Poverty in the Commonwealth

The Commonwealth Institute April 2011

Executive Summary During the recent recession, as Virginia—and the nation as a whole—faced the worst economic crisis in a generation, the number of Virginians living below the federal poverty threshold significantly increased. In 2009, more than 750,000 Virginians lived in poverty. Even more disturbing, the state’s children are now more likely to live in poverty than adults. As the effects of the recession linger, more Virginians will face the prospect of living below the poverty threshold. • More than one in 10 Virginians lived under the federal poverty level in 2009. This rate has been increasing since 2006. • About 157,000 Virginians have joined the ranks of the poor since the recession began. • In 2009, more people fell into deep poverty. About 5 percent of Virginia’s population was living on less than half of what is defined by the federal poverty line in 2009. • Virginia’s children are 47 percent more likely than adults to live in poverty. •A  lthough poverty disproportionately affects Virginia’s racial minorities, more than half of Virginians living in poverty are white. •M  ore Virginians with college degrees are joining the impoverished. Virginians with a bachelor’s degree or higher showed the most growth in poverty levels from 2007 to 2009. •P  overty exists across Virginia, but certain metropolitan statistical areas (MSAs) have far higher poverty rates than the statewide average. In six MSAs in the southern and western parts of the state, poverty rates are higher than the national average. In 2009, the Danville-MSA overall poverty rate was 21 percent, 6 percentage points more than the national rate and three times the poverty rate in Northern Virginia. •A  lmost 23 percent of Virginia’s workers earned wages too low to support a family of four above the 2009 poverty threshold.

More Virginians Living in Poverty In 2009, more than one in 10 Virginians were living in poverty and almost one in 20 were living in “deep poverty.” Unfortunately, based on recovery models from prior recessions, poverty rates will continue rising through 2010 and possibly 2011, as job and wage growth lag behind the official end of the recession. Furthermore, while overall poverty in Virginia remains relatively low compared to other states, this report shows that in some of Virginia’s metropolitan areas poverty rates are substantially higher than in the United States as a whole and that Virginia’s children are more likely to live in poverty than adults.

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As the effects of the recession linger, more Virginians will face the prospect of living below the poverty threshold.

Right Back Where We Started From Figure 1: Virginia's Poverty Rate, 1989-2009

13% Poverty Rate (%)

12% 11% 10% 9% 2009

2008

2007

2006

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2002

2001

2000

1999

1998

1997

1996

1995

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1992

1991

1990

1989

8%

Despite making progress in the late 1990s and early 2000s, Virginia’s poverty rate has crept back up and beyond where it was 20 years ago. In 2009, Virginia’s poverty rate hit 10.5 percent—for a family of four, this means living with an income below $22,050. As shown in Figure 1, Virginia’s poverty rate has been on the rise since 2006. Yet, compared to other states, Virginia ranks relatively well on this measure of economic well-being; Virginia has the ninth lowest overall poverty rate in the nation. The national poverty rate in 2009 was 14.3 percent.

Source: BLS and ACS.

More Virginians in Deep Poverty &"#

%$Figure 2: Share of Virginians Living under Half the Poverty Threshold, 2000-2009

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Source: American Community Survey.

Not only did poverty rates increase in 2009, but more and more of those below the poverty threshold fell further, into “deep” poverty. The poverty rate provides a picture of the share of the population that is considered poor, the “deep poverty” rate provides a picture of the share of the population that is extremely poor. The term “deep poverty” typically refers to an income level that is half of the federal poverty level. For a family of four, this meant living with an income below $11,025 in 2009. As shown in Figure 2, just under 5 percent of Virginia’s population—or one in every 20 Virginians—lived in deep poverty. This is an increase from the beginning of the decade, when 3.6 percent of Virginians were living in deep poverty. Nationally, 6.3 percent of Americans lived in deep poverty in 2009. Virginia’s child poverty rate is particularly troubling. Despite Virginia’s children already being 39 percent more likely to live in poverty than Virginia’s adults before the recession, the child poverty rate in Virginia has been on the rise since 2006 (Figure 3). Furthermore, the gap between Virginia’s children and adults has been widening. In 2009, almost 14 percent of Virginia’s children lived below the federal poverty threshold. This is an estimated increase of roughly 41,200 children since 2001 and roughly 19,200 children since the start of the recession. Children in Virginia are now 47 percent more likely than adults to live in poverty. Virginia’ child poverty

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increase, however, is not unique. In fact, the Commonwealth ranks fairly well nationally: Only 11 other states had lower child poverty rates than Virginia in 2009.

Losing Ground Figure 3: Virginia's Child Poverty Rate, 1989-2009 !"#$%&'()*&$(+,-(

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Although the poverty rate among white Virginians is about 2 percentage points below the overall poverty rate, more than half of the total number of Virginians living in poverty are white. Another third are African American. Figure 5 illustrates the breakdown of total Virginias in poverty in 2009 by race.

Just under 5 percent of Virginia’s population — or one in every 20 Virginians — lived in deep poverty in 2009.

