How We Could Cut Child Poverty By More Than Half and Pay for It Too

February 9, 2015

Back in 2007, the Half in Ten campaign set a goal of cutting poverty in America in half in 10 years. Not doing so well at that, are we?

Well, says the Children’s Defense Fund, what if we ended child poverty in this very wealthy country? That, of course, would mean ending poverty for parents and guardians too.

CDF recently released a report to take us a long way toward the child poverty goal. It offers nine recommendations that would reduce child poverty by roughly 60% — and deliver more economic resources for families of all but 3% of children who are poor now.

We’d have 6.6 million fewer children living in poverty, including half a million who are deeply poor, i.e., in households with incomes below 50% of the applicable poverty threshold.

What’s Notable

Several things distinguish this report. The first is that it builds on existing policies and programs that have proved effective. The aim is less to innovate than to increase reach — and in some cases, effectiveness as well.

The second, which is more distinctive, is that the report includes poverty-reduction impacts for each of the recommendations.* These reflect analyses by experts at the Urban Institute, who used Census Bureau data and its Supplemental Poverty Measure — a more complex and accurate measure than the one used for official purposes.

The third distinctive thing is that the report identifies specific policy and other budget changes that would yield enough savings or additional revenues to offset what the recommendations would cost.

What CDF Recommends

The recommendations fall into two big buckets. In the first are recommendations that would enable more low-income parents to work — or work more than they do — and to make their work pay more, both directly and through the tax code.

On the work side itself, we have subsidized jobs, like those temporarily funded through the Recovery Act. Also enough childcare subsidies so that all eligible families below 150% of the federal poverty line could afford high-quality child care during their working hours.

On the pay-more side, we, of course, have an increase in the federal minimum wage, but also an expansion of the Earned Income Tax Credit and changes in the Child Care and Dependent Tax Credit. The latter would become refundable so that families with incomes too low to owe federal taxes could benefit. At the same time, the reimbursement rate for lower-income families would increase.

In the second bucket, we have recommendations that would ensure children’s basic needs are met. These are mostly changes in major safety net programs. And all but one — treatment of child support payments — would lift more children out of poverty than any of the work-related recommendations.

The most effective of all addresses housing costs. CDF proposes a large expansion of the shrunken federal Housing Choice voucher program.

Vouchers would become available for all households with children that have incomes below 150% of the poverty line and that pay — or would have to pay — at least half their income for rent at the U.S. Department of Housing and Urban Development’s fair market rate. This recommendation alone would cut the child poverty rate by 20.8%.

Next down on the impact scale is a recommendation based on one the Food Research and Action Center has made for some years.

It would change the basis for determining SNAP (food stamp) benefits from the Thrifty Food Plan, which is generally used for no other purpose, to the Low-Cost Food Plan, which, FRAC says, is “generally in line with what low- and moderate-income families report they have to spend on food.”

We’d not only have fewer poorly-fed — or even underfed — children. We’d have 11.6% fewer in poverty. No benefits boost, however, for people who’ve got no children living with them.

How We Could Pay for the Proposals

First off, it’s worth noting that we’re already paying for child poverty — roughly $500 billion a year, according to an estimate a team of economists produced some years ago.

The proposals themselves would cost an estimated $77.2 billion a year. This is not only far less. It’s a tiny fraction — about 2% — of what the federal government spends.

CDF nevertheless lists five trade-offs, i.e., policy and spending changes that would free up funds to cover the costs of its proposals.

Like the recommendations, the trade-offs fall into two buckets. In one bucket, we have tax loopholes Congress could close, plus an income tax rate for capital gains and dividends equal to the rate imposed on wages.

In the other bucket, we have cuts in egregiously large and arguably wasteful Pentagon spending. Congress could, for example, give up on the F-35 fighter plane, which still can’t fly. This would free up $162.5 million per plane.

Total savings from this alone would fund all CDF’s proposals for 19 years, it says. Could be even longer, since the President’s proposed budget would fund more of these clunkers than the estimate CDF relied on.

