Brookings: Topics - Working Poor

Confronting Suburban Poverty in America

Alan Berube and Elizabeth Kneebone — Mon, 20 May 2013 00:00:00 -0400

Brookings Institution Press 2013 184pp.

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Presentation - Confronting Suburban Poverty in America

Synopsis:

In Confronting Suburban Poverty in America, Elizabeth Kneebone and Alan Berube take on the new reality of metropolitan poverty and opportunity in America. For decades, suburbs added poor residents at a faster pace than cities, so that suburbia is now home to more poor residents than central cities, composing over a third of the nation’s total poor population. Unfortunately, the antipoverty infrastructure built over the past several decades does not fit this rapidly changing geography. The solution no longer fits the problem. Kneebone and Berube explain the source and impact of these important developments; moreover, they present innovative ideas on addressing them.

The spread of suburban poverty has many causes, including job sprawl, shifts in affordable housing, population dynamics, immigration, and a struggling economy. As the authors explain in Confronting Suburban Poverty in America, it raises a number of daunting challenges, such as the need for more (and better) transportation options, services, and financial resources. But necessity also produces opportunity—in this case, the opportunity to rethink and modernize services, structures, and procedures so that they better reflect and address new demands. This book embraces that opportunity.

Infographic; What’s Driving the Rapid Rise of Poverty in the Suburbs?:

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The authors put forward a series of workable recommendations for public, private, and nonprofit leaders seeking to modernize poverty alleviation and community development strategies and connect residents with economic opportunity. They have created an Action Toolkit so that anyone can be apart of confronting suburban poverty.

Event:

On May 20, the Metropolitan Policy Program at Brookings hosted an event marking the release of Confronting Suburban Poverty in America, co-authored by Elizabeth Kneebone and Alan Berube. Below, you can watch a piece of the event with Elizabeth Kneebone, as she discusses how the landscape of poverty in America has changed.

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ABOUT THE AUTHORS

Alan Berube

Elizabeth Kneebone

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A New Look at How the Tax Code Works for Working Families

Elizabeth Kneebone — Mon, 19 Nov 2012 16:00:00 -0500

As the clock ticks down to January 1, and lawmakers try to hash out a deal to avoid the fiscal cliff and address the expiration of the Bush tax cuts, new data on taxpayers in the United States--collected from federal tax returns and available down to the ZIP code level through Brookings’ EITC Interactive--provide an important perspective on the impact of the tax code on families and communities across the country.

For instance, the latest EITC Interactive data--which represent tax returns filed in January through June of 2011--show that key provisions in the tax code proved responsive to the Great Recession, helping working families to weather the downturn.

Roughly one in five tax filers claimed the Earned Income Tax Credit (EITC) in TY2010--a tax break for workers with low incomes--compared to 16 percent of filers in TY2007. In part the increase in EITC receipt reflects rising unemployment and falling incomes that may have led more workers to become eligible for the credit, but it also reflects targeted expansions to the credit made through the American Recovery and Reinvestment Act (ARRA) to help strengthen the safety net and stimulate local economies.

In TY2010, nine states saw anywhere from one quarter to one third of their taxpayers claim the EITC, led by Mississippi, Louisiana, Alabama, Georgia, and Arkansas. And 10 states experienced an uptick in the rate of EITC receipt of 5 percentage points or more over the course of the recession, led by Mississippi, Georgia, Arizona, Idaho, and Tennessee. No state experienced a decrease in EITC receipt during the downturn.
More than half (60 percent) of EITC filers also benefitted from the refundable portion of the Child Tax Credit (ACTC) in TY2010--a tax benefit for low- and moderate-income working families with children that was also expanded temporarily through ARRA—compared to 45 percent in TY2007.
All together, EITC filers claimed an average credit of $2,247 in TY2010, and for those EITC filers who who received it, the ACTC boosted the average refund by $1,234.

See the map: Share of Filers Claiming EITC by State, Tax Year 2010

The release of the Census Bureau’s Supplemental Poverty Measure (SPM) last week underscores the importance of these tax credits for low-income working families. If it weren’t for the EITC and ACTC, the Census Bureau estimates that the U.S. poverty rate in 2011 would have been 2.8 percentage points higher, at 18.9 percent. The impact on child poverty would have been even greater: without these credits the child poverty rate would have reached 24.4 percent rather than 18.1 percent under the SPM definition.

Though the SPM is not available for smaller, sub-state geographies, through Brookings’ EITC Interactive policymakers and other stakeholders can find estimates of the number of filers benefitting from these credits--and the dollar amounts claimed--for every congressional and state legislative district in the country, and for every ZIP code, municipality, county, metro area, and state.

Contrary to Mitt Romney’s narrative about the 47 percent “takers” and giveaways to the Democratic base, these data show that the impact of these credits is far-reaching and broadly shared (as the list of “red” states above suggests)--crossing party and geographic lines to reach struggling working families at tax time. And that phrase bears repeating: These are taxpayers who are working.

Part of welfare reform in the late 1990s was an explicit decision to do less via traditional cash assistance and do more through the tax code to encourage work. Years’ worth of research illustrates the success of the EITC as a policy to promote work and better economic outcomes for low-income families. Updated profiles of the EITC-eligible population in TY2010 give greater insight into who these taxpayers are. More than three-quarters of these taxpayers live in family units; more than 54 percent are white; and almost half (46 percent) have some higher education. The typical EITC-eligible taxpayer has an adjusted gross income of just $13,905, and is most likely to have earned that income working in the retail, health care, accommodation and food service, construction, and manufacturing industries. These are workers filling the increasing number of low-wage service sector jobs the economy has been churning out in recent years, and in industries that bore the brunt of the latest downturn.

Discussions over the fiscal cliff and longer-term tax reform will inevitably include calls for more taxpayers to have “skin in the game.” But that’s not only a distraction from the real issues, it’s a distortion of reality. We made a choice in the 1980s and the 1990s to support work and alleviate poverty through the federal income tax. And all the evidence--federal, state, and local--shows that it’s working, for a broad base of Americans. Taxing hard-working families deeper into poverty is no fix for our short- or long-run budget problems.

Authors

Elizabeth Kneebone

Publication: The Avenue, The New Republic

Means-Tested Programs, Work Incentives, and Block Grants

Ron Haskins — Tue, 17 Apr 2012 09:26:00 -0400

Editor's Note: See the figures associated with this testimony in the attached PDF.

Chairman Ryan, Ranking Member Van Hollen, and Members of the Committee:

Thanks for inviting me to testify today. I consider it a privilege to have the opportunity to talk to members of the House Budget Committee.

In response to instructions from the Committee, I’m going to talk about three topics: trends in spending on means-tested programs; work incentives and phase out rates for means-tested programs; and block grants.

