Question

Which regions of the U.S. have been affected the most by the recession? What are the main reasons for their economic downfall? What is the poverty rate in America? Which groups of the population have been affected the most? Which regions?

How does the U.S. compare with the rest of the rich countries in the world in terms of poverty rates and middle-class income?

Answer 1

The recession of 2008 did not have equal impact across all US states. Some were hit harder than others. The areas which had high growth in residential areas, such as Florida, Arizona, Nevada and California, were hit hardest as median household income and homeownership rates in those states plummeted. In general, northeast was affected most by housing foreclosures while the Midwest was affected most by unemployment in the industrial sectors.

In numerical terms, Nevada was hit the hardest, with job loss rate of 13.11%, while on the other extreme, North Dakota has a job rise of 1.24%. There were only 2 states- North Dakota and Alska, which had a job gain during the recession period. The highest job losses in absolute terms were in California, where 1.37 million jobs were lost, a rate of -9.03%. The US as a whole lost 8.75 million jobs.

The main reasons that affect the impact of job losses seems to be the prevailing poverty rate in the state and the percentage of people employed in the manufacturing sector. The higher these two are, the higher the job losses are.

According to the U.S. Census Bureau’s 2017 estimates, the poverty rate in America is 12.3%.

In terms of regions, New Hamphsire has the lowest poverty rate (at 7.7%), while Mississippi has the highest at 19.8%. Generally southern states have higher poverty rates than northern states. States like Louisiana, New Mexico, Arizona all have high poverty rates.

In terms of race and ethnicity, the poverty rates are highest among Native Americans at 28.3%, closely followed by African Americans at 26.2. Hispanics also follow closely at 23.6%. The lowest poverty rates are among white Americans at 10.1%, closely followed by Asians at 12%.

US has consistently higher poverty and lower middle class income than other developed nations. Since the late 2000s, US poverty rates are higher than 31 OECD countries, including Australia, Turkey, Korea, Japan and western European nations. At the same time, US still has one of the highest per capita income in the world. This dichotomy means that US has very high income inequality and the distribution of wealth is very skewed. This is shown by the fact that earnings at the 10^th percentile as a share of median earnings in USA is only 47%, lower than most OECD countries.