Category Archives: Poverty

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.
Related:
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.
Related:
Equality of Opportunity Project Website [with slides, data, executive summary, and additional information]

Poor People Need a Higher Wage, Not a Lesson in Morality

Source: Greg Kaufmann, The Nation, April 22, 2015

David Brooks’ rendition of poverty is as “representative” of people with low-incomes as corrupt corporate titans are of small entrepreneurs. …. What we really need isn’t a moral revival but a moral revolution, one that might begin with Brooks and others looking in the mirror and asking some basic questions:
Do I accept that people working full-time are paid wages that keep them in poverty?
Do I accept that workers with low-incomes can’t take a paid sick day to care for themselves or a family member?
Do I accept that many parents can’t afford the childcare they need to go to work?
Do I accept that people with low-incomes often lack the transportation needed to get to job assignments and as a result are kicked off of income assistance?
Do I accept that our public schools are separate and unequal—with some kids forced to share textbooks while just miles away an affluent community has state-of-the-art facilities?
Do I propagate myths and stereotypes about people living in poverty, or do I help spread the truth—like the fact that more than 1 in 2 Americans will spend a year in poverty or near poverty during their working years?
Do I embrace the real evidence that shows just how far a little assistance can go to improve life outcomes for people in poverty? ….

The Inequality of Water

Source: Sam Ross-Brown, Paul Waldman, American Prospect, April 9, 2015

….Another way to look at it is that we’ve reached a point where two of the most immediate water crises the country now faces—Baltimore and Detroit—have nothing to do with climate. They exist entirely within a broken economic and social system, and yet they’re every bit as dangerous to public health and human rights as California’s record-breaking drought. Responding to climate change in a serious way not only means taking a hard look at our energy systems and lifestyles. It also means addressing how the politics of water and carbon impact the realities of inequality and injustice. …

America’s Working Poor: Conceptualization, Measurement, and New Estimates

Source: Brian C. Thiede, Daniel T. Lichter and Scott R. Sanders, Work and Occupations, Published online before print April 9, 2015
(subscription required)

From the abstract:
This article addresses measurement challenges that have stymied contemporary research on the working poor. The authors review previously used measurement schemes and discuss conceptual assumptions that underlie each. Using 2013 March Current Population Survey data, the authors estimate national- and race-specific rates of working poverty using more than 125 measures. The authors then evaluate the association between each measure and a latent construct of working poverty using factor analysis and develop a working poverty index derived from these results. Finally, the authors estimate multivariate regression models to identify key social and demographic risk factors for poverty among workers. The authors’ national estimates of working poverty range from 2% to nearly 19% and are highly sensitive to alternative assumptions. The authors’ analyses find that the latent construct is most highly correlated with empirical measures of working poverty that include part-time or part-year employment and that use poverty income thresholds that include both the poor and near poor. Crude rates and conditional risks of poverty among workers vary considerably among racial groups. This article provides a conceptual and empirical baseline for decisions about how best to estimate the magnitude and composition of America’s working poor population.

Beyond Child Welfare — Theories on Child Homelessness

Source: Jessica Dixon Weaver, Washington and Lee Journal of Civil Rights and Social Justice, Vol. 21, 2014

From the abstract:
According to recent federal data from 2013, the number of children who experience homelessness in the United States has reached an astonishing 2.5 million. Among industrialized nations, America has a one of the highest poverty rates among children, peaking at 22% in 2010. This Article considers why there is an ambivalent and sometimes hostile response to chronic, persistent poverty among families with young children. Various reports on the state of homeless families state that the cause of homelessness is a combination of lack of affordable housing, extreme poverty, decreasing government support, domestic violence, the challenge of raising children alone, and insufficient working wages. Homeless families with children comprise 37% of the total homeless population, and families of color are overrepresented within this number, making up 61% of the group. This article addresses the color of child homelessness and how various theories on poverty and laws designed to assist impoverished parents have created categorizations of the deserved and the undeserved poor. In an effort to transform the poverty dialogue, this article sets forth that vulnerability theory and the principle of subsidiarity can be utilized as a means to transcend identity categories and recognize both state and community responsibility to provide more comprehensive support for homeless children within families.

