Category Archives: Poverty

Broad-Based Wage Growth Is a Key Tool in the Fight Against Poverty

Source: Elise Gould, Alyssa Davis, and Will Kimball, Economic Policy Institute, Briefing Paper #399, May 20, 2015

From the Press release:
Broad-based wage growth could make a significant dent in the poverty rate, according to Broad-Based Wage Growth is a Key Tool in the Fight against Poverty, a new EPI study from senior economist Elise Gould and research assistants Alyssa Davis and Will Kimball. Despite the fact that wages and work-related income represent more than two-thirds of the total income of the bottom fifth of non-elderly American households, wage growth is often overlooked as a tool to fight poverty. Gould, Davis, and Kimball demonstrate how significant reductions in poverty could have occurred if wages for all workers had grown alongside either average wages or productivity since 1979….. The report uses various simulations to determine the effect of broad-based wage growth on poverty rates. If all workers’ wages had grown at the same rate as average wages since 1979, 4.5 million fewer people would be poor, including 1.7 million children. If all wages had grown at the same rate as productivity since 1979, these reductions would be even larger—7.1 million fewer people would be poor, including 2.7 million children. The largest impact broad-based wage growth would have on the poverty rate would occur if the economy were closer to full employment—combined with wages increasing alongside productivity growth, full employment would bring 11.2 million people out of poverty, including 4.4 million children. …..

At What Cost: The Minimum Cost of Criminalizing Homelessness in Seattle and Spokane

Source: Joshua Howard, David Tran, Sara Rankin, Seattle University School of Law, May 6, 2015

From the abstract:
Many studies around the country have demonstrated significant savings on incarceration, adjudication, and medical costs when funds are directed toward the creation of affordable housing. However, with the increasing prevalence of criminalization ordinances — ordinances that disparately impact the homeless — funds that could be used for affordable housing are being diverted toward their enforcement. Although existing studies address general costs and savings associated with housing homeless people, they do not address the costs directly attributable to criminalization ordinances. In an effort to shed light on these direct costs, the Seattle University Homeless Rights Advocacy Project has traced the following total costs directly to the enforcement of less than half of the identified criminalization ordinances in Seattle and Spokane:
– Seattle: An estimated 5-year minimum of $2,300,000 is directly attributed to enforcing just 16% of the city’s criminalization ordinances.
– Spokane: An estimated 5-year minimum of $1,300,000 is directly attributed to enforcing 75% of the city’s criminalization ordinances.

Affordable Housing Alternatives: Investing the $3.7 million spent in criminalization ordinances over the five years covered in this study in housing the homeless could save taxpayers over $2 million annually and over $11 million total over the five years.

Although these figures are substantial, they still underestimate the total overall costs that these two cities spend on criminalizing homelessness. For example, the vast majority of available data exists only for criminal violations, not civil infractions, which may constitute the largest percentage of enforcement costs in any given city. Finally, due to limitations in data, this report focuses only on two cities as Washington case studies. Although these estimates are necessarily a mere fraction of the total costs of criminalizing homelessness in Washington state, at least two things are clear: (1) these ordinances are costly and do not address the underlying problems of homelessness; and (2) the redirection of funds currently being used to criminalize homelessness to support affordable housing would result in substantial cost savings.

In a land of dollars: Deep poverty and its consequences

Source: Emily Cuddy, Joanna Venator and Richard V. Reeves, Brookings Institution, Social Mobility Memos, SERIES: Long Memos, Number 9 of 9, May 7, 2015

America is a rich country. But it contains lots of people surviving on incomes more common in developing countries. In this memo, we explore the consequences of being on the very bottom rung of the income ladder on families’ daily life, as well as the long-term life chances of their children. ….

Safety Net More Effective Against Poverty Than Previously Thought

Source: Arloc Sherman and Danilo Trisi, Center on Budget and Policy Priorities, Policy Futures, May 6, 2015

Correcting for Underreporting of Benefits Reveals Stronger Reductions in Poverty and Deep Poverty in All States.

Previous analysis of Census data showed that safety net programs cut the poverty rate nearly in half. Recently released data from the Urban Institute, which correct for underreporting of key government benefits in the Census survey, reveal an even stronger impact: the safety net reduced the poverty rate from 29.1 percent to 13.8 percent in 2012 and lifted 48 million people above the poverty line, including 12 million children. (See Figure 1.) Correcting for underreporting reveals that the safety net also did more to reduce deep poverty than previously shown, although 11.2 million Americans remained below half the poverty line.

The appendix tables provide state-by-state data showing that the safety net lifted thousands out of poverty and deep poverty in every state, ranging from 61,000 in Wyoming to 4.9 million in California.

Social Security raises more Americans out of poverty than any other program: 27.4 million in 2012. Among programs limited to people with low or modest incomes, SNAP (formerly food stamps) has the greatest poverty-reducing impact, lifting 10.3 million people out of poverty in 2012. SNAP also lifts more Americans out of deep poverty (5.2 million) than any other means-tested program.

The refundable tax credits for low-income working families — the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) — have an impact comparable to that for SNAP. Together they, too, lifted 10.3 million people out of poverty in 2012. ….

Safety Net Cut Poverty Rate in Half in 2012

The Impact of WIC on Birth Outcomes: New Evidence from South Carolina Births

Source: Lyudmyla Sonchak, SUNY Oswego, June 16, 2014

From the abstract:
This study provides new evidence on the impact of the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) on a variety of infant health outcomes by using the most recent South Carolina Vital Statistics data (2004-2012). To account for non-random WIC participation, the study relies on a maternal-fixed effects estimation, due to the availability of unique maternally link data. The results indicate that WIC participation substantially decreases the probability of low birth weight, prematurity, and the probability of being admitted to a Neonatal Intensive Care Unit. Additionally, addressing gestational bias and accounting for the length of gestation, WIC participation reduces the probability of delivering a low weight infant and a small for gestation (SGA) infant by 5% among black mothers.

