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Report:CentralOregonIndexofPoverty
HonorsThesisPaper
June2010
JoeDHagenDepartmentofEconomicsUniversityofOregon
JessicaJSchneiderDepartmentofEconomicsUniversityofOregon
SpecialthankstoGlenWaddellandJoeStoneforassistinguswithourthesisandindex.AlsospecialthankstothegenerouspeoplefromtheDepartmentofHumanServices,JaneSabatino,andTheOregonLottery,MarleneMeissner.
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Approved: 9June2010
ProfessorGlenR.Waddell Date
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TableofContents
1)Overview
2)ProjectDescription
3)TheRegion
3.1)CrookCounty
3.2)DeschutesCounty
3.3)JeffersonCounty
4)EstablishedMeasuresofPoverty
5)LiteratureReview
5.1)OregonIndexofLeadingIndicators
5.2)HealthyCommunityIndex
5.3)CentralOregonBusinessIndex
6)Data
6.1)SNAP(SupplementaryNutritionAssistanceProgram)
6.2)TANF(TemporaryAssistanceforNeedyFamilies)
6.3)DayCare(EmploymentRelatedDayCareandJOBSChildCare)
6.4)VideoSales
6.5)TraditionalLotterySales
6.6)TTU(Trade,TransportationandUtilities)
6.7)Manufacturing
6.8)NewHiresofPrivateConstruction
6.9)Unemployment
6.10)AverageMonthlyEarnings
7)Methodology
8)FutureConsiderations
9)CentralOregonIndexofPoverty
10)AppendixA(Figures)
11)AppendixB(DataSources)
12)Reference
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1)Overview
Ourclient,ScottCooper,DirectorofPublicPolicyforthePartnershiptoEndPoverty,
desiresapovertyindexfortheCentralOregonregion.Inparticular,suchanindexwillservethe
purposeofassistingpolicymakersinthecountiesofDeschutes,JeffersonandCrooks(referred
toasDistrict10withinthestate)astheyconductpolicywiththeobjectiveofalleviating
poverty.Presently,noindexexiststoservethispurpose.
ThePartnershiptoEndPovertyisanorganizationintheCentralOregonregionthatis
activelyengagedineffortstoreducepovertyinthethree‐countyarea.Theorganizationhasa
visionofa“thrivingCentralOregonwhereallfacetsofthecommunityhelpeachotherand
whereresidentshaveafairchancetolivefreeofpoverty.”Asitstandsnow,CentralOregonis
consistentlyunderperformingeconomicallycomparedtotherestofthestate,withbelow
averagepercapitaincomes,highunemployment,andlowlevelsofeducationalattainment.
Suchcharacteristicscanbelinkedtopovertyandshouldbeacauseforconcern.
ItisourunderstandingthatthispovertyindexwillbeusedbyofficersofthePartnership
toEndPovertyasacomplementtotheexistingCentralOregonBusinessIndex(COBI),asthey
continuetodesignanddevelopastrategicplanto“accomplishthegoalofimplementinglong‐
termsolutionstopoverty”inCentralOregon.
InSection2ofthisreport,wegiveashortdescriptionofourproject,indicesanda
generaloverviewofpoverty.Followingthissectionwewillbrieflydescribeseveral
characteristicsoftheCentralOregonregion–population,economicactivityandemployment
opportunities‐specifictotheindividualcounties.InSection4wewilldescribethecurrent
measuresthefederalgovernmentusestoassesspoverty(i.e.,PovertyThresholdandPoverty
Guideline)aswellasdiscussthenewcomplementarypovertymeasurebeingdeveloped(i.e.,
theSupplementaryPovertyMeasure,SPM).Wewillprovide,inSection5,ashortoverviewof
existingknowledgerelevanttoourindex,includingtheOregonIndexofLeadingIndicators
(OILI),HealthyCommunityIndex(HCI)andtheCentralOregonBusinessIndex(COBI).InSection
6wewilldefineourmodel,TheCentralOregonIndexofPoverty(COIP),accordingtothevarious
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measuresthatwillcontributetothecalculation,pausingtoexplainthesignificanceofthe
variablesastheyrelatetopoverty.WefollowupinSection7withadiscussionofthe
formulationtheindex,aswellasseasonaladjustment’swechoosetouseonseveralvariablesin
ourindex.InSection8weofferfuturesuggestionsandconsiderationsand,finally,presentour
CentralOregonIndexofPovertyinSection9
JoeHagenandJessicaSchneiderareundergraduatestudentsintheDepartmentof
EconomicsattheUniversityofOregon.
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2)ProjectDescription
“Itmatterslittleifyouhavetherighttositatthefrontofthebusifyoucan’taffordthebusfare;itmatterslittleifyouhavetherighttositatthelunchcounterifyoucan’taffordthelunch.SolongasAmericansaredeniedthedecentwages,andgoodbenefits,andfairtreatmenttheydeserve,thedreamforwhichsomanygavesomuchwillremainoutofreach;thattoliveuptoourfoundingpromiseofequalityforall,wehavetomakesurethatopportunityisopentoallAmericans.”–PresidentBarrackObama,Source:McCain‐Obamaspeechesat99thNAACPConventionJul12,2008
AspresidentObamaalludedtoabove,Americansdreamofanationwithendless
opportunities.Unfortunately,whenpovertyisoverlookedandnotproperlyaddressed,these
opportunitiesceasetoremain.Thenotionofpovertyisuniversallyunderstoodyethardto
define,accuratelymeasureandultimatelyreduce.AsAmartyaSen,NobelPrizewinnerin
economics,identifiedover30yearsago,twodistinctissuesmustbeaddressedwhenmeasuring
poverty:“(i)indentifyingthepooramongthetotalpopulation,and(ii)constructinganindexof
povertyusingtheavailableinformationonthepoor”(Sen,1976).
TheFederalGovernmentprovidesnationalguidelinesandthresholds,incorporating
measuressuchaspercapitaincome,inflation,andconsumptionhabits.However,onecould
arguethatthesefederalmeasuresaretoogeneralandfailtocapturevariationsinalocal
economy.
ThePartnershiptoEndPovertyhasrecognizedthisneedforlocalspecificity.Itisour
goaltohelptheorganization,notonlyidentifytheseappropriatelocalmeasures,butprovide
anapparatusthatcantrackpovertyovertime,providingfeedbackonboththepotential
efficacyofanti‐povertyeffortsundertakeninCentralOregonandtheremainingneedfor
povertyrelatedinvestmentsinthecommunity.1
1 AsdescribedbyPartnershipToendPoverty,theninerootcausesofpovertyintheiropinionarefamilyhistoryofpoverty,chronicpoverty,limitedeconomicopportunity,marginaleducationaltrainingopportunities,racial/culturalisolationanddiscrimination,weakfamilystructures,weaktraditionsofcivicengagementandlimitedsocialcapital,limitedcommunityawarenessandinclusivenessandcatastrophiclifeevents.