The High Public Cost of Low Wages

Source: Ken Jacobs, Ian Perry and Jenifer MacGillvary, University of California, Berkeley, Center for Labor Research and Education, Research Brief, April 2015

From the press release:
While the U.S. economy rebounds, persistent low wages are costing taxpayers approximately $153 billion every year in public support to working families, including $25 billion at the state level, according to a new report from the University of California, Berkeley, Center for Labor Research and Education. The report details for the first time the state-by-state cost to taxpayers of low wages in the United States. Following decades of wage cuts and health benefits rollbacks, more than half of all state and federal spending on public assistance programs (56 percent) now goes to working families, the report documents….

The report analyzed state spending for Medicaid/Children’s Health Insurance Program and Temporary Aid to Needy Families (TANF), and federal spending for those programs and food stamps (SNAP) and the Earned Income Tax Credit (EITC).

The UC Berkeley researchers also report that:
• On average, 52 percent of state public assistance spending supports working families, with costs as high as $3.7 billion in California, $3.3 billion in New York and $2 billion in Texas.
• Reliance on public assistance can be found among workers in a diverse range of occupations, including frontline fast-food workers (52%), childcare workers (46%), home care workers (48%) and even part-time college faculty (25%).

From 2003 to 2013, wage growth remained flat or negative for the entire bottom 70 percent of workers in the United States, Jacobs said. Over the same time, the share of non-elderly Americans receiving health insurance from an employer fell almost 10 percentage points, from 67 percent to 58 percent. Despite modest pay raises at some of the country’s largest and most profitable employers, including Walmart and McDonald’s, wages continue to lag far behind inflation.

The researchers note that raising wages would result in significant savings to state and federal governments. In recent months, the substantial cost of low wages has prompted elected officials to take action. California, Colorado, Maine, Oregon and Washington are considering increasing the minimum wage to $12 or higher. In Connecticut, a proposal currently moving through the state legislature would fine large companies that pay low wages in an effort to recoup the cost these companies impose on taxpayers. The Congressional Democrats’ fiscal year 2016 budget proposal unveiled last month included a provision that would roll back tax breaks for large companies that fail to raise pay on pace with inflation….
Related:
summary

The Public Subsidy to Low Wage Employers
Source: Stefan Baskerville, George Gabriel, Jesse Hancock, Sanjiv Lingayan, Henriette Neubert, Citizens UK, 2015

UK taxpayers are subsidising big business by an estimated £11 billion per year .

Who Pays Taxes in America in 2015?

Source: Citizens for Tax Justice, April 9, 2015

…Many taxes are regressive, meaning they take a larger share of income from poor and middle-income families than they do from the rich. To offset the regressive impact of payroll taxes, sales taxes and even some state and local income taxes, we need federal income tax policies that are more progressive.
Some features of the federal income tax offset the regressivity of other taxes, at least to a degree. For example, the federal personal income tax provides refundable tax credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit, which can reduce or eliminate federal personal income tax liability for low-income working families and can even result in negative personal income tax liability, meaning families receive a check from the IRS.

These tax credits are only available to taxpayers who work and therefore pay federal payroll taxes. These progressive provisions do make the income tax more progressive, but overall they do little more than offset the regresssivity of other taxes that poor and middle-income families pay.

Estimates from the Institute on Taxation and Economic Policy tax model, which are illustrated in these charts and tables, include the following key findings:
■ The richest one percent of Americans pay 23.8 percent of total taxes and receive 22.2 percent of total income.
■ The poorest one-fifth of Americans pay 2.0 percent of total taxes and receive 3.2 percent of total income.
■ Each income group will pay a total share of taxes that is quite similar to each group’s total share of income.
■ Contrary to popular belief, when all taxes are considered, the rich do not pay a dispropor­tionately high share of taxes. Although each income quintile pays combined federal, state and local taxes that are roughly equivalent to their share of the nation’s income, this by no means indicates our tax system is fine as is. In a truly progressive tax system, millionaires and billionaires wouldn’t be paying roughly the same tax rates as working families earning $100,000 per year.