Transcript Workshop 2. Strategies for Helping People Make a Living

PART 2:
Strategies in Todays Economy to Reduce Poverty:
A Presentation of the White Paper
January 7, 2015
New Year for Action, Winter Meeting,
Dana Point, California
Jim Masters: CCAP, NCRT. [email protected]
Allen Stansbury, Senior Associate. [email protected]
Center for Community Futures
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SEEKING A NEW APPROACH
Poverty is now Mainstream
America’s Frayed Safety-Net
7 Trends to Watch
Partnership’s New Year for Action
Draft White Paper Discussion
Nation-wide Survey
Questionnaire
The Decline of Upward
Mobility
POVERTY IS NOW MAINSTREAM
Poverty and the US Economy
• Poverty rates decline from
its high in 1959, on the
upswing since 2005
• In 1969 the official
government rate was
13.7%.
• In 1989 it was at 13.1%
• In 2009 with the slide of the
middle class into poverty
the rate was at 15%
• 2011 the poverty rate for
women in 2011 was 16.9%
and for children over 20%.
Poverty has become mainstream
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Nearly 40 % of Americans between the
ages of 25 and 60 will experience at
least one year below the official poverty
line during that period ($23,492 for a
family of four)
54 % will spend a year in poverty or
near poverty (below 150 %of the
poverty line).
If related conditions like welfare use,
near-poverty and unemployment were
added, four out of five Americans will
encounter one or more of these events.
Half of all American children will at
some point during their childhood
reside in a household that uses food
stamps for a period of time.
Source: Wall Street Journal
Economic Insecurity continues to Grow
At least 79% of all Americans between 25-60 will experience at least
one year of poverty in their lifetime.
Source: Chasing the American Dream: Understanding What Shapes Our Fortunes, Apr. 1, 2014
by Mark Robert Rank , Thomas A. Hirschl , Kirk A. Foster
40 Years of Rising Economic Risk
According to the research
published in Chasing the American
Dream: Understanding What
Shapes Our Fortunes
• Rising Economic Risk most
pronounced at ages 35-55
• While the poverty rate of the last 40
years has not changed significantly
but risk has risen
• There has been more turnover in the
poverty population during the 90’s
and 2000’s than in the 70’s and 80’s
Upward mobility in the 50 largest metro areas
comparing the top 10 and the bottom 10 areas
Odds of Reaching Top 5th
Rank
Location
Odds of Reaching Top 5th
Rank
Location
Starting from Bottom Fifth
Starting from Bottom Fifth
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San Jose, CA
12.90%
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Cleveland, OH
5.10%
2
San Francisco, CA
12.20%
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St. Louis, MO
5.10%
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Washington DC, DC
11.00%
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Raleigh, NC
5.00%
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Seattle, WA
10.90%
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Jacksonville, FL
4.90%
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Salt Lake City, UT
10.80%
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Columbus, OH
4.90%
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New York, NY
10.50%
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Indianapolis, IN
4.90%
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Boston, MA
10.50%
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Dayton, OH
4.90%
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San Diego, CA
10.40%
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Atlanta, GA
4.50%
9
Newark, NJ
10.20%
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Milwaukee, WI
4.50%
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Manchester, NH
10.00%
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Charlotte, NC
4.40%
Source: NBER-Where Is The Land Of Opportunity? The Geography Of Intergenerational Mobility In The United States
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Social Mobility in the US Less Likely
When Born to a Lower Income
Source: Brookings Institute Saving Horatio Alger
Declining Support of the National
Safety Net
America’s Frayed Safety Net
America’s Frayed Safety-Net
• SNAP: November 2013, food benefits were cut for approximately
48 million an average of 7 %, costing the typical recipient about $9 a
month. March 2014 another round of cuts impacting 10%. FY 2013
76 million vs FY2014 70 million benefited from SNAP.
• Unemployment Insurance: January 2014, 1.3 million jobless
workers stop receiving an unemployment check, after Congress’s
refusal to prolong the extension of emergency jobless benefits to
up to 73 weeks, from 26. While unemployment rates have trended
downward significantly, more are no longer seeking work.
