Leading experts weigh in on current policy issues and challenges

Are we losing the war on poverty in the United States?

I think this question can takes us in at least 2 directions. One is to explore the levels of poverty for various groups today -- and the growing evidence of the damage caused. The second is to assess the performance of policies designed to address poverty -- whether by reducing the incidence or by ameliorating the harmful effects. I hope we keep these strands of discussion - and possibly others - clearly distinct.

This conversation originally appeard on Branch on September 18, 2013. 

The Urban Institute is talking with...
Zach McDade Zach McDade
Susan J. Popkin Susan J. Popkin
Margery Turner Margery Turner
Austin Nichols Austin Nichols
Greg Kaufmann Greg Kaufmann
Scott Winship Scott Winship
MDRC MDRC
PA House GOP PA House GOP
Jared Bernstein Jared Bernstein
Elizabeth Kneebone Elizabeth Kneebone
Melissa Boteach Melissa Boteach
Margery Turner
Moderated by:
Margery Turner
Senior VP for Program Planning and Management
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I agree, especially having spent the morning listening to a conversation about how welfare reform is a failure because US entitlement programs are still costing too much, especially the SNAP program. We need better metrics than the impact on the deficit, especially when we know that the data show that food stamps are one of the best ways to reduce child poverty--which we know has long-term benefits.

Cutting food stamps is bad economics and bad policy

We are less losing the war than withdrawing our forces from battle. Having dismantled cash welfare in favor of a work-based safety net, we can hardly be surprised when the disappearance of millions of jobs results in higher poverty. The 2009 Recovery Act policies reduced hardship but are now disappearing, so we can expect hardship to increase next year even as employment recovers.

What concerns me most about this reality is that we're learning more all the time about the long-term damage to kids of living in poverty for extended periods. The damage ripples through health and mental health, education, and ultimately employment and income.

While I wouldn't argue the poor are doing particularly well or that we should be satisfied with the level of poverty we have, the evidence from the recession suggests that the safety net performed exactly as we'd want. CBO's estimates indicate that from 2007 to 2009 the bottom fifth of households, ranked by their income before transfers & taxes, fell an astonishing 23%. Transfers, however, including noncash aid like food stamps and Medicaid, lifted their incomes slightly above 2007 levels. After taxes--including the EITC-- their 2009 incomes were 6% higher than in 2007. Accounting for noncash transfers and taxes, Current Population Survey figures show that the 20th percentile fell by no more than 3% and may have risen by as much as 4%.

(Wonk part: those figures use the new PCE deflator estimates to adjust for inflation, and I used the microdata for the CPS figures. The results are fairly insensitive to focusing on households or persons as the unit, to adjusting or not adjusting incomes for household size, and to valuing Medicaid & Medicare according to their market or fungible values.)

But the evidence is clear that living in chronic disadvantage has dire consequences for children--developmental consequences, health, education, high probability of risky behavior. Cash transfers may be mitigating the worst consequences, but too many kids continue to grow up in deep poverty.

Scott Winship described the experience of the bottom fifth using the top income in that category, a common mistake. Scott also conflates the (permanent) safety net with the ARRA (temporary) policies I already mentioned; as CBO makes clear the dividing line between the bottom fifth and the next rose 2007-9 largely due to legislated increases in UI/SNAP and decreased payroll taxes.

Trends in The Distribution of Household Income, 1979–2009

http://www.cbo.gov/publication/43524

At risk of getting weed-y, contra Austin, the CBO figures I cite are averages for the bottom fifth, so they aren't based on the richest household in that group. The CPS figures are, but the results are broadly consistent with the trends for the entire bottom fifth in the CBO data.
I don't disagree about the reason that incomes recovered. I suppose this raises the question of what constitutes the War on Poverty and if it's confined to legislation from a narrow period like the mid- to late '60s and early '70s, a broader period that would include the '90s (welfare reform, EITC expansion, SCHIP), or ongoing efforts to alleviate hardship.

Susan, I'm not denying poverty is harmful, and even if it were just deeply unpleasant, that would be reason to want to reduce it. But if the question is whether we're losing the war on poverty, trends in low incomes are relevant. And those incomes have recovered (thanks to the safety net) to their 2007 levels, which were quite a bit higher than their mid-'60s levels. That suggests we've made quite a bit of progress, even if the war is not yet won. 

Contrast these trends with the trend in economic mobility out of the bottom fifth (flat since the 1960s) and it raises the issue of whether we've focused on income support to the detriment of intergenerational mobility. Which, I suppose gets to what the war on poverty is supposed to have done.

