How Two Opposite Things Can Exist
Unemployment is down. By any measure Michigan’s economy is improved since 20089, whether because of the national economy or because of specific state policies or a combination of the two. One doesn’t need a statistician to see hiring signs on display at businesses across the state.
Yet, child poverty is up in Michigan. And up significantly since 2008. According to the latest Kids Count study, more than 22 percent of the 2.2 million children under the age of 17 living in the state in 2015 were poor. In 2008, it was 19.3 percent, bad enough but still better than 2015.
How does such a contradiction occur? The two facts are completely counter to one another. If unemployment goes up, then one expects child poverty to increase. Ergo, one would say, if child poverty has increased, so too must have unemployment.
But unemployment is down, down to 5.1 percent seasonally adjusted in March, according to figures released by the Department of Technology, Management and Budget. The state still has not regained all the jobs it had in 2000, but since 2010 employment has increased by hundreds of thousands. In March, 4.666 million people were working in Michigan.
Yet, since 2008, child poverty is up.
Part of the explanation may lie with the timeframes used. In 2008, Michigan was still struggling through its one-state recession but had not yet gone into the full horror of the Great Recession. The average labor force size in Michigan during 2008 was 4.92 million and the average number of people working was 4.52 million people, according to the Senate Fiscal Agency.
In 2015, the end year measured in the Kids Count study, the average labor force was 4.75 million and the average number of people working was 4.49 million. In one sense, the economy in 2008 was still a little stronger than the economy in 2015. Except in 2015, the state’s unemployment rate average 5.4 percent and in 2008 it averaged 8 percent.
Two years later, just last month, the total workforce was more than 4.9 million – close to 2008’s average – and the number of people working exceeds the average number of those working in 2008. Perhaps then the 2017 Kids Count book will show some improvement in child poverty.
This, however, is not a story of playing with numbers to get the results one wants. It is part of the task of seeing how two apparently contradictory conclusions can still be correct. It does not delve into how one solves the contradictions.
Since 2008 the nature of jobs has changed. The state has seen improvements in jobs needing more skills, a higher level of education and training. Lower skill jobs have lagged in growth. And lower skill jobs pay less.
What has also lagged, and any economist of any ideological stripe will concur, is incomes since 2008. A Michigan worker was once of the highest-paid workers in the U.S. No longer. Per capita income in Michigan in 2015 was $42,427 while nationally it was $47,669.
The $5,000 difference would go a long way towards paying off the annual average cost of child care per child, according to the Kids Count book (the average annual cost is more than $6,700). And with more than 66 percent of children under the age of 5 living in households where all the parents have to work, child care is a requirement for these kids.
Someone working full-time, earning Michigan’s new minimum wage rate of $8.90 an hour earns $18,512 a year. What does deducting $6,700 in childcare do that annual income? Is that the most efficient use of those funds, adding to further economic growth?
The economy is better. Child poverty is up. These are facts. They are not mutually exclusive nor do they cancel each other out. They are not pleasant co-existing realities, but they are realities. The trick is not really in proving they can exist simultaneously.
No, the real trick in the end – keeping the economy growing and lowering child poverty -- will be much harder to pull off.Back to top