How Does DC Stack Up Against States?

September 18, 2014

A few additional factoids from the new Census Bureau figures — all reinforcing the acute income divide I’ve already remarked on.

On the one hand, the median income for households in the District was higher than the medians in all but four states. Neighboring Maryland had the highest — $72,483. The District’s was $4,911 lower.

On the other hand, only five states had higher poverty rates than the District. And the District tied with Alabama for the sixth highest child poverty rate. Pretty remarkable when you consider that Alabama had the fourth lowest median income.


DC Poverty Rate Rises to Nearly 19%

September 18, 2014

I was all set to write that the poverty rate for the District of Columbia dipped down last year, just as the official national rate had. But no, according to the just-released results of the American Community Survey.

The District’s poverty rate increased from 18.2% in 2012 to 18.9% in 2013,  Or so it seems. The increase is small enough increase to fall within the margin of error.*

Here’s more of what we’ve got, plus a few remarks here and there.

The Big Picture

The new poverty rate means that approximately 115,630 District residents lived on less than the very low applicable poverty threshold — just $23,624 for a two-parent, two-child family or about 26% of the family’s basic living costs in the D.C. area.

The rate is 2.5% higher than in 2007, just before the recession set in. It is also 3.1% higher than the 2013 national rate.

The deep poverty rate, i.e., the percent of residents living below half the applicable income threshold, was 10.3%. In other words, somewhat over 63,000 residents were devastatingly poor, especially when we consider the high costs of living in the District.

Young and Old

As in the past, the child poverty rate was much higher than the overall rate — 27.2%. This means that about 29,740 D.C. children were officially poor — well over half of them (16.2%) deeply so.

Both the total and the deep poverty rates for children were slightly higher than in 2012 — in both cases, by less than 1%. But they were considerably higher than in 2007, when the child poverty rate was 22.7% and the deep poverty rate for children 12%.

They were also both higher than the national rates. These, according to the ACS, were 22.2% and 9.9%.

Seniors had lower poverty and deep poverty rates — 17.5% and 4.5% respectively. These too, however, were higher than the nationwide rates. And a better poverty measure than the clunker the ACS uses would probably yield higher rates for seniors here in the District.

Non-Hispanic Whites v. Everybody Else

Race/ethnicity gaps in the District remain very wide. For example:

  • The black poverty rate was more than three and a half times greater than the rate for non-Hispanic whites — 28.7%, as compared to 7.7%.
  • For blacks, the deep poverty rate was 15.2%, while for non-Hispanic whites only 5.1%.
  • For Hispanics, the poverty rate was 12.6% and the deep poverty rate 5.6%. These are markedly lower than the 2012 rates, unlike the others here.
  • Rates for Asians were 18.7% and 13.2% respectively.

We see similar disparities in median household income, i.e., the midpoint between the highest and the lowest.

  • The median income for non-Hispanic white households was a very comfortable $118,402.
  • For black households, the median income was less than a third of that — $38,124.
  • Hispanic and Asian households fell in between, with a median incomes of $50,861 and $63,281 respectively.

The non-Hispanic white household median was a whole lot higher here than nationwide, by nearly $60,720.  The medians for black and Hispanic households were higher too, but the dollar differences were much smaller, especially the former. The median for Asian households was lower — a surprise, since it was considerably higher in 2012.

Work and Education

We’re told that work is the solution to poverty. The ACS figures support this, but only up to a point.

In 2013, 46.5% of poor residents between the ages of 16 and 64 didn’t work at all. An additional 25.7% worked less than full time or intermittently.

But that still leaves nearly 8,380 working-age residents who were employed full-time, year round and still not earning enough to lift themselves out of poverty — or at least, not them and dependent family members.

It’s a fair guess that these are mostly residents who don’t have the formal education credentials that living-wage jobs here, as elsewhere, increasingly demand. This is probably also the case for many of the part-time and some-time employed.

What we do know is that roughly 44.5% of residents 25-64 years old who had less than a high school education were employed during 2013 — and only 54.2% with no more than that.

Not surprisingly then, the poverty rate for those 25 years and older who had just a high school diploma or the equivalent was 27% last year — and for those with less, 39.3%. By contrast, the poverty rate for those with at least a four-year college degree was just 5.4%.

