The New York Times reported earlier this week that high gas prices are taking a serious toll on rural populations across the United States. This is particularly true in rural areas throughout the South, where poverty and low incomes are forcing families to choose between food and gas.

In many rural areas, local restaurants and businesses are experiencing decreasing sales, and some are even closing down. Factories are cutting workers, while some workers are forced to quit their jobs because they cannot afford the longer commutes common in rural areas.

According to the NYT article, Americans nationwide are now spending about 4 percent of their take-home income on gasoline. By contrast, in some counties in the Mississippi Delta, that figure reaches as high as 16 percent. A survey conducted by the Oil Price Information Service detailed that of the 13 counties where people spent 13 percent or more of their family income on gasoline, 5 were located in Mississippi, 4 were in Alabama, 3 were in Kentucky and 1 was in West Virginia.

From a policy perspective, higher gas prices are often praised by public transportation advocates and environmentalists who see increasing prices as an opportunity to push for alternatives to U.S gas dependency. In fact, the U.S. Transportation Department reported last month that in March, Americans drove 11 billion fewer miles than in March 2007. In many urban areas in the United States soaring gas prices are convincing more people to take public transit, with subways, streetcars, trolleys and other light rail experiencing a 10.3 percent increase in ridership for the first quarter of the year, according to the American Public Transportation Association. Even major Southern cities, such as Atlanta, Memphis, and New Orleans saw double digit increases in public transit use.

“Public transportation is a key part of the solution to decreasing greenhouse gases and meeting our national goal of energy independence. When more people ride public transportation, there are more reductions in carbon emissions and our country is less dependent on foreign oil,” said APTA president William W. Millar in a March 2007 press release. He explained that with prices topping $4 a gallon, “there is a greater urgency for higher federal funding to expand U.S. public transportation systems so Americans have an affordable transportation choice.”

The lack of affordable alternative public transportation choices is acutely felt by people across the rural South. Little public transportation is available in many areas, and since jobs are often scarcer, longer commutes to farther-away job sites are common. Often workers have no choice but to drive more than 20 miles or more for work. Experts say that job scarcity, limited public transit, and the prevalence of less-fuel efficient vehicles such as older pickups, may combine to deepen the disparity between rural America and the rest of the country as gas prices continue to rise.

As the NYT reported:

Sociologists and economists who study rural poverty say the gasoline crisis in the rural South, if it persists, could accelerate population loss and decrease the tax base in some areas as more people move closer to urban manufacturing jobs. They warn that the high cost of driving makes low-wage labor even less attractive to workers, especially those who also have to pay for child care and can live off welfare and food stamps.

"As gas prices rise, working less could be the economically rational choice,” said Tim Slack, a sociologist at Louisiana State University who studies rural poverty. “That would mean lower incomes for the poor and greater distance from the mainstream.”

Labels: economics, oil industry, poverty, rural south

Over the last two decades, government grants for college have been increasingly replaced by loans. While a big boon to banks and lenders, the privatization of student aid has put those wanting to go to college in an increasingly precarious position.

And that situation has just gotten worse, as the housing credit crisis causes lenders to back away from student loans, Stateline.org reports:

An increasing number of banks, private lenders and state agencies are dropping their student loan programs, forcing students to scramble for new sources of money. While some experts say students should be able to easily find new lenders, students who switch could end up with higher interest rates and fewer benefits, such as paid upfront loan fees, as the financial market tightens.

It's not just private lenders; state agencies are backing off as well:

Just last week, Kentucky announced that unless more money becomes available, it will not accept loan applications from new students after May 1, closing the door on 27,500 potential borrowers.

Students needing help will be able to find lenders to loan them money -- but likely at exorbitant rates and on terms that could keep students mired in debt, effectively creating a new subprime market of students in debt:

While some experts say students should be able to easily find new lenders, students who switch could end up with higher interest rates and fewer benefits, such as paid upfront loan fees, as the financial market tightens.

For more information on the issue, see the Project on Student Debt.

Labels: credit crisis, economics, higher education, students

Amidst the Tax Day groans across the South and country this week, there was one piece of good news for low-income taxpayers: this year, four states -- including Louisiana and North Carolina -- started giving an Earned Income Tax Credit.

As Stateline.org reports:

Washington state, New Mexico, North Carolina and Louisiana this year joined 20 other states in offering so-called Earned Income Tax Credit (EITC) programs — an initiative patterned after a successful federal tax credit program for the poor launched in the mid-1970s that gives federal taxes back to low-income taxpayers.

On the downside, Louisiana and North Carolina -- the only two Southern states to offer the EITC, aside from Virginia -- offer the least relief in the nation:

State EITC rates vary widely, ranging from a low of 3.5 percent of the federal credit in North Carolina and Louisiana to a high of 35 percent in the District of Columbia, 32 percent in Vermont, 30 percent in New York and 25 percent in Maryland and Rhode Island.