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Indicesarecommontoolsusedinternationallytoassesseconomictrendsthroughout
marketsandindustries,however,untilrecentlynotcommonlyusedtomeasurepoverty.An
indexisasinglenumber,contributedtobyanarrayofunderlyingvariables.Thesevariables
trackmovementsinaparticularmarket,industryorregionandexplainwhethertheareaof
interestisincreasingordecreasinginsomemeaningfulwaygivenanestablishedbaseyear.For
example,withsuchanindex,onecaninterpretincreasesordecreasesinthevalueoftheindex
(e.g.,bycomparingpercentagechangesoverquarters)assuggestiveofincreasesordecreases
inunderlyingpoverty.Commonexamplesofpopularindicesaretheconsumerpriceindex
(CPI),quantityindices(realGDP)andmarketperformanceindices(S&P500).
Unlikethecommonexamplesoftheindicesabove,wherethecontentsoftheindexfor
themostpartareeasytoidentify,ourindexismoresubjectiveasfarastheprocessof
determiningthevariablesincluded.Thismakesthetaskmoredifficult,buttheendresultmore
interesting.Withthatsaid,ourintentionforthisprojectistocreateanindexspecifictoCentral
Oregonthattracksthechangesinpovertywithintheregion.Althoughmanypeopleclaimto
careaboutpoverty,littlehasbeendonetomeasureitseffectsonaregionalorlocalbasis.The
COIPisawayfortheresidentsofCentralOregontogaugetheeffectsthatpovertyhasontheir
community.Withthistoolavailable,residentscanseeiftheactionsthey'retakingtoreduce
povertyareactuallyworkingtobenefittheregion,andifnotmodifytheireffortsaccordingly.
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3)TheRegion
“1:10inourregionlivebelowthefederalpovertyline”‐PartnershiptoEndPoverty
LocatedintheheartofOregon,thethreecountiesofCrook,DeschutesandJefferson,
span7,825squaremilesofterritory,withacurrentpopulationofapproximately208,725.2In
thepreviousdecade,CentralOregonexhibitedrelativelyhighannualpopulationgrowth
comparedtotherestofthestate.Unfortunately,annualincomeswithintheregionhavenot
followedasimilartrend.Averageprivate‐sectorwagesandper‐capitaincomesintheregion
consistentlyfallshortofboththestateandnationalaveragesdespiteemploymentgrowthin
traditionallyhigh‐wagepayingsectors.Examplesofthesesectorsincludeeducation,health
care,business,hospitalityandothertypesofmanufacturing.3Theeconomyhashistorically
beencontingentuponwoodproductmanufacturingandnaturalresourceextractionfor
employment;howeverjobcutsinthesesectorshavebeenhigh.Totalunemploymentinthe
regionremainshighaswell.CentralOregonhasalsobeendeemedatoptouristdestinationin
thestate,attractinganarrayofoutdoorenthusiasts.
RelativePopulationsasofJuly1,2007:
CrookCounty25,885
DeschutesCounty160,810
JeffersonCounty22,030
3.1)CrookCounty
CrookCountyislocatedontheeasternboarderoftheCentralOregonregionwith
approximatelyhalfofthecounty’spopulationlivingwithinthecitylimitsofPrineville.Driversof
2MeasurementfromOLMISasofJuly1,2007,exhibitinga36%populationincreasefrom2000census(153,558) 3 In2008averageprivatesectorwagesintheregionwereestimatedat$32,166,14.7%lowerthanthestateaverageof$37,703
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thelocaleconomyincludeagriculture,construction,forestproducts,manufacturing,recreation
andtourism.Howeverthelargestemployersintheregionaretheindustriesoftrade,
transportation,andutilitiesandwoodmanufacturing,asstatedbytheGovernmentofCrook
County.UnemploymentinCrookCountyishighrelativetothestateofOregon’sunemployment
rate.Percapitaincomesareconsistentlylowerthanthestateandnationalaverages,alongwith
educationalattainment.45Asof2007,CrookCountyestimates12.8percentofthecounty’s
totalpopulationtobelivinginpoverty.
3.2)DeschutesCounty
Accountingforover85.8percentofDistrict10'semployment,DeschutesCountyis
muchlargerthanitsCentralOregoncounterpartsintermsofeconomicactivity(Anderson,
Evans,2008).Withapopulationof160,810,DeschutesCountyisroughlythreetimesmore
populatedthantheothertwocountiescombined.Thedominantsectorsofthelocaleconomy
includeretailtrade(accountedforintrade,transportationandutilities),leisureandhospitality,
educationalandhealthservices,professionalandbusinessservicesandconstruction.The
county’sfourincorporatedcitiesBend,LaPine,RedmondandSistersofferawidevarietyof
year‐roundamenities,channelinginrevenuesviatourism.CentralOregonCommunityCollege
provideslocalswitheducationalopportunities,thoughfewtakeadvantageofitsaccessibility.6
In2007,thecounty’saveragepercapitaincometrailedbehindthenationalaverageby$3,558.
Asof2000,thelocalcensusestimates9.3percentofDeschutesCountyindividualsand6.3
percentoffamiliestobelivingbelowfederalpovertyguidelines.7
4 In2007,thecounty’saveragepercapitaincomewas$13,457lowerthanthenationalaverage.Thedifferencehaswidenedovertheyears,displayingadownwardtrend.In1997,thecounty’saveragetrailedthenationalaveragebyonly$6,574(OLMIS). 5 In2000,80.5%ofpersonsage25+wereconsideredhighschoolgraduates(orpossessedanequivalentdegree)whileonly12.6%ofpersonsage25+hadattainedabachelor'sdegreeorhigher(OLMIS).6Thelocalcensusreportsin2000only25%ofthepopulation25+hadattainedabachelor’sdegreeorhigher7The2000stateaveragewasreportedas11.6%ofindividualsand7.9%offamilies
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3.3)JeffersonCounty
JeffersonCountyisthesmallestcountyofDistrict10intermsofsize,populationand
economicactivity.Madras,thelargestcityintheregion,providesanoutlettothepopular
touristdestinationofLakeBillyChinook.TheWarmSpringsForestProductIndustryhas
traditionallybeenthelargestemployerinthearea,butinrecentyears,totalemploymentinthe
woodmanufacturingsectorhasdeclinedsignificantly.89Thoughtheareaisrichinnatural
resources,themajoremploymentsectorsofJeffersonCountyincludegovernment,trade,
transportationandutilitiesandgeneralmanufacturing.10Annualincomesarebelowthestate
andnationalaverageandover10.6percentoffamiliesand14.6percentofindividualsare
belowfederalpovertyguidelines.11Educationalattainmentislowrelativetostatestandards,
with76.5percentofthepopulationwhois25andaboveholdinghigh‐schooldiplomasand13.7
percentholdingbachelor’sdegrees.
