Category Archives: Poverty

Are Low-Wage Workers Destined for Low Income at Retirement?

Source: Barbara Butrica and Eric Toder, Urban Institute, September 1, 2008

From the abstract:
Low-wage workers find it difficult to save for retirement. Without savings, they will have to rely on Social Security and pensions. Yet these income sources are based on earnings, which means that low-wage workers will have lower Social Security and pension benefits than higher-wage workers. This brief assesses whether boomers with low earnings between ages 22 and 62 are destined for low income at age 67. We find that nearly two-thirds of this group will end up with low income at retirement, but more than one-third will manage to defy the odds and escape being among the lowest-income older Americans.

The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates

Source: Rolf Aaberge, Audun Langørgen, Magne Mogstad, Marit Østensen, IZA Discussion Paper Series, IZA DP No. 3686, September 2008

Despite a broad consensus on the need to take into account the value of public services and geographical cost of living differences when measuring poverty, there is little reliable evidence on how these factors actually affect poverty estimates. Unlike the standard approach in studies of the distribution of public services, this paper employs a method for valuing sector-specific local public services that allows for differences between municipalities in unit costs for providing public services. Furthermore, recipient frequencies in various demographic groups are used as the basis for determining the allocation of the value of these services on citizens of the municipalities. Geographical differences in living costs are taken into account by using municipal housing price indices or by replacing the country-specific poverty line with municipal-specific poverty lines. Applying Norwegian register data for the period 1993-2001, we find that disregarding the value of local public services and geographical cost of living differences yields a misleading picture of poverty.

What Do the Recently-Released U.S. Poverty Numbers Tell Us?

Source: Rebecca M. Blank, Brookings Institution, Testimony to the Joint Economic Committee Hearing entitled “Leave No Family Behind: How Can We Reduce the Rising Number of American Families Living in Poverty?” September 25, 2008

From the summary:
The Census Bureau recently released the official numbers on income and poverty last year (2007) in the United States. Let me underscore a few of the key facts that these data illustrate.

First, poverty did not fall to any appreciable extent during the economic expansion of the 2000s. This is quite unusual. Figure 1 shows the poverty rate and the unemployment rate. In past decades, these two indicators have moved together. When unemployment fell in the 1980s expansion, so did poverty. Unemployment and poverty both fell rapidly in the strong expansion of the 1990s. But when unemployment fell after 2003, poverty remained essentially flat.

Second, the rise in poverty reflects the generally sluggish growth in income by all families in the bottom half of the income distribution. Figure 2 shows an index of household income growth at the 20th, 50th, 80th and 95th percentiles of the income distribution over the last 30 years. Income among the bottom 20 percent grew as fast (or as slowly) as among those at the median (the 50th percentile) throughout this period. While these lower-income families achieved significant income gains over the last 30 years, particularly over the 1990s, both families in the middle of the income distribution and those at the bottom have lower household incomes in 2007 than they had in 2000. While incomes at the top of the distribution incomes have not risen rapidly in the 2000s, they have risen over the past 10 years.

Good Health Starts Early: Two Studies Show Links Between Child Poverty and Poor Adult Health

Source: Kate Bell Center for American Progress, September 8, 2008

Improving children’s health is key to better overall health outcomes, and should be a cornerstone of any comprehensive health care reform. Two new reports from the World Health Organization and the Campaign to End Child Poverty explore the extent to which health outcomes are determined by social conditions, including poverty, and they show that poverty in childhood has a clear effect on adult health.

A Profile of the Working Poor, 2006

Source: U.S. Department of Labor, U.S. Bureau of Labor Statistics, Report 1006, August 2008

In 2006, according to the U.S. Census Bureau, 36.5 million people, or 12.3 percent of the population, lived at or below the official poverty threshold, roughly the same number as in 2005.1 The majority of the Nation’s poor were children and adults who had not participated in the labor force during the year. However, 7.4 million were among the working poor–those who spent 27 weeks or more in the labor force, working or looking for work, but whose incomes still fell below the official poverty level. These individuals represented 5.1 percent of all persons aged 16 years and older who were in the labor force for 27 weeks or more in 2006, down from 5.4 percent the previous year.

