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.


Welfare Spending Up? Not So, Another Expert Says.

June 2, 2014

The welfare spending study I recently wrote about makes two main points. Spending on “social safety net” programs has increased. And it’s shifted from the neediest toward more “deserving” working families.

Policy analyst Shawn Fremstad says the first point is “overstated.” He also argues that it’s too narrow because it ignores the erosion of core unemployment programs that aren’t means-tested, i.e., limited to people below a certain income level.

He demonstrates the former by measuring spending on what he calls income security programs as a percent of GDP, i.e. the value of all the goods and services our economy produces, rather than on a per-person basis, as the study’s author, Professor Robert Moffitt, did.

Looked at this way, spending on what are what are mostly means-tested programs has risen and fallen between the mid-1970s and 2007, in synch with recessions and labor market recoveries.

Spending during recessions has trended down. And spending in 2007 — our latest relatively low-unemployment year — is a small fraction of a percent higher than it was in 1979.

What may seem like a technical debate on how to measure safety net spending really isn’t. Because Fremstad aims in part to show that our so-called welfare state has become “less generous.”

Not only that. Spending on a broader range of employment-related programs, i.e., education, training, employment and social services, is lower, as a percent of GDP, than it was in the mid-1970s. “[T]he story is more about retrenchment than expansion,” Fremstad says.

And not only that. The skewing upward is actually much more pronounced than Moffitt’s analysis finds because we have a whole lot of spending through the individual income tax code. And most of the costliest deductions, exclusions and the like disproportionately benefit the top fifth on the income scale.

Even the Earned Income Tax Credit and the Child Tax Credit, Fremstad suggests, aren’t straightforward benefits for lower-income workers because they “subsidize poorly compensated employment.”

In other words, they enable employers to get away with paying less than they could if the tax credits didn’t supplement their workers’ incomes. The EITC may actually drive wages down, according to research by a prominent labor economist.

Underlying all this is a point Fremstad doesn’t specifically state in his post, but indicated in one of his tweets as @inclusionist: Wages and benefits for working families with children hardly show we view them as deserving.

Though these are beyond the scope of a federal spending analysis, they’re federal policy issues nonetheless.

Not much hope on the horizon for improvements. We seemingly can’t even get a renewal of federal unemployment benefits, let alone a minimum wage increase or any sort of paid leave mandate.

But we blog on.


Welfare Shifts to the “Deserving” Poor … and Not-So-Poor

May 27, 2014

The U.S. is spending considerably more on safety net programs than it did in the mid-1970s, but the poorest families — most of them headed by single mothers — are receiving less.

This is a key finding in the latest of several studies conducted by Professor Robert Moffitt at Johns Hopkins University. He looked at spending the 15 largest “social safety net” programs between 1975 and 2007.

He traced payments from social insurance programs like Social Security for retirees and unemployment compensation and from means-tested programs, i.e. those that limit eligibility to people below a set income level.

Overall safety net spending in real dollars was 74% higher at the end of the period, but families in deep poverty, i.e., below half the federal poverty line, received 35% less than they did the year before Congress replaced welfare as we knew it with Temporary Assistance for Needy Families.

Well, we knew that TANF is a poor excuse for a safety net program — and in various ways, as the Center on Budget and Policy Priorities’ chart book shows.

Moffitt’s findings, however, do far more than confirm this. Basically, as he says, they show that long-standing distinctions between the deserving and undeserving poor “have grown sharper over the last 20 or 30 years.”

“The deserving are those who work, who are married or at least widowed, who have children and who are native born.”

The undeserving are the obverse, Moffitt contends, though I personally think the bans on safety net benefits for recent immigrants have other roots.

Quibble aside, what his data show isn’t merely declining support for the “undeserving” poor. We also see increasing support for famiies who aren’t poor — or even near-poor.

The shift reportedly means that a family of four earning $11,925 a year is probably getting less aid than the same-sized family earning $47,700 — 200% of the federal poverty line.

This is partly because the real-dollar value of TANF cash benefits has dropped so significantly, along with the percent of poor families served — about 43% fewer than in 1996.

At the same time, most of the fastest growing programs serve “specialized populations,” Moffitt says. These include Supplemental Security Income, which helps only lower-income people who are elderly, blind or severely disabled, i.e., those who qualify as deserving because we don’t expect them to work.

Otherwise, most of the fastest growing programs benefit families with at least one worker — the Earned Income Tax Credit and the Child Tax Credit. Childless workers obviously don’t qualify for the latter at all. And their EITC benefit is piddling.

By contrast, a married couple with two children qualifies for a maximum $5,460 credit — and for phased-down credits until their adjusted gross income reaches $49,146.

The one exception, Moffitt notes, is SNAP (the food stamp program), which isn’t restricted to any “specialized population.” But it provides only about $5 per person per day, he says — a generous rounding up, according to CBPP data.

By and large, we see “rising support for those who work and declining support for those who do not, Moffitt says. “If you’re trying and not succeeding, the welfare system today gives you basically nothing.”

We’ve cut support to families without a breadwinner — and to single-mother families in particular — because of a “presumption that they have not taken personal responsibility for their situation,” he explains.

By these lights, earning is a mark of deserving — as is marrying (someone of the opposite sex) and staying married, no matter what.

Poverty betokens some character flaw — at the very least, a failure to try hard enough, as a majority of Republicans (and not they only) apparently believe.