8TheorganizationisownedbytheConfederatedTribesoftheWarmSpringsReservation.Thereservationspansfourcountiesincluding236,082acresinthenorthwesterncornerofJeffersonCounty.9OLMISreportedthatfrom2001‐2008totalwoodmanufacturingemploymentdroppedfrom1,140to710,a38%decline10Governmentemploymentin2008totaled4840,withalmosthalfofthe2,170localgovernmentofficialslabeledas“IndianTribal”11In2007,averagepercapitaincomewas$13,629belowthenationalaverage.Theaveragecoveredwagewas
$9,152belowthestateaverage(OLMIS).
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4)EstablishedMeasuresofPoverty
Therearetwowellestablishedindicatorsofpoverty–thePovertyThresholdand
PovertyGuideline–aswellasanewsupplementtotheseexistingmeasurestobereleasedby
theUSCensusBureauinFall2011(i.e.,theSupplementaryPovertyMeasure).
ThePovertyThresholdistheofficialpovertymeasureoftheUnitedStatesandwasfirst
developedin1963.Themeasuredeterminestheminimalincomeafamilycansurviveon,with
one‐thirdofthedesignatedincomebeingallocatedtofood.Eachyearthepovertythresholdis
adjustedtokeepupwithinflationandworksinaccordancewiththeCPI.Thethresholdwas
calculatedtobe3,100dollarsin1963andalthoughithasincreasedsince,stillsignifiesthesame
purchasingpoweritdid53yearsagoforbetterorworse.
Whilesimilar,thePovertyGuidelinediffersfromthePovertyThresholdinsofarasit
representsasimplificationofsorts.Theguidelineiscommonlyusedasawaytodetermine
whichpeoplearefinanciallyeligibleforstateandfederalpovertyprogramssuchasHeadStart,
theFoodStampProgram,theNationalSchoolLunchProgram,theLow‐IncomeHomeEnergy
AssistanceProgramandtheChildren’sHealthInsuranceProgram.Theseguidelinesareusedfor
themajorityofpovertyprogramsacrossthenationbutnotall.Adeparturefromthisruleisthe
allocationofSection8housing,whichisdeterminedbythemedianincomeinthearea,notthe
PovertyGuideline.
Thesestatisticalmeasuresaredevelopedannually.However,aswithmoststatistically
derivedmeasuresofpoverty,thereareshortcomingsinhowthesebroadmeasurescanbe
employed.Forexample,indeterminingthePovertyThreshold,one‐thirdofincomeisassumed
tobeallocatedtofood,whenthishaschangedinthelast50years.Todaythisproportionis
debatedbecauseinsomecasesfamiliesspendmuchmoreonhousing,utilitiesand
transportationthantheyoncedid,andlessonfood.Itisestimatedthatfamiliesnowspend
roughlyone‐sixthofincomeonfood.Someothercritiquesincludethefactthatsomepeople
whoaredeemedeligibleandtechnicallyunderthepovertyguidelinearetrulynot,andunder
statetheirtrueincomewhichresultsineligibilityformanyofthefederalprograms.
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Althoughsomearguepovertyisoverestimated,therearemanywhobelievethe
opposite.Withthesystembeingvastlyoutdated,therearenewexpensesinthe21stcentury
thatarenottakenintoaccountinthecurrentsystem.Whenthemeasureswereinitially
establishedin1963,childcarewasnotincludedinthecostoflivingbecauseitwasassumed
thattherewasastay‐at‐homeparentineveryfamily.Thisisnotalwaysthecasetoday;with
mostfamilieshavingtwowageearnersinthelowincomebracketandthecostsassociatedwith
childcarearestillignoredeventhoughtimeshavechanged.Transportationcostsforsomehave
increasedinthelast50yearsanditismoreexpensivetogetfromplacetoplacethanitonce
was(Willis,2000).Theexpensesassociatedwithnecessities(e.g.,clothes,food,housing)have
alsogrown.Intheend,moreresourcesareneededtomaintainthesamestandardoflivingthat
peopleexperiencedinthepast,soinsomewaysthecurrentmeasureunderestimatespoverty.
Thebiggestissuewiththecurrentsystemisthebeliefthatthenumbercalculatedfor
thePovertyThresholdisalivingwage,wheninfactit’snot.Manyofthepeopleabovethe
PovertyThresholdarenotlivingcomfortablyandtrulyexperiencinghardshipsandshouldbe
considered“poor.”There’sanimmeasurabledifferencefrombarleysurvivingandliving
comfortablyandthecurrentallocationoffederalfundsforpeoplewhoaresufferingfrom
povertyisinsufficient.Itischeaperforthefederalgovernmenttokeepthecurrentobsolete
systemand,therefore,havelittleincentivetoassistandinvestinthefutureofAmerica.
Withtherangeofconcernsonthecurrentmeasuresofpovertyandneedfornew
insightinthematter,agroupofprofessionalsfromtheBLS,CensusBureauandCouncilof
EconomicAdvisorsareworkingtogethertoproduceaSupplementaryPovertyMeasure(SPM)
byFallof2011,whichwillcoexistwiththeofficialPovertyThresholdandGuideline.12Whenwe
beganthisprojecttheSPMdidn'texsist,sotheideaofaregionalpovertymeasurmentis
relativelynewandnowmorerelevantwiththeintroductionoftheSPM.TheSPMisan
experimentalventureandthecreatorshopetoincreasetheefficiencyofthestatisticwithmore
data,newmethodsandbetterresearchastimecontinues.13Thiscalculatedstatisticforthe
SPMwillbericherthananypreviousmeasuresthefederalgovernmenthasprovidedsoit
12 Information by the Census Bureau: http://www.prnewswire.com/news-releases/census-bureau-to-develop-supplemental-poverty-measure-86008962.html 13 SPM description, Census Bureau: http://www.census.gov/hhes/www/povmeas/SPM_TWGObservations.pdf
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shouldbeawelcomedadditiontothesetofpoverty‐relevantindicators.TheSPMusestools
suchastaxpayments,workexpenses,morgatagepayments,geographicregionsandothernew
andinovativemeasurementstocalculatethestatistic,unlikeformerPovertyGuidelines.Itwill
notbeusedtodetermineeligibilityforgovernmentprogramsandwillbetreatedmoreasa
macroeconomicstatisticthatwillhelppredictfutureeconomictrends.14
14 TheSPMwillbebasedontheresearchdonebytheNationalAcademiesofScience(NAS)ontheirreportfrom1995,MeasuringPoverty.
14
5)LiteratureReview
TheCentralOregonIndexofPovertyisnewtotheliterature,insofarasitpushesinthe
directionofabettermeasureofpovertythandoexistingindicesthatfocusonmore‐aggregate
measuresoftheoverallhealthofaneconomy,therefore,ourindexwilldifferinseveralways.
Thefoundationsofforecastingarewellestablishedanditisreasonabletoconsiderexisting
indicesasweformulateanindexwithafocusedinterestonpoverty.Includedbeloware
severalrelevantindicesthathelpedusformulateideasforourproject,theseincludeThe
OregonIndexofLeadingIndicators,TheHealthyCommunityIndexandfinallytheCentral
OregonBuisnessIndex.