Trends in Means-Tested Spending

The lower line in Figure 1, based on a Brookings analysis of federal budget data published by the Office of Management and Budget, shows federal spending since 1962 in the ten biggest means-tested federal programs. In 2011, we estimate that about 87 percent of the spending was on entitlement programs.[1] Federal spending on poor and low-income Americans has increased enormously. Since 1980, by which time all but two of the ten programs that spent the most money in 2011 were in place, spending has increased by about $500 billion, from $126 billion to $626 billion after adjusting for inflation.

One cause of the increase in spending is that both the population and the number of poor people in the U.S. have increased over time. Thus, even if the federal government spent the same amount of money in 2011 on means-tested programs per person in poverty as we spent in 1962, spending would have increased. The solid line in Figure 1 expresses the increase in federal means-tested spending as spending per person in poverty. Expressed in this way, over the past five decades, federal spending on major means-tested programs has increased from about $516 to a little more than $13,034 per person in poverty. If we use the figure on spending per person in poverty in 1980, when most of the major means-tested programs were in place, the increase is from about $4,300 to $13,000 per person or more than $3 spent in 2011 for every dollar spent in 1980.[2] More recently, means-tested spending increased from about $477 billion to $626 billion in the three years of the Obama administration, an increase of about 31 percent. However, the recession that began in December 2007 and the increase in poverty during and following the recession is an important part of the explanation for increased means-tested spending during the Obama administration. Spending per person in poverty increased by about 9 percent as compared with the 31 percent increase in total spending during the first three years of the Obama administration. A portion of the rise in means-tested spending, which was authorized as part of the American Recovery and Reinvestment Act of 2009, began to expire in 2010.

Figure 2 shows how means-tested spending is distributed among eight broad categories of programs.[3] The categories include health, cash, food, housing, education, social services, energy, and employment and training. The figures are for 2009, the last year for which the Congressional Research Service has calculated means-tested spending within these eight categories. Not surprisingly, the figure shows that health is by far the biggest category of spending at $319 billion in 2009, about 2.5 times as much as cash programs, the second biggest category. Employment and training at $9 billion is the smallest of the eight categories. Figure 2 shows that means-tested spending, like total spending in the federal budget, is driven in large part by the rising cost of health care. In this respect, figuring out ways to control the growth of health care spending would reduce the rate of increase in both total federal spending (and debt) as well as federal means-tested spending.

A few additional points about these figures are in order. First, keep in mind that these spending data are for only the ten largest means-tested programs. The Congressional Research Service estimates that in 2009, spending on these ten programs represented about 75 percent of total federal means-tested spending.[4] If that percentage remained roughly the same for 2011, total federal means-tested spending in that year was closer to $835 billion than the $626 billion spent on the ten biggest programs.

Second, state and local governments spend their own money on many of these programs. The Congressional Research Service has estimated that state and local governments supplemented federal spending on means-tested programs by around 27 percent in 2004.[5] If we assume that the 27 percent has remained roughly constant, we can estimate that total federal, state, and local government spending on means-tested programs was probably around $1,143 billion in 2011.

On a per-person in poverty basis, that figure represents about $23,731 in spending by federal, state, and local governments. But this estimate should be considered in light of several caveats. The first is that not all of the spending on means-tested programs goes directly to individuals and families. Some of the money is spent on programs, such as the $14.5 billion spent on Title I of the No Child Left Behind Act and the $9 billion in spending on employment and training programs, that provide services rather than direct cash or in-kind benefits. Second, some of the money in programs that provide cash or in-kind benefits directly to households goes to individuals and families that are not below the poverty level. Children in families of up to 200 percent of the poverty level, for example, are eligible for Medicaid or the Child Health Insurance Program (CHIP) in almost every state.[6] Similarly, people in households with incomes up to 130 percent of poverty are eligible for SNAP benefits (Supplemental Nutrition Assistance Program, previously food stamps). In the case of the Earned Income Tax Credit (EITC), in 2010 a single mother with two children could receive benefits if the mother’s income was below $40,964, about 225 percent of the poverty level for this family. Professor David Armor of the School of Public Policy at George Mason University is in the process of using Census Bureau data and data from other sources to estimate the percentage of benefits in health, nutrition, housing, and cash means-tested programs that go to individuals or households with income above the poverty line. Although Armor’s work has not yet been published, he is finding substantial fractions of the benefits in all these programs going to individuals and families with income above the poverty level and some of it even going to those with incomes above 200 percent of the poverty level.

Means-tested spending has increased enormously, no matter how it is measured. Although there have been some periods of comparatively rapid growth, such as during the recession of 2007 to 2009, Figure 1 shows that spending has grown almost every year for the last five decades. The increase in spending has been the most rapid in health programs, but cash, nutrition, and several other types of spending have also increased rapidly. Similarly, spending per person in poverty has also increased substantially, although not quite as rapidly as total spending.

Work Incentives and Benefit Phase Outs

The impact of welfare benefits on work incentive has always been a contentious issue. Common sense tells us that if able-bodied people get welfare benefits without doing anything in return, their incentive to work and achieve self-sufficiency will be diminished. This common sense view is also supported by a host of research studies. Reviews of the empirical evidence on this issue have consistently shown that welfare reduces work effort.[7] To reduce such work disincentive, most means-tested programs have phase out rates because program designers want to maintain a financial incentive for benefit recipients to work. The hope is that by reducing welfare benefits by less than a dollar for each dollar of earnings, recipients will have at least some incentive to work or work more. The ideal outcome would be to design benefits so that an extra dollar of earnings would always produce a net income increase that is as close to the amount of earnings as possible. The lower the phase out rate, the greater the increase in net income and therefore work incentive. However, lower phase out rates make means-tested programs more expensive. There is a clear tradeoff between program cost, benefit phase out rates, and work incentive.

The difficult problems posed by phase out rates and work disincentives is greatly complicated by the fact that all families with earnings are subject to taxation of their earnings and some families receive more than one means-tested benefit. Consider some of the possibilities: workers are subject to the roughly 15.3 percent FICA tax[8] from their first dollar of earnings; they could face an EITC phase out of up to 21 percent; families with housing benefits face a marginal tax rate of 30 percent on their earnings; and so forth. Considering all of the effects on net income and work incentives simultaneously strains the ability to understand just how much net income would change at a particular point in a person’s earnings curve. Figure 3 is taken from a 1995 report from the Congressional Research Service. Although the specific phase out rates portrayed in the figure are somewhat out of date, a mere glance at the figure conveys the immense complexity of trying to figure out the net impact of so many different phase out and phase in rates operating simultaneously. The Congressional Budget Office is now completing a similar report on marginal tax rates in the tax and transfer system which goes into great detail in showing the actual marginal tax rates faced by individuals and families with various characteristics. Some of the rates are very high and under some circumstances an extra dollar of earnings can result in net income increases of 50 cents or less.

