Download pdf - Report: Central Oregon Index of Povertycassites.uoregon.edu/.../Hagen-Schnieder_COIP_2010.pdf · 6 we will define our model, The Central Oregon Index of Poverty(COIP), according to

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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.

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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,

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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

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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).

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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

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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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Connolly,MichaelB.,Frank,AaronR.“CentralOregonEconomicActivity&Business

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