Poverty and the safety net – and the danger from federal cuts

CAHS and the Coalition on Human needs are releasing a report today on the the new census data, and the potential impact that some upcoming federal cuts can have in low income residents in the state.
  • In Connecticut, 10.8 percent of people were poor in 2014 – roughly the same as in 2013.
  • The child poverty rate also remains stuck, with 14.9 percent of Connecticut children living in poverty in 2014 – roughly the same as in 2013, as well.
Poverty in Connecticut disproportionately affects people of color:EITC cuts
  •  Nearly 21 percent of African Americans and 26.5 percent of Latinos in Connecticut are poor. In contrast, poverty for non-Hispanic whites is 6.1 percent.
  •  Nearly 15 percent of Connecticut children are growing up in poverty, and the statistics are worse for children of color: 30.5 percent of African American children and 33.4 percent of Latino children in Connecticut are poor.
The new Census Bureau findings add to the mounting evidence that programs like low-income tax credits, the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), and subsidized housing reduce poverty now and improve children’s chances of gaining economic security in the future.   The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) lifted 69,000 Connecticut residents, including 35,000 children, out of poverty each year, on average, during 2011 to 2013.
Sequester budget cuts, however, are threatening this safety net:
  • Congress will cut 1,010 existing housing choice vouchers in Connecticut alone, although today 1 in 4 low income renters in the state pay more than half of their income in rent.
  • Cuts to the Earned Income Tax Credit and Child Tax Credit could push146,000 Connecticut residents, including 63,000 children, into or deeper into poverty.
You can find more details on the proposed cuts by downloading the full report here.

Census: bad news on poverty, good on health care

RogerNew Census data released last week confirms something that we all probably knew: unemployment might be down and the economy might be growing, but the benefits are far from reaching everyone.
Poverty and child poverty rates in the state remain unchanged. Although the poverty rate edged up slightly ( from 10.7 in 2013 to 10.8% in 2014) the change is too small to be statistically significant. In layman´s terms, the difference between both numbers is small enough that we can´t say if the drop is really there. Child poverty also went up a bit (from 14.5% to 14.9%) but the change is also too small to be considered statistically significant.
What the data shows, however, is that racial disparities remain stubbornly high. The poverty rate in Connecticut among non-Hispanic Whites is 6.1%; the number climbs to 20.8% for Blacks, and 26.5% for Hispanics. For children, the gap is even wider. Only 5.6% non-Hispanic White Children are poor, compared to 30.5% for Blacks and 33.4% for Latinos. These disparities remain as wide as they were a year ago.
By county, the geographical differences in the state have not changed. Litchfield (7.5%) and Tolland (7.3% ) counties  have the lowest poverty rate, while New Haven (13.1%) and Hartford (12.2%) have the highest.
You can access the census data on their website. As usual, CT Voices for Children has an excellent write up.
Besides the disappointing poverty data, the Census release included a very important piece of good news: the Affordable Care Act (ACA) is working really well. The percentage of residents in Connecticut without health insurance dropped from 9.4 to 6.9%. The decrease is statistically significant – close to 90,000 people that did not have insurance last year have it now.

For children the drop is smaller, and not statistically significant, although the starting point was already low: only 3.7% of Connecticut children remain uninsured, down from 4.3% in 2013. Full coverage is within grasp.

The ACA is not just having positive effects in our small, progressive state in the northeast. Nationwide, the uninsured rate has dropped from 14.5% to 11.7% in one year. The decrease will be even steeper with wider Medicaid adoption, but the trend is in the right direction.

As usual, CT Voices have a policy brief covering this issue as well. You can find it here.

Minority Working Families in Connecticut Falling Behind

A sharp racial/ethnic divide has emerged within the world of low-income working families, posing a critical equity and economic challenge to Connecticut and the nation, a new study concludes

Unless lawmakers in Connecticut are willing to pursue policies that would improve conditions, African-Americans and Latinos will continue to emerge as a larger – but under-prepared and underpaid – segment of the workforce.

The disturbing portrait of America’s low-income working families was sketched by the WPF infographicWorking Poor Families Project  based on new analysis of the most recent data from the U.S. Census Bureau. The Project’s study sheds a fresh light on what’s happening inside the world of the working poor, where adults are working hard but find it difficult if not impossible to get ahead. And within this world at the bottom of America’s economic spectrum, a stark divide has emerged between white and Asian families compared to black and Latino families.

“In 2013, working families headed by racial/ethnic minorities were twice as likely to be poor or low-income compared with non-Hispanic whites, a gap that has increased since the onset of the Great Recession in 2007,” the authors write. “The significant differences among racial/ethnic groups present a critical challenge to ensuring economic growth and bringing opportunities to all workers, families and communities across the United States.”

