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Increasing Family Wealth and College Enrollment

May 18, 2012

Filed under: Education,Income & Working Families — Tags: , , , , , — admin @ 1:13 PM

Enrolling in college and receiving a college degree became increasingly necessary for moving up the economic ladder and reaching reliable employment and sufficient wages. A family’s income affects the likelihood a recent high school graduate will enroll in college. But what about a family’s household wealth or assets? Findings from the Pew Charitable Trusts indicate that increases in a family’s wealth during high school years, as measured by changes in the value of their home, raise a student’s likelihood of enrolling in college.

The chart shows college enrollment rates among students living in low- and middle-income families by the family’s home equity. For low-income families, having home equity at $35,000 (the 25th percentile) increased the college attendance rate from 9% to 29%. Enrollment rates rise to 52% when a low-income family’s home equity is $75,000 (50th percentile). Students from middle-income families also experience an increase in college enrollment as home equity rises.

Housing wealth could influence a student’s likelihood of enrolling in college for many reasons. The Pew report suggests that increases in housing wealth may affect college enrollment decisions because families use their wealth to directly finance education. Housing wealth could also indicate that a family has additional resources to set aside in a college savings account. It is also possible that families feel more economically secure, and open to helping their children navigate the path to applying for student loans to pay for a college education.

Low-wealth families may encounter more financial hurdles to supporting their children on the path to enrolling in post-secondary education. Efforts that promote wealth building among low and middle-income families and that support families in saving for a child’s education can lift more of Mississippi’s students to college enrollment and success.

Along with support for college savings, Community Development Financial Institutions (CDFIs) can connect underserved populations with a path to homeownership that builds wealth and home equity. Many CDFIs serve mortgage customers that are low- to moderate-income borrowers and first-time homeowners.

Supporting Mississippi’s families in accumulating college savings and broader wealth can lead to greater financial stability. Ultimately, these savings will result in an increased likelihood that more of Mississippi’s students pursue college courses and gain employment that allows them to save for their own families someday.

Read more on how home equity affects a student’s college decisions.

Author: Sarah Welker, Policy Analyst

Part 2: WHAT ARE THE REAL RETURNS FROM POST-SECONDARY CREDENTIALS?

May 11, 2012

Filed under: Education,Income & Working Families,Workforce — Tags: , — admin @ 9:12 AM

Yesterday, the MEPC blog looked at earnings gains that Mississippians experience from receiving a post-secondary degree. The post determined that persisting to a college degree can have real effects on wages for individuals and families.

In fact, the returns Mississippians experience from pursuing a community college certificate, 2-year degree or 4-year degree are above 23 other states. The Center on Law and Social Policy (CLASP) looked at the personal income gains in each state from students attaining an additional 100 certificates, 100 associate’s degrees and 100 bachelor’s degrees. Mississippi ranked 27th in personal income growth associated with these credential additions (see chart).

Gains from increasing credential attainment don’t just affect the individual. Increasing credential attainment also benefits families, employers and the state’s revenue generation. Mississippi also ranks even higher (19th) for state revenue increases from adding 100 certificates, associate’s degrees and bachelor’s degrees (see chart).

As a state, Mississippi stands to experience above average returns to contributions that increase post-secondary credential attainment among its citizens. The findings emphasize the need for steps that increase state revenue, so funding to higher education isn’t limited, tuitions don’t rise as rapidly as in recent years, and students aren’t faced with additional barriers in their desire for higher education. Unfortunately, Mississippi currently faces the opposite scenario.

Without a balanced approach that considers pathways to raising additional public revenue, the state is at risk of not reaping the full returns available to its residents and state resources from increasing post-secondary credential attainment.

Author: Sarah Welker, Policy Analyst
Source: Center on Law and Social Policy. The Credential Differential: The Public Return to Increasing Postsecondary Credential Attainment. Webinar on April 26, 2012.

WHAT ARE THE REAL RETURNS FROM POST-SECONDARY CREDENTIALS?

May 10, 2012

Filed under: Education,Income & Working Families,Workforce — Tags: , , , , , — admin @ 2:05 PM

Last week MEPC’s blog introduced a new tool that looks at the returns on investment adults and the state receive from increasing post-secondary degree and credential attainment among residents.

MEPC regularly recommends increasing resources for higher education, so adults have smoother, better supported pathways to success in higher education and the workforce. An analysis by the Center on Law and Social Policy (CLASP) affirms the importance of bolstering these investments and shows the value to Mississippians receiving the credentials and the state overall.

