Category Archives: Poverty

New Hope: Fulfilling America’s Promise to “Make Work Pay”

Source: Brookings Institution, The Hamilton Project

Abstract
Despite the political rhetoric of “making work pay,” in 2005 some 3.7 million households included a full-time worker and yet lived in poverty. Our paper makes the case for a national program offering the kind of work supports that were part of the New Hope program, a policy experiment that operated for three years in Milwaukee, Wisconsin in the mid- to late-1990s. New Hope was created by a coalition of community activists and business leaders. It provided a set of work supports for full-time workers—parents and nonparents, men and women—that would lift them out of poverty, ensure that they had access to quality child care and health insurance and, if needed, provide a temporary community service job to help get them on their feet.

A random-assignment evaluation of New Hope showed that the program reduced poverty, increased employment and, perhaps most importantly, boosted the achievement and positive behavior of children. We estimate that a scaled-up New Hope program would cost roughly $3,300 per participant per year and that, with reasonable assumptions regarding the valuation of child impacts, would yield benefits well in excess of costs.

Evidence from other states and two Canadian provinces suggest that New Hope could be implemented by states. Given the different ways in which states would likely implement the New Hope model to fit their unique needs and delivery systems, we propose a five-year demonstration and evaluation in five states.

Full-text (36 pages)

Rewarding the Work of Individuals: A Counterintuitive Approach to Reducing Poverty and Strengthening Families

Source: The Future of Children (via MRDC)

Between the end of World War II and 1973, the share of Americans living in poverty fell by half. But since 1973 the overall poverty rate has remained largely unchanged. Why didn’t poverty continue to decline? Falling wages and increasing rates of lone parenting are the two principal explanations. Economic changes led to stagnant and declining wages at the bottom of the wage distribution, especially among men with a high school diploma or less, and demographic changes saw a near doubling of the fraction of all families with children that were headed by a single parent.

The problems of falling wages and single parenthood are intertwined. As the wages of men with a high school education or less began to tumble, the employment rates of these men also fell, and, in turn, the share who could support a family above the poverty line began to decline — and with it the professed willingness of low-income mothers and fathers to marry. Because the U.S. social welfare system is built around the needs of poor families with children — and largely excludes single adults who are poor (and disproportionately male) — it creates disincentives to work and marry for some, aggravating these larger trends. Although recent changes have reduced marriage penalties in the tax and transfer system, some do remain, particularly when both spouses in a married-couple family have similar earnings.

A strategy that used the federal Earned Income Tax Credit (EITC) to supplement the earnings of all low-wage workers aged 21 to 54 who work full time — whether they have children or not and whether they marry or not — would counter three decades of wage stagnation and persistent poverty, with significant positive corollary effects on employment and parental child support. By conditioning the benefit on full-time work, by targeting individuals regardless of their family status, by keeping the existing EITC for families with children in place, and by calculating EITC eligibility on the basis of individual income (as Canadians and Europeans do) rather than joint income for tax filing purposes, this earnings-based supplement would restore equity to the American social compact while minimizing the distortion of incentives to work, marry, and bear children.

Overview
Full Report (PDF; 156 KB)

The Poor Will Always Be With Us, Just not on the TV news

Source: Steve Rendall and Neil deMause, Fairness and Accuracy in Reporting, September 7, 2007

According to the most recent U.S. Census Bureau data, 37 million Americans–one in eight–lived below the federal poverty line in 2005, defined as an annual income of $19,971 for a family of four. Yet poverty touches a far greater share of the population over the course of their lives: A 1997 study by University of Michigan economist Rebecca Blank found that one-third of all U.S. residents will experience government-defined poverty within a 13-year period. The poorest age group is children, with more than one in six living in official poverty at any given time.

The Next Generation of Antipoverty Policies

Source: Brookings Institution, Vol. 7 no. 2, Fall 2007

The Brookings Institution and Princeton University’s Woodrow Wilson School have released the latest Future of Children volume “The Next Generation of Antipoverty Policies.” The articles in this volume focus on several specific policies, covering a spectrum of short- and long-term strategies, that have the best chance of reducing poverty in a cost-effective way.

Low-Income Workers and Their Employers : Characteristics and Challenges

Source: Gregory Acs and Austin Nichols, Urban Institute, September 11, 2007

From the abstract:
This paper finds that about one in four workers, ages 18 to 61, earned less than $7.73 an hour in 2003. Low-wage workers who reside in low-income families with children are substantially less educated than the average worker, are concentrated in industries with low wages, and have limited prospects for wage growth. Many policies aimed at low-wage workers are not well-targeted at workers in low-income families with children, in part because only one in four low-wage workers reside in such families. Nevertheless, policies targeted at low-wage workers may have broad benefits, including improving the lot of low-income families with children.

