Culture

Not Poverty, Acute Financial Distress

I listened to TalkPoverty Live! and have some thoughts to share about how we should be addressing poverty in this country.

First of all, we should stop calling it “poverty”—in political campaigns or otherwise. It is people in “acute financial distress.” When we hear of people in distress we want to help them. When we hear that they are poor we ignore them because of all of the stigmas associated with being poor.  “Acute financial distress” is a more accurate term too—it connotes a temporary predicament shared by many in our “new economy.” Poverty, on the other hand, is misperceived as a permanent condition, even though people slip in and out of being poor.

Having experienced acute financial distress, including being homeless, I think this is the central issue and major roadblock to eliminating poverty—the stigma that goes along with “being poor.” Lately, I feel like a modern day James Brown telling people to shout, “I’m Poor & I’m Proud. Sing it loud, Y’all!

No joke. When you experience acute financial distress our society looks at you and says, aloud or not, “What did you do wrong?” and/or “What’s wrong with you?”

In my case, I became homeless because I refused to allow my mother, who was terminally ill with Alzheimer’s, to be placed in a nursing home. In the end, I was completely wiped out— physically, emotionally, spiritually and financially. There are many stories like mine.  But people prefer the stereotypes to the real stories—it makes it easier to maintain bad policies.

Bad policies like TANF which Peter Edelman wrote about in a TalkPoverty blog last month. I didn’t know who Edelman was at the time. But I’ve come to learn that he resigned from the Clinton Administration in 1996 after the President signed welfare reform legislation.  I researched why he did that and found out that Edelman was spot on. That legislation had two devastating effects: one, it dramatically reduced the amount of cash assistance that was available (for two years, believe it or not, I lived on a monthly general assistance stipend of $140.00); and secondly, it gave states nearly autonomous control of how and whether they provide cash assistance.

Now, this is where the stigma and these reforms intersect. Many of the people who administer social services (not the people working in the field who know better) also resent “poor people.”  That’s part of the reason why programs are designed in a way that makes it almost impossible for you to get your life back on track after a financial or personal trauma. And it works.  Most people give up and return to whatever situation got them into acute financial distress in the first place.

Case in point: I have been living on housing assistance in New Jersey the last four years or so. The state provides that assistance while a person applies for federally subsidized affordable housing. The understanding is that if you diligently apply for every affordable housing opportunity, they will help fund your housing until you are lucky enough to get one of the few federally-subsidized units.

When you experience acute financial distress our society looks at you and says, aloud or not, “What did you do wrong?” and/or “What's wrong with you?”

But when I went to see my case worker in April, I was told that all extensions for the Housing Assistance Program were being terminated June 30th. No explanation; no recourse.

I was fortunate, because four days after meeting with my case worker I got a letter telling me there was an affordable housing unit available for me. This was a coincidence. But I can tell you, honestly, during those three days when I didn’t know where I’d be living in another month—after being a long-term caregiver for my mother, and then losing her and becoming homeless—I  came seriously close to triggering the PTSD that I had worked so very hard for the last two years to deal with.  I know many others, not so fortunate, who right now are totally freaking out. For what? Why do this to people? The point is, without federal regulation and guidelines to oversee how states administer social services, they can pretty much do as they please.

Right now I have SSI, food stamps and subsidized housing. So I’m good, sort of.  My food stamp allowance comes to $6 a day. So I’ll be going to a Food Pantry later. I help them work it and they help me with food.

That’s the last thing I’ll say because I think most people don’t know it: there’s a lot of solidarity out here among people living in acute financial distress. That’s what’s working—in spite of social services that aren’t designed with those of us who are struggling in mind.

Though they were originally.  See Robert Beezat’s excellent article on the Forgotten Lesson of the War on Poverty.

 

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Safety Net

Congress May Lock in Large Housing Voucher Losses For Years to Come

Congress may be close to finalizing 2015 funding for the Department of Housing and Urban Development (HUD), which includes almost all federal rental assistance and affordable housing programs. Unfortunately, struggling working families, people with disabilities and others unable to afford today’s high rents will see little housing relief in Congress’ funding.

The House has passed its 2015 Transportation-HUD appropriations bill and the Senate may vote on its bill soon.  While the need for affordable housing continues to rise — the number of poor renter households who pay more than half their monthly income for housing costs has risen 28 percent since 2007 — and homelessness remains unacceptably high, the House bill cuts HUD funding compared to 2014, reducing the number of people receiving rental assistance.  The Senate allocated over $1 billion more to HUD than the House and its bill makes important investments in a few areas, but it fails to serve any additional very poor or homeless households.

