More High-Poverty Neighborhoods, More Poor People Stuck in Them

December 18, 2014

Here in the District of Columbia we’ve got rumblings and grumblings about gentrification. Young strivers (mostly white) choosing to live in the city. Driving up housing costs in formerly affordable, if often rundown neighborhoods. And so driving out low-income families. Saddling the remainder with heavy rent burdens.

Gentrification — and the related debate over the pluses and minuses — are hardly unique to the District. We read about skyrocketing rents and displaced minorities in New York City, Seattle, San Francisco and other urban centers.

But a new report tells us that gentrification, though real is rare — at least, in the 51 major metro areas it covers. We should be much more concerned, it says, about high-poverty neighborhoods, i.e., those where at least 30% of the residents are officially poor.

We’ve got more of these neighborhoods now for two reasons. The first, which speaks to gentrification, is that most neighborhoods that were high-poverty in 1970 still were forty years later. The second is that well over 1,200 more neighborhoods became high-poverty during this period.

A relatively small percent of urban poor people live in high-poverty neighborhoods — roughly 4 million of the 46.2 million people in poverty in 2010. But that’s twice as many as in 1970.

Looked at another way, the percent of urban poor people living in high-poverty neighborhoods increased from 28% to nearly 39%. In other words, we have not only more high-poverty neighborhoods, but more poor people in them.

I recently heard a presentation by a mother who lives in one of the District’s public housing complexes. She objected strenuously to plans that would convert what’s surely a high-poverty neighborhood into a mixed-income community — foreseeing, it seems, that she and her fellow public housing dwellers would be dispersed.

“Deconcentration offends me,” she said. It means “I’ll be better if I live next to you,” referring to her mostly middle-class audience. This is surely a perspective worth considering.

Yet we’ve research indicating that residents of high-poverty neighborhoods are worse off specifically because that’s where they live.

For example, our public housing resident understandably wants ready access to good schools and healthful, affordable food. Well, supermarket chains generally don’t open stores in high-poverty neighborhoods, for obvious economic reasons.

Schools in high-poverty neighborhoods are frequently underfunded. And it’s not only money they lack. They tend to have less-qualified teachers and principals, in part because they’re challenging places to work. So teachers who don’t quit, as many do, will often transfer when they can.

Sociologist William Julius Wilson has long argued that lost job opportunities in the city helped explain a host of problems in high-poverty, predominantly black urban neighborhoods — more crime, deteriorating housing, failing schools, breakdowns in family and other social structures, etc.

These lead to more concentrated poverty because people who can flee to better, safer neighborhoods. So there are fewer local retail businesses because residents don’t have the income to support them. Nor can potential risk-takers get financing. And so there are fewer nearby job opportunities — and fewer working neighbors to serve as role models, mentors and networks into the labor market.

In short, as one of the authors of the high-poverty neighborhood study says, “Place plays a significant role in shaping individual economic opportunity.”

We see the results in several studies conducted for the Pew Charitable Trusts. One found that children raised in high-poverty neighborhoods were less likely to move up the income scale as adults — and considerably more likely to move down if they hadn’t been at the bottom to begin with.

Another found lower rates of economic mobility in metro areas where neighborhoods were highly segregated into pockets of wealth and poverty. These include the District and nearby suburbs, which had a higher economic segregation score than all but two of the other metro areas assessed.

The Urban Institute’s Marjorie Turner reminds us that “neighborhoods of concentrated poverty aren’t the products of ‘natural’ or ‘normal’ housing market operations.” Nor, as she and a colleague earlier wrote in reference to the Washington metro region, do they “reflect the ‘choices’ of poor families about where to live.

Public policies created them — legal segregation, then permitted race discrimination and decisions about where to locate public housing. All but the first are generally true in all the urban areas with high-poverty neighborhoods.

Now, highly-concentrated poverty isn’t only an urban problem. Nor are blacks the only people affected, though much of the research has focused on them. We find extraordinarily high poverty rates on Native American reservations, for example, and in predominantly-white hill towns of Appalachia.

We increasingly find it in suburbs, as we know (if we didn’t before) because the cop shot the kid in Ferguson — a case study in its own right of the legacy of segregation, persistent race discrimination and a failed public housing policy.

