Editorial

Income inequality continues to burden Michigan

July 20, 2018
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The nonprofit think tank Economic Policy Institute last week released an updated report on income equality levels across the country, in all states, all counties and 916 metropolitan areas. The findings should prompt more immediate policy action, especially regarding such concerns as affordable housing. Income inequity has risen in every state and has grown even through the Great Recession recovery.

Researchers titled the report “The new gilded age,” using demographic and economic information which shows overall in the U.S. the top 1 percent took home 22.03 percent of all income in 2015; “just below the 1928 peak of 23.9, which preceded the Great Depression.”

The recent research isn’t far different from what Business Leaders for Michigan have identified as the residual effect of Michigan’s critically poor educational attainment. Michigan Future, too, has committed research resources to the subject matter, both in terms of education levels and Michigan worker earnings.

Michigan Future research showed that in 2016, 32.6 percent of Michigan households had income equal to or below two times the federal poverty level. This compares to 26.4 percent in 1999 — the last time Michigan had a strong economy and strong domestic auto industry. Michigan Future President Lou Glazer noted, “Too many Michiganders are working in low-wage and benefit jobs. In 2000, Michigan was 1 percent below the national average in employment earnings (wages and employer-paid benefits) per capita; in 2017, the state was 12 percent below.”

The Business Journal has been reporting on several efforts in the region to address the current affordable housing issue, one that may grow worse quicker than expected. In a report last week on residential builders and home sales, the trends were apparent. Joe Hayes, owner of Maplewood Homes and a 23-year veteran in residential building, was succinct in his appraisal. “Lot prices are making it really hard to build an affordable house.” He also noted “lumber right now is at an all-time high. … During the recession, we lost over half of our builders. So, there aren’t as many builders like there used to be. There is a shortage of framers, roofers, siting guys, painters, carpenters and drywallers.” All of it adding to home prices. The National Association of Realtors shared insights last week showing mortgage payments are 15 percent higher than one year ago. In 2018, 22 percent of buyers said increased costs forced them to look for less expensive homes; 19 percent looked for homes in “a different” neighborhood and the same number indicated they needed to increase their monthly mortgage budget.

The Business Journal also has reported on several area employers who have adopted Michigan’s living wage, defined as one that allows an employee to make enough money so only 30 percent of income goes to housing. It is only part of the solution. Public policy and education attainment also offer answers.

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