These inadequate bills come as the Housing Choice Voucher program, the biggest federal rental assistance program, continues to suffer from losses due to sequestration in 2013, which imposed the steepest funding cut in the program’s 40-year history.  Over 70,000 fewer low-income families had vouchers at the end of 2013 than a year earlier.  Congress provided enough funding in 2014 to restore fewer than half of these lost vouchers, but the 2015 Senate and House bills won’t even renew all of the vouchers restored in 2014, locking in large voucher losses for years to come.

Other HUD programs fare no better.  The Senate provided just enough funding for Homeless Assistance Grants (which provide emergency shelter, permanent supportive housing, and other assistance to people experiencing homelessness) to help the same number of people next year as this year (the House bill would force cuts in the number of people helped), while rejecting the President’s proposal to create more than 30,000 new units of permanent supportive housing to help end chronic homelessness by 2016.

Similarly, both bills rejected the President’s proposal to modestly expand supportive housing for the elderly and people with disabilities, providing only enough funding to serve the current number of recipients.

The Senate did reverse the House bill’s deep cuts in a number of areas by:

  • raising the voucher program’s administrative funding by $205 million to help public housing agencies run the program effectively;
  • boosting the Public Housing Capital Fund by $125 million to help repair public housing units, a critical addition given the $26 billion backlog of needed capital repairs in public housing developments; and
  • expanding funding for the HOME Investment Partnerships program by $250 million to help develop and repair units that are affordable to homeowners and renters with incomes at about twice the poverty line.

These are important improvements over the House bill, and the Senate bill better maintains the current number of people receiving housing assistance, but it won’t enable more people to receive assistance next year.

Thus, neither chamber of Congress made the hard choices needed in this tough budgetary environment to prioritize HUD’s housing programs.  These programs serve 10 million people in about 5 million households, most of whom are elderly, disabled or working parents with incomes below the poverty line and would be homeless or lack stable housing without federal rental assistance.  Yet only 1 in 4 people eligible for rental assistance receives it due to limited funding, and the unmet need is enormous.

Over 1.1 million homeless children were enrolled in school during the 2011-2012 school year, for example, and more than 90,000 people are chronically homeless (meaning they have a disability and have been homeless for over a year or repeatedly over three years).  And more than 8 million low-income households receive no federal housing assistance yet pay more than half of their income for rent and utilities — well above what’s considered affordable.

Even maintaining the status quo, as the Senate bill largely does, won’t help homeless children, who fall farther behind in school the longer they lack a home; it won’t help homeless adults with disabilities obtain supportive housing; and it won’t help more low-income seniors age with dignity in their communities. These bills are not good enough for our most vulnerable neighbors, and they shouldn’t be good enough for Congress.

 

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Safety Net

A Forgotten Lesson of the War on Poverty

Poor people organizing other poor people to take control of their future—that is what the original War on Poverty was about.  Some of its early history points to a possible way to combat poverty now and in the future.

One of the most significant successes of the first years of the War on Poverty was the strong emphasis on organizing and empowering people in poor communities to take control of many aspects of their lives (education, job opportunities and training, crime control, health care, and legal issues, to name a few).

The original intent of the War on Poverty was not only to create safety net programs.  It was to identify, train, and nurture the leaders and residents in low-income communities to mobilize and take control of their own destinies.

What this history suggests is that combatting poverty now and in the future should once again be built around poor people organizing to address the challenges that they see their families and communities up against every day.

That kind of work was undertaken by local Community Action Agencies (CAAs) and it was so effective that it threatened the existing power structures.

One of the most dramatic images of successful organizing was in the late 1960s in Chicago, where I lived and worked for the Office of Economic Opportunity helping to administer funds for War on Poverty programs.  At the time, garbage was picked up once per week by municipal crews.  But if the weather was bad—not an unusual occurrence during winters in Chicago—garbage in the poorer neighborhoods was often not collected at all.  Local community activists organized a protest, funded in part by War on Poverty community action agency grants.  People brought their garbage bags downtown and left them on the sidewalk outside of City Hall.  There were pictures in the papers and images on TV every day showing the growing piles of garbage outside of City Hall.  It didn’t take long for the City to change its operation and make sure that everyone got their garbage picked up every week.

Other successful community organizing efforts throughout the country included:

  • Rent strikes to demand sanitary, heated, and safe living conditions
  • Migrant workers striking for improved living and work conditions
  • Programs to enroll seniors in the newly established Medicare program, combat isolation, and promote access to regular meals
  • Community-based mental health and substance abuse programs
  • Job-readiness training programs
  • Head Start programs which brought together families and the broader community to give children a better chance at success

Importantly, most of the people who led the organizing for these efforts were poor themselves and lived in the communities that they were trying to improve. They had very strong leadership qualities and were well-respected by local residents.   The local CAAs hired them and they worked within the communities to identify barriers to economic opportunity and to empower local residents to overcome those barriers.