(Yes, I know these shifting age brackets are frustrating.)

Income Inequality

There’s obviously a lot of wealth in the District — and a lot of poverty. We see this in the figures I’ve cited, but also in the fact that the average household income — $102,822 — is so much greater than the median.

While 15.3% of households had incomes under $15,000, 12% had incomes of at least $200,000 — the highest bracket the Census Bureau reports.

There’s nothing new about this divide, except for the specific numbers. Nor is it unique to the District, though the disparity here seems unusually high. Nothing new about that either.

Most experts — and advocates as well — view the growing income inequality in this country as a bad thing in and of itself. They also see negatives specifically for people at the low end of the income scale. Many of the same arguments would apply to the District.

Nearly 10,860 families in the District had annual incomes, including cash benefits of less than $10,000 last year. Surely we can do better, though doing it won’t be simple.

* All the ACS tables include the margins of error, i.e., how much the raw numbers and percents could be too high or too low. In the interests of simplicity, I’m reporting both as given.

NOTE: I’ve revised several figures in this post because I’ve learned that I should use the ACS national figures for comparisons. I had originally used the Current Population Survey for these because that’s how I understood the Census Bureau advice.


Official U.S. Poverty Rate Finally Ticks Down

September 16, 2014

The Great Recession officially ended more than five years ago. Data from various sources indicate that the recovery has actually taken hold, even in the labor market. And now the official poverty rate does so too.

The Census Bureau just reported that the overall poverty rate for the U.S. population ticked down for the first time since 2006 — from 15% in both 2011 and 2012 to 14.5% last year.

But like the other indicators, the new rate shows we’ve still got a long way to go — and that such prosperity as the recovery has generated is far from equally shared.

The new poverty rate translates into 45.3 million people poor enough to fall below the Census Bureau’s poverty thresholds. These are very low — an annual income of less than $18,770 for a single parent with two children, for example.

More than 19.8 million people — 6.3% — lived in what’s commonly referred to as deep (or extreme or severe) poverty, i.e., had incomes below half the threshold applicable to their family size and configuration.

As in the past, the child poverty rate was considerably higher than the overall rate — 19.9%, representing well over 14.6 million children or about one in three of all our country’s poor. And the senior poverty rate was considerably lower — 9.5%.

Approximately 6.5 million children — 8.8% lived in deep poverty. This was true for only 2.7% of seniors.

But we’ve reasons to expect that the Census Bureau’s report on its more complex Supplemental Poverty Measure will show markedly higher rates for seniors, as well as somewhat lower rates for children.

Other disparities generally mirror those we’ve seen before. For example:

  • The black poverty rate was nearly triple the rate for non-Hispanic whites — 27.2%, as compared to 9.6%.
  • The deep poverty rate for blacks was 12.2%, while only 4.3% of non-Hispanic whites were that poor.
  • The poverty rate for Hispanics was 23.5% and their deep poverty rate 9.4%.
  • Rates for Asians were 10.5% and 5.2% respectively.

Disparities among family types also replicate a familiar patterns. The percent of married couples who were officially poor was 5.8%, while the percent for single-woman families was 30.6%. Families headed by a single man were again in between — 15.9%. And there were, as usual, far fewer of them.

Like the overall rate, most of these breakout rates were lower than in 2012. Not, however, the poverty rate for blacks or the ever-so-much-lower deep poverty rates for non-Hispanic whites and married couples.

None of the rates was as low as in 2007 — the last year before the Census survey reflected the recession. And those rates were nothing to cheer about.


More Earnings May Not Mean Less Hardship

August 20, 2014

Everyone with even a passing interest knows that the Census Bureau’s poverty thresholds are far too low — in part because they’re based on a long-outdated spending pattern.

The Urban Institute’s Molly Scott has a more fundamental objection. “All our national poverty statistics,” she says, “reflect economic poverty.” In other words, they measure total household income — both earnings and payments from programs like unemployment insurance and SSI.

The Census Bureau’s Supplemental Poverty Measure also includes the value of some near-cash benefits, e.g., SNAP (food stamps), housing subsidies, home energy assistance.

