Category Archives: Poverty

The Costs of Being Poor: Inflation Inequality Leads to Three Million More People in Poverty

Source: Christopher Wimer, Sophie Collyer, Xavier Jaravel, Columbia University, Center on Poverty and Social Policy and London School of Economics, November 2019

From the summary:
It is widely recognized that income inequality has skyrocketed in recent decades. Incomes at the top of the distribution have grown rapidly, far outpacing income growth at the bottom. Recent research also shows that prices have risen more quickly for people at the bottom of the income distribution than for those at the top —a phenomenon dubbed “inflation inequality.” An implication of this new finding is that we may be under-estimating income inequality and poverty rates in the United States—two national statistics that rely heavily on the annual inflation rate as part of their calculation. In this brief, we utilize an adjusted inflation index that accounts for inflation inequality across the income distribution and re-estimate recent trends in poverty and income inequality from 2004 to 2018. Our adjusted inflation index indicates that 3.2 million more people are classified as living in poverty in 2018, and that real household income for the bottom 20 percent of the income distribution actually declined by more than 7 percent since 2004. These results show that inflation inequality significantly accentuates both the incidence of poverty and income inequality.

Do Targeted Business Subsidies Improve Income and Reduce Poverty? A Synthetic Control Approach

Source: Jacob Bundrick, Weici Yuan, Economic Development Quarterly, OnlineFirst, September 20, 2019
(subscription required)

From the abstract:
Interstate competition for economic development has led many states to adopt targeted economic development incentive programs known as deal-closing funds. Deal-closing funds allow state officials to provide discretionary cash grants to select businesses to attract and retain economic development projects. However, whether these targeted business subsidies increase prosperity in the local economy remains unclear. The authors use evidence from Arkansas’s Quick Action Closing Fund to analyze how effective deal-closing funds are at increasing incomes and decreasing poverty. Specifically, the causal effects of the Quick Action Closing Fund on Arkansas’s county-level per capita personal income and poverty rates are estimated using a synthetic control approach. The results largely suggest that the business subsidy program fails to increase incomes and lower poverty rates over the long term, at least at the county level. These findings should serve as a caution to policy makers who wish to improve incomes and poverty rates with targeted business subsidies.

Household Debt and Children’s Risk of Food Insecurity

Source: Mackenzie Brewer, Social Problems, Advance Articles, August 8, 2019
(subscription required)

From the abstract:
In the United States, almost one in six households with children cannot access adequate food for a healthy and active lifestyle. Although food insecurity disproportionately affects lower-income households, it remains unclear why some lower-income families are more vulnerable to food insecurity than others. Household unsecured debt, such as debt incurred from credit cards and medical bills, may be an unexplored financial constraint associated with food insecurity. Using data from the 2014 Child Development Supplement (CDS) of the Panel Study of Income Dynamics (PSID), I assess whether unsecured debt, by amount and type of debt, is associated with food insecurity among lower-income households with children (N=1,319). Results indicate that medical debt increases odds of household food insecurity even after accounting for key sociodemographic and economic risk factors, while no relationship exists between other forms of unsecured debt and food insecurity. Moreover, although liquid assets decrease the risk of household food insecurity and attenuate the harmful effects associated with unpaid medical bills, few households have enough liquid assets to mitigate the risks associated with medical debt. Efforts to prevent medical debt may be essential for eliminating food insecurity among lower-income households with children.

2019 KIDS COUNT Data Book

Source: Annie E. Casey Foundation, 2019

From the summary:
The 30th edition of the Annie E. Casey Foundation’s KIDS COUNT® Data Book begins by exploring how America’s child population — and the American childhood experience — has changed since 1990.

And there’s some good news to share: Of the 16 areas of child well-being tracked across four domains — health, education, family and community and economic well-being — 11 have improved since the Foundation published its first Data Book 30 editions ago.

The rest of the 2019 Data Book — including the latest national trends and state rankings — rely on a shorter review window: 2010 to 2017.