Unfortunately, the success of community organizing and empowerment was seen as a threat to both urban/liberal and rural/suburban/conservative elected officials at every level of government.  Congressional members, fearing these new leaders as well as activism in poor communities, gutted funding for this crucial element of the War on Poverty starting in 1969.

What this history suggests is that combatting poverty now and in the future should once again be built around poor people organizing to address the challenges that they see their families and communities up against every day.

While government is unlikely to fund these kinds of efforts, non-partisan, private foundations should indeed support this type of grassroots organizing. If it works as well now as it did 50 years ago, it would force all of our elected officials, Democrats and Republicans, to listen to all of the people, not just those who have the money and organizational power to influence legislation.

And the country as a whole would benefit.

 

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Labor

Increasing Wages is an Effective Poverty Reduction Tool

Broad-based wage growth—if we can figure out how to achieve it—would dwarf the impact of nearly every other economic trend or policy in reducing poverty. Even in 2010, the bottom fifth of working age American households relied on wages for the majority (56%) of their income. When you add in all work-based income including wage-based tax credits, nearly 70% of income for low-income Americans is work-related. Yes, the targeted efforts to strengthen the safety net are well deserved. Programs such as food stamps (SNAP), unemployment insurance, and Social Security have helped reduce poverty over the last four decades.  But market based poverty (or poverty measured using only income from wages) has been on the rise and the safety net has to work even harder to counterbalance the growing inequalities of the labor market.

There was once a strong statistical link between economic growth and poverty reduction, but rising inequality has severed it, and the results are deeply dispiriting. If the statistical link between economic growth and falling poverty that held before the mid-1970s had not been broken by rising inequality, then poverty, as the government measures it, would be virtually eradicated today. Furthermore, the impact of rising inequality is nearly five times more important in explaining poverty trends than family structure.

As the Economic Policy Institute has documented in our paper launching the Raise America’s Pay project, this rise in inequality is simply the flip side of nearly stagnant hourly wage growth for the vast majority of the American workforce in the three decades before the Great Recession. So how to reverse this wage-stagnation, especially for low-wage workers? Below is a list of proposals, all linked in their attempt to rebuild institutions that provide bargaining power to workers who have had it taken from them in recent decades.

The minimum wage is currently more than 25% below its real value in the late 1960s. The Congressional Budget Office (CBO) reports that the Harkin-Miller bill to raise the minimum wage to $10.10 would cumulatively boost incomes of people below the federal poverty line by $5 billion. And this is probably too conservative; other academic research finds that the same bill would lift more than 4 million people out of poverty. Among those who would see a raise from the Harkin-Miller bill, 55% are women and 25% are women of color. Nearly one-in-five kids would see at least one parent get a raise.

We need to enforce the labor standards we have, update the ones that need it, and put power back in the hands of workers to bargain for better working conditions for themselves and their families.

Another key policy priority should be efforts to level the playing field for workers to organize and form unions. The decline in unionization over the last several decades has led to increases in wage inequality and a loss of bargaining power for workers. And this bargaining power loss is not confined to union members themselves—unions often set wage-standards for entire sectors. Importantly, the decline in unionization is not a natural, inevitable phenomenon or a result of workers no longer wanting unions. It is the result of a policy decision to allow growing employer aggressiveness to tilt the playing field against organizing drives.

This policy choice is clear when one looks at the evidence. First, unionization has held up much better in the public sector where employers have less ability to fight organizing drives. Second, in 2007, the share of non-union workers who said they wanted to be represented by a union or similar organization reached an all-time high at over 50%.   There is a growing wedge between the desire to organize and bargain collectively and workers’ ability to do so. And, third, even the most obvious form of employer aggressiveness—the firing of workers who are trying to organize—has risen sharply in recent decades, according to the National Labor Relations Board.

The fact is that the decline of unions can explain approximately one-third of the growth of wage inequality among men and approximately one-fifth among women since the 1970s. This rising wage inequality is the key driver behind stagnant wages for workers at the bottom. When low-wage workers have been able to organize, unionization is  associated with higher wages and benefits for many, including: food preparation workers, cashiers, cafeteria workers, child-care workers, cooks, housekeepers, and home-care aides.

Reducing wage theft is also particularly important to low-wage workers. Wage theft occurs when employers withhold wages that are owed to a worker, for example by requiring workers to work off the clock or refusing to pay overtime. There is widespread evidence of these practices and more—from tipped workers not being paid their wages to Apple store employees being forced to stand in line after their shift while their bags are checked for merchandise. In nearly 9,000 investigations of the restaurant industry, the wage and hour division of the Department of Labor found that 83.8% of the shops investigated had wage and hour violations —underscoring the enforcement problems.

