Institute Notes: A Dialogue on Overcoming Hunger and Poverty

The U.S. Anti-poverty Safety Net Has Eroded for People Who Need it Most

That’s the alarming top-line message in a new report by the Center for Budget and Policy Priorities. People in deep poverty, i.e. at 50 percent of the poverty line and lower, get less help from public benefits programs than people in deep poverty did ten years earlier. Moreover, people in deep poverty are getting less help from public benefits as a share of their population than people with incomes closer to the poverty line or slight above.

"In 1995, the safety net lifted above half the poverty line 88 percent of children whose family incomes were lower than that before counting safety net benefits. By 2005, this percentage had declined to 76 percent."

"Among children whose non-benefit income was between 75 percent and 99 percent of the poverty line, public programs lifted 65 percent above the poverty line in 2005, up from 51 percent in 1995."

The safety net includes means-tested programs like EITC and SNAP (formerly known as the Food Stamp Program), also housing assistance and Social Security, although the latter is used more by seniors than families with children.

These changes are due to restructuring of the safety net that has occurred in the wake of welfare reform legislation in 1996. Welfare reform was all about getting poor people off the dole and into the workforce. If you wanted government help, you had to work for it now.

The biggest change occurred in Aid to Families with Dependent Children (AFDC), a program that had been around in mostly the same form since the Great Depression. Replace the word Families in the program with the word Mothers and you get a better picture of who the program was working for.

AFDC was renamed Temporary Aid for Needy Families (TANF) and block granted, meaning states had far more control over how the program would be administered and what the rules could be inside their own jurisdiction. But the biggest difference between TANF and AFDC was that families had to be working or actively pursuing work to receive benefits, and there would be a time-limit for how long families could be on the program, usually five years, and that’s for life. 

It should not require an advanced degree to see that people in deep poverty are there because they don't work a lot. The lower you're income the less you work, obviously.

Maybe it’s just me but I find it discomfiting to think that in the first period of really high unemployment since welfare reform was enacted we’ve now got lots of people who won’t be able to take advantage of the safety net. Some changes were made in the stimulus package passed earlier this year to loosen work requirements, but those are going to expire in a year and most economists seem to agree that even if the economy is officially no longer in recession, we can still expect unemployment to remain high for some time after that.

TANF comes up for reauthorization next year. Maybe this is a good time to consider whether we’re due for some reform of welfare reform.
 

Lending Circles

Last year while in Kenya with some Bread colleagues, I visited one of the most densely packed areas of extreme poverty in the world, the Kabira slum in Nairobi. The sight of open sewers and children playing in the street in bare feet has left a permanent impression of me. But I was also impressed to find hope in this place.

One of the most interesting projects I observed in the three weeks I was in Africa was a 'lending circle' made up of a dozen women in Kabira. Basically, a lending circle pools small investments from a group of people to provide loans to its members. Loans are used for enterprise development or to pay for an urgent household need. The members of the group I met with are living on a dollar a day and a small loan of ten dollars or so can make an enormous difference. They don't charge each other interest and this is also crucial. Paying a loan back with interest for someone living on a dollar a day can make even the smallest of loans impossible to pay back.

Many of these women run small microenterprises right outside their homes, for example, setting up a stand to sell vegetables or to do sewing, or to pay a child's school fees. Lending circles work because the people in the group know each other and so the peer pressure to pay back the loan on time is enough to keep them honest. If you don't pay you get tossed out of the circle.

When I returned to the states, I wondered were any nonprofits running lending circles here. Not long afterwards I ran into a former Bread staffer at a conference. Jose Quinonez is now the Executive Director of the Mission Asset Fund in the Mission District of San Francisco and his organization runs lending circles. The Mission District has a large percentage of Hispanic families living there. Informal lending circles spring up all the time in Hispanic communities, I've since learned. Jose's is the first attempt by a nonprofit in the country to operate lending circles formally.

The lending circles run by the Mission Asset Fund do more than just formalize a practice that already exists inside their community. The Mission Asset Fund is partnering with financial institutions to recognize these lending circles and allow their transactions to qualify towards boosting credit scores of the members of the circle. This story broadcast on a San Francisco news station can tell you more about this exciting and innovative program. 

Building Momentum for an Anti-Hunger Agenda

It's been a busy week here in DC. On the domestic side, the release of the President's budget is being scrutinized in detail for spending on domestic nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP) and The Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

The President's Budget proposes funding for WIC to serve 9.8 million participants in 2010, an increase above the 9 million people currently enrolled in the program. WIC is instrumental in supporting pregnant and new mothers and young children who fall below a minimum income threshold. The large increase is intended to meet the needs of a growing pool of applicants particularly in this period of economic recession.

