Big improvements in New England economy tempered by incomplete recovery in poverty rates Big improvements in New England economy tempered by incomplete recovery in poverty rates

Boston Fed economist says some numbers cause for concern amid broad regional recovery Boston Fed economist says some numbers cause for concern amid broad regional recovery

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January 14, 2019

The good news about New England’s economic recovery since the 2008 recession is plentiful and comes on many fronts: Fewer New Englanders are unemployed today, the labor force is growing, and the poverty rate among households headed by single women has dropped. 

Still, some numbers are cause for concern in the midst of what’s seen as a broad, region-wide recovery. 

Although poverty rates declined in all New England states between 2014 and 2017, as of 2017 four out of the six states exhibit higher poverty rates than they did in 2007. Among the region’s unemployed workers, the poverty rate as of 2017 is higher than it was in 2007, and it’s also higher than it was in 2010, after the recession had officially ended. 

All this points to a regional economic picture with some surprises and plenty of complexity.  

“There is definitely a lot of nuance,” said Mary Burke, a senior economist at the Federal Reserve Bank of Boston. Burke recently analyzed these trends to inform policymakers convened in New Hampshire to consider strategies to address two-generation poverty. 

“Just because the economy looks good along a lot of indicators, and it really has improved a lot, it doesn’t mean that the recovery has been complete along all dimensions,” Burke said. 

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The broad picture today of New England’s post-recession recovery is undeniably strong. The unemployment rate in New England is 3.7 percent, well below its post-recession peak of 8.7 percent in 2010, and the rate is down among every ethnic group. Labor force participation, meanwhile, has recently risen to nearly 67 percent after hitting a post-recession low of about 65 percent in 2015.

But if the unemployment rate is so low in New England, why are poverty rates still elevated in some states? Burke noted that compared with their respective levels in 2007 prior to the recession, poverty rates are higher as of 2017 by about 0.6 percentage points or more in Connecticut, Massachusetts, New Hampshire, and Vermont. While Burke admitted this remains a puzzle, she pointed out that since 2013 or 2014, poverty rates across New England have declined significantly as labor markets have improved. Furthermore, the unreleased 2018 poverty numbers may show additional improvement. Still, Burke views the delayed and incomplete recovery in poverty rates as both surprising and troubling, as it could indicate an erosion of the safety net.

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A related – but positive – statistic highlighted by Burke is a concurrent drop in the poverty rate in households led by single females, from 25.3 percent to 23.5 percent in New England. This, even as the regional poverty rate is up among both married couple families (2.9 percent to 3.5 percent) and households headed by single males (12.5 percent to 12.7 percent).

Burke pointed to numbers indicating the percentage of women in the labor force nationwide who are in the prime age for earnings (aged 25-54) has risen significantly since 2007. That increase, from about 73 percent to 78 percent in 2018, could be pulling down the poverty rate in households headed by single females. Burke also noted that certain industries that employ high percentages of women, such as education and health services, saw steady job increases even during the recession.

“Female prime-age employment was pretty much flat across the recession, which by itself is noteworthy and speaks to the jobs they were more likely to hold,” Burke said. 

To view more national and regional labor market statistics, check out Burke’s presentation, which she gave in December at the Region 1 Administration for Children and Families’ Whole Family Approach to Jobs Symposium in Portsmouth, N.H.

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