Problems maintaining work incentives are an inevitable consequence of means-tested programs. It would be possible to reduce, but not eliminate, the work disincentive effect of the current system if all benefits could be combined and then phased out at a single phase out rate. However, there are many problems with creating such a system. For one thing, the current benefits system is a combination of cash (the EITC, the Child Tax Credit, TANF, and Supplemental Security Income) and in-kind benefits (primarily SNAP and other nutrition programs, housing, Medicaid and SCHIP, and home heating). Perhaps the in-kind benefits could be paid as cash, but that would cause problems with various interest groups such as the National Grocers Association that would fight against cashing out SNAP benefits. Democrats might oppose converting benefits to cash because providing a lump sum cash payment would make the high level of benefits paid to some families more transparent than under a system when some of the benefits are paid in kind, thereby raising objections from Republicans who would likely argue that the system is too generous and should be cut. Moreover, the administrative complexity of such a system might make it very difficult to operate. Yet another problem is that an all-cash system could greatly increase the number of means-tested benefits families receive (although they would be combined into one benefit). As surprising as it might seem, under the current system few families actually receive all the means-tested benefits for which they qualify. A recent study sponsored by the Department of Agriculture showed that only 72 percent of people qualified for SNAP benefits actually receive them and that in some states the rate is below 60 percent.[9] Both the Current Population Survey and the Survey of Income and Program Participation show that random samples of Americans receive relatively few of the benefits for which they are qualified.[10]

Given the difficulty of phasing out means-tested benefits and maintaining work incentives, an approach to this issue taken in the TANF program established by the 1996 welfare reform legislation is important to consider. Regardless of benefit phase out rates, a matter that was left up to states by the 1996 law, the federal statute requires state programs to have two features that directly address work incentive. The first is that all state programs are required to have strong work requirements. Specifically, at any given moment 50 percent of TANF recipients must be involved in work activities that are tightly defined in the legislation. States that do not comply are fined. As part of the work requirement, states are required to impose financial sanctions on recipients who do not comply with the work requirement. The combination of work requirements imposed on both states and individuals backed up by financial sanctions serve to motivate states to adopt demanding programs and recipients to prepare for and look for work, usually in the private sector. In addition, the TANF legislation imposes a five-year limit on benefit receipt, sending a strong signal that benefits are not permanent, as they had been under the Aid to Families with Dependent Children program that TANF replaced. With strong work requirements and time limits, the work incentive created by benefit phase out rates is much less important. Soon enough, individuals must work regardless of the financial work incentives.

Despite these strong pro-work features of the TANF program, it would be a serious mistake to think that American social policy depends exclusively on these essentially negative inducements to work. Beginning roughly in the mid-1980s, Congress created or reformed a host of programs that supplemented the income of poor and low-income working families, especially single mothers. These reforms included:

Expansion of Medicaid and CHIP benefits so that all children in families under 200 percent of poverty are eligible for coverage in most states
Several expansions of funding for child care and reform of child care programs to give states more flexibility in use of child care subsidies to help working families
Several reforms of the SNAP program making it easier for working families to receive food subsidies
Numerous expansions of the EITC; the maximum EITC benefit in most states is greater than the average value of their TANF benefit
Creation of the refundable child tax credit that, like the EITC, provides a cash benefit to low-income families with earnings.

Taken together, these work support benefits constitute the nation’s most successful method of attacking poverty among families with children.[11] The combination of increased work by poor mothers following welfare reform and benefits from the work support system resulted in substantial declines in poverty among children in female-headed families. Even today, after two recessions, the poverty rate among children living in female-headed families is lower than it was before welfare reform and the work rate among single mothers is still higher than before welfare reform.[12]

The TANF experience demonstrates that using phase out rates to increase work incentive can be trumped by strong work requirements and a comprehensive work support system.

Block Grants

Block grants provide states with a sum of money to accomplish broad policy purposes which are specified in the authorizing language. Block grants can be constructed so that they achieve a major goal of state policy and a major goal of federal policy.[13] States are always pleased to accept federal dollars, of course, but they also want flexibility with how the dollars are to be spent. Thus, states are doubly pleased if the block grant specifies the broad purposes of the federal grant and leaves it to state government to decide how best to achieve those purposes. From the federal perspective a major potential advantage of block grants is that spending can be controlled. In the case of open-ended entitlement programs such as Medicaid and SNAP, everyone who meets program qualifications has a legal right to receive the benefit. By contrast, in programs with capped spending such as housing programs and the major child care programs, local authorities or states receive a fixed amount of money and individuals are not entitled to receive the benefits. Most block grants, including the TANF program, the Child Care and Development Fund, and the Social Service Block Grant, have fixed funding. In all three of these cases, federal spending has increased slowly if at all in recent years and then only when Congress explicitly authorized and appropriated the additional funds. Given the enormous and growing deficit that afflicts the federal government, the possibility of spending control in major areas of social policy through the use of block grants should not go unnoticed.

The history of federal block grants shows that it is rare for the federal government to provide states with funds to achieve broad social goals without some strings attached. In the case of TANF, for example, the block grant came accompanied by substantial requirements for data reporting, work requirements that states had to follow, and many other strings. These requirements were negotiated with states in marathon sessions that resulted in requirements that states felt they could live with. If Congress is to create additional block grants, it would be advisable to negotiate the terms of the block grant with states. In the case of TANF, Congress worked with the National Governors Association, the National Conference of State Legislators, and the American Public Human Services Association to find mutually acceptable provisions on work requirements, data reporting, and other details.

The general issue of block grant requirements is especially important because of the need for accountability in spending federal funds. Under the Single Audit Act, all federal grants of over $100,000 given to states must be audited under widely accepted audit standards. But accountability for spending goes far beyond ensuring that funds are spent on activities for which they are intended. Rather, recent years have seen increased emphasis on showing whether federal funds are spent on state programs that actually achieve their purposes. Especially in education programs and welfare programs designed to encourage work, high quality program evaluations, usually involving random assignment designs, are the order of the day. Both the Bush and Obama administrations placed great emphasis on the importance of evidence-based policy.[14] Evidence-based policy is especially important today because the nation’s major social intervention programs in preschool, the public schools, delinquency, employment and training, and many other areas usually do not have significant impacts on the social problems they were designed to address.[15]

To continue this growing federal practice of insisting on program accountability, block grants should include, in addition to financial accountability, two types of mandatory reporting. First, all programs receiving block grant funds should be required to report a standard set of data on program participants such as number and characteristics of people served, type of treatment, length of treatment, and, where possible, evidence of program success. Second, the secretary of the federal agency administering the program should be provided with funds to conduct high-quality evaluations of selected programs to determine if particular approaches or program models, as well as the specific characteristics of program models, are effective in producing the desired program outcomes.

[1] Housing, Title I grants to local education agencies, and half of Pell Grants were counted as non-entitlement spending. Thus, $545.0 of total spending of $626.2 or 87 percent was entitlement spending in 2011.

[2] The number of people in poverty in 2011 will not be published by the Census Bureau until next fall. Based on a model designed by Richard Bavier, a former senior official at OMB, that has successfully predicted the poverty level for the past several years, poverty increased by .6 percentage points in 2011, bringing the poverty rate to 15.7 percent in that year. According to the American Community Survey, the population of the United States in 2011 was 306 million. Thus, around 48,042,000 people were poor in 2011. This is the figure used to compute means-tested spending per person in poverty for 2011.