Let’s start on the individual level. The chart below compares the difference in earnings between adults with a high school degree, associate’s degree and bachelor’s degree. It is not surprising that Mississippi falls below average for earnings for adults with a bachelor’s degree. However, what the chart also shows is substantial space between Mississippi’s adults with a high school degree, associate’s degree and bachelor’s degree. The space between the earnings by educational attainment reveals that Mississippi workers experience notable wage increases through pursuing education.

Higher education continues to be a pathway for increasing economic security of individuals. However, gains from increasing credential attainment don’t just affect the individual. Increasing credential attainment also benefits families, employers and the state’s revenue generation.

Tomorrow’s post will compare the returns in personal and state income Mississippi experiences from increasing college credential attainment to the returns in other states across the U.S.

Author: Sarah Welker, Policy Analyst
Source: Center on Law and Social Policy. The Credential Differential: The Public Return to Increasing Postsecondary Credential Attainment. Webinar on April 26, 2012.

 

Mississippi’s Graduation Rate Task Force Goals for Increasing Degree Attainment

May 2, 2012

Filed under: College,Education,Income & Working Families,Workforce — Tags: , , , , , — admin @ 9:55 AM

In 2009 Mississippi’s Graduation Rate Task Force developed long-term goals for increasing the number of Mississippi adults with a postsecondary degree. The Task Force outlined that they wanted to reach the national rate for degree attainment by 2025 which means raising the portion of Mississippi’s residents with a post-secondary degree to 46.5%. Currently, 29.9% of working-age adults hold a post-secondary degree.

To reach the Task Force goal, Mississippi needs to connect close to 150,000 additional residents with a 2 or 4 –year degree beyond the current rate of degree attainment, equal to an additional 950 and 1,000 graduates each year.

What different levers can contribute to increasing the rate at which Mississippi’s students attain degrees?

A new tool from the Center on Law and Social Policy (CLASP) explores what factors can raise the portion of residents earning a credential. By setting a “2025 College Attainment Goal” at 46.5%, individuals can move “bars” for Mississippi’s high school graduation rate, the college-going rate and portion of adults enrolling in college to see how increasing each one contributes to more degrees earned.

Meeting the Graduation Task Force goal will also mean increasing the number of students that persist to graduation. Individuals can also explore how increasing the rate at which students earn credentials at two and four-year colleges will also be necessary to advance the state to its goal.

The tool also demonstrates the return on investment that comes from increasing college graduates including: increased per capita earnings, increased state revenue and decreased state spending.

While the data are estimates, CLASP’s tool provides a starting point for conversation about advancements still needed in Mississippi’s post-secondary education system. Ensuring the success of adult students will be a critical part of attaining the 2025 goal. Considering non-traditional student needs in program design, support services and curriculum development is critical for raising the number of prepared adults in Mississippi’s workforce and raising the state’s competitiveness and prosperity in the years ahead.

Read more on the returns of increasing credential attainment in Mississippi.
Author: Sarah Welker, Policy Analyst

EQUAL PAY DAY 2012: A Closer Look at the Wage and Mississippi Industries

April 26, 2012

Filed under: Income & Working Families,Jobs — Tags: , , — admin @ 10:18 AM

In recognition of Equal Pay Day on April 17th, a previous post reviewed wage gaps between men and women across Southern states. This post takes a look at working men and women with an eye towards Mississippi’s industries.

WOMEN, MEN AND MISSISSSIPPI’S INDUSTRIES

While men and women are increasingly equally represented in the workforce, they are not equally represented across all industries. Survey data reveals men represent 90% of Mississippi’s workers in construction and agriculture jobs and close to 80% of those in transportation and warehousing. In contrast, women make up about 80% of the workers in education and health services industries.

The chart shows women’s wages as a percentage of men’s wages for Mississippi’s full-time workers. It is important to note that each industry contains employees in many different occupations, and the wage data presented incorporate positions from management to entry-level workers.  However, the graphic illustrates that the pay gap between men and women exists in each of Mississippi’s industries.

It is well established that women are more likely to pursue careers in fields associated with lower earnings. The three industries with the smallest pay gaps –construction, transportation and agriculture- are also traditionally male-dominated industries with a lower portion of women employed. Efforts are growing across the country to connect women to training in higher paying, ‘non-traditional’ careers as one path for lessening the difference in men’s and women’s wages.

Outside of industries, the American Association of University Women finds that even after controlling for factors like education, work position, age, college major, and the number of children in a family, an unexplained, though smaller, pay gap continues to exist between men and women. There is also evidence that this unexplained pay gap may grow over a woman’s career.

