Transcript Missouri Coalition for Budget & Policy Priorities Amy

The State of the State:
Economic Conditions in Missouri
October 2008
Amy Blouin, Executive Director
The Missouri Budget Project
www.mobudget.org
Andrew Nicholas
Center on Budget & Policy Priorities
www.cbpp.org
Where We Stand: Economic Conditions
 Stock Market: S & P 500 dropped 37% in 2008;
Major Financial Institutions “Bailout”; and
Credit Bubble
 Missouri Lost more than 20,000 Jobs in 2008
 Missouri Unemployment Rate Reached 6.7% in
August
 Increase in Long Term unemployed and
underemployed workers
(US Bureau of Labor Statistics)
Where We Stand: Economic Conditions
Income & Wages
 The median income in Missouri was $45,924 in
2007 – approximately $5,000 lower than it was in
2001 – 2nd highest decline
 At the same time, costs to care for a family are
increasing dramatically: gas, food and health insurance
inflation
 Families USA Report: Health Insurance Premiums
increased at a rate of 4.5 times the average wage
increase in the last eight years
 742,000 Missourians live in poverty, up from 659,000
in 2006, an increase of 12 percent in one year
(Poverty & Income Information from the US Census Bureau)
Where We Stand: Economic Conditions
Employment
 Over the same period of wage decline, the Gross State
Product grew by 8.5%
 First time on record where wages were stagnant despite
productivity growth
 Missouri had the 22nd largest GDP in the states in 2007
Largest Contributors:
 Manufacturing 13.3%
 Government 12.1%
 Real Estate 10%*
 Employment Insecurity & Benefits Insecurity
(GDP Information from EPI and MERIC)
Where We Stand Compared to Last Crisis:
Employment (BLS Data)
Missouri Unemployment 2000 - 2008
250,000
200,529 in August
2008:
Rate of 6.7%
179,228 in 2005:
Rate of 6%
200,000
165,798 in January
2008:
Rate of 5.5%
150,000
100,000
50,000
0
126,463 in 2001
Rate of 4.2%
76,363 in 2000:
Rate of 2.6%
140,819 in 2007:
Rate of 4.7%
Where We Stand Compared to Last Crisis: Medicaid
(Missouri DSS Data)
Missouri HealthNet Consumers
2000 - 2008
1,200,000
974,310
1,000,000
800,000
756,241
830,262
831,939
600,000
400,000
200,000
0
Jul-2000 Jul-2001 Jul-2002 Jul-2003 Jul-2004 Jul-2005 Jul-2006 Jul-2007 Jun-2008
Where We Stand Compared to Last Crisis:
Food Stamps (Missouri DSS Data)
1,000,000
899,332
Missourians
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
417,028
Missourians
316,061
Families
178,465
Families
0
2000
2001
2002
2003
Jul-2004
Jul-2005
Jul-2006
Jul-2007 Jun-2008
Where We Stand Compared to Last Crisis:
Child Care Assistance (Missouri DSS Data)
Missouri Children Receiving Subsidized Child Care
July 2000 – June 2008
60,000
50,000
40,000
47,048
43,012
30,000
20,000
10,000
0
The Growth of Income Inequality
Amy Blouin, The Missouri Budget Project
Andrew Nicholas, Center on Budget & Policy Priorities
Income Inequality Worsened over the Last 20 Years.
59.8%
36.1%
11.1%
Bottom 20%
13.0%
Middle 20%
Top 20%
Top 5%
Income change by Family Income Group, Late ’80s — Mid ’00s
Source: CBPP/EPI, Pulling Apart: A State-by-State Analysis of Income Trends, April 2008
…But Accelerated during the Past Decade
15.2%
9.1%
1.3%
-2.5%
Bottom 20%
Middle 20%
Top 20%
Top 5%
Income change by family income group, late ’90s – mid ’00s
Source: CBPP/EPI.
15 States with fastest-growing income
gaps
Source: CBPP/EPI.
More recently…
CHANGE IN REAL POST-TAX HOUSEHOLD INCOME, 20042005, COMPREHENSIVE CBO DATA
Source: CBPP/EPI.
Bottom Fifth
1.3%
Second Fifth
0.6%
Middle Fifth
0.8%
Next to Top Fifth
0.6%
Highest Fifth
7.4%
All Quintiles
3.9%
Top 10%
9.8%
Top 5%
13.4%
Top 1%
20.2%
Primary causes (2)…
REAL GROWTH OF HOURLY WAGES BY PERCENTILE, 2001-2007
Wage Percentile
Annual Growth
2001-07
Source: CBPP/EPI.
10th
20th
Median
80th
90th
-0.6%
0.0%
0.4%
3.5%
3.9%
Source: Leonhardt, David, “Next Victim of Turmoil Maybe your Salary”, New York Times, October 14, 2008.
Growth in the stock market…
8%
6%
4%
2%
Actual
0%
1958
1968
1978
Source: Congressional Budget Office
1988
1998
Projection
2008
2018
In Missouri, Inequality Increased over the Past 20 Years
34.9%
14.3%
10.9%
Bottom 20%
Middle 20%
Top 20%
Missouri Income change by Family Income Group, Late ’80s — Mid ’00s
Source: CBPP/EPI, Pulling Apart: A State-by-State Analysis of Income Trends, April 2008
Where We Stand:
2008 vs. 2001 Investments in Services
 Health Care:
The number of uninsured Missourians increased by 3.5% between 2001 and
2007.
 Missouri now has 729,000 uninsured (US Census).

 Higher Education:
Missouri Colleges and Universities received roughly the same amount of state
support in 2008 as they did in 2001 ($771 million in FY 2008 vs. $767 FY
2001),
 When inflation is taken into account, Missouri Colleges and Universities in
2008 were $140 million behind their 2001 funding levels,
 Tuition has increased by 75% as a result.

 K-12 Education:
Recent funding increases are just meeting the 2005 School Funding Formula
requirements, increasing by about 4% per year, slightly more than inflation.
 More than $1 billion below the “adequacy standard”

Where We Stand:
Missouri FY 2009 Revenue (First Quarter TotalsMissouri Office of Administration)
 Overall General Revenue Collections have decreased by
0.9 percent in FY 2009
 Individual Income Tax Collections grew by 2.3 percent in
FY 2009 First Quarter, but declined in September by 2.6
percent
 Sales and Use Taxes declined for two quarters in a
row, and 3.6 percent in FY 2009 to date
 Corporate Income & Franchise Tax declined by 11.7
percent in the first quarter of FY 2009.
 S & P 500 decline – ties to stock market decline as major
contributor in 2001 State fiscal crisis. (S & P 500 Data)
 The trends indicate concern for revenue stability at a time
when need for investment in state services is increasing.
Structural Deficit: Opportunities
Short Term
• Federal Fiscal Relief : 2nd Economic Stimulus:
• Direct Grants to States, similar to 2001 crisis
• Enhance Federal Medicaid Matching Rate, similar to
2001 crisis
• Extend Unemployment Benefits
 Center on Budget & Policy Priorities many resources on
federal assistance at www.cbpp.org
2009 State Legislative Session:
Opportunities
Evaluate Long-Term Sustainability of State Revenue
Sources: Modernize Missouri’s tax structure to fit the
new “economy”
State Economic Stimulus
•
•
•
•
State Earned Income Tax Credit
Health Care
“New” Economy Workforce Development
Work together to build a Missouri that supports healthy
communities and a productive economy:
Join the Missouri Budget Project action network at
www.mobudget.org