[3] Karen Spar, “Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009” (R41625), Washington, DC: Congressional Research Service, January 2011, p. 9.

[4] Karen Spar, “Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009” (R41625), Washington, DC: Congressional Research Service, January 2011, p. 12.

[5] Domestic Social Policy Division, “Cash and noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY2002-FY2004” (RL33340), Washington, DC: Congressional Research Service, March 2006.

[6] According to the Kaiser Family Foundation, only North Dakota, Oklahoma, Arkansas, and Idaho set the child eligibility level for Medicaid and CHIP below 200 percent of poverty; half the states are at 250 percent or above. See http://www.kff.org/medicaid/upload/7993-02.pdf

[7] Robert Moffitt, “Incentive Effects of the U.S. Welfare System: A Review,” Journal of Economic Literature, 1992, 30(1): 1-61; Sheldon Danziger, Robert Haveman, and Roert Plotnick, “How Income Transfers Affect Work, Savings, and the Income Distribution: A Critical Review,” Journal of Economic Literature, 1981, 97(3): 975-1028.

[8] The FICA tax for Social Security and Medicare is split between employer and employee payments totaling 15.3 percent of earnings (up to a limit of about $106,800 in the case of the Social Security Tax). However, economists assume that if the portion of the tax paid by employers were not required by federal law, employers would increase wages by an amount equal to the tax.

[9] Karen E. Cunnyngham, “Teaching Those in Need: State Supplemental Nutrition Assistance Program Participation Rates in 2009,” Washington, DC: U.S. Department of Agriculture, December 2011.

[10] Janet Currie, “The Takeup Rate of Social Benefits,” Los Angeles, CA: UCLA, 2004.

[11] A study in the 2008 edition of the Ways and Means Committee’s Green Book (see Appendix E, Table E-31) shows that, primarily because of increased work rates, the poverty rate of families headed by never-married mothers

before any government taxes or transfers, fell from 48.3 percent to 39.6 percent between 1989 and 2006. Thus, due to work effort by these mothers, the poverty rate before taxes and transfers had fallen by nearly 20 percent. When support for these working families from the work support system were added to income in 2006, the poverty rate fell from 39.6 percent to 26.1 percent or by an additional 35 percent. The combination of increased work rates and an improved work support system has had a major impact on poverty among families headed by never-married mothers.

[12] Poverty rates for families headed by single mothers decreased between 1996 and the start of the Great Recession in late 2007, from 35.8 percent to 30.7 percent. Even with increased hardship and unemployment during the recession, the 2010 rate of 34.2 percent is still below the 1996 rate. According to Brookings tabulations of data from the Current Population Survey, the average employment-to-population ratio for never-married mothers in the five years before welfare reform in 1996 was 44.6 percent. The ratio increased every year through 2000, increasing to 65.6 percent in that year, an increase of 47 percent compared with the five years before welfare reform. Even in 2010, after two recessions, the rate was 58.7 percent, still over 30 percent above the pre-welfare reform level.

[13] Pietro S. Nivola, Jennifer L. Noyes, and Isabel V. Sawhill, “Waive of the Future? Federalism and the Next Phase of Welfare Reform,” Brookings Institution, Welfare Reform and Beyond Policy Brief #29, March 2004.

[14] Ron Haskins and Jon Baron, “Building the Connection between Policy and Evidence,” London: NESTA, September 2011.

[15] Isabel V. Sawhill and Jon Baron, “Federal Programs for Youth: More of the Same Won’t Work, Youth Today, May 2010, p. 21.

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Ron Haskins

Publication: House Budget Committee

Image Source: © Jessica Rinaldi / Reuters

The Increase in the Number of Families Living in Poverty

Ron Haskins — Thu, 06 Oct 2011 16:04:00 -0400

At a recent event, Ron Haskins discussed poverty in the United States, stating that the United States is in a long-term pattern of increasing poverty, with numbers rising almost continuously over the last decade.

He detailed the impact of demographic trends on poverty rates, examining how the growth in the number of families headed by single mothers has complicated the fight against poverty, as these families are more likely than married couples to be in poverty, and arguing that anti-poverty policy need to address this issue to be successful.

Authors

Ron Haskins

Image Source: Â© Jessica Rinaldi / Reuters

Work-Family Conflict: Look to Employers and Communities for Solutions

Ron Haskins, Sara McLanahan and Jane Waldfogel — Wed, 05 Oct 2011 11:29:00 -0400

Most American parents are under severe time pressure because they need to work while simultaneously caring for their children and, increasingly, for elderly family members as well. Government mandates on businesses to provide workplace flexibility for employees to relieve some of this pressure are minimal to nonexistent, and most parents do not qualify for government child care programs. Unprecedented government budget strains make it unlikely that legislative bodies will provide relief in the foreseeable future. The best hope for struggling working parents lies in voluntary provision of workplace flexibility by employers and more support from community institutions.

Three demographic forces are putting intense pressure on America’s working families:

the continuing entry of mothers into the labor force complicates families’ efforts to care for their children;
high divorce rates and historically high and rising nonmarital birth rates intensify time pressures on working single parents; and
the unprecedented increase in the elderly population poses challenges for working families who need to care for older relatives.

Because women work to create a career, to maintain a middle-class lifestyle, or to avoid poverty, most mothers want to work or believe they must work. Although the rise in maternal employment may have slowed or even plateaued in recent years, it is unlikely to be reversed. Similarly, despite strong evidence that children fare better in stable married-couple families and that work-family challenges are reduced (but not eliminated) when two parents are available, the decline in marriage and rise in single parenthood are unlikely to be reversed anytime soon. Nor does the rise in longevity appear to be a short-term trend.

These three demographic changes, intertwined with the movement for gender equality and the imperative of women’s work, have all but eclipsed the once traditional view of males as breadwinners and females as homemakers. Women still spend more time than men keeping house and tending children, but the division of responsibility both inside and outside the home is becoming more equal and seems likely to continue moving in that direction. Work-family tension promises to be a permanent feature of American family life, one that affects men as well as women.

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Authors

Ron Haskins
Sara McLanahan
Jane Waldfogel

Publication: Future of Children Policy Brief

Image Source: Â© Jessica Rinaldi / Reuters

Ten Years of the EITC Movement: Making Work Pay Then and Now

Steve Holt — Mon, 18 Apr 2011 16:48:00 -0400

The Earned Income Tax Credit (EITC) is an earnings supplement available through the income tax system that offsets payroll taxes and supports low- and moderate-income workers raising children. It has grown to be called the nation’s largest federal anti-poverty program. The EITC has had significantly beneficial effects for its recipients and their communities. These include encouragement of work, reduction of poverty, and boosting of local economic activity.