On the other hand, the President’s budget does include some proposals similar to CDF’s, e.g., a subsidized jobs program, a larger maximum Child and Dependent Care Tax Credit for families with young children, more funding for housing vouchers, though far from enough to expand eligibility. General resemblances to some of the trade-offs in his tax code proposals too.

House Speaker John Boehner, among others, pronounced the budget DOA even before it got to Congress. Other sources think there might be some common ground. Far from enough — or in enough of the right places — to significantly reduce the child poverty rate. But it’s useful to know how we could do it — and pay for it too.

* Economist/blogger Jared Bernstein, who uses the report to poke Republican Presidential hopefuls, provides a table that identifies each recommendations, its impact of child poverty and the net new cost.


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.


Why Are Poverty Rates for People With Disabilities So High?

October 30, 2014

My last post tried to answer a straightforward question: How many District of Columbia residents with disabilities lived in poverty last year? The answer was about one in three, but rates were higher for children and working-age adults, especially the former.

Computing the rates is a whole lot easier than explaining why they’re so high. No source I’ve found comes close. Here’s what I’ve pieced together from federal data and other research for the nation as a whole.

Poverty As Both Cause and Effect for Children With Disabilities

The poverty rate for children with disabilities is high nationwide, though not as high as in the District, where it’s 45.5% of children old enough for the Census Bureau’s survey to have captured all the major types of disabilities they may have.

Such research as we have indicates that children are more likely to be disabled if they’re borne by poor mothers and into poor families. Inadequate nutrition, including actual hunger is a factor. Likewise inadequate health care and exposure to toxins in the environment, e.g., lead paint, pollutants in the air.

Stress itself has toxic effects on children’s physical and mental development. And living in poverty is stressful — not only because of the material hardships and instability children suffer, but because the stresses sometimes cause parents to neglect or even abuse their children — or one parent to abuse the other.

At the same time, childhood disability contributes to family poverty. Parents who would otherwise work can’t — or can’t work as much — because they need to care for their disabled child. Parents here generally means mothers, the research tells us.

Working-Age, But Not Many Working

The poverty rate for working-age adults with disabilities is somewhat easier to understand. They may be working-age, but relatively few of them are working — only 26.8% of those 16-64 last year, according to the Bureau of Labor Statistics.

About one in three were working part time — a higher percent than for their counterparts without a disability.

And both they and the full-timers may, in some cases, have gotten paid as little as a quarter an hour because some employers may legally set wages based on their own assessments of productivity.

An additional 14.7% of working-age adults with disabilities were jobless and actively looking for work — about the same percent as in 2012. The unemployment rate for their counterparts without a disability dropped to less than half this rate.

Rolling the working and looking-for-work figures together, we find that more than two-thirds of working-age adults with disabilities were not counted as part of the labor force.

How many could have worked, but became utterly discouraged by employers who wouldn’t even consider them — or who wouldn’t accommodate their disabilities, as the law requires — is an open question.

Some of the dropouts may have worked before they became disabled. If they’d worked long enough and earned enough, they might have qualified for SSDI (Social Security Disability Insurance).

But disability alone wouldn’t suffice. The Social Security Administration would have had to decide that they couldn’t earn much, if anything from work because of their disability and wouldn’t be able to for at least a year.

The benefits might — or might not — lift them over the poverty threshold. Probably wouldn’t for those whose annual earnings averaged somewhere around what a full-time, minimum wage job pays.

Adults who can’t meet the SSDI standards may instead receive Supplemental Security Income benefits if their incomes are low enough, their cash and near-cash assets small and, again, if SSA decides they’re too severely disabled to “engage in substantial gainful activity.”*

SSI lifted about 3.9 million people out of poverty last year. But their incomes couldn’t have been far below the poverty threshold without it. The maximum annual benefit for an individual was about 73% of the threshold for a single person — less, of course, for a family of any size.