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Poverty Level by Race/Ethnicity Figure 4: Percent Living Below Poverty, 2009

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Children are not the only group of Virginians disproportionately affected by poverty. Figure 4 shows that the poverty rate varies substantially by race in Virginia, with the lowest poverty rate among Virginia’s Asian population (8 percent), and highest among Virginia’s American Indian population (21 percent). In 2009, just about one in five American Indian Virginians lived below the poverty threshold. This compares to just under one in five African American Virginians, roughly one in seven Hispanic Virginians, and roughly one in 13 White or Asian Virginians.

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Source: American Community Survey.

Half of Virginians in Poverty Are White Figure 5: Share of Total Poverty by Race, 2009 (#*'

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%$The Commonwealth’s poverty rate also varies in important ways according to education level. As shown in Figure 6, education plays a key role in reducing the likelihood of poverty. In 2009, the poverty rate was highest among those Virginians with less than a high school degree. Of this group of Virginians, just about 22 percent lived in poverty. The attainment of a high school diploma, however, reduced the likelihood of living in poverty by

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Source: American Community Survey.

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half, bringing the poverty rate among this group of Virginians down to 9.4 percent. Some college, or an associate’s degree, further reduced the rate to 6.6 percent. A bachelor’s degree or higher brought the poverty rate down to 2.7 percent.

Poverty by Education Level in the Great Recession Figure 6: Percentage Living Below Poverty, 2007 and 2009

Poverty Rate (%)

25%

Although poverty rates across education groups did not change substantially between their pre-recession levels in 2007 and their 2009 levels, the greatest growth occurred among Virginians with higher levels of educational attainment. As shown in Figure 7, the change in poverty rates between 2007 and 2009 was larger among Virginians with some college or higher than among those with only a high school degree or less.

2007 2009

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Source: American Community Survey.

Highly Educated See Biggest Jump in Poverty Rate Figure 7: Percent Increase in Poverty Rate, 2007 to 2009 25% Increase in Poverty Rate (%)

Poverty by Geographic Region Virginia’s concentration of poverty varies dramatically from one region to another. Figure 8 displays Virginia’s 11 metropolitan statistical areas according to their overall poverty rates in 2009, which ranged from as low as 7.53 percent to as a high as 21.19 percent.

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Poverty Across the Commonwealth Figure 8: Poverty and Deep Poverty Rates by Virginia Metropolitan Statiscal Area, 2009 '%"!!#$ '!"!!#$ K0C53/E$ &%"!!#$ J55?$K0C53/E$ &!"!!#$ %"!!#$

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In addition to overall poverty rates, Figure 8 shows the share of individuals in “deep poverty” in each of the state’s 11 metropolitan statistical areas. These rates range from a low of 3.76 percent in Washington-Arlington-Alexandria to a high of 11.94 percent in BlacksburgChristiansburg-Radford. While it is not surprising that the Washington-ArlingtonAlexandria MSA, with its low overall poverty rate, has the lowest concentration

Source: American Community Survey.

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Residents of the Danville MSA were almost three times more likely to live in poverty than residents of the WashingtonArlington-Alexandria MSA. Despite Virginia’s relatively low overall poverty rate, six MSAs (Lynchburg, Winchester, Kingsport-Bristol, Harrisonburg, Blacksburg-Christiansburg-Radford, and Danville) had a poverty rate above the national poverty rate in 2009.

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of the very poor, the reverse is not the case with the Danville MSA. Danville has the highest concentration of poor, but only the third highest share of extremely poor. Both Blacksburg-Christiansburg-Radford and Harrisonburg had higher rates of deep poverty than Danville in 2009.

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Share of Workers (%)

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Figure 9: Share of Virginia Workers Earning Below a Poverty Wage, 2001-2009

23% 21% 19%

Poverty Wages for Virginia Workers

17% 15% 2001

2002

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2005

2006

2007

2008

2009

Source: EPI analysis of CPS.-ORG

Although poverty is often thought of as primarily affecting jobless adults and their children, an increasing share of Virginia workers earn wages that are too low to support a family of four above the federal poverty line. In 2009, more than one in five working Virginians earned wages low enough to place them below the poverty level (see Figure 9). For full-time workers, this meant earning $10.55 or less an hour. Virginia workers are still less likely than workers in the United States as a whole to earn below-poverty-level wages, but the increasing prevalence of “poverty wages” points to a troubling trend.

More than 1 in 5 Virginia workers earns a poverty wage Conclusion

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The Commonwealth Institute for Fiscal Analysis provides credible, independent and accessible information and analyses of fiscal and economic policies with particular attention to the impacts on low- and moderate-income persons. Our products inform state economic, fiscal, and budget policy debates and contribute to sound decisions that improve the well being of individuals, communities and Virginia as a whole. For more information go to www.thecommonwealthinstitute.org. P.O. Box 12516 | Richmond, VA 23241 | 804-643-2474 | www.thecommonwealthinstitute.org

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Although Virginia’s economy entered the recession stronger than many other states’ economies, many Virginia families are finding they are unable to make ends meet. This is particularly true in regions of the state that have been the most economically hard-hit. The upward creep in Virginia poverty rates since 2001—and the large jump in those rates since the start of the recession—reveals a troubling trend, one that is unlikely to be reversed for a number of years. Significant action would be required to expand the middle class through the (re-)creation of good jobs—those paying sufficient wages to support a family—and a commitment to ensure all Virginians have a chance to share in the recovery.

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