Institute Notes: A Dialogue on Overcoming Hunger and Poverty

The Child Tax Credit: Valuing All Children

The Child Tax Credit (CTC) is intended to help parents with the costs of raising children. It’s a good policy in theory. Who doubts that raising children is costly? The proper care of children is a benefit to society in a myriad of ways. I won’t overstate the value of the CTC because it amounts to only $1,000 per child. Still, every bit matters at a time when nearly one in four children is growing up in a food-insecure household.

But here’s how theory diverges from reality—and why Bread for the World’s 2010 Offering of Letters campaign is so important. The CTC as it currently stands discriminates against poor families. The reason is that the credit is non-refundable. The 2010 Hunger Report, A Just and Sustainable Recovery, does a good job explaining the difference between refundable and non-refundable tax policy, so to keep moving at a blog post clip I’ll refer you there. Suffice to say, because the CTC is non-refundable, if a family’s taxable income falls below a certain threshold, they either can’t qualify for the CTC or only a portion of it.

Here’s the thing. People don’t have portions of children. Isn’t it a bit unseemly to think poor children are not as real or worth as much government support because their parent’s income doesn’t measure up? Like a rose, a child by any other name is still a child, and his or her family should be eligible for the CTC the same as any other family.

Some people might argue that a fully refundable CTC could lead poor parents to produce more children. Please. This is silly.

The CTC is one of few policies we have that explicitly demonstrate that society has a vested interest in rearing children. That’s all children—not merely those whose parents meet the income threshold. We know there are many social inequalities in education, housing, in access to services, and in labor markets. These are the function of greed, prejudice, and selfishness. But the tax code is the creation of government, and as such must be above these wretched motives.

 

What Do Tax Credits Mean for Low-Income Families?

Below is an important chart that illustrates why the Earned Income Tax Credit (EITC) means so much to low-income families. The chart appeared in a 2006 report by the Center on Budget and Policy Priorities. Like Bread for the World, the Center is one of the National Anti-Hunger Organizations (NAHO). Bread will be relying on the Center's excellent analysis as the 2010 Offering of Letters campaign unfolds.

Clearly, the value of the EITC for this family is substantial, raising their income by close to a third. But what’s also worth noting about this chart is the “erosion factor” of the minimum wage versus the constancy of the EITC. During the 10-year period the chart covers, the real value of the minimum wage eroded by 20 percent. The minimum wage didn’t adjust for inflation, but the EITC did. By 2006, the EITC made up a much higher share of annual income for a family struggling to get by on minimum wage than in 1997.

This is another reason to highlight the EITC’s importance. The minimum wage has gotten a raise since 2006, going from $5.15 per hour to $7.25, but it is not law that the minimum wage has to be adjusted. It stayed $5.15 for 10 years. Adjustments depend on the will of policymakers.

It’s deplorable that the earnings from wages—the larger share of a family’s income—does not adjust for inflation, while the EITC—the smaller share—does. Nevertheless, this says something about where the best opportunity is for improving the well-being of low-income families. 

There has been some talk lately about lowering the minimum wage. Unbelievably, this has been couched as a potential stimulus for the economy. Nobody really expects this idea will get more than passing attention, but it shows the readiness of mainstream media outlets to entertain stupid ideas about how to address the recession on the backs of low-wage workers.

  

Tax Policy Fights Hunger in a Recession

At a time of high unemployment rates and a consensus among economists that this will be the norm for some time, it might seem like we’re aiming away from the bull’s eye by targeting tax credits for help against hunger. But Bread for the World’s 2010 Offering of Letters on tax policy changes -- specifically improvements to the Earned Income Tax Credit (EITC), a benefit designed to increase the earnings of low-wage workers -- is dead-on accurate.

Let me explain why. Low-income families usually depend on two wage-earners. These are also the families most likely to lose their jobs in a high-unemployment economy. In a recession, low-income jobs vanish more quickly than middle- and high-income jobs.

For  low-income families, the  loss of one wage-earner’s income is devastating. Fortunately, help from the Supplemental Nutrition Assistance Program (SNAP) may now become available, when previously the family’s earnings could have been too high to qualify. Unemployment insurance also can cushion the blow. And so does the EITC.

