A new report from a housing and homeless advocacy group shows poverty increasing at an alarming rate in Indiana while earnings for middle-income families continue to slip.

Indiana's poverty rate soared to 11.8 percent in 2007 from just 6.7 percent eight years ago, the recently released 2008 Status of Working Families Report shows. Median household income in Indiana dropped $3,000 between 2000 and 2007.

"The year 2001 now can be seen as the beginning of a steady decline for Indiana's working families," said Rochelle Finzel, who authored the report for the Indiana Coalition on Housing and Homeless Issues.

Those who run food pantries, homeless shelters and other service agencies in Northwest Indiana said the last decade has been tough for many Hoosiers, and they now are seeing an unprecedented jump in those needing help.

The food pantry run by Greater Hammond Community Services has seen a 21 percent increase in families needing food boxes this year, Executive Director Tim Cottingham said. The number of people needing help with home heating bills also has jumped, and the group's homeless shelter is full.

"People get the wrong idea about who comes here," Cottingham said. "People that come here work. Often it's two people working. But they are working low-wage jobs. And gas goes up, food goes up, and they can't make ends meet."

It is the same 40 miles away in the rural community of DeMotte, where increasing numbers of seniors, single-parent families and working families are coming into the Good Neighbor Food Pantry, said Kathleen Van Der Molen, a longtime volunteer who coordinates work at the food pantry.

Those observations are in line with the Status of Working Families report's findings of broad declines in the economic health of poor and middle-class families.

The report pins much of the blame on a large decline in manufacturing jobs in Indiana between 2000 and 2008, when 142,000 jobs in the high-paying sector disappeared. During the same time, 120,000 jobs were created in the lower-paying service industry.

Despite a national economic expansion from 2002 to 2007, Indiana never fully recovered from the 2001 recession, the report concludes. The state has yet to match its peak employment of a little more than 3 million jobs, which was reached in May 2000.

"Where once Indiana's thriving manufacturing sector insulated us from the higher poverty rates and unemployment that plagued other states, now our poverty rate is equal to that of the national rate," Finzel wrote in the report.

The slack employment demand in turn has affected wages. The median hourly wage for Hoosier workers was $14.85 per hour in 2007, which is only a 45-cent increase from the median wage of $14.40 in 2000.

Those earning below median wage actually saw their wages decrease, which led to the surge in poverty rates for those at the low end of the wage scale, the report concludes.