Poverty in America -And What to Do About ItRobert Doar, Morgridge Fellow in Poverty Studies

October 2015 | National Conference of State Legislatures

Post-welfare reform progress has reversed.

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11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

14.0%

14.5%

15.0%

15.5%

Po

ve

rty

Ra

te

Year

U.S. Official Poverty Rate, 1990-2014

Data: U.S. Bureau of the Census, Current Population Survey, Annual Social and Economic Supplements’ Official U.S. Poverty

Rate.

We see the same trend in child poverty.

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16%

17%

18%

19%

20%

21%

22%

23%

Po

ve

rty

Ra

te

Year

U.S. Official Child Poverty Rate, 1990-2014

Data: U.S. Bureau of the Census, Current Population Survey, Annual Social and Economic Supplements’ Official U.S. Poverty

Rate.

Race gaps in the poverty rate persist.

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0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Pe

rce

nt

Year

Race Gaps in Poverty Rate, 1970-2014

Hispanic

Black

All

White

Source: U.S. Census Bureau. Current Population Survey.

The economic position of African-Americans is deteriorating.

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0% 5% 10% 15% 20% 25% 30% 35% 40%

Black Child Poverty

Black Poverty (18-64)

Black Poverty Rates

2000 2006 2014

$32,000 $34,000 $36,000 $38,000 $40,000 $42,000

Median Income

Black Median Income

2000 2006 2014

Why are we going in the wrong direction?

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The male work rate rate is collapsing.

7Source: U.S. Bureau of Labor Statistics.

84.0

86.0

88.0

90.0

92.0

94.0

96.0

98.0

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Male Labor Force Participation, Ages 25-54

Male labor force participation is declining across races.

8

65.0

70.0

75.0

80.0

85.0

90.0

197

2

197

3

197

4

197

5

197

6

197

7

197

8

197

9

198

0

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

Pe

rce

nt

Male Labor Force Participation By Race, Age 20 and Over

White Men Black Men Hispanic Men

Source: U.S. Bureau of Labor Statistics.

Female LFP changes tell a different story.

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50.0

52.0

54.0

56.0

58.0

60.0

62.0

64.0

66.0

68.0

Female Labor Force Participation By Race, Age 20 and Over

White Women Black Women Hispanic Women

Source: U.S. Bureau of Labor Statistics.

The nonmarital birth rate is high.

0

10

20

30

40

50

60

70

80

Pe

rce

nt

Year

Percent of Births to Unmarried Women by Race, 1960-2013

Black

Hispanic

All

White

Sources: For years 1960-1999: Ventura, S. J., & Bachrach, C. A. (2000). "Nonmarital Childbearing in the United States,

1940-99." National Vital Statistics Reports, Centers for Disease Control and Prevention, vol. 48(16).

For years 2000-2013: U.S. Department of Health and Human Services. Centers for Disease Control and Prevention. National Vital Statistics

Reports.

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• Nonmarital birth rate overall: 40.6%• Nonmarital birth rate for blacks: 71%

• Nonmarital birth rate for whites: 35.8%• Nonmarital birth rate for Hispanics: 53.2%

What works in helping the poor?

• Work expectations for able-bodied adults receiving assistance;

• Poverty Rate for those who worked full-time, year round in 2014: 3.0%.

• Government assistance that makes work pay;

• Two-parent families that better prepare children for life;

• Poverty Rate for single-parent families is 5X that of married-couple families (30.6% and 6.2%).

• More effective programs for struggling men;

• Pro-growth policies that generate jobs.• The combination of welfare reform and strong economic growth lowered the poverty rate

by 25% from 1993 to 2000.

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Teen pregnancy trends show the potential of talking honestly about family.

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0

20

40

60

80

100

120

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Birth Rates Per 1,000 Females Ages 15-19

Total White Black Hispanic

Source: US Department of Health and Human Services. Office of Adolescent Health.