Moffitt understandably believes it would be futile — perhaps counterproductive — to attack the work bias in our safety net programs. He mentions doing more for those who face the largest obstacles to work, e.g., lack of marketable skills and/or affordable child care.

But he also hopes “we could find ways to assist those families who are making an effort, but not succeeding.” Effort then becomes a market of deserving.

And who will decide who’s really trying?

 

 

 


Lessons From the Ryan Budget Plan

April 7, 2014

I feel I ought to say something about Congressman Paul Ryan’s latest budget plan. Yet, as the ferocious overview by the Center for American Progress indicates, there’ not much that’s new — not even the title.

It’s again The Path to Prosperity, which is true if you’re already prosperous. A path to more desperate circumstances if you’re poor or near-poor.

Not a path you’d like the country to go down if you care about the safety net or many other things the federal government supports, e.g., education, workplace safety, healthcare and other scientific research.

Or if you’re counting on having affordable health care in your golden years — or even next year, if your employer doesn’t provide it.

Far too much for a blog post. So here instead are a couple of ways of looking at the plan.

The Devil Isn’t Just in the Details

Congressman Ryan, as we know, has a long-standing hostility to federal safety net programs — except Temporary Assistance for Needy Families, which the plan again endorses as the model for others.

So it’s no surprise that he again wants SNAP (the food stamp program) converted to a block grant that would, in some unspecified way, expand the already-existing work requirements.

The block grant clearly wouldn’t enable states to sustain current eligibility standards and benefit levels, since it would save an estimated $125 billion over 10 years. (More savings from other changes discussed below.)

It’s also no surprise that the Path would again make a block grant out of Medicaid and the Children’s Health Insurance Program. Funding increases would be based on inflation and population growth, rather than healthcare costs and the number of people eligible.

So the federal government would save $732 billion over 10 years. And states would have the “flexibility” to cope with the loss.

Many other programs that benefit low-income people would get cut in different ways — Pell grants, for example, and Supplemental Security Income for severely disabled children. There’d be no funds at all for the Social Services Block Grant because the plan would kill it.

But here’s the devil lurking behind such details. Ryan made safety-net slashing inevitable by building his plan on certain basic principles. These are all, I hasten to add, cherished by the right-wing House majority.

First, the budget must balance within 10 years. In other words, what the federal government spends in any given year can be no greater than what it receives in tax revenues.

At the same time, the tax code can’t be changed to increase revenues. Any savings achieved by closing loopholes and the like would have to be used to offset tax cuts.

So the federal government would have to spend a great deal less — even less than seemed the case last year because the Congressional Budget Office now takes a dimmer view of prospects for economy growth and thus of revenue collections.

But — another principle here — the federal government must spend more on defense than what the Budget Control Act allows.

So what the plan giveth to defense, it must taketh away from non-defense — even more so because Ryan aims to bring total spending under the cap.

Defense would thus get $483 billion more than the sequestration levels in the BCA. Non-defense programs subject to annual appropriations would get $791 billion less.

Add cuts to the so-called mandatory programs like Medicaid and SNAP and the total non-defense loss soars to $4.8 trillion.

If At First You Don’t Succeed

This, of course, applies to the SNAP and Medicaid block grants, as well as to the fuzzily-described premium support option for Medicare — essentially, a choice of private insurance plans, with costs partially subsidized. But less over time, according to both CAP and Families USA.

As in the past, the Ryan plan would raise the Medicare eligibility age to the already-increased eligibility age for full Social Security retirement benefits.

This would leave a lot of low-income seniors in the lurch because — you knew this was coming — the plan would repeal the Affordable Care Act, including the federal funding for states that expand their Medicaid programs.

Seniors are far from the only people who’d be affected, of course. Everyone who became newly-eligible for Medicaid and everyone who’s purchased — or intends to purchase — subsidized health insurance on an exchange would be back where they were before.

At least 40 million people — one in eight Americans — would become uninsured by 2024, when the 10-year budget window closes, according to the Center on Budget and Policy Priorities’ also ferocious response to the plan.

The plan would also undo compromises reflected in the new Farm Bill. For SNAP, it reverts to what the House Republicans put on the table.

Specifically, states could no longer use receipt of a TANF benefit as a basis for determining eligibility. At least 1.8 million and perhaps as many as 3 million low-income people in 40 states and the District of Columbia would lose their SNAP benefits, according to earlier estimates.

Every year, another 1 million or so would lose them because the plan resurrects another provision that didn’t survive the negotiations. This one eliminates the waivers states can get to exempt able-bodied workers without dependents from the usual work requirements when meeting them would be extraordinarily difficult.

The plan would also eliminate a provision that House Republicans got into the Farm Bill. No more so-called “heat and eat” option at all because what they hoped to achieve, i.e., SNAP benefits cuts for some 850,000 households, hasn’t altogether succeeded.

A Big So What

Well, this is the fourth Path we’ve been treated to. The last proved so problematic that House Republicans themselves couldn’t face some of the cuts required.

In any event, Congress has already passed bills setting defense and non-defense spending caps through 2021. House Republicans can’t change them. They can’t unilaterally make the far-reaching program changes either.

The plan is, however, a clear indication of Republican priorities — a “campaign manifesto,” as The New York Times calls it. Something to bear in mind as we read nervously about the upcoming Senate elections — and look beyond to 2016.

 

 


Follow

Get every new post delivered to your Inbox.

Join 156 other followers