The EITC has always had features that distinguish it from traditional family support and tax policies. It is predicated on work. It is claimed not through caseworkers and onerous application processes but by filing a tax return. And it is refundable, meaning that the amount of the credit is not tied to one’s federal income tax liability. Pioneered by the EITC, these are now features of several programs.

The new approach of the EITC created a new environment. The credit has spawned a remarkable array of social, business, and political activity. There is a national network devoted to promoting the existence of the credit, a large business sector (commercial tax preparers) and a burgeoning non-profit industry (community tax programs) each closely tied to it, financial services and products reliant on it, and significant political activity related to it.

This brief describes this activity, labeling it the "EITC Movement". This is not a traditional social movement. In fact, it is the work of dispersed actors pursuing sometimes disparate goals. It has been about a decade since this EITC Movement began to emerge in earnest, and it has now reached a maturity characterized by greater stability and institutionalization.

This brief reflects on what the EITC Movement has achieved. Making this assessment is a challenge. As a collection of distinct (however interrelated) efforts, there is not a clear set of goals to use as the standard for measuring accomplishments. An added complication is the limited data available for empirical observations.

This brief also looks ahead at the future for the EITC Movement. Challenges to the relatively stable environment of the past decade are likely. All levels of government are experiencing budgetary pressure that could affect both policy and program, and the typical cycle of philanthropy points to a period of re-evaluation and change. It is time to examine fresh approaches.

After setting the historical context for the past decade, the paper describes how the EITC Movement coalesced and grew. It then evaluates the impact of these efforts from various perspectives before concluding with a look forward to potential developments.

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Steve Holt

Image Source: Andrew Qualls

Responding to the New Geography of Poverty: Metropolitan Trends in the Earned Income Tax Credit

Emily Garr and Elizabeth Kneebone — Thu, 17 Feb 2011 03:13:00 -0500

This report assesses the changing geographic distribution of the low-income population compared to recipients of the federal Earned Income Tax Credit (EITC) between 1999 and 2007, focusing on trends in the nation’s 100 largest metro areas. The analysis finds that:

Changes in EITC receipt have tracked closely with the growing and shifting geography of working poverty. From 1999 to 2007, major metropolitan suburbs accounted for roughly half of the nation’s net growth in low-income residents (4.8 million) and EITC recipients (2.5 million), outpacing other types of communities. By 2007, these suburbs were home to more than one-third of all low-income Americans and EITC recipients.
Between 1999 and 2007, all 69 large metro areas that experienced significant growth rates in their low-income populations saw EITC receipt increase in response. Southern metro areas like Raleigh, Charlotte, and Atlanta that had the greatest increases in low-income population also saw the greatest upticks in EITC receipt as a result.
Low-income workers claimed $47.5 billion through the EITC in 2007—a real increase of 25 percent over 1999—with 60 percent of EITC dollars going to residents of the 100 largest metro areas. Suburban filers claimed one-third of all EITC funds and accounted for half the net increase in EITC dollars claimed. In the 10 metro areas experiencing the greatest increases in low-income population, EITC claims increased by almost $1 billion.

In the wake of the first recession of the 2000s and the slow recovery that followed, the number of low-income Americans increased significantly, especially in suburban communities. As that population grew and suburbanized over the decade, the EITC responded effectively both to economic trends—offering critical support to help working families weather downturns in the economic cycle—and to the changing geography of the working poor.

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The Great Recession and Poverty in Metropolitan America

Elizabeth Kneebone — Thu, 07 Oct 2010 00:00:00 -0400

As expected, the latest data from the Census Bureau’s 2009 American Community Survey (ACS) confirm that the worst U.S. economic downturn in decades exacerbated trends set in motion years before, by multiplying the ranks of America’s poor. Between 2007 and 2009, the national poverty rate rose from 13 percent to 14.3 percent, and the number of people below the poverty line jumped by 4.9 million. Yet because the economic impact of the Great Recession was highly uneven across the nation, the map of U.S. poverty shifted in important ways over the past couple of years, with implications for both national and local efforts to alleviate poverty.

An analysis of poverty in the nation’s 100 largest metro areas, based on recently released data from the 2009 American Community Survey, indicates that:

The number of poor people in large metro areas grew by 5.5 million from 1999 to 2009, and more than two-thirds of that growth occurred in suburbs. By 2009, 1.6 million more poor lived in the suburbs of the nation’s largest metro areas compared to the cities.

Between 2007 and 2009, the poverty rate increased in 57 of the 100 largest metro areas, with the largest increases clustered in the Sun Belt. Florida metro areas like Bradenton and Lakeland, and California metro areas like Bakersfield, Riverside-San Bernardino-Ontario, and Modesto, each experienced increases in their poverty rates of more than 3.5 percentage points.

Poverty increased by much greater margins in 2009 than 2008, with cities and suburbs experiencing comparable rates of growth in the recession’s second year. Between 2008 and 2009, cities and suburbs gained 1.2 million poor people, together accounting for about two-thirds of the national increase in the poor population that year.

Several metro areas saw city poverty rates increase by more than 5 percentage points, while many suburban areas experienced increases of 2 to 4 percentage points between 2007 and 2009. The city of Allentown, PA saw a 10.2 percentage-point increase in its poverty rate, followed by Chattanooga, TN with an increase of 8.0 percentage points. Sun Belt metro areas were among those with the largest increases in suburban poverty, including Lakeland, FL and Riverside-San Bernardino-Ontario, CA.

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Elizabeth Kneebone

Publication: Brookings Institution

The Social Service Challenges of Rising Suburban Poverty

Scott W. Allard and Benjamin Roth — Thu, 07 Oct 2010 00:00:00 -0400

Cities and suburbs occupy well-defined roles within the discussion of poverty, opportunity, and social welfare policy in metropolitan America. Research exploring issues of poverty typically has focused on central-city neighborhoods, where poverty and joblessness have been most concentrated. As a result, place-based U.S. antipoverty policies focus primarily on ameliorating concentrated poverty in inner-city (and, in some cases, rural) areas. Suburbs, by contrast, are seen as destinations of opportunity for quality schools, safe neighborhoods, or good jobs.

Several recent trends have begun to upset this familiar urban-suburban narrative about poverty and opportunity in metropolitan America. In 1999, large U.S. cities and their suburbs had roughly equal numbers of poor residents, but by 2008 the number of suburban poor exceeded the poor in central cities by 1.5 million. Although poverty rates remain higher in central cities than in suburbs (18.2 percent versus 9.5 percent in 2008), poverty rates have increased at a quicker pace in suburban areas.

