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As the economy recovers, many Westerners are left behind

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Jonathan Thompson | Jan 06, 2014 05:00 AM

Las Vegas is filled with symbols of how drastically the economic landscape of the West has changed over the past decade. Drive out into the city’s fringes, and you’ll see vast swaths of land for which developers — visions of master-planned tract home communities dancing in their heads — paid the Bureau of Land Management millions during the boom. Today, many of the developers have gone bankrupt, and most of the land mercifully remains open desert. Or head down to The Strip and check out the Fountainebleau, a 68-story, 3,900-room, $2.9 billion mirrored-glass-sheathed monolith. Construction on the beast was halted in 2007, and it now stands as if frozen in time, cranes still perched on its peak. It’s as likely to be leveled and scrapped as it is to be completed and opened for business.

More disturbing, though, is something you see on many a street corner, whether it’s in the old Downtown or out in the suburbs next to the Starbucks: abject poverty in the form of the homeless, quasi-homeless, panhandlers, drifters and dilapidated homes.

While this deprivation is more apparent in Vegas, juxtaposed as it is against a backdrop of decadence, it’s visible all over the West, whether in the dire housing situation on the Navajo Nation, or in the shadows of the glitzy mountain resort towns, where droves of working poor scrape by on measly wages and commute for hours to semi-affordable housing. It’s visible in Wal-Mart, where, while waiting to get a tire fixed, a man told me how he had plummeted from working on a gas rig and making a big salary — enough to put him in the top 10 percent — with a home chock full of equity in southwestern Colorado, to the bottom 10 with a slip in the mud while carrying a heavy pipe on the job. He was seriously injured, lost his job, and is now fighting to try to get his former employer to help out with his gargantuan medical bills, even as he fights to hang on to his house, which, like so many others around here, is underwater.

For the national economy, 2013 was a year of semi-recovery from the battering recession. But it was also a time when many folks and sectors of the economy continued to get left behind. Over the last five years, income inequality has risen to unprecedented levels, poverty refused to diminish, and some parts of the West remained stuck in the economic trough.

Generally, the federal government, infected with the austerity bug, not to mention sheer dysfunction, has failed to help. Not only has it refused to inject cash into areas that need it, or extend the public safety net to those who are yanked out of the middle class, but has instead, through sequestration, the shutdown, and revocation of unemployment and food stamps, exacerbated their misery — our misery, really, since the West is the region that most depends on the federal government and federal spending.

The economic landscape is revealed by statistics:

PovertyintheWest
Source: U.S. Census Bureau.


Most of the West is poor and getting poorer. Without exception, every state’s poverty rate has increased since 1999, and in many cases, the percentage of children in poverty is even higher than for the population in general. New Mexico vies with a couple of Southern states for poorest in the nation. When cost of living and housing is factored in, the numbers look even worse in places like California. Except for areas with strong extractive economies, poverty rates tend to be higher in rural than in urban areas. And the rate increases almost invariably when crossing into an Indian reservation. Apache County, Ariz., for example, much of which is on the Navajo Nation, has a poverty rate of 36.5 percent. The unemployment rate on the reservation as a whole has been pegged at 50 to 60 percent.


HomeOwnershipWest
Source: Federal Reserve Bank of St. Louis.


Home ownership rates went crazy during the boom, mostly thanks to banks handing out credit like lollipops. And thanks to all those folks buying houses, home values increased dramatically, giving homeowners a lot of equity. That allowed them to use the homes like virtual ATM machines, from which they could draw to inject money back into the economy. Then the whole house of cards blew apart with the subprime mortgage crisis, and homeownership rates plummeted. Although home sales are picking up these days, homeownership rates haven’t recovered at the same rate, an indication that corporations are buying up cheap homes en masse and renting them out. It’s also an indication that regular folks have, by and large, missed the “recovery.”


Unemployment
Unemployment rates, while dropping, remain higher than pre-Recession levels in much of the West. Source: Bureau of Labor Statistics.


Unemployment rates remain as high or higher than the national rate in most of the West, and far higher than in the years before the bust. There are exceptions: Wyoming’s jobless numbers remain low, mostly thanks to oil and gas drilling (but still higher than before the recession, and numbers of homeless are relatively high there, too). But Nevada’s unemployment remains at 9 percent. Meanwhile, Congress just refused to extend unemployment benefits to 1.3 million folks who are out of work, which, I suppose, will force them to get off their duffs and get a job if there were any jobs.


FedSpending
Source: Economic Policy Institute.

The sequester. Austerity. Budget cuts. (Not to mention the shutdown.) Whatever you call it, and whatever you think of it, it’s hitting the West harder. We are big recipients of federal dollars, be it for public lands or military bases or federal labs. Every Western state has more federal employees per 1,000 people than the U.S. average. But the flow of federal cash in this direction is diminishing, despite the fact that it was just the opposite — very heavy federal spending — that pulled us out of the Great Depression. Austerity has hit New Mexico — whose economy was flat or worse in 2013 — especially hard. Tribes, too, rely heavily on federal spending, and are scrambling to figure out how to make up for what’s lost during this budget cutting era.

IncomeInequality
The Top Decile Income Share, 1917-2012. Since the 1980s, the wealthiest Americans have accumulated a greater and greater percentage of the nation's wealth. Source: Emmanuel Saez, UC Berkeley.

This is perhaps the most disturbing graph of the year — the last several decades, even. It maps a long and radical redistribution of the nation’s wealth, from the pockets of the poor to the vaults and yachts and mansions of the rich. The only time income inequality was nearly so pronounced was in the years leading up to the Great Depression. That was repaired with high progressive tax rates that remained in place until they were dismantled, beginning in the 1980s. While recessions also hit the wealthy hard, they have proven resilient. Corporate profits are sky high these days, as is the gap between the pay of the workers and the CEOs. Since 1993, the real income of the top 1 percent has grown by 86 percent. For the rest of us, incomes have grown only 6 percent. On the bright side, Western states such as Utah and Wyoming are among the least lopsided when it comes to wealth distribution. At the same time, other Western regions — California, New Mexico and Boulder and Pitkin counties in Colorado — are among the most lopsided. Witness this in places like Aspen and Telluride, where ranches and condos are selling for tens of millions of dollars, while just down-valley the economic slump continues.

There have been glimmers of hope. The Affordable Care Act, as big a fiasco as its roll-out has been, has thus far put about 2 million people onto the health insurance rolls, thus potentially saving them from going bankrupt because of a broken leg or a lengthy illness. It could, someday, prove to be the first step towards a more comprehensive fix of our broken health care system. Fast food and Wal-Mart workers have demanded higher pay, a movement that seems to be gaining momentum. In 2013, it seems, folks stood up and demanded that they not be left behind. Let's hope that in 2014 someone finally listens.

Jonathan Thompson is a senior editor at High Country News. He tweets @jonnypeace.

Stephanie Paige Ogburn
Stephanie Paige Ogburn Subscriber
Jan 08, 2014 04:09 PM
Nice post Jonathan. Another thing I've noticed here in Denver when my partner and I looked for housing is that all the cheaper, fixer-upper-type homes had been bought up by investment groups as "fix-and-flips." They put in a new kitchen with a tile backsplash, refinish the floors, and sell it for $50K more than they bought it for. So a home that would have been $180K becomes $230K after a fix and flip. This practice has seemed to take a lot more of the affordable homes off the market for those in the medium income range. - Stephanie

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