Poverty in the Springfield area has left its mark in recent years, and as the city moves beyond the Great Recession, an area economist says the link between wages and poverty are obstacles to recovery.
On June 27, the U.S. Department of Commerce’s Bureau of Economic Analysis issued its quarterly report on personal income levels and found that total income from all sources in Missouri increased 2.8 percent in the first quarter of 2012 compared to the same period in 2011. This nearly kept pace with the national increase of 2.9 percent in the first quarter compared to the first three months of 2011.
Trouble brewing While state and national income levels may be on the rise, Springfield area statistics in recent years indicate sluggish earnings for area laborers.
In 2006, 12 percent of Springfield families with children younger than 5 years were living in poverty, less than the state and national averages of 18 percent and 16 percent, respectively. Four years later, 22 percent of Missouri families with children younger than 5 years were living in poverty, compared to 19 percent nationwide, according to the U.S. Bureau of Labor Statistics. Both are marked increases but pale in comparison to Springfield. In the city, 49 percent of families with children younger than 5 lived in poverty in 2010.
Complicating the matter, BEA data shows income levels in the Springfield metropolitan statistical area are well below state and national averages. In 2010, the most recent Springfield MSA data available, the area’s per capita personal income was $32,683, compared to $38,248 statewide and $39,937 nationwide.
Business and community leaders in Springfield are taking note.
One of the red flags in the 2011 Community Focus Report, released in October, was the effect of poverty on economic development.
The report states: “The rising levels of families in poverty bring tremendous societal challenges including increased crime, family violence, drug and alcohol abuse, financial instability, and reduced educational attainment. A continued long-term focus and community collaboration to create systemic change is vital for addressing this issue.”
Sandy Howard, vice president of public affairs for the Springfield Area Chamber of Commerce and member of the Community Focus Report steering committee that reviewed the impact of local poverty, said the chamber believes education is key.
“We see education as a fundamental factor in this problem,” she said. “We need to make sure that students have the proper training to be productive citizens in the workplace.”
Howard said companies considering investing in Springfield often look at “the total package,” including wages, cost of living and highway access.
She said the chamber is working to improve the job market by working to attract high-wage positions. For instance, formation of groups such as The Network for young professionals aims to keep graduates of Missouri State, Drury and Evangel universities here as citizens once they finish school. In 2010, Network members formed IN.network for college interns, helping soon-to-be graduates form connections with the Springfield business community.
Putting people to work John Peine, interim Springfield Workforce Development director and Missouri Career Center coordinator, works day in and day out to fight poverty by putting people to work.
Peine said Springfield’s career center is moving July 2 to 2900 E. Sunshine St. in the Southern Hills Shopping Center from its long-held offices at 1514 S. Glenstone Ave. Peine said the move is designed to increase work-flow efficiency and make it easier for staff to assist the area’s unemployed and underemployed.
The good news, according to Peine, is that the numbers of unemployed coming through the Career Center are on the decline. He said nearly 10,000 people visited the Glen Isle Shopping Center office in May, down from roughly 15,000 during the same month in 2011.
“Some of those people got jobs, and some others have fallen off the unemployment rosters,” Peine said, adding that individuals receiving unemployment come into the Career Center to file a monthly report with the Department of Labor. As unemployment goes down, he said foot traffic generally follows.
According to the BLS, unemployment in Springfield was at 6.3 percent in May, down from 7.5 percent in May 2011 – figures that were both lower than the state and national rates. In May, Missouri’s unemployment rate was 7.3 percent, and the U.S. rate was 8.2 percent.
Still, the jobs available seem to pay less than those in other areas of the state and country.
David Mitchell, director of the Bureau of Economic Research at Missouri State University, said one reason for lower wages is the cost of living.
According to the 2011 Community Focus Report, Springfield’s cost of living is 12 percent below the national average, and housing and utilities cost 23 percent and 17 percent, respectively, below the national averages.
Other factors, according to Mitchell, are education and opportunity.
“Wages are, in essence, a reflection of productivity,” Mitchell said, noting those with a range of skill sets have more options and can generally be more selective in finding a higher-paying job.
“As a college professor, I could be a janitor, as well. There could be competition then for janitors. If a janitor, let’s say, doesn’t have a high school diploma, he can’t do my job,” he said. “If there are a whole bunch of people who have the ability to do his job, that could have a tendency to decrease wages.”
But with Springfield having notable secondary educational systems such as Missouri State, Drury and Evangel universities, it is less clear why wages tend to be lower. Mitchell said geography could be a factor. He said population centers tend to be near the ocean, so Springfield could be at a geographical disadvantage.
Mitchell said the area’s low wages also could keep new graduates away and make it harder for higher paying employers to attract people from other parts of the country. In addition, area income levels may make it harder for employees to save money.
“You’re paying into your retirement less, you’re paying in less to Social Security and those types of things, so when you are done [working], the guy from Missouri can’t go to New York, but the guy from New York can go to Missouri because he’s got a larger pension,” Mitchell said.
Low wages, however, aren’t necessarily a deterrent to employers.
“It depends on who you talk to. If you talk to the manufacturing firms, you could say, ‘Hey, we’ve got low wages.’ If you’re trying to attract people here, it’s the exact opposite,” Mitchell said.
In fact, Peine said he believes many quality jobs left during the recession, contributing to area poverty levels.
“When you take a place such as Solo, where you had workers who were working for 15 years to, in one case, 49 years, those folks were at the top of their pay scales. When you get laid off, and you were at the top of your pay scale, and you start your next job, are you going to start off at the top of your pay scale?” Peine asked. “It’s not going to happen.”
This installment of Springfield Business Journal’s Architects & Engineers Project Report showcases 26 endeavors by area design and engineering professionals.