There’s obviously no one-size-fits-all solution to the problem — not even for high-poverty urban neighborhoods like those clustered “east of the river” in D.C.

Turner (and others) recommend multi-part, multi-partner “place conscious” strategies. These connect families to opportunities outside their neighborhoods, while at the same both expanding opportunities within their neighborhoods and helping those who want to move to higher-opportunity neighborhoods to do so.

“A big structural challenge,” she acknowledges. But it sounds like the right approach to me. And I think the mom in public housing would like it too.

 


DC TANF Families Face Benefits Cut-Offs With Dim Prospects for Steady Work

December 8, 2014

In early 2012, the D.C. Department of Human Services launched a redesigned Temporary Assistance for Needy Families program. As with TANF programs nationwide, it aimed to move very poor parents with children toward self-sufficiency, i.e., work that pays enough to support the family — or at the very least, too much to make them still eligible for TANF.

Now we have an in-depth, though partial view of the results. A recently-completed review of the TANF employment component found, among other things, that fewer than half the target group of parents who, with help, had found jobs were still employed.

But even this finding overstates the self-sufficiency prospects for the more than 6,000 families who may soon have no cash income whatever because the DC Council set a retroactive 60-month lifetime limit on benefits in late 2010 and a phase-out schedule ending in total cut-offs next October.

About the Review

The Office of the District of Columbia Auditor analyzed data and other information that DHS provided, with a view toward providing the basis for some conclusions about the outcome of what it refers to as the TANF Employment Program.

The program consists of two related types of services — work readiness and job placement. Both are provided by contractors. Work readiness contractors, as the term suggests, are supposed to help parents strengthen their qualifications for paying work.

But they are responsible for helping the parents find jobs as well. This is the only thing the job placement contracts are supposed to do because the parents assigned to them have been deemed ready to work.

The auditors focused only on parents who had received TANF benefits for more than 60 months because these were the parents whom DC Council Human Services Committee Chairman Jim Graham asked about.

They looked at data collected over about 32 months — from the time the new employment program began, in February 2012, to October 24, 2014. Graham wanted results by early November.

So the auditors were up against a tight timeframe. As a result, they’re careful to say, they didn’t verify what they got from DHS, as they ordinarily would.

Jobs of Any Sort for Fewer Than Half

Though the two types of employment services differ in scope, they’re both intended to get TANF  parents into — or back into — the workforce and earning enough to no longer qualify for TANF. For a family of three, that would have been anything over $588 a month in 2012-13, assuming no other income.

The auditors report that about 49% of parents referred to an employment services contractor got a job — 6,145 out of 12,463. Only about 38% got jobs that could have provided steady, full-time work.

The rest got placed in jobs that were either part-time or “temporary/seasonal” — the latter presumably referring to temporary or on-and-off jobs during periods of high-volume business like the holiday shopping season.

Wide Pay Range, Including Less Than Minimum Wage

While working, the parents got paid an average of $10.58 an hour — more than the District’s minimum wage, but less than its living wage, which is now $13.60 an hour and was less during the two prior years the audit covered.

The average masks a wide disparity in pay rates. A relative few jobs paid in the $21-$50 an hour range. A far greater number — nearly 1,590 — reportedly paid less than the District’s minimum wage.

The auditors suggested (not in the report) that contractors may have reported the minimum cash wage parents got when placed in jobs that employers chose to pay at the tip-credit wage rate.

But the District’s tip credit wage is lower than most of the subminimum wages indicated. DHS perhaps could explain, but hasn’t, though I asked.

Steady Work for Very Few

As of mid-October, 2,976 TANF parents were employed — about 48% of those who’d been placed. Only 770 remained in the jobs were they’d been placed for more than six months.

We see a drop-off beginning at the end of the first month. (The auditors don’t report a figure for parents who lost their jobs or quit sooner.) Their figures do, however, show that 835 parents didn’t have their jobs any more by the time the fourth month rolled round.

Whether they’d been placed in other jobs is an open question. Indeed, the job tenure figures may not tell the whole story.

DHS informed the auditors that an estimated 3,076 “customers” in the 60-month-and-over group had left the program — a majority, it said, because they began earning too much to remain eligible. No supporting data provided.