Late-Onset Disabilities for Some

Presumably the poverty rate for seniors with disabilities reflects in part the fact that some incurred their disabilities long before their “golden years” — born with them, in some cases, in others early enough so that their Social Security retirement benefits are very low.

But those retirement benefits, plus SSI or draw-downs from their own retirement accounts probably explain why their poverty rate is lowest among the age groups I’ve carved out. Doesn’t mean that all those who cleared the threshold are doing fine.

As I’ve said many times, the thresholds are very low. And when the Census Bureau takes account of basic living expenses, including medical out-of-pocket costs, the District’s senior poverty rate rises to 26% — higher than the rate for any state.

Would that we had SPM rates specifically for young, old and in-between people with disabilities.

* SSI benefits are also available to children with severe disabilities if their families meet somewhat similar income and asset tests and to low-income seniors, disabled or otherwise.




More Than One in Three DC Residents With Disabilities in Poverty

October 27, 2014

My post on the Census Bureau’s Supplemental Poverty Measure report prompted a fine question: What is the poverty rate for people with disabilities in the Washington, D.C. area?

I knew the SPM had no answer, but was pretty sure other Census reports would. And indeed, I found some very disturbing figures.

Not to keep you in suspense, the relevant poverty rate for the metropolitan statistical area that includes the District of Columbia was 15.9% last year. But it was more than double that for the District itself. Now the deets.

Overall Poverty Rates for People With Disabilities

The American Community Survey — our best source for community-level data — tells us that 33.9% of District residents with disabilities lived in poverty last year. This is 15% higher than the poverty rate for the D.C. population as a whole. And it’s 11.5% higher than the rate for people with disabilities nationwide.

A third of poor District residents with disabilities lived in deep poverty, i.e., at or below half the applicable poverty threshold. This rate is also higher than the national rate.

All these rates, however, provide only a partial picture because the ACS limits most of its questions about disabilities to people who are at least five years old and all of them to disabilities that cause a “serious difficulty.” Questions limited to the five and older group refer to daily life activities.

What this means, among other things, is that young children who can see and hear just fine, but have some other physical disability — or any emotional or intellectual disability — don’t get counted. Nor, of course, do older people who choose not to acknowledge serious difficulties in such activities as making decisions for themselves.

More Older People With Disabilities, But Fewer Poor

As we’d expect, the percent of District residents with disabilities increases with age. The disability rate for children between the ages of five and seventeen was somewhat over 7.4% last year. It was barely higher for working-age adults, i.e., those 18-64 years old. But about a third of residents 65 and older had at least one disabling condition.

The poverty rates for disabled people in these age groups are just the opposite. A mind-boggling 45.5% of disabled children in the over-five age group lived in families with incomes below the poverty threshold last year — less than $23,865 for a couple with two children.

The poverty rate for working-age adults with disabilities was 36.9% — nearly two and a half times the rate of those whom the ACS classified as without a disability. It’s also about 10% higher than for seniors with disabilities.

So there are the numbers. How can we explain them? That’s a more complicated question than the one that prompted this post. But I’ll take a stab at it in the next.


Better Poverty Measure, Worse Poverty Rate, But Not for Everybody

October 16, 2014

As in the past, the Census Bureau’s Supplemental Poverty Measure yields a higher poverty rate than the official measure that was the basis for the reports the Bureau issued last month. According to the just-released SPM report, the rate last year was 15.5%, rather than 14.5%.*

This means that about 2.9 million more people — roughly 48.7 million in all — were living in poverty. At the same time, 1.3% fewer people lived in deep poverty, i.e., at or below 50% of the income threshold that determines who’s counted as poor.

These differences as well as the many others reflect the fact that the SPM is constructed differently from the official measure. There’s a brief explanation of how it’s built in the last section below.

Other Shifts in Poverty Rates

We see shifts up and down for state-level rates. For example, the rate for the District of Columbia rises from 19.9% to 22.4%. Rates fall in 26 states and rise in 13. (These reflect three-year averages to compensate for the relatively small sample sizes.)