Is the American dream dead?

Source: Adam May, Al Jazeera America, America Tonight, July 22, 2014

A groundbreaking study from Johns Hopkins University shows that for big segments of the population it is. … When Alexander and his team analyzed all the data, they made a bleak discovery. Not only did the poor stay poor, but only 4 percent of urban disadvantaged students graduated a four-year college. The vast majority returned to their poverty-stricken neighborhoods after school. “Kids who grew up in low-income distressed neighborhoods on average had lower levels of completed schooling, lower-status jobs and lower earnings as young adults,” Alexander explained. Of the nearly 800 children originally surveyed, only 33 moved from birth families in the low-income bracket to the high-income bracket as young adults. Middle-class children were more likely to move up. …. Race also played a major role. Forty-five percent of white men from low-income backgrounds ended up with good-paying trade jobs, such as plumbers or factory workers. But only 15 percent of black men found the same. …. On top of that, white workers made twice as much money. Alexander believes a lot of this has to do with social network advantages: family and friend connections that give white men better access to the most lucrative sectors of blue-collar work. He said this subtle but powerful privilege “goes back generations, we’re convinced.” ….

Is the American dream dead?

WIC Works: Addressing the Nutrition and Health Needs of Low-Income Families for 40 Years

Source: Steven Carlson and Zoe Neuberger, Center on Budget and Policy Priorities, Policy Futures, May 4, 2015

….Research shows that poverty and adversity during early childhood can have lifelong consequences for physical, mental, and economic well-being. WIC is designed to support sound nutrition and health at critical points in children’s development –in utero, during infancy, and during the toddler and early childhood years. An extensive body of research over four decades shows that WIC participation is associated with healthier births, reduced infant mortality, better infant-feeding practices, more nutritious diets, better access to primary and preventive health care, and improved cognitive development and academic achievement. These striking results highlight the importance of ensuring that all eligible women and young children can get WIC benefits during pregnancy and critical periods of child development….

The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment

Source: Nathaniel Hendren and Lawrence Katz, Harvard University and National Bureau of Economic Research (NBER), May 2015

From the abstract:
The Moving to Opportunity (MTO) experiment offered randomly selected families living in high-poverty housing projects housing vouchers to move to lower-poverty neighborhoods. We present new evidence on the impacts of MTO on children’s long-term outcomes using administrative data from tax returns. We find that moving to a lower-poverty neighborhood significantly improves college attendance rates and earnings for children who were young (below age 13) when their families moved. These children also live in better neighborhoods themselves as adults and are less likely to become single parents. The treatment effects are substantial: children whose families take up an experimental voucher to move to a lower-poverty area when they are less than 13 years old have an annual income that is $3,477 (31%) higher on average relative to a mean of $11,270 in the control group in their mid-twenties. In contrast, the same moves have, if anything, negative long-term impacts on children who are more than 13 years old when their families move, perhaps because of disruption effects. The gains from moving fall with the age when children move, consistent with recent evidence that the duration of exposure to a better environment during childhood is a key determinant of an individual’s long-term outcomes. The findings imply that offering families with young children living in high-poverty housing projects vouchers to move to lower-poverty neighborhoods may reduce the intergenerational persistence of poverty and ultimately generate positive returns for taxpayers.
Equality of Opportunity Project Website [with slides, data, executive summary, and additional information]

The Impacts of Neighborhoods on Intergenerational Mobility: Childhood Exposure Effects and County-Level Estimates

Source: Raj Chetty, and Nathaniel Hendren, Harvard University and National Bureau of Economic Research (NBER), 2015

From the abstract:
We characterize the effects of neighborhoods on children’s earnings and other outcomes in adulthood by studying more than five million families who move across counties in the U.S. Our analysis consists of two parts. In the first part, we present quasi-experimental evidence that neighborhoods affect intergenerational mobility through childhood exposure effects. In particular, the outcomes of children whose families move to a better neighborhood – as measured by the outcomes of children already living there – improve linearly in proportion to the time they spend growing up in that area. We distinguish the causal effects of neighborhoods from confounding factors by comparing the outcomes of siblings within families, studying moves triggered by displacement shocks, and exploiting sharp variation in predicted place effects across birth cohorts, genders, and quantiles. We also document analogous childhood exposure effects for college attendance, teenage birth rates, and marriage rates. In the second part of the paper, we identify the causal effect of growing up in every county in the U.S. by estimating a fixed effects model identified from families who move across counties with children of different ages. We use these estimates to decompose observed intergenerational mobility into a causal and sorting component in each county. For children growing up in families at the 25th percentile of the income distribution, each year of childhood exposure to a one standard deviation (SD) better county increases income in adulthood by 0.5%. Hence, growing up in a one SD better county from birth increases a child’s income by approximately 10%. Low-income children are most likely to succeed in counties that have less concentrated poverty, less income inequality, better schools, a larger share of two-parent families, and lower crime rates. Boys’ outcomes vary more across areas than girls, and boys have especially poor outcomes in highly-segregated areas. In urban areas, better areas have higher house prices, but our analysis uncovers significant variation in neighborhood quality even conditional on prices.
Equality of Opportunity Project Website [with slides, data, executive summary, and additional information]