The President also requests an additional $5 billion over the next five years to strengthen Child Nutrition programs in the upcoming reauthorization. Congress is due to reauthorize the School Breakfast and Lunch Programs and programs that provide meals and snacks to children afterschool and during the summer. Bread for the World supports the administration's goal of expanding program access and participation so that more vulnerable children have the food assistance they need. My colleague here at Bread, Sophie Milam, noted that while the proposed increase is positive, more is needed:

"The President's budget blueprint is titled "A New Era of Responsibility." In it, President Obama calls on Congress to lay a new foundation upon which we can "renew the promise of America," with the Budget as the first step in that journey.

 

"The "promise of America" must be a place where no child goes to bed hungry. The President's budget includes $1 billion per year in new investments for Child Nutrition Programs. While it is a good start, this level of funding is not adequate to meet the President's goal of ending child hunger by 2015"

Meeting this ambitious goal requires an investment of $4 billion a year.

The Mother of all Stimuli

Yesterday, House Speaker Nancy Pelosi released some details about what Democrats are thinking about how to spend the Mother of Stimuli packages that will inaugurate the Obama era of government. 

“In the next two weeks, the Congress will be considering the American Recovery and Reinvestment Bill of 2009,” starts the memo coming out of the Speaker’s office. The memo informs us of all the areas the sectors of the economy the bill plans to address:

• Clean, Efficient, American Energy
• Transforming our Economy with Science and Technology
• Modernizing Roads, Bridges, Transit and Waterways
• Education for the 21st Century
• Tax Cuts to Make Work Pay and Create Jobs
• Lowering Healthcare Costs
• Helping Workers Hurt by the Economy
• Saving Public Sector Jobs and Protect Vital Services

Then we get the breakdown of the expected investments. It’s positively breathtaking. There’s no other way to describe it, tens of billions of dollars, one program after the other. Here are some examples:

“Clean, Efficient, American Energy: To put people back to work today and reduce our dependence on foreign oil tomorrow, we will strengthen efforts directed at doubling renewable energy production and renovate public buildings to make them more energy efficient. 
• $32 billion to transform the nation’s energy transmission, distribution, and production systems by allowing for a smarter and better grid and focusing investment in renewable technology.
• $16 billion to repair public housing and make key energy efficiency retrofits.
• $6 billion to weatherize modest-income homes.

“Transform our Economy with Science and Technology:  We need to put scientists to work looking for the next great discovery, creating jobs in cutting-edge-technologies, and making smart investments that will help businesses in every community succeed in a global economy.  For every dollar invested in broadband the economy sees a ten-fold return on that investment.   
• $10 billion for science facilities, research, and instrumentation.
• $6 billion to expand broadband internet access so businesses in rural and other underserved areas can link up to the global economy.

“Modernize Roads, Bridges, Transit and Waterways: To build a 21st century economy, we must engage contractors across the nation to create jobs rebuilding our crumbling roads, and bridges, modernize public buildings, and put people to work cleaning our air, water and land.
• $30 billion for highway construction;
• $31 billion to modernize federal and other public infrastructure with investments that lead to long term energy cost savings;
• $19 billion for clean water, flood control, and environmental restoration investments;
• $10 billion for transit and rail to reduce traffic congestion and gas consumption.

“Education for the 21st Century: To enable more children to learn in 21st century classrooms, labs, and libraries to help our kids compete with any worker in the world, this package provides:
• $41 billion to local school districts through Title I ($13 billion), IDEA ($13 billion), a new School Modernization and Repair Program ($14 billion), and the Education Technology program ($1 billion).
• $79 billion in state fiscal relief to prevent cutbacks to key services, including $39 billion to local school districts and public colleges and universities distributed through existing state and federal formulas, $15 billion to states as bonus grants as a reward for meeting key performance measures, and $25 billion to states for other high priority needs such as public safety and other critical services, which may include education.
• $15.6 billion to increase the Pell grant by $500.
• $6 billion for higher education modernization.

And there’s more still…

Hunger on the Rise

USDA released it's annual measure of hunger this week, showing an uptick in 2007 after a two-year decline. The number of people with tenuous access to food increased to 36.2 million in 2007, representing almost 1 in 8 Americans. These people, considered "food insecure," have limited or uncertain access to food and do not always know how they will provide for their next meal. A more severe subset,11.9 million people, is categorized as having "very low food security." These individuals experience hunger, reducing their portion sizes or skipping meals because there is not enough money for food.

Hunger follows the economy, and current economic conditions are foreboding. The latest employment report has unemployment at 6.5 percent, a 14-year high, while Wednesday's Consumer Price Index shows grocery prices up 7.5 percent from a year ago. Because the most recent USDA hunger data is for 2007, it does not reflect the full extent of the current economic downturn. Of the 1.2 million jobs lost in 2008, half of those occurred in the last three months. Meanwhile, food prices grew more in the first half of 2008 than they did in all of 2007. That means the number of hungry people is likely to climb even higher next year. 