How should we apply these principles in policy?

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The Earned Income Tax Credit

• Our most effective anti-poverty program because it encourages work and reduces poverty.

• Workers without dependent children get very little, and we should enhance the credit for these young men who have been struggling in the labor market.

• Expansion must happen in conjunction with reforming the EITC’s biggest weakness: a high rate of improper payments.

• A recent GAO study found that 27.2% of outlays ($17.7 billion) were erroneous

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EITC, continued.

• Options to consider for increasing compliance: • More information sharing between SSA and IRS;

• Forcing self-preparers to answer the same eligibility questions as paid preparers;

• Shifting the program out of the income tax system and integrating with the payroll tax system.

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Supplemental Nutrition Assistance Program

• An important program that provides needed assistance and serves as a critical work support.

• In recent years, SNAP enrollment has continued to grow to unprecedented levels even as unemployment has dropped.

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SNAP, continued.

• This trend is related to major policy changes in recent years: • In 2015, 41 states and DC are using waivers to ignore the work

requirement on able-bodied adults without dependent children (ABAWDs);

• Broad-based categorical eligibility, which allows states to make many individuals eligible by providing them with a brochure or 1-800 number, was allowed under a 2000 regulation and is common practice in 40 states and DC;

• Changes to reporting requirements that made it easier for recipients in many states to continue to receive SNAP even after their income rises.

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SNAP, continued.

• To restore SNAP to its intended purpose, the government should: • Reinstate work requirements for ABAWDs;

• Encourage states to refer all able-bodied, adult clients who are not on TANF to a job center;

• End broad-based categorical eligibility.

• Additionally, SNAP should be reformed to address the biggest nutritional problem the poor face: obesity.

• Common-sense restrictions, such as on sugar-sweetened beverages, can help poor Americans improve their health.

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Temporary Aid to Needy Families

• After welfare reform in 1996 created TANF, earnings and employment rose while caseloads and poverty fell.

• This success was the result of a work-first approach that empowered the states.

• In order to improve a rare success in anti-poverty policy:• States should have to meet a real WPR that is not subject to

state manipulation and game playing;

• States should experiment with ways to engage disconnected mothers more fully;

• The federal government should begin developing outcome measures to use in state evaluations.

• However, reformers should not loosen the work requirement or eliminate the distinction between work and non-work activities.

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Supplemental Security Income

• Our program for poor and disabled adults and children is growing rapidly and not leading to positive outcomes.

• Because of the way disability determinations have changed over the years, SSI should do more to help those who are able to reconnect to the labor market.

• Policy changes that are worth considering: • Child clients could meet with an SSA counselor to develop a

transition plan in case they leave the rolls at age 18.

• The EITC could be expanded for individuals leaving SSI for work

• The program needs to do more to provide training, rehabilitation, and support.

• SSI could be block granted to the states so that the government closest to the people can help them find work.

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Child Support Enforcement

• Child support is a critical program that emphasizes personal responsibility and helps single mothers.

• Unfortunately, the Obama administration has diluted the focus on collections.

• Government could help these mothers more effectively by: • Adding a requirement to SNAP to have mothers identify the

noncustodial parent and cooperate in establishing an order of support.

• Not enacting the recently proposed regulations by the Obama administration that would weaken enforcement efforts.

• Authorizing legislatively the use of child support funding for states to create employment programs.

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Child Care

• Despite the importance of child care assistance in helping low-income parents go to work, it is the weakest of the work supports.

• Low-income mothers are increasingly working nonstandard schedules, which make it challenging to use direct subsidies for traditional day care centers.

• Our current system is ill-suited for those who want to use part of their benefit for formal care but want to also use informal care.

• Our various child care programs should be simplified. • Reform should focus on giving mothers more flexibility to use

arrangements that fit their needs.• Merging child care programs would minimize work disincentives

because upward mobility would no longer require moving from one program to another.

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