5.1)OregonIndexofLeadingIndicators
Sinceitsinceptionin2003,theOregonIndexofLeadingIndicatorshasbecomean
importantcontributortoforecastingchangesineconomicactivityinOregon.TheOregon
OfficeofEconomicAnalysisworkscloselywithGovernorTedKulongoskitoconstructthe
OregonEconomicForecastwhichusestheOILIasakeycomponentindraftingtheirreport.The
OregonEconomicForecastisdistributedfourtimesayearandhelpsaiddifferentpolicymakers
fromstateandprivateorganizationsmakeimportantdecisionstocopewithfutureeconomic
conditions.Accompaniedbythefederalgovernment’sbusinessindex,TheU.SIndexofLeading
EconomicIndicators,thesetwomodelshelppredictfutureeconomicgrowthanddeclineand
areveryhelpfultoolsforpolicymakers,fromanationalandregionalstandpoint.
TheOILIisformattedaftertheConferenceBoard’smethodologyfortheU.SIndexof
LeadingEconomicIndicators,aseasonallyadjustedmonthlyindexofleadingindicators.
CurrentlyaflatweightingschemeisusedinconstructingtheOILI;howeverthismightchangein
futurerevisionsoftheindex.TheOILIconsistsoftendifferentcomponentschosenfortheir
potentialrelationshiptothebusinesscycleandtheirabilitytopredictfutureeconomic
changes.ThetencomponentsincludeTheUniversityofMichiganConsumerSentimentIndex,
15
totalwithholdingsforOregonemployees,Oregonnew‐businessincorporations,thenumberof
help‐wantedadsinTheOregonian,totalresidentialbuildingpermits,interestratespreads,
initialunemploymentclaims,theInstituteforSupplyManagementNationalIndex,
semiconductorbook‐to‐billratioandtheFederalReserveBankofAtlantaDollarIndex.
UsingthisasacomplementtoourCentralOregonPovertyIndex,itwillbeahelpfultool
toanalyzeourfindings.Bycomparingbusinessindicestoourpovertyindex,wewillbeableto
getpreliminaryinsightastowhetherourindexismovingintherightdirection.Intuitively,one
wouldexpectasaneconomyimproves,povertydecreasesandbusinessactivityincreases,
suggestinganegativecorrelationbetweenthetwoindices.
5.2)HealthyCommunityIndex
TheHealthyCommunityIndexisanindexthatstepsawayfromthetraditional“business
index”modelandlooksatsocietalandeconomicissuesasawhole,toassessthewellnessofa
community.Thisindexinsomerespectsisacloserrepresentationtotheindexwerelookingto
createandincludessomesimilarexplanatoryvariableswethinkcouldhavecorrelatingfactors
topovertysuchasmedianhousingprices,welfareratesandfoodstampdistribution.The
HealthyCommunityIndexwascreatedforthegreaterEugene/Springfieldarea,howevercould
beappliedtoalmostanycommunitywithsimilarsizeandqualities.Thepurposeofthisindexis
nottopredictchangingeconomicconditionswithinthecommunityperse;insteaditlooksat
howthe“healthiness”ofthecommunityischangingonamonthlybasis.Theydefine
“healthiness”withavarietyofexplanatoryvariablesanddoagoodjobofcapturingthekey
componentsofwhatmakesahealthyandstrongcommunity.Thismodelisagoodexampleof
anindexthatdoesn’tstrictlyrevolvearoundbusinesscyclesbutinsteadassessesthewellness
ofacommunityasawholeandsteersawayfromthetraditional“businessindex”whichonly
includeseconomicindicators.
ThecontributorstotheHealthyCommunityIndexareaverageweeklyincomes,a
housingaffordabilityindex,differenteducationalmeasures,unemploymentrates,publicsafety
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measures,airquality,foodstampandwelfareratesandfinallyemployerhealthinsurance
costs.
5.3)CentralOregonBusinessIndex
TheCentralOregonBusinessIndex(COBI)isthecurrentlocalbusinessindexrecognized
bytheEconomicDepartmentofCentralOregonaswellasthelocalcommunity.Theindex
tracksbusinessactivitychangesonamonthlybasisandweightsmodelcomponentsin
accordancetohistoricaltrendsoftheregion’seconomy.Theindexincorporatesthe
methodologyusedintheU.S.CompositeLeadingIndex(CLI).15
COBIreferencestwoothercompositeindices,TheSouthernNevadaIndexofLeading
IndicatorsandtheOregonIndexofLeadingIndicators,duetoeconomicsimilaritiesbetween
CentralOregonandSouthern,NevadaandthestateofOregonasawhole.Themodel
evaluationincludesnoindividualindicatorseriesprior1990duetochangingdynamicsofthe
region.Eightindividualdataseries,startingin1997,areincludedintheCOBI.Thesevariableare
reportedonamonthlybasisandincludecorporatefillings,roomtax,airportactivity,new
permanentelectricalconnections,newclaimsofunemployment,Oregonianhelp‐wantedads,
totalhousingunitssoldandmedianresidentialhousingdaysonthemarket.
Collectively,thesethreemodelshavegivenusgoodbackgroundinformationandinsight
onthedifferentelementsofindices.Althoughwecouldn’tfindanypastliteratureon“poverty
indices”wefeelasifwehaveastrongbasetocreateasuccessfulpovertyindexforCentral
Oregon.OurmodeltheCOIPcontains10differentexplanatoryvariablesthatsharesimilar
characteristicsfromthethreeindicesabovebutdifferwithafocustowardspoverty.Inthe
nextsectionweexplainourmodelindetailanddeliversomeinitialfindingsanddata.
15 Conference Board Website: http://www.conference-board.org/economics/bci/pressrelease_output.cfm
17
6)Data
Thevariablesincorporatedinourmodelwereusedforavarietyofreasonsincluding
relevance,availabilityandpotentialcorrelatingfactorstopovertyinCentralOregon.After
havingdifficultyfindingmonthlydataforCentralOregonwedecidedtocreateaquarterlyindex
andconvertthemonthlydatawehadintoquarterlymeasurements.Weattainedthemajority
ofourdatafromseveraldifferentsourcesincludingBLS(BureauofLaborServices),Census,
DHS(DepartmentofHumanServices),TheOregonLottery,OLMIS(OregonLaborMarket
InformationServices)andCentralOregonAssociationofRealtors.Theyearscoveredinour
indexare2001to2009.Thedatawehaveiseasilyattainablesoitshouldn’tbedifficulttokeep
theindexcurrentanduptodate.Someofthevariable’sweincludedareusedasproxiesdue
toalackofdataintheCentralOregonregionbutwefeelasiftheydoasufficientjobcapturing
thetruevalueweinitiallywanted.Therewereseveralvariableswewould’velikedtoinclude
butduetoinsufficientdataorlackofquarterlyreportingcouldn’tincludethem.Wewilldiscuss
thesevariablesinmoredetailinSection9.