Millions of low- and moderate-wage workers have also seen slow wage growth because they are working overtime and not getting paid for it. This is because the real value of the salary threshold under which all salaried workers, regardless of their work duties, are covered by overtime provisions has been allowed to erode dramatically. Simply adjusting the threshold for inflation since 1975 would raise it to $984 per week (or $51,000 on an annual basis), from its current level of $455 ($24,000 annually). This simple adjustment would guarantee millions of additional workers time-and-a-half pay when they work more than 40 hours in a week.

Other labor market policies and practices, which, if changed, would increase the wages of low- and moderate-wage workers, include: the misclassification of employees, such as construction workers who are deemed independent contractors so that the employer doesn’t have to pay for workers’ compensation. Just-in-time scheduling occurs when employers schedule workers erratically and sporadically, and denies workers any regularity in their schedule or pay. Think about how difficult that is for working parents who need to support their families and also find child care, or for workers who need a second job to make ends meet. Finally, paid sick time, paid family medical leave, and flexible work hours, all would support workers and their families.

The social safety net remains crucial for low-income working families in this country and also needs reforms. Everything from shoring up SNAP to extending EITC to childless adults to expanding Medicaid to people in those states which refuse federal dollars. We also should have universal pre-K and affordable and high quality child care—we need to use every tool in our toolbox to give kids a chance of success, reducing inequality at the starting gate of kindergarten.

But, if we really care about children in our country, then we also need to raise the wages of parents working hard every day to lift their families out of poverty.  We need to enforce the labor standards we have, update the ones that need it, and put power back in the hands of workers to bargain for better working conditions for themselves and their families.

 

 

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Safety Net

Ending Child Poverty in the US: Financially Prudent, Morally Just

More than one in five children in the US lives in poverty: that’s 790,000 children in New York, 429,000 in Chicago, and 125,000 in Washington, D.C. In all, there are 16 million poor children. Child poverty is also rising, up six percentage points since the turn of the century.

Those numbers make it seem like a pretty intractable problem. After all, it’s literally millions of our children—living without adequate shelter, without healthy food, without adequate opportunities to play and learn and grow. If we’ve let things get this bad then surely child poverty must be nearly impossible to solve.

But the fact is it isn’t difficult to end child poverty, or at least to dramatically reduce it. As Austin Nichols, an economist at the Urban Institute, wrote last year:

If the United States offered cash benefits to children in poor families, we could cut child poverty by more than half. According to calculations using the 2012 Current Population Survey, poor children need $4,800 per year each, on average, to escape poverty. That’s $400 a month for each child.

If we issued a $400 monthly payment to each child, and cut tax subsidies for children in higher-income families, we would cut child poverty from 22 percent to below 10 percent. If we further guaranteed one worker per family a job paying $15,000 a year, and each family participated, child poverty would drop to under 1 percent.

A child benefit is now common across developed countries, with amounts of about $140 a month in the UK, $190 in Ireland, $130 in Japan, $160 in Sweden, and $250 in Germany.  A smaller child benefit of $150 per month would chop child poverty from 22 percent to below 17 percent. Adding the job guarantee would lower child poverty to 8 percent.

So the fact is we could end child poverty, but we’d have to give poor families money to spend on their children—and there’s a lot of evidence that simply giving poor people money works. But it would be expensive, and in these economic times surely we can’t afford it, right?

That’s actually not so clear. It would be expensive in the short run—about $76 billion annually—to spend $4,800 a year on every poor kid. But what if it’s really expensive in the long run not to?

Empirical evidence suggests that the economic costs of child poverty each year in the U.S. are about $550 billion, or 3.8 percent of GDP.

Rigorous evidence is also mounting that being born into poverty makes it much likelier that a newborn will have a range of physical ailments, and that she’ll spend significant time in poverty during her childhood. That same body of evidence shows how much likelier it is that children who spend significant time in poverty will be poor as adults. And that effect compounds: the more time in child poverty, the worse the outcomes when the child reaches adulthood—including outcomes for health, education, economics, and criminal justice.

In other words we know—when a baby is born—if she’s likely to be poor as a child and therefore poor as an adult. And we know that if she’s poorer as an adult, she will have worse educational outcomes and less productivity in the job market. Her kids will likelier be poor and unhealthy, and the family as a whole will rely more on the social safety net.

Put that all together and it gets awfully expensive fast—up to $550 billion a year, compared to $76 billion or less a year to dramatically reduce poverty.

So what if instead we spent some of that money now—up front—to help children break out of the cycle? While it’s expensive, future savings stemming from higher productivity and lower safety net spending are great. That makes it sound a lot like—wait for it—an investment! You invest money now because you expect strong returns in the future.

Dramatically reducing poverty is in fact the financially prudent thing to do, and helping 16 million American children out of poverty is the moral thing to do as well.

 

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