As in the past, rates also shift for major race/ethnicity groups. Most of the shifts are relatively small. An exception here for Asians, whose poverty rate was 5.9% higher, and for blacks, whose deep poverty rate was 4.6% lower.

The most marked shifts are again for the young and the old.

  • The child poverty rate drops from 20.4% to 16.4%, reducing the number of poor children by about 2.9 million.
  • The deep poverty rate for children is less than half the official rate — 4.4%, as compared to 9.3%.
  • By contrast, the poverty rate for people 65 and older rises from 9.5% to 14.6%.
  • And the deep poverty rate for seniors ticks up from 2.7% to 4.8%.

Poverty Rates Without Key Federal Benefits

The changes for seniors largely reflect the fact that the SPM factors in medical out-of-pocket costs. But the SPM report also tells us that the senior poverty rate would have been 52.6% without Social Security payments. In other words, Social Security protected about 23.4 million seniors from poverty last year — more than three and a half times as many as were poor.

This is only one of the policy-relevant figures the SPM report provides in a section that shows how poverty rates would change if some particular benefit weren’t counted as income. Some examples Census has helpfully translated into raw numbers:

  • The refundable Earned Income Tax Credit and Child Tax Credit lifted 8.8 million people out of poverty.
  • But for SNAP (food stamp) benefits, about 4.8 million more people would have fallen below the poverty threshold.
  • Unemployment insurance benefits lifted 2 million people over the threshold.

So we see that the much-maligned safety net programs work. But we also see that policy choices have impaired the impacts some of the biggies formerly had.

For example, SNAP benefits lifted about 5 million people out of poverty in 2012, before the across-the-board cuts became effective. We’ve yet to see the effects of the further, targeted whack at benefits that’s part of the new Farm Bill.

The anti-poverty impacts of UI benefits shrunk further — a trend dating back to 2010, according to the Center on Budget and Policy Priorities. The number of people the benefits lifted out of poverty last year was nearly half a million fewer than in 2012.

And that was before Congress let the Emergency Unemployment Compensation program die at the end of last year. The new UI figure almost surely reflects reductions it made when it last renewed the program, however.

SPM 101

As I’ve explained before, the SPM is a more complex — and generally viewed as better — poverty measure than the one that’s used for official purposes, e.g., as the basis for the federal poverty guidelines that help determine eligibility for many safety net and other means-tested programs.

The Bureau begins by setting initial thresholds based on what the roughly 33rd percentile of households with two children spend on four basic needs — food, shelter, clothing and utilities.

It then bumps the amount up a bit to account for some other needs, e.g., household supplies, transportation that’s not work-related. It also makes some housing cost adjustments based on differences between major geographic areas and whether households rent or own — and in the latter case, with or without a mortgage.

Next, it deducts for certain other necessary expenses, e.g., work-related expenses, out-of-pocket costs for health care. And, as income, it adds the value of some non-cash benefits that households can use for the four basic needs. It also, for the same reason, folds in the refundable tax credits.

The report I link to at the beginning of this post provides a fuller — and considerably more wonkish — explanation.

* This is the same rate the Census Bureau reported last month. However, most of the official rates in the SPM report differ somewhat because the Bureau has included children under 15 who are unrelated to anyone they’re living with, e.g., foster children. The official measure doesn’t include them as part of a family unit.

I’m using the adjusted rates so we can have apples-to-apples comparisons. But the rates reported last month are those that should be used for other purposes.

UPDATE: The Center on Budget and Policy Priorities reports that the refundable tax credits lifted 9.4 million people out of poverty. This figure, it says, is based on its analysis of the SPM data. I don’t know why it’s higher than the Census Bureau figure I linked to.

More Than a Third of Young DC Adults in Poverty Last Year

October 6, 2014

My recent post on the new poverty rates for the District of Columbia prompted an email from Deborah Shore. She wanted to know what I could tell her about poverty among older teens and young adults.