• Affordable Care Act. Despite its success of registering a significant
number who did not have health care insurance in 2013, states and
members of congress war against the program continues unabated.
• Temporary Assistance for Needy Families (TANF) Despite a decline
of 60% in its case load since 1998, it is positioned as a disincentive
to finding work.
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Trends in Unemployment Rate and EmploymentPopulation Ratio 2000-2014
Source: Federal Reserve Economic Data
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Declining Areas in the Safety Net
Monthly Participation in the SNAP
food stamp program 1990-2012 actual
and 2012-2020 projected
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7 Emerging Trends to Watch Impacting
Low-Income Communities
Some Good News:
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Workers in 21 states will see the minimum wage rise in 2015,
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Improving wages of 7 million workers,
By end of 2016 29 states will have minimum wages above the federal minimum,
Overall will generate $838 million in new economic growth.
But, 3.3 million still are at or below minimum rates.
Potential wage-salary increases as labor market tightens.
As more low-income gain access to health care - health costs will be more
contained (see graphic)
However:
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Will the long-term unemployed , those who have been out of work six months or
longer, successfully transition into new jobs?
Without changes to tax code, most likely, inequality will continue to worsen
More automation and big data continues – less manual labor, greater demand for
technical knowledge and skills.
Inflation continues to moderate – but will oil prices remain below normal? Will
the US economy slide into stagflation?
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Some Possible Long Term Trends
1. Increase in Federal Reserve Bank interest
rates-possible damping of business and
consumer spending
2. Further reduction of trade barriers – Two
major treaties are in negotiation (Atlantic
and Pacific Rim)
3. Immigration Reform can lead to a younger
workforce that can sustain the current
pension levels of retiring baby boomers
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Obamacare on the Road to Success:
Spreading Health Care Costs and Capped Admin Costs
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More than 11 million previously uninsured Americans are now covered by a health care plan,
Nearly half of them Medicaid recipients at the bottom of the economic ladder.
Another 16 million Americans who were previously insured also signed up
Many with substandard plans that were upgraded as a result of the A.C.A.
Strategies to Change the
Landscape
The Partnership’s Year for Action
Selected Anti-Poverty Strategies
1. Inequality: Piketty, Stiglitz, and Reich
2. Center for American Progress: “Half in Ten”
Campaign
3. Economic Policy Institute
4. New American Foundation
5. Tax Reform Strategies
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Piketty “solution” to inequality
• Global wealth tax
– Inherited wealth
– Top incomes
– Capital gains
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Stiglitz: Least Equal Opportunity
• America has become the country with
the least equality of opportunity of any of the
advanced industrial countries.
• That means children that are born of poor parents
or poorly educated parents are not living up to
their opportunities.
• We’re wasting our most valuable asset – our
human resources.
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Stiglitz: A Tax System Stacked Against the 99 Percent
• “The richest 400 individual taxpayers, pay less than 20
percent of their income in taxes — far lower than mere
millionaires, who pay about 25 percent of their income in
taxes, and about the same as those earning a mere
$200,000 to $500,000.
• “In 2009, 116 of the top 400 earners — almost a third —
paid less than 15 percent of their income in taxes.”
• “… as the top 1 percent has grown extremely rich, the
effective tax rates they pay have markedly decreased.
• “Tax fairness has gotten much worse in the 30 years since
the Reagan “revolution” of the 1980s.”
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Reich: “The Poor are… US”
• “Now, a significant percentage of the poor are working but not earning
enough to get themselves and their families out of poverty.
• And a growing portion of the middle class finds itself in the same place often in part-time or temporary positions or in contract work.”
• “…sudden and unexpected poverty has become a real possibility for
almost everyone these days. And there's little margin of safety.
• “With the real median household income continuing to drop, 65 percent
of working families are living from paycheck to paycheck.
• “Race is no longer a dividing line, either. According to Census Bureau
numbers, two-thirds of those below the poverty line at any given point
identify themselves as white.
• “This new face of poverty - a face that's both poor, near-poor and
precarious working middle class and simultaneously black, Latino and
white - renders the divide-and-conquer strategy obsolete.