And the agency doesn’t know whether “customers” who did earn more than the minimal maximum for eligibility remained employed — let alone how gainfully — because it doesn’t track families once they leave the program.

More Knowns and Unknowns

First off, we should recall that the auditors focused solely on parents who’d been in the District’s TANF program for quite a long time — or had cycled in and out for even longer. Results for parents who had recourse to TANF because of some singular, temporary setback might be different.

On the other hand, the parents in the sample didn’t include those whom DHS had identified as having significant, ongoing health and/or personal barriers to work, e.g., alcoholism or drug addiction, PTSD due to domestic violence.

About 60% of the rest weren’t immediately work-ready, according to the agency’s assessments. It assigned them to contractors for further education and/or development of marketable skills. Fewer than 10% completed their programs.

Does this mean they were hustled into jobs they couldn’t keep because contractors get a bonus for placements? Or did they themselves get desperate because their very low benefits had shrunk — and were soon to disappear?

Did the fact they had to scramble every day to find a place for their family to spend the night — or some used clothing for their kids — make it just too hard to satisfy the work readiness requirements and, more importantly, their employers’ expectations?

Do we need a thoroughgoing, independent assessment of the TANF employment program? Sure does seem that way.


Many Millions Above the Poverty Line Lack Basic Economic Security

November 24, 2014

Blogger Matt Bruenig has declared war on the notion that poor people are “a small, especially degenerate class.” I don’t think this view is as common as he implies, thought it’s hardly as marginal as one would wish.

I mentioned his campaign, however, because the salvo I’ve linked to focuses on the arbitrariness of the federal poverty line. Look, he says, at the 53 million people hovering just above it, according to the Census Bureau’s latest Supplemental Poverty report. That’s 4 million more than fall below it.

And look at the gradual upward slope of the income distribution from way below the poverty line up to 300% of it. We see no “especially large gap” that would justify putting poor people into one bucket and everyone else into another.

Besides, he reminds us, people cycle in and out of official poverty. During 2009-11, for example, 31.6% of the population lived in poverty for at least two months, but only 3.5% were poor for the entire three-year period.

It’s nevertheless hard to imagine doing away with a line of some sort or other — at least, so long as we have programs that set eligibility and/or benefit levels based on income.

At the same time, a line, wherever we set it, will be a crude measure of what should most concern us — material hardship. Do people have the wherewithal for food, shelter, heat during the winter, etc. For what they need to pay in order to work, e.g., transportation, perhaps child care?

As I wrote awhile ago, Molly Scott at the Urban Institute showed that a single mother working part time at the minimum wage could actually be better off than a single mother working 60 hours a week at the same wage. Public benefit help explain this, but so do work-related costs.

Yet having just the resources to get by day to day without material hardship seems a low bar to set in a country with as much wealth as ours. Wider Opportunities for Women proposes that we look instead at how much a family much have to be economically secure.

WOW has a very complex database — the BEST (Basic Economic Security Tables) Index. It’s made up of many hundreds of monthly budgets for different family configurations, with and without employment-based benefits, and each reflecting costs in diverse geographic locations.

The budgets include not only basic needs and work-related expenses, but some savings for retirement and for emergencies — enough to get along for nine weeks without earnings because that was the average time jobless workers remained unemployed when the index was created.

The budgets are strictly “no frills,” in the words of WOW’s Vice President for Policies and Programs. In other words, they don’t allow for entertainment, vacations or even electronics, except a phone. They do, however, include optional, below the line savings for higher education and home ownership.

Using the BEST Index, WOW finds that 44% of Americans didn’t have enough income for economic security two years ago. Children in the household raised the rate to nearly 50%.

Economic insecurity was much more common than this for single parents with children — 77% without enough income. The rate for single-mother families was an even higher 81% — more than two and a half times their high poverty rate.

These are national figures. Economic security requires far more income in some places than others, of course. Consider, for example, Scott’s single mother and her two elementary school-age children living in the District of Columbia.

She and her kids would have cleared the poverty threshold in 2012 if she earned $18,500 a year. But she’d have had to make well over four times as much — at least $79,932 — for her family to be economically secure.