The data reveal, in the United States today, more parents are financially stable and living without burdensome housing costs. More teens are graduating from high school and delaying parenthood. And access to children’s health insurance has increased compared to just seven years ago.

But it is not all good news. The risk of babies being born at a low weight continues to rise, racial inequities remain systemic and stubbornly persistent and 12% of kids across the country are still growing up in areas of concentrated poverty.

Locally, New Hampshire has claimed the No. 1 spot in overall child well-being, followed by Massachusetts and Iowa. Mississippi, Louisiana and New Mexico sit at the other end of this list — and among familiar company. In fact, save for California and Alaska, the lowest 18 ranked states call Appalachia, the South or the Southwest home.

How to Adjust the Official Poverty Measure

Source: State Policy Reports, Vol. 37 no. 10, May 2019
(subscription required)

A recent request by a federal agency is purportedly intended to gather information to inform a future decision, but some observers see a wolf in sheep’s clothing.

Related:
Trump May Redefine Poverty, Cutting Americans From Welfare Rolls
Source: Justin Sink, Bloomberg, May 6, 2019

• OMB says in regulatory filing it may recalculate poverty level
• Switch to so-called chained CPI would slow growth of poverty

FAQ: The Trump Administration’s Proposal to Lower the Federal Poverty Line
Source: Center on Budget and Policy Priorities, May 30, 2019

On May 6, the Office of Management and Budget (OMB) issued a notice requesting comments on changing the methodology for updating the federal poverty line for inflation. The notice floats the idea of updating the Census Bureau’s poverty thresholds using an alternative, lower measure of inflation than the traditional Consumer Price Index (known as the CPI-U) — either the “chained” CPI or the Personal Consumption Expenditures Price Index. This would result in lower poverty thresholds, with the gap between the current and proposed methodologies increasing each year….

State of the Union: Millennial Dilemma

Source: Stanford Center on Poverty and Inequality, May 2019

The annual Poverty and Inequality Report provides a unified analysis that brings together evidence across such issues as poverty, employment, income inequality, health inequality, economic mobility, and educational access to allow for a comprehensive assessment of where the country stands. In this year’s issue, the country’s leading experts provide the latest evidence on how millennials are faring.

Contents include:

Executive Summary
David B. Grusky, Marybeth Mattingly, Charles Varner, and Stephanie Garlow
With each new generation, there’s inevitably much angst and hand-wringing, but never have we worried as much as we worry about millennials. We review the evidence on whether all that worrying is warranted.

Racial and Gender Identities
Sasha Shen Johfre and Aliya Saperstein
The usual stereotypes have it that millennials are embracing a more diverse and unconventional set of racial and gender identities. Are those stereotypes on the mark?

Student Debt
Susan Dynarski
Often tagged the “student debt generation,” millennials took out more student loans, took out larger student loans, and defaulted more frequently. Here’s a step-by-step accounting of how we let this happen.

Employment
Harry J. Holzer
Labor force activity has declined especially rapidly among young workers. The good news: We know how to take on this problem.

Criminal Justice
Bruce Western and Jessica Simes
The imprisonment rate has fallen especially rapidly among black men. Does this much-vaunted trend conceal as much as it reveals?

Education
Florencia Torche and Amy L. Johnson
The payoff to a college degree is as high for millennials as it’s ever been. But it’s partly because millennials who don’t go to college are getting hammered in the labor market.

Income and Earnings
Christine Percheski
When millennials entered the labor market during the Great Recession and its aftermath, there were uniformly gloomy predictions about their fate. Does the evidence bear out such gloomy predictions?

Social Mobility
Michael Hout
Millennials have a mobility problem. And it’s partly because the economy is no longer delivering a steady increase in high-status jobs.

Occupational Segregation
Kim A. Weeden
Are millennial women and men working side by side in the new economy? Or are their occupations just as gender-segregated as ever?

Poverty and the Safety Net
Marybeth Mattingly, Christopher Wimer, Sophie Collyer and Luke Aylward
Millennial poverty rates at age 30 are no higher than those of Gen Xers at the same age. But this stability hides a problem: Millennials are replacing a falloff in earnings with large increases in government assistance programs.

