September 19, 2013

Declining income, rising poverty plague SC economy

South Carolinians were better off at the turn of the century than they are today, according to a new report released Thursday.

South Carolinians were better off at the turn of the century than they are today, according to a new report released Thursday.

It finds the state’s residents bring home less money in their paychecks and more are living in poverty than in 2000. Also, fewer have health insurance compared with five years ago, according to the U.S. Census’ American Community Survey.

In 2000, the Twin Towers still were standing, the tech bubble had not crashed and the Great Recession was more than a half-decade in the future. Now, South Carolina and many other states are struggling to regain jobs lost during the recession and cope with a changing employment market, including more low-paying service jobs.

According to the survey:

•  S.C. residents lost more than $5,000 a year in median household income – or about half of the annual grocery budget for a family of four – from 2000 to 2012.
•  Nearly 300,000 more residents fell below the poverty line during the same time period, leaving about 1 in 5 state residents living in poverty last year, compared with 1 in 6 in 2000.

A higher percentage of state residents went uninsured in 2012 – 19.6 percent versus 19.2 percent in 2008 – or had public coverage, including Medicare or Medicaid – 22.6 percent in 2012 versus 18.9 percent in 2008. A smaller percentage had private health insurance – 58.7 percent in 2012 compared to 61.9 percent in 2008.

The numbers are “disappointing but not all that surprising,” said Mark Vitner, senior economist with Wells Fargo in Charlotte.

The state’s smaller, rural areas have been hit hard by disappearing jobs, he said. Meanwhile, the state’s three major metro areas are seeing some success as Boeing hires in the Lowcountry, BMW expands in the Upstate and three major tire makers ramp up in the Midlands.

“For most of the state, however, there simply has not been enough job growth and too many of the jobs that have been created have been in lower paying sectors, including leisure and hospitality, retailing and temporary staffing,” Vitner said.

That has caused some workers to drop out of the labor force and others to take one or two jobs that pay less than what they made before the recession, with many getting stuck in those jobs.

That also has led to fewer households having the kind of discretionary income that they had in 2000, producing “a huge drag on the state’s economy,” Vitner said.

So how does the state bring back some of its lost wealth?

State leaders need to go at it from two fronts, Vitner said: Diversifying job growth and improving the quality of education available in the state.

“We need to see stronger job growth in knowledge and innovation-driven sectors, including high-tech fields like mobile devices, software engineering, cloud computing, internet security, advanced manufacturing, alternative energy, etc.,” he said.

The state has made some headway, Vitner said, with fuel cell research and its growing aerospace industry, for example.

Education also is key to improving economic conditions in the state, the economist said.

“This is no easy task and goes well beyond simply finding more funding for primary and secondary education,” he said. “We need to change public attitudes toward education so that we celebrate and encourage success, and quickly correct and turnaround any failures.”

Areas with a high number of college graduates generally are seeing solid income growth, Vitner said.

“By contrast, many areas of South Carolina, particularly in the rural areas, have way too many folks who did not complete high school,” he said.

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