Tackling the Roots of Poverty is an Economic Development Priority for Ashtabula County

The poverty problem is Ashtabula County is large and growing.  Currently 21.5% of the county’s population base lives in poverty, which amounts to 20,547 people. Growth Partnership’s new dashboard projections suggest that the county’s poverty rate could grow to 24% by 2020 if the growth of poverty continues at the same rate it has over the past 5 years. This means 22,203 people in the county will be living in poverty in 2020.

Not all people in poverty are unemployed. According to the US Bureau of Labor Statistics (BLS), 23% of the nation’s poor are “working poor,” which means they had jobs and were working, but still fell below the poverty rate. If we apply this 23% rate to Ashtabula County’s poor, it indicates that 5,107 of the county’s 22,203 people in poverty are “working poor.” Working poverty has many causes, which include low educational attainment, lack of marketable skills, low-paying jobs, lack of transportation, social and community surroundings, and many other factors.  We need to do more to lift the county’s working poor out of poverty.

Many people have been asking this question: How much is spent on addressing social priorities (including our social problems) in Ashtabula County? Our preliminary research, based upon U.S. Bureau of Economic Analysis (BEA) data, indicates that $1.022 billion in government transfer payments was spent in 2014 to address social needs and problems in the county. Health-related payments (Medicaid and other public health) accounted for $517 million of this total in 2014, or 51% of the total. Government-paid retirement and disability benefits (social security and disability insurance payments) accounted for another $350 million per year, or 35% of the total. Income maintenance benefits accounted for another 10% of the total, or $102 million a year. Unemployment insurance, veterans’ benefits, and education and training assistance accounted for the remaining 4% of total government transfer payments to recipients in Ashtabula County.

What does this $1-billion plus in government transfer payments say about the county’s economy? The county’s total personal income (from all public and private, earned and unearned sources) is $3.3 billion a year, which means government transfer payments represent 31% of the county’s total personal income. The $1-billion plus also means that the county’s population (not just the poor) is “significantly” dependent upon government payments in one form or another. The county’s population base is aging, which is a trend we see across Ohio and the nation. An aging population tends to rely more on government transfer payments, especially Social Security, Medicare, and Medicaid. This is the case in most places.

Two critical factors drive growth in local economies and nationally. These two factors are higher earned income (which stimulates greater consumer spending and saving) and greater educational attainment (which enables access to higher paying jobs and benefits). Ashtabula County lags in both areas, which hobbles economic growth and development in the county.  Let’s look at these factors comparatively. In 2014, high school graduates in Ashtabula County had median earnings of $25,475 in Ashtabula County compared to Cuyahoga County high school graduates who earned $26,935. The difference between the two counties at the some college and associates degree level is only $519 per year. The income gap widens within and between the two counties as educational attainment increases. Those with a Bachelor’s degree in Ashtabula County earned $31,439 in Ashtabula County and the same in Cuyahoga earned $47,796. Finally, those with graduate and professional degrees earned $49,806 in Ashtabula County compared to $65,458 in Cuyahoga County. These differentials argue that: 1) educational attainment propels earnings growth; and 2) the earnings gap widens between Ashtabula and Cuyahoga Counties as educational levels rise. This geographic earnings differential is one key reason explaining why many college-educated young residents do not return to Ashtabula County after completing their education.

The value of an education goes beyond earnings potential. Self-respect, knowledge and understanding, access to greater choices in life, social status, and many other benefits stem from being educated. While some people argue that not everyone needs a 4-year degree, there are clear benefits to higher educational attainment. There are also costs, especially as higher education costs have spiraled upward. Student debt is a major growing problem across America.  The high school diploma and technical/career training/certification strategy makes great sense for many people who do not want to or cannot go to college. Well-paying jobs with good benefits are a necessity for both college-educated and technically-trained young people. Ashtabula County must create more jobs of this type. The economy is driven by skills and knowledge, and not low-skilled, low-paying jobs. 

Typically, Ashtabula County’s per capita personal income (PCPI) has stood at 80% of Ohio’s PCPI. We must close this income gap, even though the county’s cost of living is lower than that of Ohio and the nation (Ashtabula County is 80% of the US and Ohio is 88% of the US). You get what you pay for! If higher earnings power does not exist in Ashtabula County, better retail shopping will not develop here and higher quality homes will not be built here. And the tax base in the county will not grow sufficiently to meet future local public service needs. Finally, local employers will not keep and attract higher quality workers unless they pay more.

Unless we strengthen education, skills, and earnings significantly in the future, the situation will worsen in the county in the future.

It’s easy to dismiss these trends as “aspects of a larger economic and social reality in America,” but if the quality of life and standard of living in Ashtabula County are to improve in the future, we must work together to move the needle in dealing with these realities at the local level. What we are doing now across the government, business, civic and philanthropy sectors is having little impact on economic and social conditions in the county. There is no room for blame, there is only room for concerted action by all of us!

What priorities should we focus on moving forward? I believe we need a coordinated plan focused on these 8 strategic objectives:

  1. Examine and develop agreement on why what we (all public and private sector economic and community development entities in the county) are doing now to address these challenges is having little to no impact. This is not a time for rhetoric; it is a time for deep understanding and concerted and unified action.
  2. Create a shared broad-based understanding of the county’s economic and community challenges and opportunities. Citizens, workers, young people must understand these issues. This understanding will help us address 3-8 below.
  3. Stem the working-age population loss from the county (500 out-migrating from the county per year on average). They are leaving because of better employment, business and quality of life opportunities elsewhere. And the county’s poverty and crime problems are also driving people out of the county.
  4. Attract new educated and skilled residents to the county. We need to diversify the county’s population base.
  5. Help existing employers develop a competitive edge through innovation, new product development, and higher-skilled workforce development.
  6. Grow new startup businesses in the county and jumpstart the growth of existing young smaller companies with favorable growth potential.
  7. Improve educational attainment in the county, especially in our struggling school districts. This objective is impaired by #8 below.
  8. Reduce poverty and crime in the county, which are huge detriments to new local economic growth both directly and indirectly. These problems continue to grow, especially the number of “working poor” in the county.

Ashtabula County cannot afford a “status quo” approach to economic and community development. We need to move to the “collective impact” model that brings all our economic and community development organizations together to act in concert. We must work together to tackle the 8 challenges listed above. Shared understanding and teamwork are the first steps. Then, we must be prepared to develop more effective longer term strategies to address other 6 priorities.

The collective impact approach means that we:

  • See the big picture and how all the pieces fit into it.
  • Commit to the long-term and ensure that short-term efforts are consistent with long-term goals.
  • Re-write the mission statements of our economic and community development organizations to ensure that “collective impact” is their #1 priority.
  • Agree to learn together and learn from others.
  • Adopt a holistic approach to economic and community development that sees the connection between economic and social realities.
  • Focus on the causes of our economic and social problems and stop treating the symptoms.
  • Stop doing things that aren’t working and adopt an improved approach.
  • Create new incentives that motivate the right attitude and behavior by everyone.

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