• Now most people are now on the same losing side of the divide.
• Since the start of the recovery, 95 percent of the economy's gains have
gone to the top 1 percent.
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“Half in Ten” Campaign
Success Stories:
• Child Care
• Food and Nutrition
• Education
• Health
• Housing
• Income Assistance
• Jobs training
• Low-income tax credits
• WIC
• Unemployment Insurance
• Minimum wage
Call to Action July 21, 2014 Re:
New House Child Tax Credit Bill Leaves
Behind Millions of Low-Income Working
Families
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While it permanently extends the Child Tax Credit
higher up the income scale so more families with sixfigure incomes will benefit.
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It fails to make permanent the 2009 reduction
in the CTC’s earnings threshold, set to expire
at the end of 2017.
If this provision expires, a single mother with
two children who works full time throughout
the year at the minimum wage and earns
$14,500 would lose her full CTC of $1,725 in
2018.
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It indexes the current maximum credit of $1,000
per child to inflation. This provision would not
help most working families with low or moderate
incomes, because it benefits only those with
incomes high enough to receive the maximum
credit.
Economic Policy Institute (www.EPI.org)
Issues Focus:
• Labor Laws – Examples
– Extend Unemployment Benefits - State Cuts to Jobless
Benefits
– Tipped Workers and Minimum Wage (by the end of
2015 29 states will have increased their minimum wage)
• Tax Credits –Examples
– The Earned Income Tax Credit
– Child Tax Credit
• Immigration reform - Example
– Overloaded Immigration Courts
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New American Foundation
Asset Building Program: issues and papers
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Children's Savings Accounts
Solving the Retirement Puzzle
Rebalancing the Scales
The Financial Health Check
Connecting Tax Time to Financial Security
California Civic Innovation Project technology to influence local government
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“Public Pathways: A Guide to Online Engagement Tools for Local Governments
Economic Growth Program research papers such as:
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The Wizard of Jobs a US labor status report on the first 6 months of 2014 and its continued
jobs slump.
America's Debt Problem discusses the impact on middle and low income classes due to
excessive private debt and its consequences.
Pay More, Get Less that takes a look at the cost of health, medical, education, basic financial
services and communications
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Tax Reform Strategies
• Background
• Simplification and Tax Reform Measures
• Reform of the Tax Expenditure System
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Tax Reform - Background
• Last overhauled of the federal tax code: 1986
• Tax Cuts, i.e. lowering of capital gains to 15% have
benefited the wealthy, however
• Middle and Low Income have been hit by increased
“payroll” taxes
• Tax reform is the best way to tackle “income
inequality”
• One tax reform strategy: raising taxes on high-income
earners and corporations to pay for expanded
benefits to low-income Americans.
• Second alternative: classic tax reform of “broaden the
base, lower the rates.”
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Tax Reform and Simplification
Three recommendations for reform and
simplification:
• National Commission on Fiscal Responsibility and
Reform Simpson-Bowles 6 Part Budget Plan
• Urban and Brookings Institute Tax Policy Center
• US Senate Committee on Finance Tax Reform List
• Reform of The Distribution of Major Tax
Expenditures in the Individual Income Tax System
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Recommended
Reading
Website References
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Please visit our Blog Site:
Decline of the US Middle Class,
America’s New Working Poor
http://declineofusmiddleclass.blogspot.com/?view=sidebar
Learning Communities Resource
Center Contacts
• Denise Harlow – CEO
[email protected], 202-595-0660
• Barbara Ledyard – Project Director, Learning Communities Resource Center
[email protected], 202-449-9775
• Sonji Dawson Johnson – Program Specialist
[email protected], 202-769-5524
• Cashin Yiu – Program and Event Coordinator
[email protected], 202-683-9090
This publication was created by the National Association of Community Action Agencies – Community Action Partnership, in the performance of the U.S. Department of Health
and Human Services, Administration for Children and Families, Office of Community Services Grant Number 90ET0436. Any opinion, findings, and conclusions, or
recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the U.S. Department of Health and Human Services,
Administration for Children and Families.
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