This week, at a forum on poverty and the 2012 election, Republican pollster Jim McLaughlin said 88 percent of voters view a candidate’s position on equal opportunity for children of all races as important in deciding their vote for president. Washington Post columnist Michael Gerson commented that it was “most encouraging” that “Americans of every ideological background believe in opportunity for children. It’s a common ground commitment.”
I wish I shared his confidence. I think if that commitment were truly a strong one, we would be doing much more to help the 22 percent of American children and their families—disproportionately people of color—get out of poverty.
Yet too many politicians and citizens still seize on President Reagan’s old line—“We fought a war against poverty, and poverty won”—as a reason not to make substantial investments in children and families. The data, however, suggest that this take on anti-poverty legislation is a myth.
From 1964 to 1973 we reduced poverty by 43 percent. More recently, six initiatives in the Recovery Act kept nearly 7 million Americans from falling into poverty. Saying we failed simply because there is still poverty is like saying clean air and clean water laws failed because there is still pollution.
The truth is, we do know many of the things that need to be done to reduce poverty, and our failure to act means we are choosing to accept a brutal status quo. Here’s a look back at how we could have reduced poverty by 25 percent if we had possessed the will. These programs and others still offer us opportunities to prove our commitment to children and their families today.
Task Force on Poverty
In 2007, a Center for American Progress Task Force on Poverty that included Peter Edelman, Angela Glover Blackwell and others, released a report with twelve recommendations on how to cut poverty in half over ten years. The Urban Institute used widely respected modeling to study just four of the recommendations—raising the minimum wage, strengthening the Earned Income Tax Credit, expanding the Child Tax Credit and improving child care assistance—and found that together they would reduce poverty by 26 percent. While the numbers may have changed, it’s still true that improving public policy in these four areas would have a major impact on poverty.
The Minimum Wage
The Task Force on Poverty recommended raising the minimum wage to half the average hourly wage—the historic marker for the minimum wage—and indexing it to inflation. In 2007, that would have meant raising it to $8.40, and it would have reduced poverty by 1.7 million people.
For most of the 1960s and 70s, a worker with a full-time minimum-wage job could lift a family of three above the poverty line, about $17,300 today. But the federal minimum wage has been raised only three times in the past thirty years and now stands at $7.25 per hour, which results in sub-poverty earnings of $15,080 for a year-round, full-time employee. If the minimum wage had kept pace with inflation, it would now be $10.39 and pay a full-time worker $21,611 annually.
Polls show wide bipartisan support for an hourly minimum wage of at least $10. Maybe that’s why Republican frontrunner Mitt Romney came out in support of raising it automatically with inflation every year. At least that’s what he told NELP policy analyst Anne Thompson in New Hampshire. When informed of Romney’s statement, anti-poor crusader Newt Gingrich was incredulous.
In the 2008 campaign, President Obama endorsed raising the federal minimum wage to $9.50 by 2011, and indexing it to inflation. Many states aren’t waiting for Congress to get its act together—nineteen (including DC) have raised the minimum wage above the federal level, and ten automatically increase it to keep pace with inflation. New York, New Jersey, Delaware, California, Missouri, Illinois, Massachusetts, Maryland and Connecticut are all currently considering raising the minimum wage.
A commitment to creating opportunities for poor families means a commitment to raising sub-poverty wages.
The Earned Income Tax Credit and Child Tax Credit
The Earned Income Tax Credit (EITC) is a federal tax credit for low- and moderate-income working people that serves as a wage supplement. If it exceeds a low-wage worker’s tax liability, the IRS refunds the balance. The Child Tax Credit helps working parents cope with the rising costs of raising their kids, providing up to $1000 for each child, depending on earnings.
In 2007, the Task Force on Poverty recommended expanding the EITC to include childless workers and improving benefits for families with three or more children. It also recommended adjusting the Child Tax Credit for inflation and lowering the earnings threshold for qualifying (then at $11,300) so that the poorest working families would benefit. These measures alone would have reduced poverty by 5.5 million, according to the Urban Institute.
In fact, the Recovery Act did a lot to improve both tax credits. It expanded the EITC so that working parents with three or more kids receive a higher credit than families with fewer children. It also substantially improved the Child Tax Credit by lowering the qualifying earnings threshold to $3,000 so that more poor families would receive the benefit.
The results? In 2009 the federal EITC kept 6 million people out of poverty, half of them children. It also kept more than 3 million children out of poverty in 2010. In 2009, the Child Tax Credit protected approximately 2.3 million people from poverty, including about 1.3 million children, according to the Center on Budget and Policy Priorities (CBPP).
But without Congressional action these improvements will expire at the end of 2012. For a family with two or more kids working full time at the minimum wage, that would mean a Child Tax Credit of $300 instead of $1800 (because the first $13,000 in earnings wouldn’t count towards calculating the credit).
Next Thursday—the day before what the IRS has dubbed EITC Awareness Day—the National Community Tax Coalition (NCTC) will release a terrific report highlighting not only the antipoverty effect of the EITC, but its association with improved health outcomes for families and greater educational outcomes for kids, as well as boosting neighborhood businesses, local economies, and the nation’s economic recovery. They will hold a briefing on the Hill along with the Community Action Partnership and others, and call for federal EITC improvements, preserving state EITCs, and expanding Volunteer Income Tax Assistance services to help families take advantage of full tax refunds.