“At least” because this formidable sum assumes she was eligible for unemployment insurance, e.g., not a contract worker, and that her employer provided both a health insurance and a retirement plan. Without these employed-related benefits, she’d have had to make $85,992.

In both cases, the biggest ticket items for her child care, taxes and rent. Child care was the second biggest, even though her children needed it only during after-school hours — nearly $1,300 a month. And the rent, as WOW computes it, is quite low for the District — $1,259 a month.

I’m not sure what we should make of all this. I suppose we could begin, as Professor Stephen Pimpare suggests, by recognizing the “widespread economic fragility” of households in our country — and the weakness of the safety net many are likely to need.

But there are other, more specific policy lessons in the enormous gap between what it takes to be officially not-poor and what it takes to have enough for health, safety and work-related costs, plus a modest stash to draw on so as not to fall into poverty.

Far too many lessons for this post. But the sobering figures surely support a wide range of proposals — and confirm objections to others that our recent “Republican wave” seems likely to toss onto our Congressional and state legislative agendas.

 


Acute Affordable Housing Shortage for Lowest-Income Renters

September 11, 2014

A new and notable brief from the National Low Income Housing Coalition provides further evidence of the shortage of housing that low-income individuals and families can afford to rent.

As in the past, NLIHC flags the acute shortage of units that extremely low-income households could rent at an affordable rate, i.e., for no more than 30% of their income.

ELI households are the poorest category used for publicly-subsidized affordable housing — and the poorest analysts customarily use. They’re those whose incomes are at or below 30% of the median for the area they live in.

The most notable thing about the NLIHC analysis is that it introduces a new poor category — deeply low-income households. Their incomes are, at most, 15% of the applicable AMI.

ELI and DLI Renters Nationwide

DLI households are part of the ELI category, but we can see how recent housing and income trends have disadvantaged them the most. For example, in 2012, the latest Census figures NLIHC had to work with:

  • There were 10.3 million ELI renter households nationwide, but only 3.2 million available units they could afford — in other words, 31 for every 100 households.
  • Of these households, 4 million were DLI.* The shortage for them was nearly as great as their number — 3.4 million units. This translates into 16 units for every 100 households.
  • All but 13% of ELI households paid more than they could afford for rent, plus basic utilities. And 75% of them paid more than half their income for these basic needs.
  • Housing burdens, as they’re called, were even worse for DLI households. Ninety percent paid more than they could afford and 95% more than half their income.

Drilling Down to DC

Another notable thing is that NLIHC includes (un)affordability figures for states and the District of Columbia and for major metropolitan areas, including the one used to set the AMI for the District. So we who have a particular interest in affordable housing for the District’s lowest-income residents have new grist for our mills.

Somewhat surprising, at least to me, is the fact that the crunch for them is apparently somewhat less severe than the nationwide crunch — at least, according to the NLIHC figures. We should take them with a grain of salt, however, because the AMI for the District is considerably higher than the District’s own median income.

That said, the local housing market is hardly friendly to the District’s lowest-income renters. And we’ve got a lot of them. NLIHC reports that:

  • There were 26,485 ELI households in 2012 and only 45 affordable, available rental units for every 100 of them.
  • Nearly 71% of them — 18,750 — were DLI households. For them, the affordable housing shortage was worse — 34 units for every 100 households.
  • All but 29% of the ELI households — and all but 23% of those in the DLI subgroup — paid more than half their income for rent.

So for large majorities of both, rental housing wasn’t just somewhat unaffordable, but so unaffordable as to represent a significant risk of homelessness — or if not that, then other hardships.

Trade-Offs Made to Pay for Unaffordable Housing

A recent survey for the MacArthur Foundation found that nearly two-thirds of childless adults — and 75% of parents — whose rents or mortgages were unaffordable had made at least one trade-off in order to cover their housing costs.

Trade-offs included cutting back on health care and/or “healthy food,” amassing credit card debt and giving up on saving for retirement.

Why ELI and DLI Renters Can’t Find Affordable Units

As NLIHC has explained before, part of the problem is that more higher-income households are choosing to rent. So the law of supply and demand has kicked in, driving up what landlords charge.

At the same time, developers have seen a money-making opportunity. Of the 2.5 million rental units added to local markets since 2009, fewer than half a million were affordable for households with incomes below 80% of the AMI, i.e., the highest of the low-income tiers.