In Connecticut, there are 77,161 low-income working families, meaning their total income fell below 200 percent of the official poverty rate. Of that total, 38.6% percent are minorities compared to only 11.5% percent who are white. Some 37% percent of all black working families fall into the low-income category, as do 48.1% percent of all Hispanic working families.

These disparities impact our economy but they also harm the fabric of our communities here in Connecticut. It’s past time that we address these problems at the state level.

Latinos are particularly at risk because so many of their low-income working families include at least one immigrant parent, the data show. Despite a high work ethic, Latino immigrants are among the most disadvantaged with lower earnings, less education and little healthcare. Nationally, some 14 million of the 24 million children who live in low-income working families belong to racial or ethnic minorities. This bodes poorly for the nation’s future as children who grow up in low-income families face the very real prospect of never escaping poverty, the study found.

Disparities cannot be erased overnight, but policymakers can start to reduce the gaps with a two-pronged approach that simultaneously increases access to education and training while enacting policies that “make work pay,” the researchers assert. State governments have demonstrated success with policy initiatives including:

  • Raising the minimum wage.
  • Increasing need-based financial aid for postsecondary education and expanding child care assistance and other supports for students with children.
  • Supporting programs that link education to career opportunities and helping English language learners.
  • Extending Medicaid benefits to all who are eligible.
  • Encouraging employers to provide paid sick leave for all workers.

Providing all low-income families with the tools they need to succeed is critical to the long-term health of our state and nation. said Senserrich. Our state’s leaders must take action to ensure the American Dream is once again accessible by all.

Link to full report. More information on the Working Poor Families project is available on their website

Connecticut doing worse on financial security

Despite an improving national and state economy, new data released today by the Corporation for Enterprise Development (CFED) show many Connecticut residents are still struggling to afford the state’s high cost of living. CFED’s 2015 Assets & Opportunity Scorecard ranked the state among the lowest across various measures of housing affordability, including homeownership by income (47th), housing cost burden for renters (44th), housing cost burden for homeowners (43rd) and overall affordability of homes (39th).

Additionally, the Scorecard found that limited savings and unstable employment make it 6793826885_d3b6befb99_zharder for many Connecticut residents to keep up. It ranked Connecticut dead last (51st) among all states and the District of Columbia for average credit card debt and 36th for its high rate of underemployed residents, defined as part-time workers who want full-time jobs and discouraged workers who have stopped searching for employment. The report also found that 14.9% of jobs were in occupations with low wages.

These findings are included in the 2015 Asset and Opportunity Scorecard from CFED, part of a comprehensive nationwide analysis on American´s ability to save, build wealth, and become financially secure. Connecticut is ranked 27th in the nation, down from 25th last year.

All this is despite some very strong state policies on the areas covered by the report, many  of them very recent. The state was ranked in the top ten of all states in policies designed to promote Financial Assets & Income (3rd), Health Care (6th) and Education (5th). On the remaining two issue areas, Businesses & Jobs and Housing & Homeownership, Connecticut remained in the top half of states, ranking 17th and 13th, respectively.

The full scorecard for Connecticut is available here. You can also download the full press release from CFED here.

 

 Growing Up in Poor Neighborhoods

photo7A recent study by Jonathan Rothwell and Douglas Massey analyzes the impact of growing up in poor neighborhoods and its impact on the future of the kids living there. We know a lot about how growing up in a low income family affects future earnings, but there is less research on how growing up on the wrong side of the tracks can impact future opportunities. The authors´ main objective was, as a result, comparing how a kid from poor parents would fare compared to the same kid if he had lived in a bad neighborhood. At the same time, they looked at how the the children of wealthy parents do when growing up in a poor corner of town.

The results are pretty staggering. Leaving all other things equal, moving a kid from an area in the bottom 25% of the income distribution to one at the top 25% yields $635,000 in additional lifetime earnings. As a matter of comparison, the lifetime premium of a college education is $1.1 million – so just moving a family from Hartford to Avon will yield about half of that return at no cost, even if the kids do not go to college. You can read more on this research here.

The implications for Connecticut, by the way, are considerable. Income segregation is, after all, one of defining features of our state. Mixed income neighborhoods are great at promoting social mobility; unfortunately, our state does not have many.

Analysis: census data shows persistent poverty in the state

inequality-405x355CAHS and the Coalition on Human Needs (CHN) have released an analysis reviewing the latest census poverty data for Connecticut and the rest of the nation.  The new figures show a state than far from coming back from the recession stronger, is leaving more families behind.

