatives, the One Macon strategy called for the establishment of a new Business Education Partnership (BEP).

Fast forward to October 2014. Roughly six months after the One Macon strategic planning process concluded, the first meeting of the new Business Education Partnership (BEP) was held. Decades of failed partnerships and false starts – many predicated upon a lack of trust rooted in the aforementioned “white flight” from the public school system – resulted in an aura of skepticism about the intentions and viability of a Business Education Partnership in 2014. On that day in October 2014, the Business Education Partnership discussed a series of values to uphold (candor, mutual respect, courage to discuss difficult conversations, and commitment to action, among others), and a set of characteristics that they wanted to avoid (fear of conflict, defensive dialogue, and lack of accountability, among others). 

Fast forward another three years. The Business Education Partnership and the One Macon initiative have successfully launched the Leader in Me in multiple elementary and middle schools throughout the community, supported by a $2.1 million campaign to fully fund implementation across all 27 elementary and middle schools. In April of this year, the Griffith Family Foundation made the largest donation to date – a $250,000 contribution to support expansion of the program in the years ahead. The program has just begun its third year in two elementary schools that served as the initial pilot programs – Sonny Carter and Burdell-Hunt Elementary – while others are entering their second year. Students, parents, teachers, and administrators have all noted the impact in just one or two years of implementation. The program is often frequently cited for its impacts on student’s commitment to their coursework, communication habits, and leadership attributes, which manifest themselves in a variety of outcomes. Student suspensions at the two pilot schools were cut in half in just the first year of implementation, dropping from 352 incidents to 168. 

You can read more about Macon-Bibb’s Leader in Me implementation progress here: https://macontheleaderinme.com/

The program’s implementation, the Business Education Partnership (BEP), and the entire One Macon strategic planning and implementation process would not have been possible without the vision and leadership of the Greater Macon Chamber of Commerce, and the One Macon Steering Committee. Numerous chambers of commerce around the country have led successful efforts to launch The Leader in Me in the community’s school system; the Decatur-Morgan County (AL) Chamber of Commerce helped advance the first district-wide implementation of The Leader in Me in the world. Many other chambers were inspired by the remarks delivered by Leader in Me students at the Association of Chamber of Commerce Executives (ACCE) Annual Convention in Raleigh, North Carolina in 2009. ACCE is a great resource for other chambers looking to learn how their peers have led these successful initiatives, as are your peers in Macon-Bibb, Decatur-Morgan County, and others around the country.