In 2007, the Task Force on Poverty noted that only about one in seven families qualifying for federal childcare assistance actually received it. As a result, poor families paid a disproportionate share of their income toward childcare that was often inadequate, and were often forced to choose between things like rent or childcare, or employment and childcare. The Task Force recommended doubling federal spending for early care and education initiatives, with states coordinating childcare, Head Start, pre-K and other programs for children from birth to age five, promoting healthy child development and more work opportunities for parents.
Five years later, the percentage of families qualifying for federal childcare assistance that actually receive it has barely budged, and there are waiting lists across the country. Poverty rates for families headed by a single mom drop from 40.7 percent to 14 percent when she has full-time, year-round employment—tough for anyone to do when you don’t have access to or can’t afford a safe, reliable place for your kids.
Moreover, research shows that low-income mothers who receive childcare subsidies are more likely to be employed, work more hours and work standard schedules compared to mothers without subsidies. That’s not only good for the parent, it’s good for kids too since a more reliable parental presence has a dramatic impact on children’s brain development.
But instead of bolstering childcare, we are moving in the opposite direction. It’s funded with a fixed federal block grant, so funding hasn’t risen with increased demand. The Recovery Act provided a temporary boost that allowed states to provide care for an estimated 314,000 children in 2010, according to the Department of Health and Human Services. But that money ran out and wasn’t extended for FY2012. The result? A recent study by the National Women’s Law Center (NWLC) reveals that families in thirty-seven states were worse off under one or more key child care policies in 2011 than they were in 2010, and only better off in one or more of those areas in eleven states.
NWLC is a great place to stay informed and get involved on this issue.
A Current Battle—Unemployment Extension
We know a parent being unemployed can affect a child’s development in the short term—including psychological stress and academic performance, and increased incidences of abuse and neglect—and in diminished career opportunities and earnings as an adult over the long-term.
Unemployed workers still outnumber available jobs by over four to one. Yet Congress has refused to offer a clean yearlong extension to help people meet basic expenses, and a two-month extension expires on February 29. In 2010, federal and state unemployment benefits kept 3.2 million people out of poverty, according to Rabbi Steve Gutow, president of the Jewish Council for Public Affairs.
“We have the opportunity to prevent the completely avoidable slide into poverty and hunger for those looking each day to return to work,” writes Gutow. “A full one year extension to weather the slow recovery is the right thing to do for our economy, for families and individuals who should not have to ask for help, and for the pursuit of justice.”
“The State of Homelessness in America,” National Alliance to End Homelessness: Remarkably, the homeless population decreased 1 percent between 2009 and 2011, from 643,067 to 636,017, largely due to $1.5 billion in homelessness prevention funds in the Recovery Act. However, the number of poor households spending more than 50 percent of their income on rent is on the rise, as is the number of people “doubling up” with friends, family or other non-relatives for economic reasons. The report indicates that the need for support will continue to increase while the federal funds dry up. You can get involved in pushing for investments in proven, housing-centered solutions here.
“Did Welfare Reform Work?,” Athens County Department of Job and Family Services: The report looks at the stated goals of welfare reform, whether they have been met, and the cumulative impact on children and families. “Contrary to the political rhetoric from both parties, welfare reform was not a success,” says Jack Frech, director of Athens County Job and Family Services.
“2012 STATE Child Well-Being Index,” Foundation for Child Development: The study looks at indicators in many areas, including: family economic well-being, health, safe/risky behavior, educational attainment, community engagement, social relationships and emotional/spiritual well-being. Child well-being varies greatly by state and shows substantial correlation with higher tax rates, per pupil spending on education, limits on Medicaid child eligibility and levels of Temporary Assistance for Needy Families (TANF) benefits. The report makes recommendations on what the federal and state governments must do to protect the health and education of children, and notes that state action is key since less than 10 percent of the federal budget is invested in children’s programs.
Quotes of the Week
“The thing that’s inconsistent with the American ideal is a lack of mobility. When you have a situation where there is inequality in which those at the bottom can’t rise, that’s a caste system.”
—Michael Gerson, Washington Post columnist, former speechwriter for President Bush
“Another issue is whether we can turn these low wage jobs that are now an enormous part of our economy into better jobs. There was a time when manufacturing jobs, and going into the mines, and steel mills were low-wage jobs. It was the union movement and the rights of workers to organize—enforced by the government—that raised those jobs to the point where people could move into the middle-class. There is no reason why many of the low-wage service jobs now can’t be turned into better jobs. But that would require a new militancy on the outside—politicians would have to be pushed, and the media would have to be pushed to cover it, to get that done.”
—Bob Herbert, former New York Times columnist, distinguished senior fellow at Demos
US poverty (less than $22,300 for a family of four): 46.2 million, 15.1 percent
Kids in poverty: 16.4 million, 22 percent of all kids
Poverty rate for people in single mother families: 42 percent
Increase in number of Americans in poverty, 2006-2010: 27 percent
Increase in US population, 2006-2010: 3.3 percent.