But Scott has something quite different in mind than a better version of our poverty measure. “The problem,” she says, is that “the arbitrary poverty line is a bad measure of material poverty, the amount of hardship people experience meeting their basic needs.”

People both above and below the poverty line often struggle to get through the month. The only difference between them is “the mix of resources they use and the costs associated with work,” Scott says.

She gives us two hypothetical single mothers in the District of Columbia. Both have two school-age children. They live next door to each other, so the rent on their apartments is the same. They both have minimum wage jobs. The difference is that one works part time, the other 60 hours a week.

The part-time mom’s family gets a larger SNAP benefit because the household’s income is lower. She’s somehow managed to get a housing voucher — again because her income is extremely low.

At the same time, her transportation costs are lower, presumably because she doesn’t work every day. And she doesn’t have to pay for child care because she works only while her kids are in school.

The end result is that her gross income is much lower, but her family is actually somewhat better off. Probably still facing struggles, but not actually in the hole, like the family headed by the other mom, whose earnings put them nearly $10,000 above the federal poverty line.

The moral of this story is that policymakers — and others — who champion work requirements and other strategies “to get people to work more” are often actually looking for more ways to minimize spending on programs that help poor people make ends meet.

We may spend less, but achieve little or nothing to alleviate hardship, as Scott’s time-and-a-half working mom’s situation shows.

Scott’s conclusion is more cautionary than prescriptive. “[W]e need to make sure our policies and programs do more than swap out subsidies for low-income wages that won’t change people’s quality of life.”

She refers to “real ladders of opportunity and supports along the way.” Which is all very well and good, but we need to do something about those low-wage jobs as well — and about supports for people who, for various reasons, can’t climb a ladder into a genuine living wage job.

For our single mothers in the District, that would be a job paying $32.95 an hour, assuming full-time, year round work. This would give them an annual income nearly three and a half times higher than the poverty line for their families — and about $1,950 more than the median for all households in D.C.

We’ve got bills in Congress that would raise the floor the “ladders of opportunity” rest on. There’s the long-stalled minimum wage increase, of course, but also a pair of bills that would, among other things, ensure that workers don’t get shorted if they’re sent home early or required to work for awhile and then again later because their employers go in for “just-in-time” scheduling.

We’ve got bills that would guarantee most workers some time off with pay so they could stay home when they were sick or for other compelling reasons, e.g., childbirth, an ill family member who needs care.

We’ve even now got a bill that would help ensure that some of the 26 million or so workers employed by federal contractors get paid what they earn.

And, of course, President Obama has used his pen — or as some Republicans say, disregarded the Constitution — to both raise their wage floor and better protect them against wage theft, as well as some other prohibited labor practices.

But the mighty pen can’t boost federal funding for child care — the second largest item in the living wage budget for our D.C. single-mother families. It can’t do anything about the cost of housing, which, as you might expect, is the largest.

And it’s highly doubtful Congress will either — any more than it will raise the minimum wage or pass all the other bills that would somewhat improve the financial circumstances of low-wage workers.

What’s more frustrating, in a way, is that there is no silver bullet — or round of silver bullets — ready for policymakers to fire, if they choose. Material poverty seems to me even more complex than plain vanilla economic poverty.

Which isn’t an argument for doing nothing. There’s a lot that can be done, much of which we already know. It is an argument, however, as Scott implies, for rejecting out of hand solutions that rely solely on getting more people into the workforce.

 

 


Why Not Just Give Poor People Money?

July 14, 2014

Not long ago, a Chinese millionaire decided to invite some homeless people for a fancy free meal, with $300 checks as a post-dessert treat. The operators of the shelter he contacted agreed to supply the guests, but only if he donated the money to the shelter instead.

Some of the guests might use their cash gifts to buy alcohol and drugs, the executive director reportedly said.

The story provoked some sputtering and muttering, as you might imagine. It also gave rise to a New York Times op-ed that teed up an idea that’s been around for awhile. Why not just give the poor cash?

This, in fact, has been done, to a limited extent, in some developing countries. Professor Christopher Blattman, who wrote the op-ed, provides examples, including some trial programs he and colleagues had assessed.