DeschutesCountyistheeconomicpowerhouseandhasthelargestpopulationin
District10whichmakesourindexsomewhatskewedtowardstheBendandDeschutesarea.
ThepopulationofDeschutesismorethanthreetimeslargerthanCrooksandJeffersonjointly,
sothereisobviouslysomedistortioninourindex.Althoughitcouldhavebeenbeneficialto
createanindexspecifictoeachcounty,duetotimeanddataconstraintswecombinedthe
threecountiesandcreatedoneindexforthewholeregion.However,wefeelourindexstill
providesavalidrepresentationoftheregion,andwilldoanefficientjobforecastingpovertyin
CentralOregon
Below(Figure1–VariousModelComponents)arethevariablesweincludedinour
indexaswellastheothervariablesfortheindiceswereviewedandabriefdescriptionofthe10
variablesincludedinourindex.Additionally,thetimeseriesgraphsforeachvariableinour
indexareincludedinSection10(i.e.,AppendixA).
18
Figure1–VariousModelComponents
OILI• Universityof
MichiganConsumerSentimentIndex
• TotalWithholdingsforOregonEmployees
• OregonNew
BusinessIncorporations
• TheOregonianHelp
WantedAds• TotalResidential
BuildingPermits• InterestRate
Spreads• Initial
UnemploymentClaims
• InstituteforSupply
ManagementNationalIndex
• Semiconductor
Book‐to‐BillRatio• FederalReserve
BankofAtlantaDollarIndex
HCI• AverageWeekly
Income• Housing
AffordabilityIndex• APCreditRatio• HigherEducation
Affordability• DropoutRate• Unemployment
Rate• PublicSafety• AirQuality• FoodStampRate• WelfareRate
COBI• CorporateFilings• RoomTax• AirportActivity• NewPermanent
ElectricalConnections
• NewClaims
Unemployment• OregonianHelp‐
WantedAds• TotalHousingUnits
Sold• MedianResidential
HousingDaysonMarket
COIP• SNAP
(SupplementaryNutritionAssistanceProgram)
• TANF(Temporary
AssistanceForNeedyFamilies)
• DayCare• VideoSales• TraditionalLottery
Sales• TTU(Trade,
Transportation,Utilities)
• Manufacturing• NHPC(NewHiresof
PrivateConstruction)
• Total
Unemployment• AverageMonthly
Earnings
19
6.1)SNAP(SupplementaryNutritionAssistanceProgram)
Traditionallyknownas“foodstamps,”theprogram’snamechangedinOctoberof2008
toSNAP.Althoughtherewerenochangesinfundingfortheprogram,theUSDA(UnitedStates
DepartmentofAgriculture)saidtheshiftreflected,“Anewfocusonnutritionandputting
healthyfoodwithinreachforlowincomehouseholds.”16
ForthemostpartSNAPcaseloadsincreasedthroughouttheentiretimeperiodand
morethandoubledfrom2000to2008.Afteranalyzingthedataitisapparent,thatanincrease
inSNAPdistributionisasignthatpovertyintheregionisincreasing.TobeeligibleforSNAP
youhavetobeunderthePovertyGuideline,soaspovertyincreases(incomegoesdown)more
peoplebecomeeligibleforfoodstamps.Weincludedthisvariablebecauseofitssupposed
correlationtoanincreaseinpoverty.OtherfactorsinfluencingthegrowthinSNAPcouldbe
attributedtoanincreaseinawarenessthatfoodstampsexistortheoverallenlargementofthe
populationinCentralOregon.Thisvariablecontributespositivelytotheindex.Thisdatawas
providedonamonthlybasisbytheDepartmentofHumanServices.
6.2)TANF(TemporaryAssistanceforNeedyFamilies)
TANFisaprogramthathelpsfamilieswhoareinneedofassistancewithtemporarycash
paymentswiththegoalofhelpingthemriseoutofpovertyandeventuallytoaselfsustaining
level.Aspeoplebecomeprogressivelydeprivedofmoneythisprogrambecomesmorerelevant
andanincreaseinTANFisassociatedwithmorepovertyintheregion.Alongwiththefinancial
assistance,theTANFprogramhelpsfamiliesfindemployment,housing,childcareand
assistancewithdomesticviolence.Theseareallcommoncharacteristicsoffamilieswhosuffer
frompovertyandwhoareinneedofgovernmentassistance.Asyoucanseefromlookingat
Figure3,theTANFdistributionincreasedmarginallyuntilapproximately2007.Whenthe
recessionprogressed,duringthistimeperiod,sodidtheamountofpeoplereceivingpayments
16 Quote from USDA: http://www.fns.usda.gov/snap/snap.htm
20
throughtheprogram.TherewasalargespikeinFigure3overthefinaleightquarters,soit’s
apparenttheamountofpeopleunderthePovertyGuidelineandeligibleforthisprogram
increasedaswell.SimilarlytoourthoughtsonSNAP,aspovertyrises,morepeoplebecome
eligibleforfederalpovertyprograms,inthisinstanceTANF.Inesessence,asmorepeoplefall
belowthePovertyGuidelineintheregion,theprevalenceofpovertybecomesmore
noticeable.Thusthisvariablecontributespositivelytotheindex.TheTANFdatawasattained
fromtheDHSandwasprovidedonamonthlybasis.
6.3)DayCare(EmploymentRelatedDayCareandJOBSchildcare)
TheEmploymentRelatedDayCareandJOBSchildcareprogramsprovidelow‐income
workingfamiliesandindividualswithasubsidyforagivenchildcareservice.Inordertoqualify,
personsseekingdaycareassistancemust:(1)needchildcaretoremainemployed(2)bewithin
theproposedincomelimits(currently185percentofthefederalpovertylevel).Familiescan
alsoqualifyiftheyarecurrentlyenrolledintheJOBSprogram.17Becausequalification
guidelinesexpectindividualsandfamiliestobebelowthePovertyGuideline,wecaninferthat
asdaycarecaseloadsincrease,povertycanbeexpectedtoriseaswell.Thisvariablecontributes
positivelytotheCOIP.ThisdatawasprovidedonamonthlybasisfromtheOregonDHS.
6.4)VideoSales
Videosales,refertothetotaldollaramountofnetsales(allsalesafterprizeshavebeen
paid)fromallVideoLotteryterminalswhichincludepokerandlinegames.Thesegamescan
onlybesoldinestablishmentsthathaveOregonLiquorControlCommissionlicenses(i.e.,bars)
17 JOBSforOregon'sFuture(JOBS)isaDHSsubsidyprogramwhichprovidesemploymenttraining,preparinglow‐incomeindividualsforanappropriateworkenvironment.Often,thisprogramcanmitigatetheneedforTANForotherformsofwelfareassistance.
