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Study finds Wisconsin poverty rate reached new low in 2015

By   /   June 8, 2017  /   News  /   No Comments

Wisconsin conservatives see a recent drop in the state’s poverty rate as proof that low taxes and pro-business policies are working.

The report by researchers at the University of Wisconsin-Madison found that a key statewide poverty measure declined from 10.8 percent in 2014 to 9.7 percent in 2015 – the lowest rate ever recorded since the university’s Institute for Research on Poverty launched the annual study nine years ago.

As Wisconsin emerged from the Great Recession, the addition of 70,000 jobs helped to push down the poverty rate, the study found. In turn, the child poverty rate hit a record low of 10 percent, and the number of elderly residents living in poverty went from 8.3 percent to 7.8 percent over the same time period.

“Recent research from the UW-Madison Institute for Research on Poverty shows that the Wisconsin comeback has the poverty level statewide at its lowest point in nine years,” the Wisconsin Republican Party said in a statement. “Thanks to the bold reforms of Gov. Scott Walker and Republican leaders, Wisconsin is working.”

Report co-author Timothy Smeeding, a professor of public affairs and economics,  downplayed the effects of any recent state policies.

“The short answer is no – nothing the state did explains the decline,” Smeeding said in an email. “In fact, the decline might have been a bit bigger if the state did not reduce its EITC (earned income tax benefit) or toss 40,000 off of SNAP (Supplemental Nutrition Assistance Program). But these would make only a tiny difference.”

Overall, Smeeding sees the national economic recovery and uptick in jobs as the prime movers in the poverty rate reduction, coupled with some outmigration to other states.

In addition, the University of Wisconsin report emphasizes the role of that state’s social safety net in helping workers struggling at the low end of the wage scale in Wisconsin.

“This report also underscores the importance of a safety net that enhances low earnings for families with children, puts food on the table and encourages self-reliance – as Wisconsin’s safety net does – and in doing so makes a big difference in combating poverty over and above the job market effects …” the report says.

But Michael Jahr, vice president of outreach and special projects with the Wisconsin Policy Research Institute, does see a correlation between declining poverty rates in the state and Wisconsin’s current pro-business mindset, which he says has been fostered by Republican control of both houses of the legislature and the governor’s office.

“That mindset has led to stability in the Wisconsin economy that has allowed for job growth to the point where we almost have full employment,” Jahr told Watchdog.org.

In the past eight years, Wisconsin went from having a sizable budget deficit to a budget surplus, he said, and one of the reasons behind such trends is Wisconsin having a governor who said no to any kind of tax increases.

Local governments have become more efficient as well, according to Jahr, because the state repealed the prevailing wage law dealing with school projects, freeing up public funds for other expenditures.

“We’ve exceeded what a number of other states are experiencing,” he said, noting that it’s common to see “We’re hiring” signs around the state due to shortages of skilled workers.

Rep. Lisa Subeck, D-Madison, who serves on the Assembly Children and Families Committee, sees the national economic recovery driving the decline in the poverty rate. And she echoed concerns expressed in the University of Wisconsin report that the safety net’s effects are beginning to shrink due to changes in SNAP, along with increases in the cost of child care and medical expenses.

“In the last couple of years, we’ve seen the GOP attacking anti-poverty programs,” Subeck said.

The positive news on the poverty numbers could be reversed if the safety net in the state continues to deteriorate, she said.

Subeck sees a multitude of problems continuing to squeeze workers in the state, including a minimum wage that hovers at the poverty level, the state coming in last in the nation in business startups and uncertainties about the job market as the nation shifts away from manufacturing.

“I think we’ve had a rough six years under Gov. Scott Walker and the Republican majority,” said Subeck, whose priorities include raising the minimum wage and maintaining the state’s safety net.

But Jahr advocates a different course to help expand economic opportunities for those who are struggling. He favors reducing some of the state’s occupational licensing requirements that keep would-be entrepreneurs from opening their own businesses and helping ex-offenders gain an improved chance for employment.

“Business certainly helps in terms of poverty alleviation,” he said, “but there are still barriers to entry that are not offset by a good economy.”

 

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