Household Income Rises, Poverty Rate Unchanged, Number of Uninsured Down

Source: U.S. Census Bureau, August 2008

From the press release:
Real median household income in the United States climbed 1.3 percent between 2006 and 2007, reaching $50,233, according to a report released today by the U.S. Census Bureau. This is the third annual increase in real median household income.

Meanwhile, the nation’s official poverty rate in 2007 was 12.5 percent, not statistically different from 2006. There were 37.3 million people in poverty in 2007, up from 36.5 million in 2006. The number of people without health insurance coverage declined from 47 million (15.8 percent) in 2006 to 45.7 million (15.3 percent) in 2007.

These findings are contained in the report Income, Poverty, and Health Insurance Coverage in the United States: 2007. The data were compiled from information collected in the 2008 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC).

Also released today were income, poverty and earnings data from the 2007 American Community Survey (ACS) for all states and congressional districts, as well as for metropolitan areas, counties, cities and American Indian/Alaska Native areas of 65,000 population or more.

How Living Wage Legislation Affects U.S. Poverty Rates

Source: Suzanne Heller Clain, Journal of Labor Research, Vol. 29 no. 3, Summer 2008
(subscription required)

I investigate how living wage legislation affects poverty. I find evidence that living wage ordinances modestly reduce poverty rates where such ordinances are enacted. However, there is no evidence that state minimum wage laws do so. The difference in the impacts of the two types of legislation conceivably stems from a difference in the party responsible for bearing the burden of the cost.

New poverty, income, and health coverage analysis

Source: Jared Bernstein, Economic Policy Institute, Income Picture, August 26, 2008

The U.S. Census Bureau’s annual release of poverty, income, and health coverage held some good news for Americans, but drilling down below the surface reveals a continuing erosion of the economy for working people. Although median household income increased slightly and the poverty rate was essentially unchanged from 2006 to 2007, incomes for working families (as opposed to retirees) actually dropped. The drop was especially significant when compared to median income in 2000, which is a better comparison because–like 2007–it was the final year of a cycle of economic growth. Given current conditions, income levels will surely decline further in 2008. The biggest surprise of the release came in the area of health care coverage. The number of uninsured dropped slightly in 2007, but the decline was due to an increase in government-sponsored coverage for children. Meanwhile, the rate of employer-based insurance coverage continued its seven-year decline.
See also:
Overall health insurance coverage rises, but masks decline in private coverage

Lessons From The Telephone Lifeline Program Add To Concerns About Using Utilities To Deliver Low-Income Climate Rebates

Source: Matt Fiedler, Center on Budget and Policy Priorities, July 18, 2008

From the abstract:
Protecting the budgets of low-income consumers is a critical issue in the design of climate change legislation. The Lieberman-Warner Climate Security Act recently debated in the Senate contained a measure that relied primarily on electric and gas utilities to deliver such relief. However, evidence from the only existing federal program that delivers low-income assistance through utility companies — the Lifeline program for telephone service — strongly suggests that an untried utility-based mechanism would miss large numbers of consumers who could be captured using proven alternatives.
Related:
Veto Threat on Funding For Low-Income Heating Assistance Ignores Serious Need

Refundable Credits Have Cut Taxes for Low-Income Households

Source: Roberton Williams, Urban Institute, August 19, 2008

From the abstract:
In 1979, federal taxes claimed 8 percent of the income of households in the lowest quintile of the income distribution.1 Over the following three decades, the average effective tax rate (ETR) taxes as a percentage of income fell by nearly half to 4.3 percent in 2005. Most of the decline resulted from a sharp drop in the individual income tax, primarily due to expansion of the earned income tax credit and the child tax credit (CTC). Because the EITC is refundable and the CTC is partially refundable, they can reduce a households tax liability below zero and generate a net payment.