Category Archives: Poverty

Census Bureau Releases Poverty Estimates for States, Counties and School Districts

Source: U.S. Census Bureau

The U.S. Census Bureau today released 2005 poverty estimates for each of the nation’s almost 14,000 Title I-eligible school districts. The estimates are produced in order for the Department of Education to implement provisions of the No Child Left Behind Act of 2001.

The school district data, part of the Small Area Income and Poverty Estimates, are contained in data tables showing the number of poor children ages 5 to 17 in families.

The tables also contain 2005 state- and county-level estimates of median household income and the total number of poor children younger than 18, related children between 5 and 17 in families; and for states, through age 4. Included as well are estimates of the total number of people of all ages in poverty in states and counties. These estimates are the only source of income and poverty data for counties and poverty statistics for school districts with populations of less than 65,000.

The estimate tabulations, sponsored by the U.S. Department of Education, are one of the criteria used to allocate federal funds to local jurisdictions. The Census Bureau has, for the first time, produced the estimates by using results from its American Community Survey (ACS). ACS data were combined with aggregate data from federal tax information, administrative records on food stamp program participation, Census 2000 statistics and annual population estimates.

Small Area Income and Poverty Estimates (SAIPE)

Better Workers for Better Jobs: Improving Worker Advancement in the Low-Wage Labor Market

Source: Brookings Institution, The Hamilton Project

Abstract
This paper proposes a new federal funding stream to identify, expand, and replicate the most successful state and local initiatives designed to spur the advancement of low-wage workers in the United States. In the Worker Advancement Grants for Employment in States (WAGES) program, the federal government would offer up to $5 billion annually in matching funds for increases in state, local, and private expenditures on worker advancement initiatives. To gain funding, states would have to develop local advancement “systems,” which would provide career-oriented education and training to youth, working poor adults and “hard-to-employ” workers. Partnerships would be developed between local training providers (like community colleges), employer associations, and intermediaries. Additional financial supports for the working poor—including child care, transportation, and stipends for working students—would have to be funded as well. Initially, the WAGES program would require states to compete for federal grants, which would ultimately be renewable. The program would generate a “learning system” in which states would have an incentive to innovate and use information from other initiatives. The federal government would provide substantial technical assistance and oversight. Performance measurement and rigorous evaluation would be required for program renewal; states achieving substantial worker advancement would be awarded major bonuses and more rapid renewal of funding.

Full-text (40 pages)

Employment-Based Tax Credits for Low-Skilled Workers

Source: Brookings Institution, The Hamilton Project

Abstract
Families in low-income communities face three interrelated problems: unemployment rates are high, incarceration rates of low-skilled men are high, and a large fraction of children in low-income communities are being raised in single-parent households. To address these interrelated problems, I propose a two-part policy designed to increase the return to work. The first part of my proposal is an expanded earned income tax credit that would apply to low-income, childless taxpayers. The second part of my proposal is a targeted wage subsidy for low-wage workers who live in certain economically depressed areas, whereby the federal government would pay subsidies of 50 percent of the difference between the worker’s market wage and a target wage of $11.30 per hour. The premise for adopting these policies is straightforward: increasing the return to work for childless low-skilled workers will lower unemployment rates and achieve the dual social benefits of reducing incarceration rates and increasing marriage rates, thus reducing the number of children being raised in single-parent households. The proposal would redistribute $10.4 billion to poor, working individuals. Based on empirical estimates from the literature, I expect employment to increase by 850,000 jobs and crime to fall by over one million incidents. Conservative estimates of the social cost of crime indicate that the social benefit from reduced crime could cover 8 percent or more of the cost of the proposal. Many estimates of the cost of crime would claim much larger cost saving. The proposal would also increase marriage and improve the environments in which poor children are raised.

Full-text (36 pages)

A Hand Up: A Strategy to Reward Work, Expand Opportunity, and Reduce Poverty

Source: Brookings Institution, The Hamilton Project

Abstract
Poverty remains a pressing problem in the United States. Many of the 36 million Americans in poverty are working, but full-time work at the minimum wage does not provide enough income to escape poverty. This paper offers a three-part strategy to reduce poverty and strengthen growth across the income spectrum. First, the most effective antipoverty policy is to help people find a job that pays enough to support a family. This paper’s principal focus is on programs to reward and facilitate work. Second, a broader set of policies is necessary to prepare people to succeed, by investing in human capital and other critical needs. Finally, public policies should provide a more robust safety net and a set of social insurance policies to help people rebound if they do experience economic hardship, and reduce the likelihood of their falling below a certain economic level at any point. Together, these policies can raise the living standards of struggling families and allow everyone to share in our nation’s prosperity.

Full-text (36 pages)

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.