Watch video of co-author Scott Allard explaining the report's findings » (video courtesy of the University of Chicago)

This report examines data from the Census Bureau and the Internal Revenue Service (IRS), along with in-depth interviews and a new survey of social services providers in suburban communities surrounding Chicago, IL; Los Angeles, CA; and Washington, D.C. to assess the challenges that rising suburban poverty poses for local safety nets and community-based organizations. It finds that:

Suburban jurisdictions outside of Chicago, Los Angeles, and Washington, D.C. vary significantly in their levels of poverty, recent poverty trends, and racial/ethnic profiles, both among and within these metro areas. Several suburban counties outside of Chicago experienced more than 40 percent increases of poor residents from 2000 to 2008, as did portions of counties in suburban Maryland and northern Virginia. Yet poverty rates declined for suburban counties in metropolitan Los Angeles. While several suburban Los Angeles municipalities are majority Hispanic and a handful of Chicago suburbs have sizeable Hispanic populations, many Washington, D.C. suburbs have substantial black and Asian populations as well.

Suburban safety nets rely on relatively few social services organizations, and tend to stretch operations across much larger service delivery areas than their urban counterparts. Thirty-four percent of nonprofits surveyed reported operating in more than one suburban county, and 60 percent offered services in more than one suburban municipality. The size and capacity of the nonprofit social service sector varies widely across suburbs, with 357 poor residents per nonprofit provider in Montgomery County, MD, to 1,627 in Riverside County, CA. Place of residence may greatly affect one’s access to certain types of help.

In the wake of the Great Recession, demand is up significantly for the typical suburban provider, and almost three-quarters (73 percent) of suburban nonprofits are seeing more clients with no previous connection to safety net programs. Needs have changed as well, with nearly 80 percent of suburban nonprofits surveyed seeing families with food needs more often than one year prior, and nearly 60 percent reporting more frequent requests for help with mortgage or rent payments.

Almost half of suburban nonprofits surveyed (47 percent) reported a loss in a key revenue source last year, with more funding cuts anticipated in the year to come. Due in large part to this bleak fiscal situation, more than one in five suburban nonprofits has reduced services available since the start of the recession and one in seven has actively cut caseloads. Nearly 30 percent of nonprofits have laid off full-time and part-time staff as a result of lost program grants or to reduce operating costs.

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Scott W. Allard
Benjamin Roth

Publication: Brookings Institution

Image Source: © Danny Moloshok / Reuters

The Child Tax Credit after ARRA: How Would Expiration Affect Metropolitan Families?

Elizabeth Kneebone — Thu, 08 Jul 2010 06:14:00 -0400

INTRODUCTION:

Currently, the largest provision in the U.S. tax code that benefits working families with children is the Child Tax Credit (CTC). Through the CTC, eligible families can claim a credit of up to $1,000 for each child under 17 at tax time. The credit is first used to pay down taxes owed. If the CTC exceeds the amount due, taxpayers may also be eligible to receive some or all of the remainder as a refund, supplementing their wages and boosting their take home pay.

The refundable portion of the CTC is limited to 15 percent of earnings above a specified threshold. The American Recovery and Reinvestment Act (ARRA) set that threshold at $3,000 in tax years 2009 and 2010, and the administration’s 2011 budget proposes to maintain that level in future years. However, if this budget proposal is not adopted and the ARRA threshold is allowed to expire, the earnings floor will revert to its previous level—which would have been $12,550 in 2009—and continue to increase annually as it is indexed for inflation, further eroding the benefit each year for working families whose wages do not keep pace.

Though delivered through the tax code, the CTC is the largest of any federal cash assistance program for children. While it provides an important work incentive for lower-income families, it also acts as the mechanism through which the federal government delivers extra financial support to families raising children. Letting the earnings threshold revert to pre-ARRA levels would exclude a significant number of lower-income families from receiving this support.

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Elizabeth Kneebone

March 2010: The Landscape of Recession: Unemployment and Safety Net Services Across Urban and Suburban America

Emily Garr and Elizabeth Kneebone — Tue, 30 Mar 2010 00:00:00 -0400

Two years after the country entered the Great Recession, there are signs the national economy has slowly begun to recover. Thus far recovery has meant the return of economic growth, but not the return of jobs. And just as some communities have felt the downturn more than others, recovery has not and will not be shared equally across the nation’s diverse metropolitan economies.

Within metropolitan areas, many communities continue to struggle with high unemployment and increasing economic and fiscal challenges, while at the same time poverty and the need for emergency and support services continue to rise. Even under the best case scenario of a sustained and robust recovery, cities and suburbs throughout the nation will be dealing with the social and economic aftermath of such a deep and lengthy recession for some time to come.

An analysis of unemployment, initial Unemployment Insurance claims, and receipt of Supplementary Nutritional Assistance Program (SNAP, formerly known as food stamps) benefits in urban and suburban communities over the course of the Great Recession reveals that:

Between December 2007 and December 2009, city and suburban unemployment rates in large metro areas increased by roughly the same degree (5.1 versus 4.8 percentage points, respectively). By December 2009, the gap between city and suburban unemployment rates was one percentage point (10.3 percent versus 9.3 percent)—smaller than 24 months after the start of the first recession of the decade (1.7 percentage points) and the downturn in the early 1990s (2.2 percentage points).
Western metro areas exhibited the greatest increases in city and suburban unemployment rates—5.8 and 5.6 percentage points—over the two-year period ending in December of 2009. Increases in unemployment rates tilted more toward primary cities in Northeastern metro areas (a 5.3 percentage-point increase versus 4.2 percentage points in the suburbs), while suburbs saw slightly larger increases in the South (5.0 versus 4.4 percentage points).
Initial Unemployment Insurance (UI) claims increased considerably between December 2007 and December 2009 in urban and suburban areas alike. The largest increases in requests for UI occurred in the first year of the downturn—led by lower-density suburbs—with new claims beginning to taper off between December of 2008 and 2009.
SNAP receipt increased steeply and steadily between January 2008 and July 2009 across both urban and suburban counties. Urban counties remain home to the largest number of SNAP recipients, though suburban counties saw enrollment increase at a slightly faster pace during the downturn—36.1 percent compared to 29.4 percent in urban counties.

Even as signs point to a tentative economic recovery for the nation, metropolitan areas throughout the country continue to struggle with high unemployment. Within these regions, the negative effects of this downturn—as measured by changes in unemployment and demand for safety net services—have been shared across cities and suburbs alike. Standardizing sub-state data collection and reporting across programs would better enable policymakers and services providers to effectively track indicators of recovery and need in the nation’s largest labor markets.

Read the Full Paper » (PDF)
Read the Related Report: Job Sprawl and the Suburbanization of Poverty »

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Job Sprawl and the Suburbanization of Poverty

Steven Raphael and Michael Stoll — Tue, 30 Mar 2010 00:00:00 -0400

In nearly all metropolitan areas in the United States, jobs have been moving to the suburbs for several decades. In the largest metropolitan areas between 1998 and 2006, jobs shifted away from the city center to the suburbs in virtually all industries. As the U.S. population also continues to suburbanize, larger proportions of metropolitan area employment and population are locating beyond the traditional central business districts along the nation’s suburban beltways and the more distant fringes.

