2015 County Data Book shows stark divide in economic opportunity

The 2015 County Data Book is out today — and the news isn’t good. Although a recovering economy has started to lead to lower rates of child poverty and higher levels of income for families overall, we’re still a long way away from where we were before the Great Recession. Even worse, the Data Book shows a stark divide in levels of economic opportunity based on skin color and place of birth.

For white kids in the Portland Metro Area, things are starting to look better. But for everyone else, and in particular for children of color, barriers to opportunity are high. White children outside the metro area and children of color live in families with much higher rates of poverty and much lower incomes. This is especially problematic given that half a person’s earnings can be predicted by how much his or her parents made.

Source: CFFO analysis of American Community Survey Microdata, 2009-2013

Source: CFFO analysis of American Community Survey Microdata, 2009-2013

Source: CFFO analysis of American Community Survey Microdata, 2009-2013

Source: CFFO analysis of American Community Survey Microdata, 2009-2013

In many ways, what we’re seeing today is a result of the long-term trend of job polarization, in which middle wage jobs are harder to come by while low and high wage jobs grow at higher rates. This polarization hollows out the middle of the income distribution and increases the gap between the high and low economic rungs. Although this polarization has been decades in the making, the Great Recession exacerbated it — in fact, 8 out of 10 jobs lost during the recession were middle wage jobs. This chart from the Oregon Office of Economic Analysis illustrates the problem well: although middle wage jobs are more available than they were in the depths of the recession, the growth rate is much smaller than that for low and high wage jobs.

Source: Oregon Office of Economic Analysis

Source: Oregon Office of Economic Analysis

For workers lucky enough to be in high wage jobs, this is all well and good. But for workers stuck in the low end of the wage distribution, this job polarization makes it even harder to stay afloat. Moreover, it negatively affects the levels of economic opportunity for their kids in the future. Paired with high housing and child care costs throughout Oregon, lower incomes mean that parents are more likely to have to live in areas with concentrated poverty, near schools with lower levels of funding, and are less likely to be able to invest in high quality early learning opportunities for their kids. All of these factors place kids at a significant disadvantage in terms of later economic success.

Most importantly, this job polarization is not random. Those most likely to move from middle to low wage jobs are workers of color — and those most likely to have access to high wage jobs are White, metro-area workers. Today, nearly half of low wage jobs are held by workers of color, compared to only 25% of high wage jobs. For White, metro-area workers the statistics are almost the mirror image.

Source: CFFO analysis of American Community Survey Microdata,

Source: CFFO analysis of American Community Survey Microdata,

The aggregate economic statistics are saying that we’re in a recovery — a good but not great one. But looking below the surface, it quickly becomes clear that the bulk of our kids and families aren’t reaping any of the benefits. And without immediate action to narrow the gulf of opportunity between White, Portland-area children and everyone else, we risk setting an entire generation behind.


The media and voters are paying attention to housing affordability — but are Oregon legislators?

Sparked by a much-mocked video that went viral, attention in the last few months has been focused on the Portland-area’s skyrocketing rents. As Portland’s population has boomed over the past several years the supply of housing has been slow to respond, resulting in increasing rents and sometimes pushing residents out of their homes and into less expensive areas of the city.

Although Portland, as the state’s largest urban area, gets much of the attention when it comes to the media coverage of increasing rents, the problem of housing affordability is not isolated to one area of the state. In fact, more than half of Oregon’s renters are “rent burdened” and spend 30% or more of their incomes on housing, putting Oregon in the bottom third of states nationally.
Rent-Burdened Households

Moreover, despite the disproportionate amount of attention paid to Portland’s housing problem, the problem is widespread — more than half of renting households in every area of the state were rent burdened between 2009 and 2013.

Source: CFFO Analysis of American Community Survey 2013 5-Year Public Use Microdata

Source: CFFO Analysis of American Community Survey 2013 5-Year Public Use Microdata

In many ways, this data actually understates the magnitude of the problem. The amount of rent a family pays factors in that families shop for housing they can afford — even if it means moving to areas with limited opportunities for economic advancement. At the same time that rents have increased and put pressure on families’ budgets, more and more children are growing up in neighborhoods with concentrated poverty. In Oregon, the number of children living in these neighborhoods more than tripled between 2000 and 2013, severely limiting the opportunities for economic success they’ll have later in life.

No family should be forced to settle for housing that they can afford at the expense of their child’s opportunities for future economic success. During the previous legislative session the Oregon legislature gave authority to issue bonds totaling $60 million during the upcoming biennium to construct new affordable homes for Oregon families. Although this legislation was a significant step in the right direction, its scope falls far short of what is needed to guarantee quality, affordable housing for all Oregon families. First, the legislature approved only a portion of the $100 million that was originally requested by Governor Kate Brown. Moreover, even that original request would have only benefitted a maximum of 4,000 families, which represents fewer than 3% of Oregon households that are rent burdened throughout the state.