Housing
Darrick Hamilton and Christopher Famighetti
Housing reforms during the civil rights era helped to narrow the white-black homeownership gap. But those gains have now been completely lost … and the racial gap in young-adult homeownership is larger for millennials than for any generation in the past century.

Social Networks
Mario L. Small and Maleah Fekete
Millennials are not replacing face-to-face networks with online ones. Rather, they’re a generation that’s found a way to do it all, forging new online ties while also maintaining the usual face-to-face ones.

Health
Mark Duggan and Jackie Li
It might be thought that, for all their labor market woes, at least millennials now have health care and better health. How does this story fall short?

Policy
Sheldon Danziger
A comprehensive policy agenda that could help millennials … and other generations too.

What it Costs to Die

Source: Liz Farmer, Mattie Quinn, Governing, June 2019

Funerals have become a luxury that many Americans can’t afford. Cities and counties are paying the price….

…..What’s happening in Henry County is playing out in places across the country. Rising funeral costs and a lagging economy have made it increasingly hard for many low-income Americans to pay the necessary expenses to dispose of a body. The average cost of a funeral today is $7,400, a price tag that’s risen nearly twice as fast as inflation since the 1980s. (That cost doesn’t include flowers, obituaries and gravesite fees that can tack on another couple thousand dollars.) At a time when 40 percent of Americans can’t even afford an unexpected expense of just $400, according to the Federal Reserve, the notion of a proper funeral and burial has become, for many people, an unattainable luxury.

When family members can’t afford to claim a body, the burden falls on local governments to handle the remains. There’s no comprehensive data on the number of unclaimed bodies in morgues across the country, but everyone agrees it’s a problem that’s getting worse. The St. Louis Medical Examiner’s Office had to add mobile refrigerated trailers in 2017 to hold all its bodies. The Connecticut Office of the Chief Medical Examiner briefly lost accreditation in 2017 because it ran out of storage space. In Mobile County, Ala., annual spending on indigent burials has increased 300 percent over the last decade. In Kentucky, Pollard estimates that indigent burials have jumped 50 percent in just the past 18 months…..

Getting poorer while working harder: The ‘cliff effect’

Source: Susan R. Crandall, The Conversation, June 3, 2019

….Given the pressure to earn enough to make ends meet, you would think that low-paid workers would be clamoring for raises. But this is not always the case.

Because so many American jobs don’t earn enough to pay for food, housing and other basic needs, many low-wage workers rely on public benefits that are only available to people in need, such as housing vouchers and Medicaid, to pay their bills.

Earning a little more money may not automatically increase their standard of living if it boosts their income to the point where they lose access to some or all of those benefits. That’s because the value of those lost benefits may outweigh their income gains.

I have researched this dynamic, which experts often call the “cliff effect,” for years to learn why workers weren’t succeeding at retaining their jobs following job training programs. Chief among the one step forward, two steps back problems the cliff effect causes: Low-paid workers can become reluctant to earn more money due to a fear that they will get worse off instead of better…..

The Decline of Cash Assistance and the Well-Being of Poor Households with Children

Source: H Luke Shaefer, Kathryn Edin Vincent, Fusaro Pinghui Wu, Social Forces, Advance Articles, March 19, 2019
(subscription required)

From the abstract:
Since the early 1990s, the social safety net for families with children in the United States has undergone an epochal transformation. Aid to poor working families has become more generous. In contrast, assistance to the deeply poor has become less generous, and what remains more often takes the form of in-kind aid. A historical view finds that this dramatic change parallels others. For centuries, the nature and form of poor relief has been driven in part by shifting cultural notions of which social groups are “deserving” and “undeserving.” This line was firmly redrawn in the 1990s. Did the re-institutionalization of these categorizations in policy have material consequences? This study examines the relationship between the decline of traditional cash welfare between 2001 and 2015 and two direct measures of wellbeing among households with children: household food insecurity and public school child homelessness. Using models that control for state and year trends, along with other factors, we find that the decline of cash assistance was associated with increases in both forms of hardship.