Understanding the association between employment decentralization and the suburbanization of poverty is important because of the continued growth of the suburban poor. In 2005, the suburban poor outnumbered their city counterparts by almost one million. And during the first year of the recession that began in 2007, suburbs added more than twice as many poor people as did their cities.

The suburban poor face unique disadvantages. These include concentration in inner-ring, disadvantaged, and jobs-poor suburbs; overreliance on public transportation, which often provides inferior access to and within suburban areas; and spatial mismatch between where the suburban poor live and the locations of important social services.

An analysis of data on the location of people and jobs in the 50 largest U.S metropolitan areas in 1990 and 2006–2007 finds that:

The poor are more suburbanized in metropolitan areas with greater employment decentralization. Overall, the poor are generally less likely to live in suburbs than the non-poor (55.8 percent versus 70.9 percent). Metropolitan areas with both high suburbanization of poverty and job sprawl are somewhat larger and lie mostly in the South and West, including Atlanta, Miami, San Francisco, Seattle, and Orlando.
Poor whites and Latinos are more suburbanized than poor blacks in metro areas with high job sprawl. This disparity is most marked in metropolitan areas with higher poverty rates, indicating that in such regions, poor blacks may be less able to suburbanize in response to the outward movement of jobs than other groups.
Metropolitan areas where jobs decentralized more over time experienced greater suburbanization overall, but not among the poor. This suggests that the outward movement of jobs in metropolitan areas in recent years does not by itself explain suburbanization of the poor during this time. Rather, other related factors may have propelled the decentralization of both the poor and jobs—such as lack of reverse commute public transit, or negative aspects of central cities.
Within suburbs, the poor generally live in communities that have somewhat below-average numbers of jobs. About 68 percent of all suburban residents live in areas with above average numbers of jobs compared with 62 percent of the suburban poor. Even lower shares of black and Latino suburban poor live in jobs-rich communities, particularly in higher-poverty metropolitan areas.

Together, these findings suggest that employment decentralization is a driver of the suburbanization of poverty. However, the responsiveness of the poor to the outward movement of jobs, particularly racial and ethnic minority poor, does not appear to be as strong as that for the population as a whole. Policies designed to minimize the frictions that limit broader access to jobs-rich suburbs, such as providing more incentives for multifamily housing, reevaluating existing zoning laws and development impact fees, using more housing vouchers in new suburban locations, and enforcing fair housing laws in suburban areas could go a long way toward easing mobility for the poor and enhancing their labor market outcomes.

Read the Full Report »
Read the Related Paper: The Landscape of Recession »

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Steven Raphael
Michael Stoll

Food Stamps and the Growing Suburban Safety Net

Alan Berube — Tue, 01 Dec 2009 15:39:00 -0500

An important federal program that tends to fly under the radar received some unprecedented real estate this past weekend--an enormous spread on page A1 of Sunday’s New York Times.

Jason DeParle’s article, and some nifty interactive maps on the Times website, portray the recent rapid growth of the food stamp program, now officially known as the Supplemental Nutrition Assistance Program, or by its rather unfortunate acronym, SNAP. DeParle documents how, in the wake of welfare reform in the mid-1990s, successive administrations--from Clinton to Bush, and now Obama--have worked in a bipartisan fashion to erase the stigma that once haunted the program, and ensure that eligible families receive access to its benefits.

Because welfare reform transformed what was an individual entitlement into a block grant to states, cash welfare caseloads in many states have remained relatively flat despite the worst recession in generations. As a result, food stamps--which remain a federal entitlement--have become an even more important countercyclical tool for fighting poverty, and enrollment has expanded by about one-third since 2007. DeParle charts that rise over the past two years across a broad cross-section of U.S. communities, all of which are feeling the economic pain of rising foreclosures, mounting job losses, and declining family incomes.

Of particular note, the article discusses the significant increases in food stamp receipt occurring in many suburban communities, now that a majority of the nation’s metropolitan poor live outside central cities. Indeed, the counties in which food stamp receipt has doubled, and which have at least 5,000 recipients today, are largely suburbs--around Atlanta, Florida’s Gulf Coast, Austin, and Youngstown. As my colleagues Elizabeth Kneebone and Emily Garr reported earlier this year, however, increases in food stamp enrollment in outer suburban counties have been somewhat lower than might be expected based on the rapid unemployment increases they have suffered. Lack of familiarity, distance to the nearest welfare office, stigma, or real eligibility differences may be to blame for under-enrollment in these farther-out areas.

All of which is to say, as food stamps become the de facto federal support system for millions of families during the next few years of elevated unemployment, plugging participation gaps in suburbia may be an important new frontier for fighting hunger and poverty in America.

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Alan Berube

How the Recession’s Affecting Immigration

Audrey Singer and Jill H. Wilson — Thu, 19 Nov 2009 11:29:00 -0500

With U.S. unemployment at a 26-year high Americans will be feeling the economic downturn for some time. Immigration experts are seeing global signs of the recession in major shifts in U.S. immigration trends, especially at the high and low ends of the skills spectrum. Here are the most significant changes.

You know the U.S. is in a recession when…

Mexicans are sending money to relatives in the United States.

In 2007, Mexicans living in the U.S. sent about $26 billion to relatives living in Mexico. The amount of remittances dropped to $25 billion in 2008, the first decline since the Central Bank of Mexico started keeping track 14 years ago. In the first nine months of 2009, the Bank reports that only $16.4 billion has been sent south, a 13 percent decline from 2008. Now, there are some signs of an increase in “reverse remittances,” in which residents of Mexico wire money to their relatives north of the border to help them through tough times. While still a small fraction of the north-to-south remittance flow, which provides Mexico with its second largest source of foreign income (after oil exports), an uptick in reverse remittances is a striking example of the ripple effects of U.S. job loss.

H1-B visas are still available.

In fiscal year 2009, the H1-B visa program that links high-skilled immigrants with sponsoring U.S. employers had all 65,000 application slots filled in one day. In FY08, it took two days, and in FY07, 56 days. But things have changed. After 211 days into the 2010 fiscal year, there were almost twenty thousand slots still available. With high unemployment and shrinking budgets many corporations are unable to hire from abroad as they did in recent years. What’s more, companies that receive federal bailout funds must hire U.S. workers or demonstrate they are cannot find them if they do. Technology firms for years have pressured Congress to increase the number of H1-B visas. This may be a break for domestic tech workers who have often been on the other side of the argument.

Apprehensions at the U.S.-Mexico border are down.

If arrests at the U.S.-Mexico border are an indication of illegal crossing activity, the fact that the number has dropped by more than 23 percent during the past year probably indicates a reduction in persons attempting to make the trip. Precipitously declining economic opportunity combined with beefed-up enforcement have been factors in the recent drop in the number of immigration arrests at the border over the past few years. The number recorded for FY 2009 represents a 34-year low point. At the same time the border patrol budget has risen to nearly $11 billion, up from $6 billion in 2004.

More Americans are looking for jobs overseas.