It’s also the case, however, that higher-income renters are occupying units that ELI households could afford — about 45% of them nationwide. A recent in-depth study of the Washington metro area came up with virtually the same crowd-out figure.

So there’s a large unmet need for low-cost units. But, as NLIHC says, organizations that want to help meet it face significant challenges, e.g., insufficient subsidies for both developers and operators, who can’t otherwise cover their costs with the rents they’ll collect.

A clarion call for greater public investments in affordable housing programs, of course. And since we can’t look to Congress any time soon, state and local governments, including the District, will have to do more for their lowest-income residents.

Obvious, but I felt I had to say it.

* The American Community Survey, which NLIHC used for most of its analysis, reaches only people who are in some manner housed. So the affordable housing shortage for the very lowest-income individuals and families is even greater than reported, as the brief duly notes.


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.


Summer Brings Hunger, Despite Free Meal Programs for Children

June 5, 2014

“I usually do, in the summertime, go without eating, says Jean C., one of the Witnesses to Hunger. She tells her kids she’ll eat later, but the oldest has caught on.

Summer is always an especially difficult time for low-income parents with school-age children.

During most of the school year, their kids get free or reduced-price lunches. A growing number also get no-cost or low-cost breakfasts. They may get an after-school snack — or even supper — if they stay to participate in an “educational or enrichment” activity, e.g. tutoring, a photography class.

But summer rolls round. Now parents have to stretch their budgets to serve three squares a day, every day — and like as not, something in between.

Not surprisingly, Census surveys have found higher rates of food insecurity among families with school-age children during summer months.

The U.S. Department of Agriculture administers two summer meal programs designed to address this problem — one only for schools that provide subsidized lunches during the school year and one for nonprofits and government agencies generally.

With some exceptions, subsidies are available only to programs in areas where at least half the children qualify for free or reduced-price school meals — or (extra paperwork here) to those that can show that half the children they serve do.

But meals are free to all participating children. And USDA’s more inclusive program — the Summer Food Service Program — reimburses at somewhat higher rates than for free school breakfasts and lunches during the school year.

The summer meal programs are doing better than in recent years, according to the Food Research and Action Center’s just-released status report. But better isn’t all that great.

Nationwide, the programs served more than 2.9 million children during July 2013 — 15.1% of children who’d received free or reduced-price lunches during the prior school year.

This is surely better than July 2012, when they served 14.3%. The higher rate, however, reflects not only an increase in the number of children served, but a smaller decrease in the number who’d received free or reduced-price lunches.

And it’s still lower than rates before 2010, when a downward trend had already set in. By way of comparison, the rate was 20.8% in 2002.

FRAC cites recession-related budget cuts to programs that commonly serve subsidized summer meals — both summer school and a variety of others, e.g., arts and crafts classes at public recreation centers, daytime soccer camps.

Even so, only about one in five children who might have gone hungry — or more likely, caused their parents to — benefited from a summer meal program more than five years before the Great Recession set in.

This suggests other limits. So do FRAC’s more recent participation rate breakouts, which consistently show wide variations among states — in the latest case, ranging from 30.4% in New Mexico to 4.5% in Oklahoma.

First off, the SFSP hinges on sponsors to launch and operate programs — and so on interest, organizational capacities and resources the subsidies don’t provide. And so-called area eligibility, i.e., the 50% rule I mentioned above, tends to limit where they can locate their programs.

Summer meals are said to help draw children into worthwhile activities. But I’ve been told the opposite is also true.

In other words, sponsors generally need to offer activities with some appeal because the prospects of something free to eat aren’t a sufficient magnet. Or perhaps they might be, but carry a stigma the activities counteract.

Sponsors and other community organizations need to let families know what the programs offer and where — seemingly obvious, but only 40% of low-income families recently surveyed knew where free summer meal sites were located.

Transportation to program sites is a problem, especially in rural areas. Elsewhere also, since 40% of the food-insecure parents surveyed — not nearly all of them rural — cited lack of transportation as a reason their children didn’t participate in a summer meal program.

There’s a whole other kind of limit. FRAC tells us that July is generally the peak month for summer meal programs. In other words, many don’t operate from the time schools close to the time they open again.