If Oregon intends to take the issue of housing affordability seriously, legislators need to put forth a much more concerted effort. Although this year’s legislative session has concluded, next February there is another opportunity for legislators to give more Oregon families greater access to quality and affordable housing — but only if legislators give the issue as much attention as voters and the media have been.

Expanding preschool is a no-brainer

Established in 2011, Oregon’s 40-40-20 goal commits the state to advancing policies that will result in 40% of Oregonians finishing college, another 40% receiving an Associate’s Degree or occupational certification, and the final 20% at the very least completing high school or earning a GED. Based on where Oregon was when this effort was initiated, it will take considerable effort to reach the goal. For example, the most recent data for 25- to 34-year-olds shows that 80% of those who typically do not earn either an Associate’s or Bachelor’s degree would have to do so for the state to achieve the 40-40-20 goal.

Source: 2013 American Community Survey 3-Year Estimates, Table B15001

Source: 2013 American Community Survey 3-Year Estimates, Table B15001

Making this goal even harder to achieve, Oregon is in the bottom third of states in terms of preschool participation. Preschool participation has been shown to boost cognitive development, increase rates of high school completion and college attendance, and even increase lifetime earnings by as much as 19%. In all, investments in preschool yield long-term social benefits, with one Nobel Laureate estimating that each dollar invested creates up to $8.60 worth of benefits in the form of higher tax revenue on increased earnings as well as decreased spending on programs like juvenile justice.

Oregon has made a limited effort to expand preschool access to children through Oregon Head Start. The program, however, is aimed only at children living at or below poverty and serves only 7,290 three- and four-year-olds. Although our poorest children certainly benefit from preschool, other low-income children would also benefit from increased access. Nor are these poorest children the only ones who struggle to afford preschool — only 30% of children living below 200% of the poverty level are enrolled in preschool in Oregon, compared to nearly 50% of all other children.

Source: CFFO analysis of 2013 American Community Survey 3-Year Public Use Microdata

HB 3380, currently in the Ways and Means Education Subcommittee, recognizes the importance of expanding access to preschool for more children. The bill adds important new space for children to receive critical early education. Rather than limiting the program to public-only providers, the bill would also invest state dollars in mixed-delivery. In other words, it would open up preschool slots to children at or below 200% of the poverty level in a broad array of preschool providers that meet quality standards. By expanding the number and types of providers that are able to participate, the program would expand publicly-funded preschool to 1,500 more 3- and 4-year-olds, an increase of 20%.

Although HB 3380 is only one step towards guaranteeing universal access to the benefits of preschool, it is a critical first step. It is also one of the smartest, most cost-effective steps the state can take to ensure that our children reach their full potential and that Oregon reaches its 40-40-20 goal. By investing in preschool we are also investing in our future workforce. Well-prepared workers and innovative job creators create prosperity for the state as a whole. With $8.60 in benefits for every $1 spent, expanding preschool access is a no-brainer. The only question is, do we have the foresight necessary to make the investment?

Earned Sick Time: Good for Kids, Good for Business

Oregon is considering becoming the fourth state to allow nearly all employees to earn paid sick time. SB 454A, currently in the Joint Ways and Means Committee, would allow employees working at companies with 10 or more workers to take up to 40 hours of paid sick time for themselves or if a family member requires care. Currently, nearly half of all private sector employees work at a job that does not provide any paid sick time. And 71% of low-wage workers work at a job with no paid sick time. This is an especially large issue in Oregon, where 26% of mothers with young children work in low-wage jobs — the second-highest rate in the nation.

Why is paid sick time so important? Because so many workers live paycheck to paycheck, missing even one day of pay can mean missing a rent payment. As a result, workers without paid sick days are more likely to show up to work even if they are sick — and because they can’t stay home, they are 75% more likely to send a sick child to school or daycare. Not being able to stay at home to get better or care for a sick child jeopardizes everyone’s health. Workers and children are less likely to get better, and those around them are more likely to get sick. In fact, the lack of paid sick time for millions of workers nationwide likely helped spread the H1N1 flu and exacerbated the 2009 pandemic.

The most common objection to a state law like SB 454A is that it’s bad for business and would endanger jobs. Luckily, the law has been implemented elsewhere and provides an opportunity to empirically test these claims. In fact, Portland implemented a paid sick time law in January 2014, providing the perfect opportunity to study the effect of a similar law at the state level. The result: no negative effect on employment growth, and evidence that the law may have actually increased job growth.