For the most part, recipients used the money to improve their lives. Some extremely poor women who were given $150, plus a few days of business skills training nearly doubled their earnings, invested in some “durable assets” and, on average, tripled their savings.

Even homeless men and drug users in Liberian slums bought themselves some clothes and “ate and lived better.”

In most of the trials, people worked more after they got the grants, though the trials apparently didn’t impose work requirements, as our major cash assistance program does — and SNAP (the food stamp program) for people like at least some of the Liberian slum-dwellers.

Would handing out cash, with no strings attached, work here — and on a large scale? We don’t know. The U.S. projects Blattman mentions required families to set goals and report on progress, make efforts to “build up their human capital,” etc.

What we do know is that private donors, public officials and nonprofits like the New York City shelter are likely to take a dim view of addressing poverty in the simplest, most direct way, i.e., by giving poor people money.

Even one of the projects that linked cash to goal-setting and the like encountered “mistrust from donors and other nonprofits who held hard to the view that poor people can’t make good decisions,” Blattman says.

This is a commonly held view, I think. In some cases, it’s a form of blaming. People are poor because they made bad decisions — didn’t finish high school (or go on to college), had children before they were married, etc.

And how many stories have we read of the extravagant and/or unhealthful things people buy with their food stamps? How many proposals to keep them from using their benefits this way?

We see something of the same view in widely-reported experiments designed to show that poor people make bad decisions through no fault of their own, but because their brains are overloaded with worries about not having enough money. Note the assumption here.

Awhile ago, blogger Matt Bruenig figured that we could cut poverty in half by giving every American about $3,000 a year, which we could each use however we chose.

This was perhaps more a thought-provoker than a serious proposal — a way, as he said, of showing that the obstacle to “dramatic poverty reduction” is politics, not the inherent complexity of devising effective solutions. Nor the cost.

Yet he’s not enthusiastic about simply giving everyone who’s poor enough money to lift them over the poverty line. This, he says, “would probably cause intolerable numbers of people to drop out of the labor market.”

Reihan Salam at the National Review objects to “unconditional income support” — and for somewhat similar reasons. “[I]t might help the most motivated poor people with the strongest social networks to raise their earnings potential,” he says. But it would harm the rest because they wouldn’t engage in gainful employment.

The biggest worry for him, it seems, isn’t what this would do to our economy, but rather that the poor would miss out on the personal benefits work provides.

Brink Lindsey, a “bleeding heart” libertarian whom Salam cites, elaborates on this point at length. “Joblessness,” he says, “means not only lack of income, but also lack of status, lack of identity, and lack of direction. It is the path … to anomie and despair.”

I suppose, in our society, this is generally true, though we can all think of exceptions — just as we can all think of jobs that, if anything, impair one’s sense of personal identity.

What’s interesting to me is that both Salam and Lindsey assume that poor people will make a decision that’s bad for them. They’ll forgo personal fulfillment and chose “anomie and despair” instead.

I doubt that giving no-strings cash to poor people is the solution to poverty. Among other things, it’s unimaginable that we’d give them enough. But, as Blattman says, “why not try” and see what happens?

 


Millions of People Living Always on the Margin

June 12, 2014

Nearly 50 years ago, Molly Orshansky, who invented our official poverty measure, noted that when the number of people below the applicable poverty threshold rose, the number just above dropped. And then the reverse happened.

“This reciprocal trend,” she wrote, “suggests that there may be a sizable group in the population living always on the margin — wavering between dire poverty and a level only slightly higher but never really free from the threat of deprivation.”

A recent report from the Census Bureau confirms this insight. Or so it seems.

What we know for sure is that, in 2011-12, virtually the same number of people who were near-poor at the beginning fell into poverty as rose above the Bureau’s near-poverty cut-off, i.e., 125% of the applicable poverty threshold.

Fewer than either remained in the near-poverty group for even this brief period. So many people are indeed on the margin — 14.7 million in 2012. And if past is prologue, almost as many will plunge (or plunge back) into dire poverty as will gain more than brief freedom from the threat of deprivation.

This is only one of the interesting things the report tells us. The other big eye-opener, for me, is that the near-poverty rate doesn’t behave like the poverty rate.

