Friday, December 15, 2017

Poverty in Wyoming on the Rise

I never thought the day would come when New York has a fiscally more intelligent governor than Wyoming. Yet here we are. While Governor Mead is pushing as hard as he can for his "economic development" ENDOW program, Governor Cuomo of New York is exhibiting some fiscally conservative character traits. Explains the Times Union out of Albany, NY:

the state is facing a multi-billion dollar budget deficit heading into next year, necessitating either program cuts or revenue raisers. Whether state grants and other incentives doled out through the council process will be touched remains to be seen. Asked if REDC [Regional Economic Development Council] spending might be cut back in 2018, a spokesman for Gov. Andrew Cuomo said simply that work on the budget continues. 
Governor Cuomo created the REDCs in 2011, which makes it even more interesting to contrast his attitude toward economic-development spending against Governor Mead's commitment to ENDOW.

Believe it or not, but Cuomo has actually been moderately successful as governor. New York is still a mess of high taxes and entitlement programs, and the Empire State has been losing population two years in a row. That said, in 2016 their Government Employment Ratio was just over half of ours, 167 to 305. Our government compensation ratio is higher than theirs, and while their private-sector GDP growth is negative, it is far less negative than ours.

New York has actually been more successful than us in another way: poverty. From 2013 (the year when the poverty population peaked as a result of the Great Recession) to 2016 (latest year for which numbers are available), the number of New Yorkers in poverty has decreased by 31 percent. During the same period of time, the poverty population of Wyoming only decreased by nine percent.

Furthermore, the decrease in New York correlates fairly well with an overall negative trend in population; ostensibly, poor people pack up and leave the Empire State to find jobs elsewhere. In Wyoming, on the other hand, the relationship between total population and the poverty population is a bit different:

Figure 1
Source: The Census Bureau

In 2014, we saw a major drop in total population as well as in the poverty population. Since then, however, while total population has remained stable, the poverty population has crept up again. Since 2014, we have seen a 12.7 percent increase in the number of poor here in Wyoming.

In other words, our poverty rate has increased notably, from 9.7 percent to 10.9 percent.

Speaking of changes in total population and poverty population, we are one of only a few states where the total population is stagnant or declining, while at the same time the number of poor is increasing. In figure 2, the blue function represents the change in total population by state (right axis) and columns report changes in the poverty population (left):

Figure 2
Source: The Census Bureau

States with strong population growth also see the total number of poor go down. By contrast, for the most part, states with declining total population experience an increase in the poverty population.

These numbers reinforce the warning I have sounded about raising taxes: if we do, we will continue to lose population, while a growing number of those who stay will fall into poverty. 

It is not hard to imagine what this means for tax revenue - and for government spending on welfare programs.

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