Congress can take steps now to help low-income families weather the economic storm and perhaps mitigate a more substantial increase in hunger. The dismal economy has caused demand for food assistance to near record highs, with almost 30 million people now participating in the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program). That jump in enrollment, a 9.5 percent increase over the last year, reflects one of the program's greatest strengths: its responsiveness to economic conditions. By serving all who are eligible, SNAP reacts quickly to changes in income, providing a nutritional safety net for vulnerable families. Unfortunately, the program is less responsive to sharply rising food prices. With grocery prices increasing so rapidly, the value of the SNAP benefit erodes throughout the year, meaning families are able to purchase less food with the same benefit.

That's why Bread for the World has been calling on Congress to provide a temporary boost in SNAP benefits. Increasing SNAP benefit levels is a win-win, helping low-income families keep pace with rising food costs while providing a quick boost to local economies. Economists estimate that every additional dollar in SNAP benefits results in $1.73 in increased economic activity. Despite both the obvious need and merit, Congress passed up yet another opportunity to help hungry families when members were in town this week. Even as economists testifying before the Senate Budget Committee on Wednesday called for a boost in SNAP benefits, Congress failed to provide additional funding for nutrition assistance. 

Legislators did approve an extension of Unemployment Insurance benefits on Thursday, ensuring critical assistance for the growing number of Americans who cannot find work. Still, we must do more to help struggling families access food. Unlike the current Administration, the incoming Administration has expressed support for SNAP funding in a broad stimulus package. Congress must make this a top priority when it returns in January.

More on Measuring Poverty

In Montgomery County, Maryland, right outside Washington, DC and the county in which I live, along with several of my colleagues at Bread for the World’s Washington office, I learned it takes an income of $68,086 per year for a family of three to meet a basic self-sufficiency standard, according to a study done by Montgomery County officials. Anything less and a family of three is likely struggling to pay your bills.

 

If that doesn’t sound all that newsworthy, realize that for a family of three the poverty line is defined as just little above $17,600, roughly ¼ of what Montgomery County government says is needed to be self-sufficient. Without an income of 68k, a family can expect to have trouble meeting rent, buying food, fueling the car or paying for public transportation, clothing the kids, paying for childcare, electricity, and so on and so on. Imagine how it is for a family down around 10k.

 

The “self-sufficiency standard” isn’t some arbitrary moniker cooked up by Montgomery County. It originated during of the 1990s, around the time of welfare reform, when service providers and researchers around the country got fed up with the official government poverty measure and how wildly off the mark it was in certain areas of the country.

 

Montgomery County is one of the most expensive places in the country to live because it’s so close to Washington, DC, but it’s not a whole lot different if you live in New York City or the suburbs around it, and ditto for Boston, Chicago, Atlanta, Philadelphia, Los Angeles, San Francisco, Seattle, or any other major city. I guess all of us who live in these places could move, but these are where the jobs are. Bread for the World works on federal policies that affect poor and hungry people and much of it is focused on Capitol Hill. It doesn’t make sense to do this elsewhere, where costs of living would be less expensive. I suspect most people who work in the places I mentioned above would argue they face similar restrictions.

 

Earlier in the week, I talked about using a concept like development to talk about poverty in the United States. Here my focus is on self-sufficiency. Not to confuse anyone, the point I wish to make is the current official definition of poverty makes little sense, and there are indeed alternatives to point the way toward reform. The federal government needs to come up with a new way of thinking about poverty, social exclusion and how to measure it. Local governments, like Montgomery County, clearly get that.

A Tale of Two Communities

NPR this morning had a blurb between news segments about the healthiest and unhealthiest communities in America. The healthiest community is Burlington, VT, where 92 percent of the population describe themselves in “good or great health.” A report by the Centers for Disease Control verifies it to be the case, so it’s not solely about the perceptions of the folks that live there.

Then NPR told us about the least healthy community in the country, Huntington, WV, where obesity rates and hence diabetes rates are abnormally high, and that many of the elderly don't have teeth. All these are signs of poverty, so I wondered why NPR didn’t say anything about poverty in the story. I went to the NPR website to see if I could find a transcript, but it’s evidently too early to get it; however, the website did post an AP story—which included the following details contrasing life in Burlington versus Huntington.

—Burlington is better off financially, with 8 percent living at the federal poverty level, compared to 19 percent in Huntington.
—It's much more educated, with nearly 40 percent of area residents having at least a college bachelor's degree. Only 15 percent in the Huntington area do.