The pay gap between men and women has clear effects on families’ income and their economic security. And while the gap has diminished over time, the data from 2010 underscore that steps to preserve work supports for women and their families and steps to reduce gender pay discrimination continue to be necessary for Mississippi’s women and their families.

Author: Sarah Welker, Policy Analyst
Sources: U.S. Census Bureau. American Community Survey 2008-2010 Averages.

EQUAL PAY DAY 2012: A Closer Look at the Wage Gap Between Men and Women

April 24, 2012

Filed under: Taxes,Workforce — Tags: , , — admin @ 10:50 AM

Last week MEPC’s blog focused on Tax Day(April 17th). Equal Pay Day was also April 17th and this week we are focusing on the differences in wages between men and women across the country.

Earlier this year, MEPC release its State of Working report and looked at hourly wages for all workers. However, more recent data from the Census Bureau allows a comparison of annual earnings for a more limited sample of full-time workers.

The chart below details the gap in wages between men and women that persists in many Southern states. Across all industries women working full-time in Mississippi earned 75% of men working full-time in 2010. The gap is same in Alabama and Arkansas while North Carolina, Florida and Georgia all registered smaller wage gaps that the national norm.

While disparities between full-time earnings for men and women continue, women continue to make advances in educational attainment. Women over 25 years old in Mississippi are more likely than their male counterparts to have attained an associate’s degree, bachelor’s degree or more.

This trend mirrors the nation where women are attaining post-secondary credentials at higher rates than men. Among Mississippi’s younger working-age population, the differences in educational attainment broaden. Thirty-seven percent of women between 25 and 34 years old have an associate’s degree or beyond compared to 26% of men in the same age range.

What about factors beyond educational attainment?

To continue Equal Pay Day coverage, an upcoming blog will look at wages and Mississippi industries and share national findings on women and wages.

Sources: U.S. Census Bureau. American Community Survey 2008-2010 Averages.
Author: Sarah Welker, Policy Analyst

Inequality Hurts Us All—Our Tax System Shouldn’t Make This Worse

April 19, 2012

Filed under: Budget & Tax,Taxes — Tags: , , — admin @ 12:52 PM

Our state is a better place when we all do well.  Unfortunately, our current tax system makes inequality in our state worse by taxing working-poor families deeper into poverty.

Mississippi’s state income tax threshold, the amount at which persons start having to pay income taxes, has fallen below the federal poverty line since 2005 (See Figure 1, below).

Each year, the federal poverty line rises due to increases in the cost of living.  Last year, the federal poverty line rose by $698 from $22,113 to $22,811 for a family of four, while Mississippi’s income tax threshold had no adjustment. Without any adjustment for inflation, more and more individuals living below the federal poverty line will be required to pay state income taxes.


In 2011, a number of states exempted low-income families from state income tax and a many other states offered refunds to low-income working families through Earned Income Tax Credits. 404,394 Mississippians claimed the federal Earned Income Tax Credit (EITC) in 2011 which brought an additional $1.5 billion into our state.¹

A state EITC would reduce the income taxes owed and provide a wage supplement for over 360,000 working families living in or near poverty in Mississippi.  Research has shown that most families use the EITC to pay for necessities, home repairs, maintaining/replacing vehicles needed to commute to work, and obtaining additional education or training to boost their employability and earning power.²

Inequality hurts us all.  Our state tax system shouldn’t make this worse—especially when we have the ability to adjust our tax system to reflect the realities of working families in our state through a state-level Earned Income Tax Credit.

¹http://www.eitc.irs.gov/central/eitcstats/

²Timothy M. Smeeding, Katherin Ross Phillips, and Michael A. O’Connor, The Earned Income Tax Credit:  Expectation, Knowledge, Use, and Economic and Social Mobility. http://ideas.repec.org/p/max/cprwps/13.html

Author: Francinia D. McKeithan, Policy Analyst/ SFAI Policy Fellow

What Do Tax Breaks for Millionaires Cost in Mississippi?

April 16, 2012

Filed under: Budget & Tax,Income & Working Families,Taxes — Tags: , — admin @ 11:41 AM

Today, the United States Senate will be voting on the “Buffett Rule.”   The “Buffett Rule” is the principle that the tax system should be reformed to reduce or eliminate situations in which millionaires (households earning $1 million or more annually) pay lower effective tax rates than many middle-income people.