It’s true that in many families both wage-earners have lost their jobs. That’s the most tragic of all cases, and this group needs SNAP and unemployment insurance. We don’t know the numbers for sure, but in all probability, fewer families have lost two earners than one, or one of the two (and maybe both) has been forced to work fewer hours.

Without the EITC, low-wage jobs barely allow families to escape poverty. The EITC can lift wages by up to 40 percent in some households. Anybody who discounts the EITC’s importance in a recession fails to appreciate how essential this program is to families where there is one wage-earner when there used to be two.

The optimal solution to poverty would include something other than simply improving the EITC. A higher, regularly adjusted minimum wage, affordable health insurance and child care, more housing assistance, or legislation that makes it simpler for labor to organize are all solutions that should be part of how the country addresses inequalities in the labor market. But the political reality is that the present government doesn’t want to take a comprehensive approach. The tax code has become the preferred policy area lawmakers in both parties have been willing to use to help poor families. While that may not be optimal, that’s the country in which we live.

Housing and Hunger

Lack of affordable housing is directly related to child hunger, reports Children’s HealthWatch, a Boston-based group, in a new study. Indeed, this may seem like plain old common sense. Now we have good research to make a compelling case for more and better housing assistance as a necessity for reaching the President’s goal of ending child hunger by 2015. 

The study also reinforces the recommendations Bread for the World Institute offers on housing policy in the 2010 Hunger Report, A Just and Sustainable Recovery. 

Children's HealthWatch compared two groups of children in Boston over a 10-year stretch, 1998-2008. One group was families with children receiving public housing support; the other was families with children at the same income level as the former but not on housing assistance. In the households getting assistance, the children were:

• More likely be food secure.
• Less likely to be seriously underweight.
• More likely to be classified as “well” on a composite indicator of child health.

“The research also found that subsidized housing made the greatest difference in protecting the growth of children living in families struggling to put enough food on the table (households classified as food insecure). Food insecure children living in subsidized housing were 52 percent less likely to be seriously underweight than food insecure children on the wait list.” 

Housing is normally a family’s greatest expense. It’s not uncommon for families to spend 50 percent of their income on housing in an expensive metropolitan area like Boston. A housing subsidy reduces housing costs to 30 percent of family income, freeing up money that can be spent on food. No matter what the family earns, they only pay 30 percent of their income on housing. Compare this to families not on assistance:

“In 2008, a family living in the Boston metropolitan area needed to make $54,120 or approximately $26.00 an hour to afford a two-bedroom apartment renting at the fair market rent of $1,353.8 Members of a family earning minimum wage would need to work a combined 130 hours a week to afford this same apartment—an impossible challenge for families with one or two adults. Boston’s low-income families clearly are looking for a needle in a haystack when it comes to finding an apartment they can afford.” 

The lack of affordable housing available to low-income families has only gotten worse since the recession. Remember, the recession started with a bust in the housing market, which has led to record numbers of foreclosures. This has pushed more families out of homes and into the rental housing market and driving up the cost of rents.

A pediatrician quoted in the study, when asked about treating undernourished children, explained, "What do I really wish I could do? I wish I could write a prescription for affordable housing."

SNAP to attention, America

The New York Times has an article about the dramatic rise in the number of people enrolled in the Food Stamp Program. In fact, this is a misnomer the Times perpetuates. The nation’s flagship nutrition program is now named SNAP, i.e. Supplemental Nutrition Assistance Program.

Several hundred words into the article, authors Jason DeParle and Robert Gebeloff explain the change had to due with the stigma associated with food stamps. Why then continue to perpetuate the food stamp brand by using the outdated name of the program instead of SNAP in the title of the article: "Food Stamp Use Soars, Stigma Fades"?

My concerns about the title aside, the article does a decent job of humanizing the problem of hunger in the United States. It includes some compelling stories. One of the people profiled is an electrician, whom I guess we could describe as the protagonist in the story, formerly too proud to seek help. Now, given his own troubles, he has had a change of heart about the people he used to think were just chiselers.

With most of his co-workers laid off, Greg Dawson, a third-generation electrician in rural Martinsville, considers himself lucky to still have a job. He works the night shift for a contracting firm, installing freezer lights in a chain of grocery stores. But when his overtime income vanished and his expenses went up, Mr. Dawson started skimping on meals to feed his wife and five children. 

He tried to fill up on cereal and eggs. He ate a lot of Spam. Then he went to work with a grumbling stomach to shine lights on food he could not afford. When an outreach worker appeared at his son’s Head Start program, Mr. Dawson gave in.