It would have been helpful if NPR had included these details from the AP story because it would put the comparison of the two communities in context. It would have helped even more to explain that poor health, poverty and low levels of education often travel together.

In our next hunger report, released a week from today, we talk about using a more expansive framework in thinking about deprivation and social exclusion in the Untied States. It’s about more than just income-poverty, the framework we rely on in this country. Anyone who studies or works on issues related to human development understands that health and education are inseparable from poverty and hunger, that you rarely find one without the other, and it makes a whole lot of sense to address these problems together, as the Millennium Development Goals do. And it would make sense to do so right here in the United States.

Studs Terkel

Studs Terkel passed away on Friday at the age of 96. Studs is not someone you might expect to read about on this blog, but I was big fan and can’t help noting his passage.  And I do think there’s something any social justice type can learn from what he had to teach us about the dignity of all people.

The obituaries over the weekend described Studs as one of the preeminent chroniclers of the average American guy and gal. His books are mostly collections of interviews, many distilled from his radio show that ran for decades, syndicated out of his home town of Chicago. Studs had as much right as anyone to call Chicago his town, and I'm sure he will be memorialized there as one of its great native sons.

The interviews that appear in his books were carefully edited, but they always sound as natural as if they were taking place at that very moment. I first learned of Studs in some college writing courses I taught way back when I was a graduate student. A Studs interview was a mainstay in the anthologies writing instructors use to demonstrate examples of fine writing. One of the perks of teaching college courses is the publishers of these anthologies send you volume after volume in the hopes you’ll use one instead of another, although they all pretty much serve the same function equally well.

My favorite of his books is Working: People Talk About What They Do All Day and How They Feel About What They Do. I have to admit this book was an inspiration for me when I was working on the Institute’s 2008 report, Working Harder for Working Families. The interviews with Renee Musser Hummell that appear in each of the chapters were deliberately intended to convey a person’s real experiences with hunger and poverty.

What distinguished Studs Terkel was his uncanny ability to draw people out and let them tell their own story. That’s an obviously important quality in an interviewer, but its remarkable how often interviewers on radio or television are more interested in hearing themselves speak instead of the people they are interviewing. Working was a collection of interviews Studs did with plain old working folks, lots of them working class, people who were not all that articulate but had the most incredible things to say about their lives and the worlds they lived in. Studs's interviews support the belief that everyone is a unique soul. 

I’ve tried to use what I leaned from Studs whenever I interview people for the hunger report. I genuinely believe we can learn more about poverty and hunger by listening to people talk about what it means to live in these conditions than any other form of research. I wouldn’t call Studs a researcher. He connected us with people, all sorts of people, and helped us to understand them and what it is like to live in their skin. For me there is nothing more valuable a researcher could aspire to than that. This is called telling the truth.  

Bring Back the Layaway

Elizabeth Warren, lawyer, professor, author and blogger, had an interesting post a week ago at TPM Cafe on “layaway” shopping. How many people remember layaway? Isn’t that something our grandparents did way back in the era before TV? Warren notes, “For more than a decade, I have had to explain these transactions to a roomful of students who have never even heard of pay-in-advance.”

For better or worse, layaway may be making a come back. Consumption fell 3.1 percent the last quarter, the biggest drop since 1980, reports the Center for Economic and Policy Research. Department store giant K-Mart is now advertising layaway plans, as Warren points out: “If we needed evidence of the constriction of consumer credit, here it is. K-Mart is advertising the layaway plan that department stores used for decades before the free flow of credit turned the layaway plan into a relic.” Whether this is the beginning of a trend, we’ll know soon. The Christmas shopping season is swiftly approaching.

Economic Stimulus Package Redux

Congress is now mulling over what to include in another economic stimulus package. It seems to be a foregone conclusion one is coming. The last one accomplished less than it was hoped for, and that's because much of it was saved rather than spent. Yes, I'm a proponent of increasing savings, especially for poor families, but if we want to give the economy an instantaneous boost, people need to spend it.

The obvious way to get the biggest bang for the buck from a stimulus package is to target it to low-income households. Nobody is going to spend the money quicker than those who are struggling to put food on the table, fill the gas tank or pay for medicines. Almost a million people have lost their job this year so far, so increaing unemployment insurance seems like a no-brainer of a way to inject money directly into the economy.

Below is an interesting graphic that appeared on the Economic Policy Institute website that shows various returns on a dollar of government spending.

 

At the top of the list are money spent on food stamps and unemployment insurance. Down around the bottom are corporate tax cuts, cuts in capital gains, and the tax rebates favored in the last stimulus package earlier this year. Congress and the administration have a chance to do a lot more good for the economy, and for the people who are hurting the most. Let’s hope they make the right decision.