The latter is always considerably higher — 15%, as compared in 4.7% in 2012. But the poverty rate swings up and down as recessions set in and end. The near-poverty rate barely registers the downturns and upturns in our economy.

Here’s another difference. The poverty rate for seniors, according to the official measure, is much lower than the rate for children — 9.1%, as compared to 21.8% in 2012. But the near-poverty rates were statistically the same.

In other ways, the near-poverty rates resemble differences in poverty rates among groups the Census Bureau reports on, but only in a very general way.

For example, in 2012, the near-poverty rate for blacks was higher than the rate for whites — 6.3%, as compared to 4.5%. But the poverty rate gap was more than twice as great — 27.2%, as compared to 12.7%.

Similarly, the near-poverty rate for single-mother families was higher than the rate for married couples — 7.3%, as compared to 2.8%. But again the gap was far wider for their respective poverty rates — 30.9%, as compared to 6.3%.

What this means, of course, is that fewer blacks and single mothers were living on the margin because more were officially poor, which is very poor indeed.

This is also the case for working-age people not in the labor force, including those with severe disabilities. The poverty rate for those neither working nor actively looking for work was 28.4%, while their near-poverty rate was 6.7%.

These are only a few examples of comparative rates, based on the latest published Census figures. The near-poverty rate report also compares rates for 2012 with those for 1966, when Orshansky published her paper.

Overall, the near-poverty rate dropped, though only by 1.6%. And it dropped enough to be statistically significant for virtually every group the report breaks out.

The exceptions related to changes in our labor market. Specifically, the near-poverty rate for adults over 25 with less than a high school diploma or the equivalent was 1.8% higher in 2012.

Rates were also higher for adults in this age group at every education level below a four-year college degree or more. For those with the degree(s), the very low near-poverty rate was effectively the same — 1.2%.

And what about our safety net? Census can’t backtrack to 1966, but it does provide figures for the number of near-poor people who benefited from six major programs — or types of programs — in 1981.

We see significant changes in the number and percent of near-poor people served between the baseline year and 2012 for only four. And only one of them represents a decrease.

In 2012, 9.9% fewer near-poor people received public assistance, i.e., cash benefits from the Temporary Assistance for Needy Families program* and/or one of the dwindling state general assistance programs.

Near-poor participation in SNAP (the food stamp program) increased by the same percent. But the increase for the Earned Income Tax Credit was larger — 12.5%. And it’s the only safety net program Census reports on that benefited more near-poor than poor people.

The program with the greatest reach of all was the free and reduced-price part of the school lunch program. In 2012, it served 84.6% of near-poor children and a barely higher 88.5% of children in poverty. For the near-poor, this represents a 16.6% increase over 1981.

By and large, I think these changes, as well as the raw participation figures tend to confirm studies indicating that safety net spending has shifted toward people who, for one reason or another, are viewed as deserving — adults who work and those who can’t be expected to.

More conclusively, the report confirms the fragile hold on even a modicum of income security that Professor Mark Rank, among others, has sought to demonstrate — and that Orshansky flagged so long ago.

* TANF hadn’t replaced welfare as we knew it in 1981. So the comparison is to its predecessor.


Congressman Paul Ryan Previews His Anti-Poverty Agenda

January 21, 2014

Congressman Paul Ryan wants to rebrand himself as a big thinker on poverty issues — and show a skeptical American public that the Republican party truly cares about low-income people.

He’s promised a comprehensive anti-poverty agenda to replace the efforts launched with President Johnson’s War on Poverty, to which he gives “a failing grade.”

He’s been visiting projects in inner-city neighborhoods, accompanied by Robert Woodson, the conservative founder and president of the Center for Neighborhood Enterprise. He’s been talking with experts at like-minded think tanks.

The agenda is yet to come. But we got something of a preview last week when he spoke at the Brookings Institution’s Social Mobility Summit.

Ryan said he “could already hear howls of protest from certain corners.” So I’ll refrain, as best I can, and try to summarize what seem to be major planks of the framework for his agenda-in-process.

Poverty is not just deprivation, but “a form of isolation.” This is Ryan’s major take on poverty in America. He goes at it from various angles — all linked to adverse government impacts.