“It’s embarrassing,” said Mr. Dawson, 29, a taciturn man with a wispy goatee who is so uneasy about the monthly benefit of $300 that he has not told his parents. “I always thought it was people trying to milk the system. But we just felt like we really needed the help right now.”

For readers who want to pour over lots of data, the article includes, or at least the online version does, SNAP usage rates in every county of the country, broken down by several useful indicators, like race, children, and rates of program growth since the start of the recession.

Despair and Hope in Detroit

One of the most breathtaking, and heartbreaking, facts I came across when researching education policy for the 2010 Hunger Report: A Just and Sustainable Recovery was the high school dropout rate in Detroit. Three-quarters of Detroit kids drop out of school.

Let me say that again, the high school graduation rate inside the city is just 25 percent. Probably nothing better than this conveys the despair and neglect of parts of America. 

We talk a lot about marginalized areas of the country in the 2010 Hunger Report, but Detroit sticks out in my mind right now because of something I just read about it. Bob Herbert, who has a column twice a week in the New York Times, has written recently about Detroit. Herbert is one of my favorite columnists writing for a major newspaper these days. Few others who occupy such important real estate on an Op-Ed page are willing to talk to (rather than just about) people struggling in low-wage jobs or marginalized neighborhoods like the ones Bread for the World Institute zeroed in on in the 2010 Hunger Report.

Herbert’s most recent piece about Detroit ran today. It was a sequel to another that ran on Saturday, a depressing view on the state of the city and how the recession that the rest of the country is feeling has been unraveling quietly in Detroit for decades.

Detroit and its environs are suffering the agonies of the economic damned because of policies, crafted at the highest national and corporate levels, that resulted in the implosion of crucially important components of America’s manufacturing base. Those decisions have had a profound effect on the fortunes not just of Detroit, or even Michigan, but the entire U.S. economy.

As we said in the Hunger Report, and Herbert discusses in this column, the manufacturing base is crucial to maintaining a healthy middle class. What happened to Detroit could at one time be seen as symptomatic of a self-destructive streak in U.S. industrial policy. The current recession is revealing how that streak now looks more like a fait accompli.

But in Herbert’s second article about Detroit, which he titles it Signs of Hope, despair gives way to something good that may be coming up for the city, as well as the country's battered industrial base. The focus of the article is Stan Ovshinksky. By no means a household name, Ovshinsky is someone we should hope to all hear more about if we believe restoring America’s industrial base is crucial to rebuilding our economy in ways that will keep it growing sustainably.

Mr. Ovshinsky knows as much or more about the development and production of alternative energy as anyone on the planet. He developed the technology and designed the production method that made it possible to produce solar material “by the mile.” When he proposed the idea years ago, based on the science of amorphous materials, which he invented, he was ridiculed. 

Over the weekend, a colleague of mine at Bread for the World Institute sent me an email about the first Herbert article, saying it echoes much of what we said in the 2010 Hunger Report, except it left out the clean energy sector we champion as the best hope for rebuilding America's industrial base. It was gratifying to see Herbert use today’s column to add hope to the despair that Detroit has come to stand for. There is indeed hope for America's industrial sector, but it will depend on forward thinking public policy to bring it to fruition. And it will not only require investments in clean energy, but also in education so that workers in Detroit will have the skills to take advantage of new manufacturing jobs.

2010 Hunger Report: A Just and Sustainable Recovery

Bread for the World Institute’s latest annual hunger report, its 20^th edition of this esteemed report, appears today. A Just and Sustainable Recovery analyzes what needs to happen to reduce hunger and poverty as the U.S. and global economy recover from the worst economic crisis since the Great Depression.  

A jobless recovery will not suffice and does not have to be what we get if policymakers grasp the opportunity to rebuild the economy in ways that put people at the forefront of policies to stimulate and sustain growth. 

The report highlights policies that can ensure a sustainable future in spite of the ups and downs that are inevitable in business cycles. It calls for new investments in the nation's energy infrastructure, as to create lots of jobs; rebuilding the manufacturing sector, also to create jobs but more importantly to get America producing things people want to buy, besides risky financial products; reducing inequalities in areas like housing, health care and education policy; helping low-income families to save and build assets for the future, just as the government does for middle and upper income families; and revitalizing neglected communities throughout the country, places so far on the margins they are effectively excluded from participating in the rest of the national economy, except for low-paying work in the service sector. This report has a big agenda, but we're at an opportune moment for making a fresh start and thinking big about the future.