Portland’s implementation of the law provides an opportunity to apply an analytic technique called “difference in differences” because the law was applied in only one place (Portland) and not in other surrounding areas that are very similar (Clackamas and Washington counties). By looking at the change in employment before and after the law was implemented and in areas where the law was and was not in place, we can see what the unique effect of the law was. But why wouldn’t we just look at Portland job growth? Because there are factors other than the paid sick time law, like an especially cold winter, that could have affected job growth in Portland as well as the surrounding areas. Comparing within the region suggests that Multnomah county job growth was in no way negatively affected by the paid sick law — and that the law may have even contributed to better job growth than in the neighboring counties.

Source: CFFO analysis of Quarterly Census of Employment and Wages data

In the first 6 months of 2013, Washington and Clackamas counties had private sector job growth that was almost a full percentage point higher than Multnomah. But in 2014, after the sick time law had been implemented in Portland, the job growth in Washington and Clackamas fell by 1.2 percentage points and was only 0.07% higher than it was in Multnomah. Taking these two sets of changes into account, the “difference in differences” effect of the sick time law was 0.8% higher job growth in Multnomah county. While job growth in Multnomah county was lower in 2014 than 2013, the larger fall in Washington and Clackamas, where this law was not implemented, shows that the factors that led to that drop were unrelated to paid sick time. In other words, the law had absolutely no negative effect on employment.

To be sure, more research is required to evaluate the full, long-term effect of the law. But the immediate evidence is clear. Sick time laws are good for kids, good for workers — and good for business.

The child care conundrum

As Oregon continues to emerge from the Great Recession, some families are beginning to feel more economically secure. Oregon’s unemployment rate is lower and wages are growing faster than the national average. However, while the economy has begun to pick up steam, the struggle to make ends meet continues for many. As shown in our most recent Progress Report, child poverty remains higher and median family income is lower than at the end of the recession. Oregon’s most vulnerable families continue to struggle to get ahead. This struggle is most felt by young children. In fact, young children in Oregon are the most likely to live in poverty — an experience that hinders cognitive development and stunts opportunities for success later in life.

Source: CFFO analysis of 2013 American Community Survey 3-Year Public Use Microdata Sample

The cost of caring for young children makes it even more difficult for families to escape poverty. One of the highest costs for parents is child care, and Oregon has one of the least affordable child care systems in the country.

Source: Child Care Aware of America. Parents and the High Cost of Child Care: 2014 Report.

Source: Child Care Aware of America. Parents and the High Cost of Child Care: 2014 Report

The high cost of child care presents a conundrum for families. Without a well-paying job parents struggle to pay for child care, but without child care they cannot be available to work. But the state as a whole also faces a child care conundrum — if the expense of child care makes work economically infeasible for too many families, the Oregon economy as a whole suffers. Employment Related Day Care (ERDC) is a program designed to resolve this conflict by helping low-income families access child care for their children and remain in the workforce.

In recent years the state has scaled back ERDC in response to declining state revenue. A cap was placed on the number of families that could be served by the program, and currently almost 3,5000 families are on the wait list to receive these critical child care supports. Furthermore, the program requires families to verify eligibility every month, meaning that a parent who receives a small raise or earns more through overtime in a single month can lose the ERDC benefit altogether. This potential loss of benefits creates a “cliff effect” that can undermine the purpose of the program — instead of supporting parents’ transition to full-time, well-paying jobs, the cliff creates a financial hardship when parents do work more hours or earn more money.

The Oregon Legislature is considering strengthening the ERDC program by increasing the number of families served and minimizing the disincentive for parents to advance in their careers. HB 2015 is currently in the Ways and Means Joint Subcommittee awaiting further action and is supported by a broad array of groups, including SEIU, Oregon Center for Christian Voices, Oregon Association for the Education of Young Children, Portland Community College, and the Oregon Business Association. Increasing the funding for the program overall is vital to reaching all those families still recovering from the Great Recession who hope to take advantage of the job and wage growth the state is experiencing. The bill would also adjust the requirements to determine eligibility annually, not monthly, thereby providing greater certainty and smoothing out benefits for families that may have regular fluctuations in their income. Finally, the bill extends ERDC to cover parents in school, providing greater support to parents who hope to pursue careers with family-sustaining wages within a few years.

HB 2015 is an investment in Oregon’s current and future workforce. By expanding the program and providing stability to families’ eligibility, more parents will participate in the labor force and help grow Oregon’s economy. By helping place young children in high-quality child care settings, the state makes it more likely that students will be prepared for school and earn more in their careers. As the legislature considers competing budget priorities, it is vitally important that they ensure that all families have equal opportunity to benefit from the improving economy. Without action on ERDC we as a state risk closing families off from work opportunities and allowing children to languish in poverty.