On the one hand, “taxes take people out of the workforce” because employers would hire more people if their taxes were lower and people would “work that extra hour.” These people, one notes, are in the workforce.

On the other hand, government programs are partly responsible for cutting poor people off from education, work and family. Here Ryan is borrowing from Brookings research that’s become a well-worn conservative recipe for avoiding poverty — finish high school, get a full-time job, marry, then (and only then) have children.

But while the recipe comes close to blaming poor people for irresponsible choices, Ryan blames the federal government. It’s “walling them up in a massive quarantine,” he says.

Government anti-poverty programs create a “poverty trap.” We have a “hodgepodge” of programs created to solve different problems at different times, Ryan observes.

And they create disincentives to earning more, he says, because they result in “high marginal tax rates” — economist-speak for what a household loses in benefits, as well as the higher taxes it pays when its income increases.

The result of income cut-offs for benefits is also sometimes referred to as the “cliff effect” — a problem that’s getting attention from experts across the political spectrum.

Some government programs mitigate the cliff effect. The Earned Income Tax Credit, for example, phases out rather than abruptly ending. Ryan likes this. The health insurance subsidies provided by the Affordable Care Act also phase out. Well, we know what Ryan thinks of the ACA.

Whether, as he says, the high marginal tax rates discourage work is a more complex issue than he acknowledges.

Economist Eugene Steuerle, whom he cites, told interested House subcommittees that studies have produced “mixed and ambiguous” results, but that he believes the extra income often outweighs the tax effect. Indeed, “some people may work more to generate the same net income.”

A better poverty plan would reflect two principles — simplicity and standards. Simplicity means “consolidation,” i.e., block-granting of some sort.

Ryan is intrigued by the UK’s new Universal Credit, which will replace six benefits for low-income working-age people with a single monthly cash payment and also smooth out the cliff. It’s going through “a rough patch,” he acknowledges, apparently referring to technical rollout problems.

It’s also already subject to what the Guardian calls “stealth cuts,” i.e., a three-year freeze on the amount recipients can earn before their credit starts phasing out. But it’s unfair, at this point, to say that’s why Ryan’s interested.

On the other hand, we’ve got his proposed block grants for SNAP and Medicaid, which make it hard to believe that his evolving plans “have nothing to do with a line on a spreadsheet,” as he claims.

Standards refer to work requirements, which Ryan apparently believes lead to work — “the shortest route back into society.” Also, I think, to time limits, since federal assistance should be an “onramp — a quick drive back into the hustle and bustle of life.” Note the isolation theme again.

The model Ryan likes — wouldn’t you know it? — is the Temporary Assistance for Needy Families program.

As Republicans often do, he cites results — not wholly attributable to TANF — from the late 1990s. Caseloads shrank as more welfare mothers entered the workforce. The child poverty rate declined.

But single-mother employment rates have since dropped. And single mothers who were working in 2011 earned, on average, a bit over $400 a week. The child poverty rate is higher than it was in 2000.

The most significant lasting outcome of welfare “reform” is the caseload cut — from 68% of poor families with children when it was enacted to 27% in 2010.

Only local communities can solve the problem. This isn’t a new message. I remarked on it when the House Budget Committee, which Ryan chairs, issued its latest annual plan.

Ryan made the implications clearer, however. Government, he said, has “crowded out civil society.” It’s told people that poverty isn’t their problem — and by implication, we’ve believed it.

This is a curious view of what goes on in communities today. We have scads of faith-based and other nonprofits that provide food, shelter, clothing, training, health care and more to people in need.

They depend in part on donations — in both time and money — from people who quite clearly believe that poverty is their problem. The organizations are also, in some cases, the way that government anti-poverty funds are translated into services.

And they’re the source of new solutions. The Housing First model for addressing chronic homelessness is an example — though not, one I think, that conforms to Ryan’s standards.

Ryan says that the only way to solve the problem of poverty is “face to face.” If this means that he will not only meet with, but learn from the people who’d be affected by his plan-in-the-making, then it may be a whole lot different from what he previewed last week.

I’ll reserve further howls till we see it.


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