21
tosellliquorbythedrink.Notonlyisvideogamblinganinterestinghabittoanalyzeandrelate
topoverty,butitalsoservesasaproxyfordrinking,ormorespecificallybaractivityinDistrict
10.Bothofthesehabitshavesomedistinctrelevancetopoverty.Eachactivityonitsownis
extremelyaddictiveand,whencombined,areevenworseandcancausemoreproblems.With
thissortofaddictivepowerthereisadefinitepossibilityofleavingpeopleaddicted,
emotionallydistraughtandinourcaseeventuallypoorwhenconstantlyparticipatinginthese
behaviors.Somestudieshavefoundthat,“Theprevalenceofalcoholmisuseamonggamblers,
especiallyamongpeopleexperiencinggamblingproblemsishigh”(Ellery,2005).Althoughwe
wouldhavelikedtoincludesomesortofmeasurecorrespondingtodrinkingpercapitainthe
regionwethinkthisworksasarelevantandefficientproxy.
InCentralOregontotalvideosaleshaveincreaseddramaticallyoverthetimeperiodwe
studied.Inquarteroneof2001,thebeginningofourindex,videosaleswere3.86million
dollars.Byquarterthreeof2007,videosalesreachedahighof10milliondollars.Thisismore
than2.5timeslargerthantheoriginal2001numberandisahugeincreaseoveraneightyear
period.Astherecessionbecameconsiderablyworse,subsequentto2007,videosales
decreasedandendedat7.3milliondollarsbyquarterfourof2009.Notonlydidtotalvideo
salesincreaseoverthetimeperiodwestudiedbutsodidtheamountofretailersofferingvideo
gaming.Inquarteroneof2001,76differentretailersofferedvideogaming.Byquarterfourof
2009,thisnumberincreasedby39andreachedatotalof115.
Someoftheincreaseinvideosalesintheregioncouldbeduetoseveraldifferent
reasonsincludingthelargeinfluxinthepopulationaswellasthegrowthandavailabilityof
electronicgaming.However,itseemsthatsuchalargeincreaseinvideosalesisoutof
proportionwiththeaugmentationofthepopulation.
LookingatFigure5,astheeconomyexpandsgamblingincreasesaccordingly,butasthe
economyretractsgamblingdecreasessimilarly.Thiscouldbebecauseasmorepeoplefall
belowthePovertyGuideline,discretionaryspendingbecomestighter,andpeoplerespondby
gamblingless.AsDavidGaleoftheNorthAmericanAssociationofStateandProvincial
22
Lotteriessaid,“Theeconomyprobablyhasaffectedlotterysalesthewayit’saffectedall
discretionaryspending”(Stone).Howeversomearguetheoppositeandsaythatthelotteryis
recessionproof.InanarticlewrittenbyRupalParekh,heclaimsthatdownturnsinthe
economydon’taffectlotteryrevenuesbecausestatelotterieschangetheirmarketingand
promotionalstrategiestoappealtopeoplewhoarestrappedforcash.Statelotteryofficialsdo
thisbyofferingcheaperalternativesandcatchytaglinestopromotetheirgames(Parekh,2008).
Atthispointinourstudy,weareunsurehowpeopleinpovertyrespondtogamblingduring
differenteconomictimes.Therefore,moreresearchshouldbeconductedinthefieldof
gamblingbeforeadefinitiveanswercanbereached.Atthemoment,thevariablecontributes
positivelytotheindex.WeattainedthisdatafromTheOregonLottery’sHeadquartersand
wereprovideddataonaquarterlybasis,whichincludedeachcountiesspecificretailers,sales
andcommissions.
6.5)TraditionalLotterySales
Traditionallotterysalesrefertogrosssales(i.e.,beforeprizeshavebeenpaidout)of
traditionallotterygamesuchaslotterytickets,PowerBallandKeno.Thesegamesarefoundat
localconvenientstoressuchas7‐Elevenandothermomandpopsthroughouttheregion.The
salesforthesegamesdon'texhibitthesameincreaseasexperiencedinvideosalesbutdosee
somegrowthoverthetimeperiod.Traditionallotterysaleswere3.3milliondollarsinthefirst
quarterof2001,peakedatmorethan3.8milliondollarsinthethirdquarterof2003andare
currently3.8milliondollarsasofquarterone2010.
Astechnologyhasincreaseddramaticallyoverthelasttenyearsitmayhavebecome
morepopularandexcitingtotakeadvantageoftheseadvancements,makingvideogambling
moreattractiveanddesirable.Yet,wewillassumethatincreasesinlotterysalesarereflective
ofunderlyingeconomicconditions,andincreasewhentheeconomyisboominganddecrease
whentheeconomyiscontracting.Webelievethattraditionallotterysalesfollowasimilar
trendtovideosalesbutnottothesameextent.Therefore,thevariablecontributespositively
23
totheCOIP.WeattainedthisdatathroughourresourceatTheOregonLotteryandwere
providedthesamequarterlymeasurementsforeachcountiesspecificretailers,salesand
commissions.
6.6)TTU(TotalJobsinTrade,Transportation,andUtilities)
Thisvariabledisplaysthetotalofamountofjobsintheindustriesoftrade,
transportationandutilities.ThesearethelargestindustriesinDeschutesandCrookscounty(as
farasthetotalamountofjobsintheprivatesector)andsecondlargestinJeffersonCounty
(manufacturingisnumberone).ConsumingthelargestamountofjobsinDistrict10
collectively,itcanbeusedasasigninregardstowhethertheeconomyisexpandingor
contracting.Astheseidustriesfallanddisplacemoreworkers,thereisalargerneedfor
governmentassistance,whichisaindicationofmorepovertyintheregion.
Overall,thetotalamountofjobsintheseindustrieshavedecreasedoverthelastseveral
years.However,TTUhasmadeasurgeinthelastquarterof2009suggestingapossible
decreaseinunemploymentandpovertyinthenearfutureandanoverallboostinthissectorof
theeconomy.Webelieve,astheseindustriesrecover,overallpovertyintheregionwill
decreaseaswell,leadingustobelieveTTUshouldcontributenegativelytotheindex.We
attainedthisdataonamonthlybasisthroughOLMISandseasonallyadjustedthedatadueto
significantvariationincertainmonthsthroughouttheyear.
6.7)Manufacturing
Thevariablemanufacturingreferstothetotalmanufacturingemploymentinthethree
counties.Manufacturing,asmentionedinthe“TheRegion”section,hashistoricallybeenan
importanteconomicdriverforbothCrookandJeffersonCounty.Althoughemploymentin
manufacturingforbothcountiespeakedaroundlate2001andsincehasdroppedbymorethan
24
half,itisstillcurrentlythesecondlargestindustryforCrooksandthelargestforJefferson.In
DeschutesCountytotalmanufacturingemploymentpeakedin2006andsincehasdroppedby
morethanhalf.AnnualmanufacturingwagesforCentralOregonareconsistentlybelowthe
annualstateaverageofallindustries,andrequirealowlevelofspecializedtraining.