Fighting Poverty through Incentives and Work Mandates for Young Men

Source: Ron Haskins, Princeton-Brookings, Future of Children Policy Brief, Fall 2007

This brief examines two sets of public policies – wage subsidies and work requirements- that hold promise for helping young men increase their employment and earnings and which could alleviate many social problems, including crime, unemployment, nonmartial births, and poverty.

Income Down, Poverty Up Since 2000

Source: Joint Economic Committee, press release, August 28, 2007

Follow up to August 28, 2007 posting Census Bureau Reports Household Income Rises, Poverty Rate Declines, see today’s press release: “Senator Charles E. Schumer, Chairman of the Joint Economic Committee (JEC) and Rep. Carolyn B. Maloney, Vice Chair of the JEC, today reacted to the U.S. Census Bureau’s release of its 2006 report on income, poverty and health insurance coverage in the United States. Although median household income rose slightly in 2006, after adjusting for inflation, the report showed that all but the richest of American households have seen their incomes decline since 2000. The Census Bureau also revealed that while the national poverty rate declined by 0.3% in 2006, the number of people in poverty living in poverty has risen by 4.9 million since 2000, an increase in the poverty rate of one percentage point. Additionally, the number of children under 18 in poverty has skyrocketed under the Bush Administration, rising 10.7 percent in the last 6 years.”

The JEC also released three fact sheets taking an in depth look at the findings in the Census Report:
The Number of Americans without Health Insurance Rose Again in 2006
Household Income Up Slightly in 2006, but Down Since 2000
Nearly One in Eight Americans Living in Poverty

Promoting Homeownership among Low-Income Households

Source: Edgar O. Olsen, The Urban Institute, Opportunity and Ownership Project Report No. 2, August 20, 2007

The United States’ current system of low-income housing assistance is biased against homeownership. This paper documents the bias and suggests reforms to eliminate it. The new policies would allow more low-income families to become homeowners by providing similar subsidies for renters and owners under the two largest programs for low-income housing, Section 8 and the Low-Income Housing Tax Credit. The reforms would not require additional spending, would improve the cost-effectiveness of the system of low-income housing assistance, and would avoid the two biggest mistakes in past attempts to subsidize homeownership: subsidizing the construction of new units and requiring intended beneficiaries to buy from selected sellers.

U.S.: Household Income Rises, Poverty Rate Declines, Number of Uninsured Up

Source: U.S. Census Bureau, CB07-120, August 28, 2007

From the news release:
Real median household income in the United States climbed between 2005 and 2006, reaching $48,200, according to a report released today by the U.S. Census Bureau. This is the second consecutive year that income has risen. Meanwhile, the nation’s official poverty rate declined for the first time this decade, from 12.6 percent in 2005 to 12.3 percent in 2006. There were 36.5 million people in poverty in 2006, not statistically different from 2005. The number of people without health insurance coverage rose from 44.8 million (15.3 percent) in 2005 to 47 million (15.8 percent) in 2006. These findings are contained in the Income, Poverty, and Health Insurance Coverage in the United States: 2006 report. The data were compiled from information collected in the 2007 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). Much more summary material in this news release.

Related from the Census Bureau:
• Numerous Documents and Tables Can Be Accessed Here
Income, Earnings and Poverty in the United States: 2006

Other related items:
Number And Percentage Of Americans Who Are Uninsured Climbs Again: Poverty Edges Down But Remains Higher, And Median Income For Working-Age Households Remains Lower, Than When Recession Hit Bottom In 2001
Source: Center on Budget and Policy Priorities, August 28, 2007
More Americans, Including More Children, Now Lack Health Insurance
Source: Center on Budget and Policy Priorities, August 28, 2007
U.S. Uninsured Rate Climbs Again
Source: Daniel C. Vock, Stateline.org, August 29, 2007
Number of Uninsured U.S. Residents Increases by 2.2M to 47M in 2006
Source: Kaiser Daily Health Policy Report, August 29, 2007

2007 KIDS COUNT Data Book Shows Slipping Economic Conditions for Children, Focuses on the Critical Importance of Lifelong Family Connections for Youth in Foster Care

Source: Annie E. Casey Foundation, 2007

From the press release:
National trends in child well-being taken together have improved slightly since 2000, according to a report released today by the Annie E. Casey Foundation. The 18th annual KIDS COUNT Data Book indicators show:

● Four areas of improvement: child death rate, teen birth rate, high school dropout rate, teens not in school and not working;
● Two areas of slight improvement: infant mortality rate, teen death rate; and
● Four areas have worsened: low-birthweight babies, children living in families where no parent has fulltime year-round employment, children in poverty, and children in single-parent families.

These national trends are not on par with the well-being improvements that were seen at the end of the 1990s, with economic indicators taking a downturn in 2005. The report also examines America’s child welfare system and challenges the country to make lifelong family connections for children and youth in foster care a national priority.

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