I’m sure many of you know why. For the rest, Deborah is the executive director of Sasha Bruce Youthwork, a nonprofit she founded 40 years ago. It now provides emergency shelter, transitional housing and a range of services to homeless and at-risk youth in the District.

Deborah also chairs the board of the National Network for Youth — a large coalition of organizations that serve and advocate for runaway, homeless and disconnected youth, i.e., those who are neither in school nor working.

I’m grateful for her question because, like many others who reported on the results of the American Community Survey, I didn’t initially pay attention to the figures for young adults.

Children, of course. Yet the very high poverty rates for them, both in the District and nationwide, can’t be neatly separated from poverty among teens and young adults because some are parents — mostly single mothers, it seems.

The Census Bureau doesn’t tell us a whole lot about youth in poverty, though I suspect one could dig up a fair amount if one had the tools to work with the detailed tables that expand what it reports from a special piece of the Current Population Survey. I don’t.

So I went searching among the thousands of tables the Bureau uses to report the results of the ACS — a better source for community-level data anyway. Here’s what I found there and in some other reports.

Folded into the District’s child poverty rate are roughly 2,925 children on the verge of adulthood, i.e., 16 and 17 year olds. They represent about a tenth of all poor D.C. children — a far lower percent than the very youngest.

But many more who’d just crossed the threshold were officially poor. The Census Bureau reports 21,000 young D.C. adults, i.e., 18-24 year olds, in poverty. This makes for an age-group poverty rate of a bit under 37%. It’s more than 11% higher than the national poverty rate for the age group.

And (here comes the bombshell ) nearly one in four young adults in the District lived in deep poverty last year, i.e., had incomes at or below half the applicable threshold. For one person living alone, deep poverty means a maximum annual income of $6,060 — and for a single parent with one child, a maximum of $8,029.

By far and away more young adults in the District were deeply poor than poor, but less so. This was not true for young adults nationwide. For them, the deep poverty rate was 13.7%, according to the ACS, or 10.2%, according to CLASP’s analysis of the Current Population Survey.

Well, what are we to make of all this? One thing is that the poverty rates reflect the unusually hard time young adults are having in the labor market.

The unemployment rate for 18-19 year olds was 19.8% last month, as compared to 5.4% for everyone older who was also jobless and actively looking for work. The rate for 20-24 years olds was 11.4%. And rates for both groups were even higher for men.

Such figures as we have suggest that far from all jobless young people were actively looking. Last year, only 64.7% of 18-24 year olds were either working or seeking work. This is nearly 8.7% lower than in 2000.

At the same time, those who were working didn’t earn much. The median for 18-24 year olds was $17,760 in 2012 — and for those with less than a high school education, a mere $13,510.

Try as I might, I haven’t found comparable figures for young adults in the District. The Economic Policy Institute provides a couple that come close, however. It tells us that 14.8% of D.C. workers under 25 were unemployed last year, not including those who were still enrolled in school or those who’d decided it was futile to look.

An additional 26.2% were underemployed, i.e., working part time, though they wanted full-time work or had looked during the year, but given up. (I don’t know why EPI doesn’t count the latter as unemployed.)

Both rates are due partly to the fact that young workers generally have a tougher time getting — and staying — employed than workers with more job experience. This is especially true when there are far more job-seekers than jobs to go around.

But the premium our local labor market puts on college degrees is probably also a factor, as the DC Fiscal Policy Institute’s analysis of 2012 unemployment rates shows.

And so far as good jobs are concerned, only one of the “high demand/high wage” jobs in the District requires only a high school diploma or the equivalent — and only two others less than a four-year college degree.

Both the poverty and the un/underemployment rates help explain the surge of homeless families in the District, since nearly half the parents who spent at least part of last winter in the DC General family shelter were 18-24 year olds.

They also help explain some first-time-ever figures for homeless youth who had no family members with them. Of which more in my next post.



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