Withadecreaseinemploymentopportunitiesinadominatingeconomicsector,thereis
thepotentialforahighamountofworkerdisplacement.Thusworkersmayfilefor
unemployment,seekretrainingfornewemploymentopportunities,takealowerpaying
position,orremainjobless.Withthissaid,webelievethatasthemanufacturingindustry
continuestodeclinemoreworkerswillbecomedisplaced,thusincreasingpoverty.
Manufacturing,therefore,contributesnegativelytotheCOIP.Weattainedthisdatafrom
OLMISanditwasreportedonamonthlybasis.
6.8)NHPC(NewHiresofPrivateConstruction)
AsdescribedbytheOLMISwebsitenewhiresofprivateconstructionreferstothe,
“Estimatednumberofworkerswhostartedajobtheyhadnotheldinthepastyearandthejob
turnedintoajobthatlastedatleastafullquarterwithagivenemployer.”Weusedthis
variableasaproxyfornewconstructionintheCentralOregonregionandgraphicallyisquite
interesting.AsNHPCpeakedinDistrict10around2006,attheheightofthehousingbubble,
newhireshavedramaticallydecreasedsinceandhavereachedanewtenyearlowforthe
region.TheamountofNHPCjobsforquartertwoof2009was621,whereasinquarteroneof
2000newhiresrestedat1689.
AlthoughthisissimilartotherestofAmericawithnewconstructionmovingataslower
pacethanoncebefore,ithasobviouslyhurttheCentralOregoneconomyandputmany
constructionworkersinatemporaryorextendedunemployedposition.Asconstruction
increasesnewbuildings,jobsandopportunitiesariseand,withoutthisessentialpartofthe
economy,CentralOregonhasbecomedepressed.AsNHPCdecreases,povertyactsinversely
25
andincreases,leadingustobelievethevariableshouldcontributenegativelytotheindex.We
attainedourdatafromOLMISonaquarterlybasisandseasonallyadjustedthisvariable.
6.9)Unemployment
UnemploymentinCentralOregonissignificantlyhigherthantherestoftheUnited
States.Weincludedthisvariablebecauseofunemploymentsrelevancetopoverty.AsofMay,
theunemploymentratenationallystoodat9.9percent,Oregon11.2percent,Deschutes14.1,
Jefferson15.2andCrooks17.5.AlthoughtheentireUnitedStateshasbeenaffectedbythe
economicdownturn,CentralOregon,hasbeenaffectedmore.Fromthebeginningof2008to
2009,unemploymentintheregionhadincreased50percentandiscurrentlyrising.As
unemploymentrises,thelikelihoodofpeoplebeingfinanciallystabledecreases.Intuitively,this
correspondstoanincreaseinpovertyasunemploymentrises.Unemploymentcontributes
positivelytothemodel.Afteranalyzingthep‐statisticsforeachmonthwefoundstatistically
significantdifferencesbetweenthemonthsandproceededtoseasonallyadjustthedataon
thatbasis.WegatheredthedatafromtheBLSonamonthlybasisandthestatisticsignifiesthe
totalpeopleunemployedinthethreecounties.
6.10)AverageMonthlyEarnings
Weincludedaveragemonthlyearningsforitsrelevancetostandardofliving.However,
itmightnotbethebestrepresentationforthegroupofpeopleweretargeting,lowincome
earners.Thisnumberisartificiallyinflatedtowardsthehighincomeearnersanddoesn’t
necessarilyreflectthetrueearningsofthelowerclassinCentralOregon.Initiallywewantedto
includeavariableforthe25thpercentilewageearnersintheCentralOregonregion,however
wewerenotprovidedthisdatabythelocalworkforceagencyinBend.Wagesincreased
significantlyduringtheboomperiod,experiencedinthemid2000’s,butfellafterthepeakand
26
evenmoreastherecessionworsened.Weattainedthisdataonaquarterlybasisforeach
individualcounty.Wethenproceededtoaveragethethreecountiesaveragemonthlywage
andcomputeonenumberforCentralOregon.Assumingthatincreasesinaveragemonthly
earningsleadtolowerratesofpoverty,thismeasurewillcontributenegativelytotheCOIP
index.ThedatawasprovidedbyOLMIS.
27
7)Methodology
Beforecompilingindividualcomponentsintoasingleindex,eachvariableshouldbe
examinedforseasonalvariationandadjustedifnecessary.Wefoundthatunemployment,
NHPCandTTUhadpersistentvariationthatcouldbeattributedtoseasonality.Thiswas
apparentintheresidualplots,aswellasthesignificantP‐values,inmonthsthatwere
seasonallyaffected.
Onceseasonaladjustmentsaremadethecomponentsneedtobecondensedintoa
singleindex.OurapproachtocreatingtheindexissimilartothatoftheCentralOregon
BusinessIndexandUniversityofOregonIndexofEconomicIndicators,bothofwhichwerebuilt
uponthemethodologyusedtobytheConferenceBoardtodeveloptheU.S.LeadingIndex:
Individualcomponentsaretransformedintosymmetricpercentagechanges,andtheresultantseriesareadjustedtoequalizethevolatilityofthecomponents.Thisprocessensuresthatachangeinahighvolatilitycomponentisweightedequallyto a change in a low volatility component. The adjusted series are summed tocreatetheindex,whichisrebasedtoset1998=100(Duy,2010).
Ourmodeldiffers,inthatourbaseyearissetto2001.Datathatwasattainedonamonthly
basishasbeenconvertedtoquarterlymeasurementsbyaveragingthethreemonthsand
aggregatingthemintoasinglemeasurementforthequarter.AsmentionedinSection6,TTU,
NHPCandaveragemonthlyearningscontributetotheindexnegatively,whileallothervariables
contributepositively.
28
8)FutureConsiderations
Althoughwefeelasifourindexcaptureschangesinpovertyintheregioneffectively,
thereweresomevariableswewould’velikedtoincludebutduetoalackofdata,timeand
resourceswerenotabletofindthemonaquarterlybasisoralltogether.Variableswethought
ofincludingbutcouldn’tfindweredrug/alcoholabusepercapita,crimepercapita,median
rentalprices,amoreconcisemeasurementofconstruction,realquarterlyearningsforthe25th
percentilewageearners,homelessness,domesticviolence,fireworksales,peoplelivingunder
thepovertythresholdandfinallyemergencyassistance.
Whilewewereabletoattainmorethanhalfofourdataonamonthlybasis,duetoan
inconsistencyandlackofmonthlymeasurementsforthevariableswewantedtoinclude,we
decidedtochangeourmodelintoaquarterlyindex.Thisincreasedtheamountofvariableswe
wereabletoincludeandmadeiteasierforustoconstructtheCOIP.Inthefuture,ifpossible,
wewouldliketoupdateourmodeltoamonthlyindexinordertotrackfluctuationsinpoverty
moreclosely.
OurrecommendationsfortheCentralOregonregionistostartkeepingmoremonthly
dataonthevariableswesuggestedaboveaswellasothermeasuresthatcorrelatetopoverty.
