The middle class is being hard hit all over the country, and Wisconsin’s middle class is taking the hardest hit of all. Wisconsin’s middle class, once nearly the strongest in the country, has shrunk more than in any other state, according to a new report.
The share of Wisconsin households considered middle class fell to 48.9% in 2013, down significantly from 54.6% in 2000. Middle class households are those that earn between 67% and 200% of the state’s median income, according to the definition laid out in the report by Pew Charitable Trusts. That would mean that in 2013, Wisconsin households with incomes between about $34,000 and $103,000 would be considered middle class.
Wisconsin isn’t alone in losing its middle class. In fact, all 50 states saw the size of their middle class decline between 2000 and 2013. But Wisconsin’s loss was the largest, with about 1 out of every 10 of its middle-class households leaving the middle class during this period. Read more
A national group recently issued the 2015 Assets & Opportunity Scorecard, which provides a trove of comparative data on household financial security and policy solutions. It’s a very important resource – coming at a time when new data show that income disparities in Wisconsin have reached record levels, and as a broader range of politicians have begun to offer plans for fighting poverty (see for example the plan recently offered by Senator Darling and Rep. Kooyenga).
The scorecard was prepared by the Corporation for Enterprise Development (CFED), a nonprofit organization based in Washington DC that works to expand economic opportunities for low-income families and communities. They have scored and ranked states on the basis of a wide range of outcome measures, and a second ranking compares states on the basis of how well they are doing in adopting an array of policy solutions that have been shown to increase opportunity for low-income households. Read more
Federal officials recently released the 2015 Federal Poverty Income Guidelines, better known as the federal poverty levels (FPL). States and the federal government use the guidelines to determine eligibility for many public assistance programs, such as Medicaid, BadgerCare and child care subsidies.
Low-wage workers in Ohio, Nebraska, and 18 other states got a raise at the beginning of the year when those states increased their minimum wages. Minimum-wage workers in Wisconsin got no such bump in their paychecks.
Weakening unions will be a top priority for state lawmakers when they next meet in January, according to new statements by legislative leaders. Unions help workers achieve higher wages, and limiting unions’ abilities to advocate for workers could make it harder for some families to climb the economic ladder.
Unionized workers earn more in wages and other compensation than non-union workers who are otherwise the same in education, industry, age, and other factors. Union workers earn $1.24 more per hour, or 13.6% more than other similarly-situated workers who are not in unions, according to an 2012 analysis by the Economic Policy Institute. For a full-time worker, that wage difference adds up to nearly $2,600 per year.
In addition to earning more money, union workers are better off than their counterparts with regards to health insurance, retirement, and paid time off. Union workers are more likely to:
- have employer-sponsored health insurance, including coverage after retirement;
- have smaller health insurance deductibles;
- have lower health insurance premium costs;
- have a pension; and
- have more paid time off.
SNAP benefits, also known as food stamps, help put food on the table for nearly half a million Wisconsin children in families with low incomes. Efforts to restrict access to SNAP, such as the changes Governor Walker has proposed, could harm children by making it harder for families to make ends meet.
SNAP provides a modest but important boost to many Wisconsin families with children. In 2013, 452,000 children across Wisconsin benefitted from SNAP – about 1 out of every 3 children in the state. In four counties – Milwaukee, Sawyer, Adams, and Burnett – more than half the children benefitted from SNAP at some point during the year.
Governor Walker has said that he wants to make it harder to receive SNAP benefits, by requiring people to pass a drug test before they can receive assistance. We don’t have the details yet on what Governor Walker is proposing, but we do know that his plan would likely be cost inefficient and conflict with federal requirements that bar wide-spread drug testing for SNAP recipients. Read more
Voters in Wisconsin and across the country showed extensive support on Tuesday for increasing the minimum wage, by approving ballot measures calling for raises for the lowest-paid workers.
Across Wisconsin, 67% of voters approved raising the minimum wage to $10.10 from its current level of $7.25. The non-binding referendum was on the ballot in nine counties and four cities where local officials voted to include it.
The measure to increase Wisconsin’s minimum wage passed with flying colors even in solidly red parts of the state. For example, in Wood County, voters favored Governor Walker over Mary Burke by a wide margin, giving Walker 57% of their votes. But the Wood County electorate also showed strong support for increasing the minimum wage, with 56% of voters approving the measure.
The minimum wage proved to be a winning issue in other states as well. Voters in four states and two cities approved binding measures to increase the minimum wage and give an estimated 609,000 low-wage workers a raise next year. Read more
Poverty-wage work is widespread in Wisconsin, with 1 in 4 workers earning poverty-level wages, according to a new report from the Center on Wisconsin Strategy. Raising the minimum wage would give these workers a raise, provide a shot in the arm to the local economy, and help create a more inclusive version of economic prosperity.
There is a wealth of information about poverty-wage workers in Wisconsin in the COWS report, but one fact in particular stands out: The typical poverty-wage worker in Wisconsin is 30 years old. (The report defines poverty-wage work as work that pays $11.35 an hour or less, the amount needed to keep a family of four out of poverty with full-time, year-round work.)
Opponents of raising the minimum wage sometimes mischaracterize the issue as a disagreement about how much to pay teenage workers. In one of the gubernatorial debates, Governor Walker recalled working for minimum wage at McDonald’s, but said he knew he would be moving on to better-paying jobs. Read more
TANF Funding Squeeze Creates a Substantial Budget Challenge
The Department of Children and Families (DCF) budget proposes a very large cut in the portion of funding for the Earned Income Tax Credit that comes from the federal welfare reform block grant, which is known as Temporary Assistance for Needy Families (TANF). Specifically, the department’s 2015-17 budget proposes cutting $55.8 million from the TANF funding that gets transferred to the Department of Revenue, which would mean that state General Purpose Revenue (GPR) has to fill the very substantial gap.
Assuming the Walker Administration isn’t planning to cut the EITC, I applaud DCF for wanting to use state funds rather than TANF funds to finance that credit for low-income working families. Unfortunately, the Department of Revenue (DOR) budget proposal doesn’t currently include an increased GPR appropriation for the EITC. Taking both agency proposals together, we have a $55.8 million hole that needs to be filled by state policymakers, and that problem is on top of the other structural budget challenges that have gotten more media attention. Read more
Three Wisconsin electric utilities have proposed billing changes that would raise energy costs for people with low incomes.
We Energies, Madison Gas & Electric, and Wisconsin Public Service Corporation (WPS) have asked the state’s Public Service Commission for permission to change how the utilities bill for electric service. This request has gotten a great deal of news coverage (see here and here) focusing on how the change would make it less cost-effective for customers to install solar systems that generate electricity, and would reduce incentives to be energy efficient.
Mostly missing from the news coverage has been the fact that the changes would shift costs to customers with low incomes. The utilities want to increase the fixed monthly fee charged to customers, while reducing the usage-based kilowatt-hour charge. The result would be higher costs for people who use little electricity, and lower costs for customers who use a lot of electricity. Read more