Only around 210,000 taxpayers – a bit over 1 of every 1,000 – would face higher federal taxes if the measure were enacted, according to the Tax Policy Center.

The National Women’s Law Center shared information on how these tax breaks affect the Federal government as shown in the graphic below.

Here are two examples of how these issues play out in our state.    

  • Child Care Assistance— There are currently 12,964 working Mississippians on the waiting list for child care services.  The waiting list occurred primarily in response to the expiration of $31 million in American Recovery and Reinvestment Act funds.  The funds were used to clear the waiting list in October 2009.
  • Home Delivered Meals— The Aging and Adult Services unit served 1,743,698 individual meals and another 358,790 congregate meals in FY11; however another 2,910 individuals remain on the program’s waiting list.

Taxes are important to all Mississippians, not just because they represent a portion of their paychecks, but also because they fund the public structures that provide the foundation for creating jobs and building a strong economy.  Our state’s tax system should be equitable and adequate, taxing all individuals based on their ability to pay and taxing our citizens in such a way that we are able to build and support the structures that we all depend on each day.

Author: Francinia D. McKeithan, Policy Analyst/ SFAI Policy Fellow

MARCH JOBWATCH

April 12, 2012

Filed under: Income & Working Families — Tags: , — admin @ 1:02 PM

The U.S. Bureau of Labor Statistics released Mississippi’s monthly employment data on March 30th.   The release presented a mixed picture of Mississippi’s labor market as the unemployment rate declined markedly, but still registers above national and regional rates.

Positive signs for Mississippi’s job market:

  • Mississippi’s unemployment rate declined by a larger margin than any other state in February. The state’s unemployment rate came in at 9.5%, a decline of 0.5% from January.
  • Mississippi’s unemployment rate is lower than one year ago, down 1.0% since February 2011.
  • Mississippi’s labor force has grown by 5,300 workers since February 2011 as individuals re-enter the workforce and look for employment.
  • Looking back at 2011, Mississippi saw a gain of 6,525 jobs over a 12-month period.

Signs that additional recovery is still needed:

  • Mississippi’s has 69,600 fewer jobs than at the start of the 2007 recession.
  • Mississippi’s unemployment rate was still above the national rate of 8.3% in February.
  • Mississippi’s February unemployment rate registered above neighboring Mid South states (see chart).

 

An article on the Clarion Ledger last weekend focused on industries and occupations experiencing job growth across the state. Jobs in health care, business services and education are all sited as having substantial growth and/or openings. As Mississippi’s job market recovers from the recession, Mississippi can take several steps to prepare low-skill adults for advancement along a career path to higher wages including:

  • Enhance funding for Adult Basic Education and GED courses, so more support staff are available to promote student transitions from a GED into college-level classes.
  • Imbed occupational and vocational skills content into adult basic education and remedial courses at community colleges, so students connect learning in math and reading with potential careers.
  • Provide college credit for learning attained on the job, so adults can progress through degree programs at a faster pace.

For more recommendations for advancing the skills and job opportunities for Mississippi’s working adults see MEPC’s policy brief on sector initiatives here.

Author: Sarah Welker, Policy Analyst

Updated: HB1396 Takes Advantage of Mississippi’s Working Families

April 2, 2012

Filed under: Budget & Tax — Tags: , , , — admin @ 9:22 AM

This is updated information to the March 30th post on HB 1396

HB1396 represents the types of policies that keep Mississippi and its families from moving ahead and should not be supported. HB1396 significantly drives up the cost of small loans made by small loan companies which are used by working families.

Example:
Compared to the more expensive $1,500 loan under the current statute, this act will increase the current allowable costs on (interest and fees) by $884.88.

***HB1396 changes the fee structure on installment loans making them more expensive.***

On the more expensive $1,500 loan with a term of 24 months, the cost of the loan without credit life insurance is $2,954.88 under the existing statute.  HB1396 will increase the allowable cost by $884.88 (see chart below).


On a monthly basis, HB1396 will increase the costs of making loan payments on the more expensive $1,500 loan by $36.87. For families already in the financial position to need this product, $37 could be the difference between having enough money for gas to go to work and not making it.

One rationale for pursuing this bill has been that the small loan companies have been affected by the recession.  However, in 2010, there were 517 small loan companies licensed in the state of Mississippi with nearly $795 million in loans outstanding.  Clearly, someone is able to make these loans.  The rationale also ignores the fact that Mississippi’s working families have been hurting as well – and this bill will cause further harm.

For more information on HB 1396, see our Fact Sheet.

Author: Ed Sivak, MEPC Director
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