News From Terre Haute, Indiana


August 21, 2011

Government transfer programs provide safety net

The wheels of our economic wagon began to wobble in 2007. In 2008 they came off. Then they were partially restored in 2009 and, in some areas, fully functional again in 2010. What restored the wheels to the wagon?

The most widely available measures of local economic activity are the annual county estimates of personal income provided by the U.S. Bureau of Economic Analysis. Last week, the BEA issued its advance report on PI for metropolitan statistical areas. Here is what we learned:

At first glance, the nation’s 366 MSAs combined enjoyed nearly 5 percent more income in 2010 than in 2007. When inflation is taken out of those data, however, the gain turns to a loss of 0.5 percent. Thus, we could say that our metro areas have nearly recovered from the great recession.

This bounty was not spread evenly across the nation. Jacksonville, N.C., led the nation in income growth at 22 percent with three-quarters of that growth coming from the Marine base at Camp Lejeune. Indiana’s top gainer was the Bloomington MSA, growing by 4.3 percent (79th in the nation).

In sum, 239 of the 366 MSAs had inflation-adjusted PI greater in 2010 than in 2007. In that group of recovered metro areas we find Terre Haute and Evansville joining Bloomington.

Also recovered in terms of income, if not employment, are Lafayette, Columbus and Anderson.

Below, but still within 1 percent of their 2007 income levels are Michigan City-La Porte and Indianapolis-Carmel.

Muncie, Fort Wayne and South Bend-Mishawaka are within 3 percent, but Elkhart-Goshen and Kokomo are still more than 8 percent from their 2007 levels.

Only the three Nevada metro areas of Reno, Las Vegas, and Carson City were below Kokomo in the national ranking of PI change 2007 to 2010.

All of these figures hide the massively important role played by government transfer programs in providing the safety net on which so many Americans depend. Nationally, the 366 MSAs had a decline of $352 billion in earnings received by workers and business proprietors between 2007 and 2010. That was a drop of nearly 5 percent in the take home pay of Americans at work.

Offsetting that decline was a 28 percent surge ($403 billion) in transfer payments from the government to individuals. These are dollars for social security, unemployment compensation, Medicare, Medicaid, income assistance, Veterans’ and several other programs that keep millions from poverty, illness and despair.

In 2007, transfer payments accounted for 21 percent of personal income, but by 2010, when help was necessary, they rose to 25 percent. Without this increase, not 239, but only 76 MSAs would have cleared their 2007 income levels. Bloomington would have been Indiana’s only MSA in remission from the recession.

Remember, these transfer payments are among the government spending programs that some politicians contend need to be trimmed back, cut down, or eliminated entirely. Unemployment compensation has been under attack during most of the recession. Social security and Medicare are described as threats to our fiscal future.

The hardships of the recession have been bad enough. Why would anyone want to cut back the programs that assist the neediest in the worst of times?            


Morton Marcus is an independent economist, speaker, and writer formerly with IU’s Kelley School of Business.


Text Only | Photo Reprints
Latest News Poll
AP Video
Raw: Thousands Flocking to German Crop Circle Raw: Otters Enjoy Water Slides at Japan Zoo Texas Scientists Study Ebola Virus Two Women Narrowly Avoid Being Hit by Train Smartphone Powered Paper Plane Debuts at Airshow Raw: Plane Lands on New York Highway Raw: Deadly Landslide Hits Indian Village Raw: 16 Killed in Gaza Market Strike Southern Accent Reduction Class Cancelled in TN Obama Chides House GOP for Pursuing Lawsuit Raw: Bolivian Dancers Attempt to Break Record Crayola Announces Family Attraction in Orlando Harding Love Letters Now Open to Public Raw: Amphibious Landing Practice in Hawaii LeBron James Sends Apology Treat to Neighbors Six PA Cops Indicted for Robbing Drug Dealers Kangaroo Goes Missing in Oklahoma Raw: Guinea Rap Concert Stampede Kills 33+ Cat Fans Lap Up Feline Film Festival 3Doodler Bring 3-D Printing to Your Hand
NDN Video
Heartwarming 'Batkid Begins' Documentary is Tear-Jerker Orlando Bloom 'Takes a Swing' at Justin Bieber In Ibiza Pitch Invading Morons Cause Chaos - @TheBuzzeronFOX Sadie Doesn't Want Her Brother to Grow Up "Maxim" Hotness! See Jessica Alba's Sizzling Spread Two women barely avoid being hit by train Broken Water Main Floods UCLA Orlando Bloom and Justin Bieber Reportedly Came To Blows In Ibiza Meet the Man Behind Dumb Starbucks Chris Pratt Adorably Surprises Kids at a 'Guardians of the Galaxy' Screening NOW TRENDING: Peyton Manning dancing at practice "The Bachelorette" Makes Her Decision Thieves pick the wrong gas station to rob Golden Sisters on '50 Shades' trailer: 'Look At That Chest!' Staten Island Man's Emotional Dunk Over NYPD Car - @TheBuzzeronFOX GMA: Dog passes out from excitment to see owner Baseball Hall of Famers Inducted 'Hunger Games: Mockingjay Part 1' Sneak Peek Florida Keys Webcam Captures Turtles Hatching Morgan Freeman Sucks Down Helium on 'Tonight Show'

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
  • -


    March 12, 2010