Experts also note that the addition of Washington state -- which doesn't have an income tax -- could open the door for states like Florida, Tennessee and Texas, which also don't have an income tax.

Labels: democracy north carolina, earned income tax credit, economics, louisiana

Because utilities in the South operate under a traditional rate regulatory structure that encourages investment in new plants and limits competition, companies seeking to develop nuclear power facilities in order to take advantage of federal tax incentives are drawn to the region -- even though it already has a surplus of idle generation.

That's the finding of a new analysis by the Reuters news agency. Titled "Nuclear industry eyes oversupplied U.S. South," the story notes that of the 21 reactor sites identified in NRC filings, 15 are in the South: four in Texas, three in South Carolina, two each in North Carolina and Florida, and one each in Alabama, Georgia, Louisiana and Mississippi. But at the same time, the Southeast has more than enough existing gas-fired generation to meet power needs for at least another decade.

The push for new nukes comes as Southerners are still paying for the expensive plants built during the nuclear boom of the 1980s, Reuters notes:

Frank Spencer, a former Mississippi assistant attorney general, has not forgotten the years-long legal battle over Entergy Corp's Grand Gulf station that pitted elected officials in Arkansas, Louisiana and Mississippi against the utility and state and federal regulators. The fight over who would pay went to the U.S. Supreme Court.

Spencer battled unsuccessfully to keep Mississippi residents from paying more than their share of Grand Gulf's price tag which ballooned to more than $3.4 billion from $900 million.

"It was a huge burden, with the increase in rates," said Spencer, now a minister who runs a soup kitchen and shelter in Jackson. "It was the most costly plant at the time and Mississippi had to pay for one-third of it."

Today, a typical Entergy Mississippi customer still pays $12 a month for overruns at the 23-year-old nuclear plant, according to state regulatory filings.

And it's not just ratepayers who will be bearing the financial burden: A number of states including Georgia, Mississippi, Louisiana and Florida are considering handing out their own taxpayer-funded incentives to politically powerful nuclear companies.

Labels: economics, energy policy, nuclear power, tax subsidies

In a telling follow-up to my last post on states slashing budgets to trim deficits, Jordan Green at YES! Weekly in Greensboro, NC has an excellent piece of reporting on what happens to workers who get stiffed by their employers.

Despite a growing number of workers being laid off or fired without receiving proper pay, the N.C. Department of Labor Wage and Hour Bureau is cutting back, making only two attempts to collect from the employer before telling the empty-handed workers the case is "unresolved":

"Because of personnel turnover we couldn't keep up with the inventory, so we modified to limited services procedures to where we were making two attempts to contact, and then making a decision of how to proceed," said Jim Taylor, the state's wage and hour administrator. "And if we didn't get voluntary payment in most cases, it was referred back to the complainant."

The Wage and Hour Bureau is stretched thin, Taylor said. Claims for nonpayment of wages are up at a time when longtime investigators are retiring, less experienced employees are seeking better pay in the private sector and the bureau is generally suffering from high turnover.

[T]he number of cases [of North Carolina employers not paying workers] open more than doubled from 722 in fiscal year 2005 to 1,961 in fiscal year 2006. Caseload currently hovers at around 1,200. The cost incurred by the bureau's limited-service mode has been a decline in the share of cases resolved with a factual determination from 62.2 to 55.8 percent from 2005 to 2007, while cases closed with no response from the employer skyrocketed from 1.9 to 16.1 percent over the same period.

Green also reports that the bureau is currently "opting to not use an enforcement statute" that would compel deadbeat employers to turn over records, "nor does the bureau have sufficient staff to conduct onsite investigations."

Labels: economics, economy, jordan green, north carolina, Work and Community

Homeowners and credit card consumers aren't the only ones drowning in debt. A new analysis by the Center for Budget and Policy Priorities warns that 20 states are facing a combined budget shortfall of $35 billion in 2009, and eight more are expected to have problems.

According to the study, eight out of the 12 Southern states are in the hole or heading there:

The 20 states in which revenues are expected to fall short of the amount needed to support current services in fiscal year 2009 are Alabama, Arizona, California, Florida, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New York, Ohio, Rhode Island, South Carolina, Virginia, and Wisconsin.

Another five have said that they will have deficits that will need to be closed for fiscal year 2009, but have not released information on the size of those deficits. They are Louisiana, Michigan, Mississippi, Oklahoma, and Vermont. Analysts in three other states — Connecticut, Missouri, and Texas — are projecting budget gaps a little further down the road, in FY2010 and beyond.

What's the best way for states to fill these gaps? Unfortunately, most start slashing social services -- a dubious approach that not only hurts the most vulnerable, but also takes more money out of the economy than a tax increase does, making the economic situation even worse.

The Progressive States Network outlines the basics of a more effective strategy, based on three themes: (1) Have wealth pay their share, and cut taxes for working families; (2) Cut corporate loopholes, not social services; and (3) Prune economic development subsidies, protect social investments.

Labels: economics, Southern Politics, state politics, Work and Community