Despite Growing Economy, Poverty is Increasing in Some States and Counties

September 21st, 2015

This week we highlight areas with increasing poverty rates and offer some perspective on the opening of a new Airbus factory in Mobile, Alabama.

Despite Growing Economy, Poverty is Increasing in Some States and Counties

Last week the Census Bureau published updated estimates to its poverty and income data for all the States and for the largest Counties in the U.S.

While the national rate of poverty was unchanged, the poverty rate increased in 18 States.


Source:  U.S. Census Bureau

The largest increase was in Alaska (20%).   The largest decrease was in Mississippi (-11%).  Even after this substantial decline, Mississippi still has the highest poverty rate in the country (22%). Note that changes less than 2.0% are likely not statistically significant.

Of the 18 States with increasing poverty rates, all but three experienced increases in Median Household Income.

At the County level, 391 of the 828 Counties included in the report showed increases in the poverty rate.


Source:  U.S. Census Bureau

Among the largest Counties, Anchorage, Alaska experienced the largest increase (+45%). Other notable Counties are Fairfax, Virginia (+14%), and Burlington (+24%) and Ocean (+19%) Counties in New Jersey.

Subscribers to DIVER Analytics can use the Filter Tool to identify portfolio holdings located in areas with increasing poverty rates.

Mobile, Alabama is Hoping it Picked the Right Piece from the Box of Chocolates

This week, the European aircraft manufacturer Airbus opens its first factory in the United States in Mobile, Alabama.  Like much of Alabama, the economy in Mobile is among the weakest in the nation.

County DIVER Geo Scores (August 2015):  Alabama



This weakness persists, despite numerous advantages:  deep water port, rail connections, a right to work labor regime (and access to Gulf Shore seafood). Some of this seafood is harvested in nearby Bayou La Batre (the site of the shrimping scenes from Forrest Gump).

Some of the press coverage speculated that this might be the start of an economic revival.   The projected 4,000 jobs would be a 5% increase in employment in Mobile.

The chance at economic revival comes at a price.  The State of Alabama and the City of Mobile agreed to significant incentives to attract Airbus to the site.  This is the most recent attempt by Alabama to jump start its economy with incentive packages.


Compared to previous incentive packages, the Airbus deal appears to be a bargain.  The cost for each projected job in this deal is $39,625 per job, much less than the ThyseenKrup package, which had projected $500,000 per new job.

While Boeing and Airbus are fierce competitors, it would take substantial improvement in the Alabama State and Mobile economies, before they matched the Washington State and Seattle economies where Boeing is located.


Alabama may be hoping that the large subsidies are a short cut to economic prosperity, but we are skeptical.


Have a great week,

Michael Craft, CFA