In Pennsylvania alone, 12.5% of the population is classified as impoverished. That's an estimated 1.5 million citizens who may not have stable housing, family sustaining jobs, or enough to eat at meal time

Fifty years after LBJ's launch of the War on Poverty, with trillions of dollars spent on efforts, yes, I most definitely believe we are still fighting the war on poverty. Perhaps it's time to begin developing new strategies to combat this war more effectively.

-Rep. Dave Reed (PA House Majority Policy Chairman)

I think it should be possible to acknowledge that current anti-poverty policies have a positive impact while also arguing the hardship that persists, the damage inflicted on kids in particular, and the barriers to intergenerational mobility. As the US economy evolves, strategies for helping families at the bottom of the income distribution achieve both stability and access to meaningful opportunities need to evolve as well.

On new strategies, I suggest a (taxable) child benefit of a few hundred dollars a month and a job guarantee (perhaps tracking subsidized jobs programs briefly authorized under TANF emergency funds during the recession). The first might even be politically feasible if married to tax reform. The US is also implementing new place-based interventions including Promise Neighborhoods, Choice, HOST, etc. But temporary assistance needs to strengthened before the next recession, and current ongoing hardship addressed as SNAP and UI expansions expire.

 We can end child poverty. Or, at least, do more.

Austin - I'm glad you introduced the issue of PLACE because I think the evidence is very strong that when poor kids grow up in severely distressed neighborhoods, the risks of long-term damage and stunted opportunities are particularly severe. I've argued for place-conscious rather than myopically place-based policies, that would include intensive family-strengthening services close to home, significant investments to reduce violent crime, and effective linkages to city-wide and regional opportunities. This approach would also create mechanisms for poor families (who want to) to live in and/or attend school in neighborhoods that already offer safety and high-quality amenities.

Austin and Marge--of course, I agree about the importance of place. We know the costs of living in chronically disadvantaged communities are profound, especially for kids. Intensive family strengthening services can help, but we also need to address basic hardship more effectively in order to be able to have any impact at all.

Desperate and hungry in the nation's capital

The good news from today’s 2012 income and poverty results is that for the first year since the great recession hit, things aren’t getting worse. The bad news is that three years into an economic recovery, they’re not getting better either. Though the economy has expanded, today’s report shows that this growth has gone straight to the top of the income scale and circumvented the middle and the bottom.

First Impressions of the 2012 Poverty, Income, and Health Insurance Data (with updates)

Clearly, there's a need for more robust policy on both hardship alleviation and economic mobility. The two are different but clearly interlocked: kids who are hungry can't learn and families living in violent neighborhoods are undermined for the long term.

Marge, I like the distinction you make between "place-based" and "place-conscious" strategies. Even for poor kids and adults living in less-distressed neighborhoods, place determines not only whether they have access to critical work supports and safety net services—like subsidized child care or emergency food assistance—but also whether they have access to the kinds of opportunities that can provide a path out of poverty—like quality education and jobs. 

The increasingly regional reach of poverty within our major metro areas underscores the need for place-conscious policy responses that can help break down barriers to opportunity region-wide, in urban and suburban communities alike.

In the growing economy of the 1990s, building a safety net around work (particularly, the expansion of the EITC and the passage of TANF) made sense –- especially from a political standpoint. But in the aftermath of the Great Recession and continued high unemployment, what might work better? Can we maintain a focus on encouraging work while without impoverishing single-parent families in periods when work is scarce?

We’ve been experimenting with conditional cash transfers here in New York City in which cash payments are conditioned on benchmarks in a variety of areas: family preventive health care, children’s education, as well as parents’ work and training. Results thus far suggest that families can qualify for payments, boosting their incomes and reducing poverty and hardship.

This approach seems very promising in that it may enable poor parents to provide the healthcare, stability, and educational foundations their kids need to ultimately escape poverty. Others in this conversation may want to add more about other promising two-generation strategies.

As we tour the commonwealth studying the barriers in place for those attempting to break out of poverty, these are some particular trends we continue to hear. We're beginning to really see the same disjoints in the system, such as interdepartmental lack of communication, beneficiary cliff effects, and the need for further transitional support.