The report also makes the case for U.S. leadership in reducing hunger and poverty around the world and in addressing climate change. Without addressing the triple threats of hunger, poverty, and climate change, the report argues, the coming decades augur far greater instability around the world. 

The release of the report coincides with a launch event at the National Press Club, including speakers David Beckmann, president of Bread for the World and Bread for the World Institute, Robert Greenstein, president of the Center on Budget and Policy Priorities, Gawain Kripke, director of research and policy at Oxfam America, and Reverend Lennox Yearwood, president of the Hip Hop Caucus. The report’s website, including everything in the print edition plus many other features, will be adding video from the National Press Club event within a few days.

Here on Institute Notes we’ll be blogging regularly about the report, as issues discussed in the report, from hunger to climate change to health care reform and jobs and inequality, continue to be in the news everyday.  So check in and participate in the discussion with us if you like. 

It's Not All About Unemployment

There's definitely more information worth highlighting in the new government food security data released on Monday.

"Fifty-five percent of the food-insecure households surveyed in 2008 said that in the previous month they had participated in one or more of the three largest Federal food and nutrition programs--the National School Lunch Program, Supplemental Nutrition Assistance Program (SNAP, the new name for the Food Stamp Program), and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).

The thing is, why only 55 percent? Here's some other information:

Among households reporting food insecurity, 42.2 percent had incomes below the official poverty line.

Once again, I'd ask why only this much? Presumably, most food insecure households you'd think would be poor, right?

These two findings from the study, I think, set into focus something we have to think about if we want to get really serious about reducing hunger in this country. Plenty of people above the poverty line go hungry because they earn too much to qualify for nutrtion programs, but not enough to cover basic living expenses. So they scrimp on food, one of the most fungible items in any household's budget. 

Lots of people lost their job during the recession. Of course the number of people on food assistance skyrocketed. But for those people who didn't lose their jobs and whose income was between 100-200 percent of poverty (and higher in some high-costs areas of the country like New York City, San Francisco, Washington, DC), they continued to struggle, as they always struggle, because of exorbitant costs of living. Among people surveyed in the study with incomes between 100-130 percent of poverty and between 130-185 percent of poverty, food insecurity rates were 42.5 percent and 37.5 percent respectively.

The food insecurity numbers will decrease once people start going back to work. But for those people still earning too much to qualify for public assistance, but not enough to get the food they need, their problems will not go away, not unless we come up with a better, and more accurate, description of what poverty means in the United States. 

Poverty: That Churning Sound

The Urban Institute released a wonderfully useful fact sheet called "Transitioning In and Out of Poverty." I won't go over everything included, but here are some facts I thought worth highlighting: 

• 51.4% of the U.S. population experiences poverty at some time before the age of 65.
• On average, poor individuals have a 1 in 3 chance of leaving poverty in any given year.
• Half of those who get out of poverty become poor again within 5 years.
• Roughly 50 percent of those who become poor are out of poverty a year later.
• Between 40 and 50 percent of those who become poor live in a household where someone has lost a job.
• More than half of people leave poverty because a family member gets a job.

Some of this seems like common sense. Wouldn't you expect employment status to be significant? Some of it you might never realize. Half of all people experience poverty!

If there's one thing that comes across in the data, it's a clearer picture of how much churning there is among the poor. Contrary to strereotypes of a permanent underclass, most people don't stay in poverty for that long. At the same time, the data show how difficult it is for people to get free of poverty forever.

The fact sheet is useful in making a case for strong safety nets. And for jobs. A jobless recovery won't make much difference in reducing poverty rates. In that case, we should ask what recovery?

Policymakers have to be laser-focused on creating jobs, or we need to push them to be laser-focused .  

Making Sure the President's 2015 Goal to End Child Hunger Isn't a Joke

Updated poverty data released earlier this month by the Census Bureau were a concrete reminder of the toll the recession has taken on families. The Department of Agriculture releases new food insecurity data in November. Poverty and food insecurity tend to fluctuate at the same rate. If the poverty data are any indication of what’s in store with food insecurity, we should all be steeling ourselves for some very tall challenges ahead.