So presumably parents of many of those more than 2.9 million children had to come up with the three squares a day during some good part of the summer vacation.

All of which is to say that USDA’s summer meal programs, fine as they are, may not be the solution to hunger for parents like Jean — and in worse cases, their children.

They could get help from a bill recently introduced in Congress — of which more in my next post.


Of Poverty Traps and Benefits Cliffs

April 28, 2014

Congressman Paul Ryan, as we know, views safety net programs as a “poverty trap” because they’re means-tested.

“The federal government effectively discourages … [poor families] from making more money, his War on Poverty report says, because they’ll lose benefits if they do — and pay higher taxes as well.

Whether these prospects actually discourage work is debatable — and at the very least, contingent on many variables. The loss of benefits isn’t. Progressives and conservatives alike have commented on the so-called “cliff effect” — to different ends, as you might imagine.

I’ve been puzzling over policy solutions because cliffs or something very like seem inherent in means-tested programs. And to some extent, they are.

But that doesn’t mean we should just shrug our shoulders — or view the only solution as “universal programs” akin to Medicare, as Roger Senserrich at the Connecticut Association for Human Services apparently does.

A recent report by Children’s HealthWatch shows that we could make progress by looking carefully at the real-world causes and effects of cliffs.

The report focuses on SNAP (the food stamp program) and, as one might expect, effects on children’s health when families lose all or a portion of their benefits due to income increases.

The distinction here indicates that SNAP is already structured to create a downward slope, rather than what the word “cliff” brings to mind. Benefits nevertheless dwindle — and eventually disappear — as income rises.

Families can be hit with a double or triple whammy because other safety net and work support programs are also means-tested. A Witness to Hunger, for example, worked overtime for a month, “and they just cut me off food stamps, and they cut my kids’ medical insurance off.”

This may be one reason that income increases are often not enough to compensate for lost SNAP benefits, as results of a CHW survey show.

For example, young children in families who’d altogether lost their benefits were 78% more likely to be food insecure than those in families who’d consistently received them.

For those in families whose benefits had been reduced, the likelihood was 55% greater. And caregivers were 30% more likely not to seek health care for themselves or another family member because they felt they couldn’t afford it.

The CHW report is entitled Punishing Hard Work, though not only wage increases can send families over the cliff.

They can also lose SNAP benefits when a disabled child starts receiving Supplemental Security Income, for example, or when an absent parent starts paying child support. In either case, children should be better off, but may not be.

CHW advocates several federal policy solutions to moderate the cliff effect.

One reflects a recommendation the Food Research and Action Center has made for many years. Use the U.S. Department of Agriculture’s Low-Cost Food Plan instead of the Thrifty Food Plan as the basis for determining maximum SNAP benefits.

As FRAC has explained — and the Institute of Medicine confirmed — the TFP is unrealistic in various ways. And it understates the costs of foods in the market baskets used to set benefit levels, as CHW itself has shown. Even more so the costs of foods that would make up a healthful diet.

A shift to the Low-Cost Food Plan wouldn’t affect the maximum income threshold, but it would leave families with larger benefits during the tapering-off period.

Two other recommendations address permissible deductions in gross household income. Both would increase the likelihood of a net income below the poverty line — the eligibility cut-off for SNAP.

One would eliminate the cap on deductible housing and utility costs — just $478 a month for most families.

The other would expand the current medical expenses deduction, which is now available only to elderly family members and those who receive disability benefits. Yet families can incur out-of-pocket healthcare costs for other members, even if they’re covered by Medicaid.

These costs often increase with income, as families move to private health insurance plans, as CHW observes. So expanding the medical expense deduction would help preserve one benefit as another shrank.

This is one example of why policymakers should “look across programs to determine … unintended consequences related to increasing family income.”

CHW looks to the Affordable Care Act as a potential vehicle, since it gives states an opportunity to create linkages between healthcare subsidies and other federal benefits.

Well, we know what Congressman Ryan thinks of the ACA. Another “poverty trap,” he calls it.

But if he were really concerned about encouraging people to “begin … getting the dignity of work, rising [sic] their income,” etc., he’d be focusing on the kinds of solutions CHW advocates instead of trying to gut programs like SNAP.

 


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