On policy, I suspect that place is important & encourage everyone to read my friend Patrick Sharkey's book, Stuck in Place. 2/3 of black adults today experienced a depth of neighborhood poverty growing up that only 1/20 of white adults saw. That said, the Moving to Opportunity policy experiment, which gave rental vouchers to people in poor neighborhoods for them to move to less-poor neighborhoods, should be discouraging to those of us who want to expand upward mobility. David Muhlhausen, of the Heritage Foundation, has a book evaluating the entirety of recent randomized social policy experiments, and it is a depressing read. Wonder what models for opportunity expansion MDRC likes other than conditional cash xfers, about which I am hopeful.

One more point, which is that the two most important opportunity expanding strategies since the War on Poverty may well turn out to be economic growth and the work-oriented safety net reforms of the 90s. Conservatives are not wrong to emphasize perverse incentives and high implicit marginal tax rates. Means-tested programs can be safety nets in downturns but poverty traps in up-turns.

Scott - I'm afraid you've mischaracterized the findings from the Moving to Opportunity demonstration. The treatment group ended up in neighborhoods that were less distressed (& less violent) than the control group, and benefited from significant health/mental health gains. But few families lived for long periods in truly low-pov or high-opp neighborhood. A careful multivariate analysis conducted here at Urban found that adults who spent longer periods in lower pov neighborhoods (other things being equal) enjoyed higher employment & earnings. Kids achieved higher math & reading scores.

Benefits of Living in High-Opportunity Neighborhoods

All respect, Margery, but the program had basically no effect on adult income or child educational outcomes. It did have health and happiness effects, which ain't nothing, but if we had hoped to expand economic mobility, there's nothing in there that's encouraging. Effects didn't differ according to how young kids were when they moved, for instance. Multivariate re-analyses thwart the strengths of the experimental design. 

One interpretation of the MTO results is that concentrated *poverty* per se may not be the thing to focus on. There are all sorts of different ways disadvantage can be concentrated, and the dimensions are all correlated with poverty. Rob Sampson, e.g., notes that the new neighborhoods' schools were still below average.

Today I keep thinking about the inaugural Half in Ten report in 2007 (!), and how Urban Institute showed that just the recommendations on a modest minimum wage increase, childcare expansion, and strengthening EITC and Child Tax Credit could have reduced poverty by 26%. If you add to that just the lessons we've learned from bipartisan (at least when it comes to governors) subsidized jobs program and SNAP, it's so clear how much low-hanging fruit there is if we were committed to making further progress. But the political will whose absence we consistently lament will never be present absent a political movement/pressure. On another note, we are not losing war--poverty would be 30% without safety net (cbpp).

And thank you PAHouseGOP for joining discussion--oh would there were more of you on the federal level who could have serious discussion without demonizing and take up topics such as "cliff effect" that you mention. If I'm not mistaken, you also called for Medicaid expansion in PA which wasn't too popular in your party. I admire that courage. It's not that everyone has to agree on role of government but we should be able to engage in a good debate without degrading people who are doing their best to survive.

One work-conditioned safety net program that enjoys broad support is the EITC, which supplements the earnings of families by as much as $6,000 per year, lifting millions out of poverty. But the federal EITC tax credit for singles is capped at less than $500. With the NYC Center for Economic Opportunity, we’re launching a new demonstration of an EITC-like credit in New York City for low-income single workers without dependent children -- most of them men -- with the goal of increasing employment and earnings, reducing poverty, and perhaps increasing the payment of child support.

The Center on Budget and Policy Priorities put together a great roundup of research on the impact of the EITC, from its effectiveness in keeping working families out of poverty to encouraging work--particularly among single mothers--to the long-term effects it has on children (e.g., higher wages as adults and more hours worked). The local data on EITC filers also show how responsive EITC receipt has been to changes in the economy (especially with the added ARRA expansions) and to changes in the geography of the working poor.

Earned Income Tax Credit (EITC) Interactive and Resources

EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds

Expanding the EITC for workers without qualifying children could help bring the same work incentive boosts to young men and non-custodial parents as earlier expansions brought to single mothers. I second Austin...it's great to hear that NYC CEO and MDRC are setting up a demonstration to target low-income single workers.

In any discussion of the safety net, we need to distinguish permanent and temporary expansions, whether they count toward official poverty (such as expanded unemployment benefits) or not (such as the payroll tax holiday and larger SNAP benefits). Comparing 2007 and 2011 will pick up expanded benefits that have been steadily disappearing and will be gone come 2014. We also cannot freely count the cost of in-kind transfers as income, e.g. average spending on Medicaid beneficiaries, and we cannot talk about "disposable income" without defining what that means.

I provided a range of estimates that included different treatments of Medicaid & Medicare valuation. The more conservative one values them at $0 until a household has a threshold level of income that takes care of their basic food and shelter needs. I don't think any of us would argue they should be valued at $0 for anyone, let alone the poorest among us, so that's a pretty conservative lower bound. 

"Disposable income" is a term used often in the literature on cross-national income comparisons (and layman conversation), but if "post-tax and -transfer" suits you better, that's what I'm getting at. 

I'm curious whether anyone thinks the poverty rate will go up in 2013 or 2014 because the recession-era benefit expansions will be gone.

Austin, you may also be interested in this chart by Jared's colleague Arloc Sherman--no conservative, he--showing steep declines in poverty over the long-run (w/o taking health insurance into account). Compare to Jared's conventional chart showing the trend for the 20th percentile. Arloc wins this one.

Official Poverty Measure Masks Gains Made Over Last 50 Years

Charting a Path to Shared Prosperity

Scott, Greg and others point out that economic hardship would be much worse without our current safety net. To some degree we ARE winning the war.

But Marge, Sue and others rightly point out that the damage to people, places and especially kids from poverty can be long-felt and costly. 

Given the broader policy and fiscal context of the United States - we're war weary, we're in debt, we talk of safety net cuts - should we reframe the whole discussion? 

Instead of war, call it investing in a portfolio: strong communities, good schools, healthy, happy, well-fed, well-educated children. These expenditures are truly investments because they pay off in the future. Why can't we sell that narrative: to spend some money now to save much later?

I agree with Zach, that the "war" framework is not helpful. War on Poverty programs like Head Start, Community Action, and VISTA did and still do make a big difference. But the big drop in poverty in the post-WWII era also had a lot to do with shared economic growth, higher unionization rates, and a full employment economy (not to mention improved social insurance programs that are not typically considered as part of the War on Poverty).

I think we need to push back on the notion that we "lost" because as others have noted programs such as SNAP, EITC, etc.. have made a BIG difference and do not register on our outdated poverty statistic. But we also have to acknowledge that high levels on income inequality, unshared economic growth, a proliferation of low-wage work, and weakened labor standards are making these programs work harder than they should have to. I'd like to think that as we approach the anniversary, we should come around a proactive push for more jobs, better wages, and investments in family economic security in addition to defending the role that current safety net programs have played in pushing Americans out of poverty.

I also think when the "war" does come up--and we know it will plenty approaching January--we can use historical perspective along these lines to reframe: we know that poverty would be twice as high without the safety net--nearly 30 percent. So we've succeeded in cutting it down to 15 percent; now it's time to focus on the next 15 percent and get it down to zero. Thanks all of you for your great work!

If there’s one picture I could show to policymakers to wake them up to the profound costs to broad swaths of Americans of gridlock, austerity, immobility and just the general ignoring of the central economic problem — the disconnect between overall growth and shared prosperity — it would be this one. 

It clearly reveals a tale of two economies, one lifting the incomes of high-income households, the other failing to reach the middle- and low-income households. 

Including this year’s stable 15 percent rate, poverty has gotten worse or stayed the same for 11 of the last 12 years. This is a remarkable and persistent disconnection between growth and living standards. 

http://economix.blogs.nytimes.com/2013/09/17/charting-a-path-to-shared-prosperity/#more-168303

Charting a Path to Shared Prosperity

I'll sign off, but thanks to everyone for the spirited conversation on such an important issue. While I've focused a lot on the progress we've made in reducing poverty, I'm in agreement with the general consensus that it's not time to declare victory and go home. Two stats: one in five household heads say they worried at some point in the year about whether they would run out of food at the end of the month and not be able to afford more ers.usda.gov, and only 1 in 6 poor kids makes it to the top two-fifths in adulthood brookings.edu. Conservatives are increasingly interested in policies to expand upward mobility, & I'm hopeful that with consensus on the goal, we'll talk in several decades of how we won the war on immobility.

There are many pro-poor policies that the official stats don't count, not least of which is public education (more than food and housing assistance or health insurance programs). But leaving aside the definition of income, I think there is too much emphasis on perverse incentives and high effective tax rates. I think Zach's comment about investing in children is right on--we need to attack child poverty on multiple fronts: improve early education, improve pathways to careers, but also in the short run make sure kids have enough cash to get by. I think giving cash to families with kids makes a lot of sense, but others will worry more about disincentives to work among parents than about the deep poverty rate of children.

Thanks so much, everyone, for your participation. Hope you enjoyed the discussion as much as we on the sidelines did. You're welcome to continue to the conversation over on the Urban Wire.