Thursday, February 14, 2013

SOTU 2013: Promising Prospects for Anti-Poverty Policy

“Let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty.”
After a distinct lack of mention of poverty throughout the 2012 Presidential election campaigns—from either candidate—President Obama, in his 2013 State of the Union address, mentioned “poor” and “poverty” five times.
With clear frustration in his demeanor, Obama spoke of how unacceptable it is that wages and income have barely budged for the vast majority of Americans, while corporate profits have skyrocketed. To address this, he proposed increasing the minimum wage to $9/hour, up from the current $7.25/hour. For a family where the parent is working 40 hours a week at minimum wage, this would put an extra $280 in their pocket, money that could go towards rent, utilities, transportation, child care, or even leisure activities like going to see a movie. Furthermore, this increase in the minimum wage would be indexed to the cost of living, which would cushion the impact of inflation on the buying power of a family’s income.
President Obama’s housing plan to let families refinance at today’s interest rate and save $3,000 a year, while beneficial to many, will be especially beneficial to people of color, who were disproportionately affected by the housing crisis. Nationwide, Black and Latino families saw their wealth and assets decimated as their homes went into foreclosure.
The President spoke at length about the tremendous value of early childhood education: “Every dollar we invest in high-quality early education can save more than seven dollars later on – by boosting graduation rates, reducing teen pregnancy, even reducing violent crime. In states that make it a priority to educate our youngest children, like Georgia or Oklahoma, studies show students grow up more likely to read and do math at grade level, graduate high school, hold a job, and form more stable families of their own.” We all know that children are our future, but put into economic terms there is no doubt that infusing children with services early in their lives results in a strong return on investment for the nation. Obama committed to working with states to make high-quality pre-school available to every child.
Finally, the President also mentioned reforming some of the financial penalties in our public policies that he views as dissuading some people from marriage. In addition, he put a greater emphasis on policies that encourage fathers to take responsibility for their children. Children fare better when they are raised in two-parent households, so the President’s commitment to these policies is a boost to strengthen family relationships. The President did not go into detail about specific policies to address family strengthening, but given the diversity of formations that make up American families today, including multigenerational households, children raised by relatives, and single parents, it would be helpful for policymakers to consider these realities moving forward.
Although the President spoke at length on issues that would help low-income and poor Americans, there were still key issues left unaddressed. Of critical importance is the mass incarceration of people of color, particularly Black men for non-violent crimes, which continues to have deleterious effects on whole communities, affecting men’s ability to be good fathers, gain employment, or continue their education (if they were youths).
President Obama’s State of the Union speech was significant because just uttering the words of ‘poor’ and ‘poverty’ means that federal policymakers will be more apt to address poverty in the coming months. This is of timely importance because of the imminent due dates for major budget decisions, involving the sequester, debt ceiling, a final fiscal year 2013 budget, and release of the fiscal year 2014 budget. All of these are opportunities for policymakers to protect low-income and poor Americans by not cutting the services and supports that help them to work and support their families.
For results-based policies to support children and their families – visit

Monday, February 4, 2013

For Working Families, Growing Difficulty in Making Ends Meet

There is beginning to be some mention of income and social inequality in mainstream discussions. While it does not come up as often as it should – when it does it is often considered provocative.  In the past month the conversation has really been heating up, topped off by President Obama’s inaugural address in which he stated America “cannot succeed when a shrinking few do very well and a growing many barely make it.” Media outlets are highlighting the impact of income inequality in the United States and the ways that this gap obstructs economic growth.

A new report from the Working Poor Families Project (WPFP) reveals the extent of the problem for low-income families, and how the increase in the wage gap has spread over the last few years and across the United States. Although the economy is in recovery—the unemployment rate has declined, the housing market is recovering and the stock market is bouncing back—even with employment, millions of families are still struggling to afford basic needs. With incomes at just 200% of the federal poverty level and often with no assets, working families are vulnerable to unforeseen events that could suddenly drop them into poverty (e.g. job loss, accidents, costly medical issues).

Many of the jobs to which people are returning are not the pre-Recession middle class jobs they once had, but are a mix of part-time and low wage jobs. The WPFP report states in 2011, about one-fourth of adults in low-income working families were employed in just eight occupations, as cashiers, cooks, health aids, janitors, maids, retail salespersons, waiters and waitresses, or drivers.

Key findings from the report, include:
  • The number of low-income working families in the U.S. increased to 10.4 million in 2011, up from 10.2 million in 2010.
  • The total number of people in low-income working families now stands at 47.5 million.
  • In 2011, there were 23.4 million children in low-income working families.
  • There are 10 states, spread across the U.S., where the share of working families increased by 5% or more between 2007 and 2011.
  • The richest 20% of working families took home 48% of all income, while those in the bottom 20% received less than 5%.
The high cost of living for low-income working families is significant. In 2011, 61% of low-income working families had a high housing cost burden—defined as spending more than 33% of household income on housing costs such as mortgage, rent and utilities. For working families below the poverty threshold, 81% had a high housing cost burden. Other expenses they deal with on a daily basis include transportation, made more difficult with the high cost of gasoline, and child care. For families that work long hours, nights and/or weekends, child care is especially burdensome.

This data proves that even though families are taking advantage of the employment opportunities available to them, they are still unable to make ends meet. Fortunately, there is a place for federal and state policymakers to begin to turn the tide on inequality. According to the Working Poor Families Project, policymakers can take actions to strengthen job growth and job quality by supporting the following policies:
  • Raising and indexing the minimum wage;
  • Providing all workers access to paid sick days and family leave;
  • Enforcing work rules and wage standards; and
  • Ensuring that if public job creation expenditures persist, they benefit workers and their communities
Beyond policies focused on employment, policymakers can help the economic security of families by supporting policies that control household costs, build household assets, and curb household debt. For more information on those ideas, visit CSSP’s Policy for Results webpage on reducing child poverty.