Idaho Has the Second Best Ranking in the 2018 Family Prosperity Index

Posted by Dr. Wendy P. Warcholik - 2018-06-19 18:09:00

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The Family Prosperity Index (FPI) provides federal, state, and local policymakers—as well as religious and civic leaders and community-minded citizens—the roadmap needed to develop economic and social policies that improve the well-being and prosperity of American families and their communities. No other measure provides more credible and comprehensive insights into how the economy affects families, and how families affect the economy.


Unlike Gross Domestic Product (GDP), the unemployment rate, and other standard measures of economic performance, the FPI recognizes the vital, central role that families play as the engine of the American economy. Only by recognizing the central role of the family can any measure of the economy provide a complete, accurate, and useful picture of American prosperity and cultural well-being.


In the 2018 Family Prosperity Index (pdf), Idaho has the second top index score of 6.28. More specifically, among the six major indexes that make up the FPI, Idaho ranks in the top 10 in five of them: Demographics (3rd), Family Self-Sufficiency (6th), Family Structure (3rd), Family Culture (9th), and Family Health (3rd). In the Economics major index, Idaho ranks 13th.



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Over time, between the 2012 and 2018 FPI, Idaho has increased its score by 6.2 percent from a score of 5.91 in 2012 to 6.28 in 2018. This increase was driven by four of the six major indexes:


  • Economics increased by 27 percent from 4.40 in 2012 to 5.60 in 2018.


  • Demographics increased by 12 percent from 6.67 in 2012 to 7.47 in 2018.


  • Family Self-Sufficiency increased by 12 percent from 5.17 in 2012 to 5.77 in 2018.


  • Family Health increased by 3 percent from 6.10 in 2012 to 6.27 in 2018.


However, partially offsetting these increases were decreases in two of the six major indexes:


  • Family Structure decreased by 4 percent from 6.75 in 2012 to 6.49 in 2018.


  • Family Culture decreased by 5 percent from 6.39 in 2012 to 6.06 in 2018.


Each of the six major indexes consist of five sub-indexes for a total of 30 sub-indexes. Keep in mind that the FPI uses 60 measurements, or variables, of social and economic data, and each sub-index uses at least one of these variables. If a sub-index uses two or more variables, each variable has an equal weight. Regardless of how a variable is used, it has two measures: its level (worth 80% of its value) and its 5-year average annual growth rate (worth 20%).


Yet, although Idaho ranks 2nd overall there are concerns, especially in the Economics index (13th highest) where Idaho is the weakest. To strengthen this score, Idaho must find ways to boost its private sector because only the private sector can create new income. The public sector, in contrast, can only redistribute income through taxes and spending.


This distinction is important because there is a significant positive correlation between per household personal income and the private sector share of personal income (see the Economics section in the 2018 Family Prosperity Index for more details).


Put simply, the larger the private sector in a state, the greater the per household personal income.  In fact, one can see this correlation in Idaho’s FPI scores. Idaho ranks 18th in terms of the size of the private sector and, correspondingly, only ranks 37th in per household income.




Lower household income, in turn, translates into more families (with related children) living in poverty where Idaho ranks 30th. More troubling, family poverty in Idaho has been significantly growing faster than the U.S. average between 2000 and 2016 (46 percent vs. 14 percent, respectively).



In turn, poverty can hinder long-term economic progress by stunting personal development. For example, Idaho only ranks 35th in educational attainment—above the national average in associate degrees, but below average in bachelor and graduate degrees. Moving families out of poverty would potentially boost their educational levels, especially for their children.





A more skilled labor force would be a boon to the private sector thus creating a virtuous cycle—higher educational attainment -> growing private sector -> higher incomes -> lower poverty -> higher educational attainment ... and so on.


Fortunately, there are options that policymakers can pursue to jump start the growth in the private sector, jobs, and family income. Idaho’s personal income and sales tax rate are not regionally competitive—especially considering Washington, Nevada, and Wyoming have no personal income tax and Oregon and Montana have no sales tax.


Tax reform to the personal income and/or sales tax would provide stimulus to the private sector and would do so without negatively impacting the state budget. For example, New Hampshire has the country’s only working state Flat Tax (pdf) and operates without a state income or sales tax. Idaho policymakers should take note.

About the Author

Dr. Wendy P. Warcholik
Dr. Wendy P. Warcholik has worked as an Economist in public policy settings for nearly 20 years. She has extensive experience in applying statistical and econometric tools in public policy paradigms.