USAToday reports that more Americans are seeking work abroad than in the past. Although “the trend reverses a longtime pattern of far more foreign workers seeking jobs in the U.S.” sounds like an overstatement, there are signs that Americans are more willing to consider working abroad. The country’s largest staffing company, Manpower, says it has 500 clients seeking overseas work, compared a few dozen six months ago. And a recent survey of executives in the U.S. revealed that 54 percent would be likely to take a job in another country, compared to 37 percent in 2005. The top prospects? India, China, Brazil, Dubai, and Singapore.

Immigration slows.

When the Census Bureau released data from its 2008 American Community Survey this September, immigrant numbers made headlines, as they often do, but this time the stories were about the numbers’ leveling off rather than climbing up. After years of fast-paced growth, the size of the foreign-born population in the U.S. was statistically unchanged from the year before. While some of the reduction could be due to stepped-up enforcement actions – at the border, worksites, and by local law enforcement – fewer jobs, especially in immigrant-heavy industries like construction, technology, and manufacturing, make for a weaker pull on migrants.

It is unclear how long these twists in U.S. immigration trends will last. Homeland Security Secretary Janet Napolitano in a speech on Friday announced that the Obama administration is moving ahead with immigration reform noting that this administration had achieved a “fundamental change” (no doubt aided by the recession’s impacts) in border security and enforcement against employers hiring illegal immigrants. She elaborated by saying that the diminished inflow along with better enforcement outcomes opened up the prospects for federal reform, including an earned legalization program to bring unauthorized immigrants out of the shadows. Let’s hope she’s right.

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Image Source: Arpad Benedek/istock photos

Economic Recovery and the Earned Income Tax Credit

Elizabeth Kneebone — Wed, 21 Oct 2009 00:00:00 -0400

The American Recovery and Reinvestment Act of 2009 increased support for low-income working families by making important expansions to both the Earned Income Tax Credit (EITC) and the Child Tax Credit. At the National Community Tax Coalition’s inaugural Day of Action on Capitol Hill, Elizabeth Kneebone discussed the impact of these expansions on families and communities across the country. She also explored the effects of recent legislative proposals to strengthen the EITC for workers without qualifying children.

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Elizabeth Kneebone

Publication: National Community Tax Coalition

The Threat to Work

Ron Haskins — Tue, 22 Sep 2009 11:28:00 -0400

One of the few government strategies that has proven successful in reducing poverty is encouraging or demanding that adults on welfare work, even at low wage jobs, and then subsidizing their earnings. The welfare reform legislation of 1996 is widely viewed as the origin of this two-part strategy. The 1996 reforms and a strong economy produced big increases in employment by poorly educated single mothers.

However, the poor skills of these mothers, combined with the decades-long stagnation of wages at the bottom of the wage distribution, make it unlikely that most of these mothers will ever earn sufficient wages to avoid poverty, let alone join the middle class. Fortunately, both state and federal governments have come to the rescue by providing billions of dollars in wage supplements for these working mothers.

In our new book Creating an Opportunity Society, Isabel Sawhill and I call these wage supplements the work support system. Work supports include the Earned Income Tax Credit, the Child Tax Credit, food stamps, health insurance, housing, school lunch, and several additional programs. Low-income working families, with earnings of around $10,000 or $12,000 per year, can qualify for combined cash and in-kind income worth more than $30,000. The beauty of the combined earnings-work support strategy is that the public wants the unskilled to work, and in exchange appears willing to endorse the substantial work support payments now on offer to these mothers and their children. Equally important, both the work requirements and the work supports were mostly enacted on a bipartisan basis and continue to enjoy bipartisan support.

But a dark cloud is now appearing on the horizon. The explosion in mothers' employment lasted until the recession of 2000. By January of 2009, their employment had dropped by a whopping 10 percentage points from its 2000 high. Similarly, the total income of mothers in the heart of the low-wage income distribution for women had jumped by about 30 percent between the early 1990s and 2000 but then remained stuck for the next eight years. By 2008, their total income was actually lower than in 2000. With employment, income, and earnings stagnant or in decline for nearly a decade, and poverty now on the rise, it is time to worry.

Having worked on the welfare reform legislation and several of the expansions of work supports when I was a Hill staffer with the Ways and Means Committee, I vividly recall the optimism many of us felt about the strategy of requiring work and then supplementing low wages with work supports. But now we face a huge question: Will the jobs come back? In a future posting, I will discuss several ideas about how to fight this threat to the most successful anti-poverty policy the nation has yet devised.

Authors

Ron Haskins

Urban Revitalization and Opportunity

Bruce Katz — Thu, 09 Jul 2009 15:05:14 -0400

Public housing has long been criticized as a breeding ground for concentrated poverty, under-achieving schools and for its lack of access to services. As a means to expand opportunity to some of the nation’s most impoverished communities, the Obama administration has proposed the Choice Neighborhoods Initiative, a program that aims to take the current HOPE VI program beyond public housing by transforming these neighborhoods in a new way.

Video

Choice Neighborhoods Initiative will Revitalize Poor Communities

Helping More Unemployed Workers Find Jobs and Build Skills

Jeffrey R. Kling — Fri, 08 May 2009 12:00:00 -0400

First let me begin by thanking Lou Jacobson for putting together what I think is an excellent paper about Strengthening One-Stop Career Centers. In my remarks, I will aim to do three things:

First, I’ll share with you what I believe has been learned about finding jobs and building skills from psychology and behavioral economics, which turns out to be quite complementary to many of Lou’s recommendations based on his study of labor markets and institutions.
Second, I’ll talk about implications of these ideas specifically for Workforce Investment
Act reauthorization.
Third, I’ll propose ways in which research capacity at the Labor Department could be strengthened to support innovations potentially

Read the full remarks»

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Jeffrey R. Kling

Strengthening One-Stop Career Centers

Fri, 08 May 2009 08:30:00 -0400

Event Information

May 8, 2009
8:30 AM - 11:00 AM EDT

Room 333
Hall of States Building
444 North Capitol St, NW
Washington, DC

On May 8, The Brookings Institution and the National Association of State Work Force Agencies hosted a discussion forum on a new paper, "Strengthening One-Stop Career Centers: Helping More Unemployed Workers Find Jobs and Build Skills."

One-stop career centers help millions of unemployed and disadvantaged workers each year find new jobs and opportunities for advancement. Unfortunately such centers are hampered by poor accountability and a lack of adequate funding. This Hamilton Project paper proposes a new approach to "One-Stops" that would increase cost effectiveness, reduce unemployment and underemployment and provide a more highly skilled workforce.

Following an introduction by Rich Hobbie, Executive Director of the National Association of State Workforce Agencies, Louis Jacobson, Senior Economist at CNA (Center for Naval Analyses) presented his paper. Following the presentation, Jeffrey Kling, senior fellow and deputy director of Economic Studies commented on the paper.

Event Materials

Participants

Moderator

Rich Hobbie

Executive Director, National Association of State Workforce Agencies

Panelists

Louis Jacobson

Senior Economist, CNA