Although the recession officially ended in 2009, poverty has increased in the last four years: 9.4% of Connecticut´s population was below the Federal Poverty Line in 2009, compared to 10.7% last year. Children are still the hardest hit, as well as minorities. To make things worse, inequality got even worse – the income of the top 1% of US earners grew by 31.4% since the end of the recession, compared to 0.4% to the other 99% of Americans.

You can download the full report here, with additional details regarding education, inequality, access to jobs and food insecurity.

A look at inequality

Inequality, both regarding income and wealth, is slowly getting back to our national debate. The benefits of economic growth in the past three decades have increasingly been going to those at the top of the income distribution, while wages remain flat for the middle class or even slowly decline for the poor.

Although inequality has been trending up in most developed nations, the United States is an outlier on the magnitude of this shift. Consider this, using data from Atkinson, Piketty and Saez (original graph):

Inequality

 

In this graph there are two outliers with growing inequality in the past two or three decades: Sweden (that goes from being extraordinarily equal to just very egalitarian) and US. In our case, the US goes from having more or less average levels of inequality to being far and beyond any other developed nation.

Today at the CLASS conference we gave a presentation on the rise of inequality both in the US and in Connecticut, offering a lot more data and graphs showing how things have changed in the country in the last 30 years, and offering some policy ideas on the effects of these growing disparities and how we can address them. You can download the Powerpoint from our presentation here (PDF) o you can have a look at the slides after the jump. Continue reading

The rich are indeed getting richer

Via Kevin Drum, a quick look at the share of national wealth in the hands of the top 3% of Americans, as compared to the bottom 90%:

blog_wealth_share_2010_2013

The data comes from the Federal Reserve´s 2013 Survey of Consumer Finances. In 1989 the top 3% were already ahead by 11 points. 24 years later, the distance has climbed to 30.

It is important to stress that this is something fairly new. The United States was in 1970 one of the most egalitarian societies in the developed world, with an income distribution not that different from what we could see in Germany or Sweden. Starting in the early eighties things suddenly changed, and the US became a remarkable outlier in this regard, with only the UK coming even close. The rise of inequality in the United States was certainly not inevitable, by any means.

When Women Succeed, Families Succeed!

40% of all households depend on women as the sole or primary breadwinner.  Yet, today in Connecticut women are paid 77cents for every dollar paid to a man for the same work. In reality this means that women must donate an average of three months work each year before they begin to be paid equally to their male counterparts. This wage gap is found across all income levels and all levels of educational attainment.  (PCSW Research Brief)

But what does it mean for our economy? Family success

When considering the wage gap, single parent households that are headed by working women face greater barriers to economic security for themselves and for their children.  So what would it mean if women received equal pay? There would be additional money for groceries, child care payments, and rent; equal compensation could make the difference between poverty and economic sustainability for many working mothers. In fact, it is estimated by the Institute for Women’s Policy Research that the very high poverty rate for working single mothers would fall by nearly half, from 28.7 % to 15%.  This in turn will greatly reduce children living in poverty. With fewer families in poverty Connecticut will pay far less for social services, there will be a larger tax base and children will have a greater opportunity to grow up in a healthy and positive environment. The result would be  an economically stronger Connecticut.

What can be done?

During a recent round table discussion at the Permanent Commission on the Status of Women, Senator Blumenthal said the time for equal pay is now.  He along with others in Connecticut’s democratic congressional delegation, including Chris Murphy and Rosa DeLauro, are hoping to gather enough support to pass the Paycheck Fairness Act of 2014. The Paycheck Fairness Act would build upon the Equal Pay Act which of 1963 by addressing some of the loopholes that exist in that legislation.   It would require that:

  • employers rather than employees carry the burden of proof when addressing equal pay issues
  • companies be prohibited from taking retaliatory action against employees who raise concerns about gender-based wage discrimination
  •  penalties be strengthened  for equal pay violations, including both compensatory and punitive damages

Blumenthal believes there is majority support for this bill; however the Senate was unable to gather the 60 votes needed to prevent a filibuster in the Senate.  He is hoping that with additional support and advocacy work, this bill will pass before years end. For more information :

Latinas stuff News Coverage:

 

Data points for Friday: racial disparities in Connecticut

When we talk about child poverty and opportunity in Connecticut, we can not just focus onp.sowing the top line indicators. We live in a wealthy, prosperous state, after all, so many of them will look pretty good compared to other states. Looking at the numbers a bit more closely, however, things look different, and we see that the tale of “two Connecticuts” is still there, hiding behind the averages.

CAHS has published some very interesting research in the past on this subject: