The Stimulus Package (HR1) and Low-Income Families

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Abstract

This speech, given at the University of Chicago's School of Social Service Administration, discusses how the stimulus package addresses the policy needs of low-income working families. It focuses on three questions: how it might reduce poverty in the short term; how it might help position service providers for addressing poverty in the long term; and what researchers can do to inform future policies in this area. Efforts are compared to the following goals: increasing wages, promoting job stability and upward mobility, and providing income supports when needed.

Introduction

A third of all families with children, 13.4 million families with children, are low-income, defined as families with incomes less than twice the federal poverty line. Nearly three-quarters of these families have at least one employed adult, though not all are working full-time. Over 60 percent of the working adults have a high school education or less. How we address these labor-market problems will help determine the inequality in our country and the prospects for future generations. But is this the best time to push for the types of changes we need?

Some would say “no” because federal deficits are too large and state budgets hard-pressed to meet current needs. High unemployment and business failures will further deplete government revenues, and businesses struggling for survival are likely to rebuff new initiatives that require higher business taxes or new employee benefits.

Others would say “yes” because crisis forces us to re-think the role of public policy and governmental action. More families feel vulnerable, making them more likely to recognize that the market alone cannot solve all of today’s problems. To paraphrase a quote from William Galston that appeared in the New York Times, policymakers have not all bought the idea of bigger government, but President Obama “has an opening to make his case.”

Several opportunities to promote change around family economic well-being are already on the horizon. The president has asked Vice President Biden to head a task force on middle-class families, which could incorporate upward mobility in its agenda. At its first meeting in Philadelphia in late February, it addressed upward mobility in its report on green jobs.

Meanwhile, key programs are up for reauthorization in President Obama’s first term. The Workforce Investment Act is slated for reauthorization this year and preliminary hearings are already under way. TANF, or Temporary Assistance for Needy Families, is due for reauthorization in 2010. Both programs are candidates for re-design, so that they can better meet the needs of people in vulnerable families who need additional skills or income support when they are without wage income.

Four policy reform goals belong in any plan to reduce poverty and increase upward mobility. Some are furthered by the stimulus package, but some are not. To the extent that stimulus programs address the needs of low-income families, we need to ensure that research and evaluation efforts help us assess their value.

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