Reducing Poverty and Economic Distress after ARRA: Next Steps for Short-Term Recovery and Long-Term Economic Security

Abstract

As unemployment in this recession holds near 10 percent and a growing number of Americans becomes impoverished, much work remains to reduce and respond to poverty and economic distress. In part, this work can build on the provisions of the American Recovery and Reinvestment Act (ARRA), better known as the stimulus package, which has moderated the effects of the recession but will soon phase out. This brief provides a framework and recommendations for next steps, directly related to the stimulus package and driven by other lessons learned from the recession and its aftermath.

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Introduction

Even though children in the United States have higher poverty rates than adults and the elderly, federal spending on kids is disproportionately small and has been shrinking for years. The recession threatened to eat away further at those investments, prompting the president and Congress to temporarily boost funding for some two dozen federal programs that benefit children. To support the development of children in lowincome families, we recommend making some of those provisions permanent.We also propose new investments in the preschool and postsecondary years when public spending is at its lowest, while also experimenting with new initiatives to support low-income children.

Policy Opportunities After ARRA

As unemployment in this recession holds near 10 percent and a growing number of Americans becomes impoverished, much work remains to reduce and respond to poverty and economic distress. In part, this work can build on the provisions of the American Recovery and Reinvestment Act (ARRA), better known as the stimulus package, which has moderated the effects of the recession but will soon phase out. This brief provides a framework and recommendations for next steps, directly related to the stimulus package and driven by other lessons learned from the recession and its aftermath.

Next steps to reduce poverty and economic distress are crucial for two reasons. First, despite the fact that employer payrolls have begun to grow again, high unemployment and related damage from the worst economic slowdown of a generation will likely continue for three to five more years. Elevated unemployment for this length of time will substantially harm many individuals and families, damage the long-term prospects of the children who grow up in these families, erode state budgetary capacity to provide education and social services, and hamper the longer-term performance of the American economy. Second, persistent poverty and unemployment were problems for many Americans even before the economic slowdown. Therefore, the United States needs to reinvigorate its ongoing strategies for improving the income and labor market prospects of low-wage and less-educated workers in the short term and the long term.

This brief ranges across policy domains often treated separately, including poverty and safety net, child and family, and youth and adult employment and workforce development policies. However, we did not address two important policy topics that would each require a book in itself: health reform (especially given the recent passage of reform legislation) and K–12 education (where a robust federal effort is already under way).

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