MakingthisdatamorewidelyavailablecanonlyhelpfacilitatefurtherresearchinCentral
Oregon.Anotherrecommendationwouldentailincreasingoverallawarenessinthecommunity
forprogramssuchasTANF,SNAPandDaycareespeciallyduringtimesofeconomiccontraction,
forreasonsmentionedinSection9.Ifmorepeopleknewabouttheseprogramsandwere
assistedintheregistrationprocess,itcouldpotentiallyincreasethespeedatwhichpeople
moveabovethePovertyThreshold.
29
9)CentralOregonIndexofPoverty Figure12istheCentralOregonIndexofPovertyoverthetimeperiod2001to2009.As
theUSeconomyregressedintheearly2000s,theCOIPdisplayedanupwardtrendinpoverty
untilthesecondquarterof2003.Fromlate2003until2007povertyinCentralOregon,on
average,stayedrelativelyconsistent,asmeasuredbytheCOIP.Asthehousingmarketcrashed
andtheeconomyfacedtheworstrecessionsincetheGreatDepression,povertyintheregion
rosedramatically(asdisplayedbyFigure12),andisstillincreasingasofquarterfour2009.
Figure12–CentralOregonIndexofPoverty(COIP)
Figure13plotstheCOIPagainsttheUniversityofOregon’sCOBImodel.Thetwoindices
moveforthemostpartinversely,andeventhoughthey’replottedondifferentscalesthe
underlyingtrendsshouldn’tbeignored.Whencontrastingchangesinbusinessactivityto
changesinpovertylevelsaninverserelationshipshouldbeexpected.Onewouldinferthatas
theeconomyexpandsandbusinessactivityincreases,povertywoulddeclineduetomore
30
opportunitieswithintheeconomicsector.However,thismaynotalwaysbetrueaseconomic
opportunitiesmaynotbeavailabletothesameextentforthosewhoexperiencepoverty.
Betweentheyears2003and2007theCentralOregonregionexperiencedlarge
economicgrowth(partiallyattributedtothehousingbubbleinDeschutesCounty),exhibitedby
alargeincreaseintheCOBIindex.However,duringthesametimeperiod,theCOIPremained
relativelystagnantanddidn’tshowthesamenegativetrendinpovertyexpectedfromthe
economicboom.Thiscouldbeanindicationthateconomicgrowthdoesnotnecessarily
produceasignificantreductioninpoverty.Pro‐poorgrowthis“growththatreducespoverty”
(Ravallion,2004),whichisadebatedtopicinthefieldofeconomics.Itisthoughtthatgrowth
affectspovertyinseveraldifferentwaysdependingontheparticulareconomyorregion.
InequalityintheUnitedStatesisrelativelylowcomparedtotherestoftheworldand,onthis
basis,growthaffectsournationinaspecificway,“Highinequalitywillhelpprotectthepoor
fromtheadverseimpactofaggregateeconomiccontraction.Lowinequalitycanthusbea
mixedblessingforpoorpeoplelivinginanunstablemacroeconomicenvironment;ithelpsthem
shareinthebenefitsofgrowth,butitalsoexposesthemtothecostsofcontraction”(Ravallion,
2007).
SinceTheUnitedStateshasgenerallylowinequality,growthissmallforpeoplein
povertyduringtimesofexpansionwhileduringtimesofcontractionpeoplewhoarepoor
experiencelargedownfallsandtrulyfeeltheeffectsofarecession.LookingatFigure13,one
cantellthatduringtheeconomicexpansionbetween2003and2007theCOIPshowedmodest
decline(i.e.,areductioninpoverty).However,whentheeconomyexperiencedalarge
contractionin2007,theCOIPskyrocketed,whichrelatestothequoteaboveinthesensethat
peoplewhoarepoor,wholiveinenvironmentsoflowinequality,experiencehighcostsintimes
ofcontraction.Forthisreasonwebelievethatourmodelisanimportantandeffectivedevice
inmeasuringpovertyforCentralOregonandshouldbeupdatedinthefuture,asopposedto
usingtheinverseoftheCOBIasaproxymeasurementforpoverty.Abusinessgrowthmodel
31
doesn’tnecessarilypickupthesesmall,butimportantcharacteristics;therefore,apoverty
indexisneededtomeasurepovertyoftheregioneffectively.
Figure13–COIPwithCOBI
Whilepeoplewhoarefinanciallystablehavetheabilitytotakeadvantagesofeconomic
opportunities,duringbothcontractionsandexpansions,peoplewhoarebelowthePoverty
Guidelinedon’tnecessarilyexperiencethesameluxuries.AsdescribedbytheWorldBank,
“Thecreditconstrainedpoortendtohavehighmarginalproductsfrominvestmentgiventheir
lowinitialcapitalendowments,buttheyareunabletoexploitopportunitiesfor
investment.”(Ravallion,2007)PeopleunderthePovertyGuidelinehavedifficultyretaining
capitalduetothefactthatthemajorityoftheirincomeisspentonnecessities.Thismakesit
difficultforpeoplewhoareinpovertytomoveabovethePovertyThresholdespeciallyduring
timesofeconomicdownturn.Forthereasonsstatedinthissection,localgovernmentsshould
monitorchangesinpovertyduringtimesofexpansion,whiletakeamoreproactiveapproach
duringtimesofcontractiontoavoidsevereincreasesinpoverty.
32
10)AppendixA(Figures)Figure2–SNAP(TotalCaseloads)
Figure3–TANF(TotalCaseloads)
33
Figure4–DayCare(TotalCaseloads)
Figure5–VideoSales($)
34
Figure6–TraditionalLotterySales($)
Figure7–TTU(TotalJobs)
35
Figure8–Manufacturing(TotalJobs)
Figure9–NHPC(TotalJobs)
36
Figure10–TotalUnemployment
Figure11–AverageMonthlyEarnings($)
37
11)AppendixB(DataSources)SNAP
Contact:JaneSabatinoEmail:[email protected]://www.oregon.gov/DHS/assistance/foodstamps/snap‐info.shtml
TANF Contact:JaneSabatinoEmail:[email protected]://www.oregon.gov/DHS/assistance/cash/tanf.shtml
DayCare Contact:JaneSabatinoEmail:[email protected]://www.oregon.gov/DHS/children/childcare/providers.shtml
VideoSales Contact:MarleneMeissnerEmail:[email protected]
TraditionalLotterySales
Contact:MarleneMeissnerEmail:[email protected]
TTU OregonLaborMarketInformationSystemhttp://www.qualityinfo.org/olmisj/CES
Manufacturing OregonLaborMarketInformationSystemhttp://www.qualityinfo.org/olmisj/CES
NewHiresofPrivateConstruction
OregonLaborMarketInformationSystemhttp://www.qualityinfo.org/olmisj/qwi
TotalUnemployment
BureauofLaborStatisticshttp://data.bls.gov:8080/PDQ/outside.jsp?survey=la
AverageMonthlyEarnings
OregonLaborMarketInformationSystemhttp://www.qualityinfo.org/olmisj/qwi
38
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