More About Arloc Sherman

Arloc Sherman

Sherman is a Senior Researcher focusing on family income trends, income support policies, and the causes and consequences of poverty.

Full bio and recent public appearances | Research archive at CBPP.org


After Welfare Reform, the Poorest Families Had More Trouble Paying Bills

May 22, 2012 at 2:38 pm

We have noted evidence of a disturbing trend:  growth in the number and percentage of Americans living on less than $2 a day — a type of extreme poverty that, until now, has been associated only with poor nations.

The University of Michigan’s Luke Shaefer, one of the authors of the study that broke the news, has more to report.  He and the University of Chicago’s Marci Ybarra, his co-author, find signs of growing material hardship among families whose incomes fall below half of the poverty line.

The new study, which looked at households with children from 1992 through 2005, notes a widening gap in well-being among low-income families after the national welfare overhaul of the mid-1990s.  The authors found:

[S]uggestive evidence that material hardship — in the form of difficulty meeting essential household expenses, and falling behind on utilities costs — has generally increased among the deeply poor but has remained roughly the same for the middle group (50-99 percent of poverty), and decreased among the near poor (100-150 percent of poverty).

Not surprisingly, these hardships appear to be sensitive to business cycles.  Hardship rates among the deeply poor improved, for example, from 1992 to 1995, when the economy was growing.  But they worsened sharply from 2003 to 2005 — perhaps due to delayed effects of the 2001 recession compounded by the weakened safety net, the authors suggest.

Shaefer and Ybarra say their findings support their hypothesis that “the well-being of the deeply poor decreased substantially following the first economic slowdown after the 1990s welfare reforms. In contrast, the well-being of the near poor improved through 2005.”  They caution that studies that consider the poor as a single group may miss these diverging effects of welfare reform.

These conclusions make sense because “welfare reform,” in a broad sense, was not just one policy but many.  In general, working families received more help after the mid-1990s than before — for example, in the form of higher Earned Income Tax Credits or child care assistance.  Yet, families who lost jobs or could not find steady work generally fared worse — they lost access to cash assistance and often could not qualify for the new work-based tax credits and other work supports.

The study adds to the evidence that economic vulnerability at the very bottom of the economic ladder has grown since the federal government weakened the safety net in the 1990s.

House Votes to Eliminate Local Data

May 11, 2012 at 10:21 am

Republicans in the House inexplicably voted this week to defund the American Community Survey (ACS), the nation’s main source of state and local data on affordable housing, household income, poverty, race, state-to-state migration, immigration, education level of the workforce, types of disabilities of local residents, and scores of other major topics.

The federal government uses the data to distribute more than $400 billion in federal formula funds each year, and the information helps communities and businesses decide where to build new roads, bridges, schools, homes, and stores.  Business groups including the U.S. Chamber of Commerce, National Retail Federation, International Council of Shopping Centers, and National Association of Home Builders consider the data vital.

The House proposed no alternative to collecting these data.

The ACS replaced the traditional long form of the decennial census.  Several of the questions date back to the 1850s.

Some who voted to end the ACS funding objected to it as an example of government intrusion because its questions go beyond the Constitution’s required enumeration of inhabitants.  But the census has always asked more than that, all the way back to 1790.  Federal agencies have determined that every ACS question is necessary to carry out legislation that Congress itself has passed.

The key difference between the ACS and the old decennial census is timing.  Instead of blitzing households all at once every ten years, the ACS continuously contacts different households — about 3 million a year — and releases updated findings annually.  To get down to the neighborhood level, the Census Bureau averages together five years of ACS data to generate a sample size that is almost as large as the one the old census long form collected.

Some proponents of the ACS cut cited a desire to save money.  But if the Census Bureau has to return to the old long-form approach to collect the same data, the effort may end up costing more, partly because Census would need to hire and train a new, inexperienced staff every ten years.

The bigger cost by far would come from losing the information entirely.

Tax Credits for Working Families Help Women Now and Later

March 30, 2012 at 10:32 am

March is women’s history month and income taxes are due in April.  So it’s a good time to note the difference that tax credits for working families, such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), make for women’s economic security.

Working Family Tax Credits Kept Millions of Women Out of Poverty in 2010 The EITC is enormously successful at encouraging work and boosting earnings among low-income single mothers and is strikingly effective at reducing poverty.  Using data and procedures explained here, I estimate that the EITC kept an estimated 3.4 million women and girls above the poverty line in 2010.  That figure includes the effect of temporary 2009 Recovery Act expansions in the EITC, which alone kept 233,000 women and girls above the poverty line.

The numbers rise when you include a second federal income tax credit — the less well-known CTC, which provides up to $1,000 per child for working families:  together, the CTC and EITC kept 4.9 million women and girls above the poverty line in 2010, including more than 800,000 just by the Recovery Act’s expansions of both credits.  (The Recovery Act expanded other benefits that kept women out of poverty, too.  Counting just a few of them — the Making Work Pay Tax Credit, two expansions of unemployment benefits, and added food stamp benefits, in addition to the EITC and CTC improvements — the Recovery Act and subsequent extensions kept 3.5 million women and girls above the poverty line in 2010.)

Further, research suggests that the EITC may continue to improve these women’s economic security even after they retire.  In a new Congressional Budget Office working paper, researchers project that by raising employment and earnings levels for working-age women, the EITC will boost their Social Security retirement benefits.  That’s because your Social Security eligibility and benefit levels are based on your prior work and earnings history.

The vast majority of seniors rely heavily on Social Security benefits in retirement, but these benefits are especially critical for women and low-wage workers. That the EITC is expected to boost Social Security receipts and benefits among low-wage women is just one more way that it provides economic security by promoting and supporting work.

Under $2 a Day in America, Part 1

March 5, 2012 at 2:03 pm

Note: This is the first in a series of posts on extreme poverty that CBPP will do this week.

Living on less than $2 per person a day is one World Bank definition of poverty for developing nations.  Unfortunately, this threshold is increasingly relevant to the United States, according to a new study from the National Poverty Center.

The number of U.S. households living on less than $2 per person per day — which the study terms “extreme poverty” — more than doubled between 1996 and 2011, from 636,000 to 1.46 million, the study finds (see graph).  The number of children in extremely poor households also doubled, from 1.4 million to 2.8 million.

The figures are for cash income only, although the authors —the University of Michigan’s H. Luke Shaefer and Harvard University’s Kathryn Edin — note that extreme poverty is up even when one counts non-cash benefits like SNAP (food stamps).  We will discuss the connection between these findings and food and housing assistance in follow-up posts.

Extreme Poverty Doubled in Past 15 Years

The authors note an apparent connection between the sharp growth in extreme poverty and the loss of public assistance benefits, stating that “This growth has been concentrated among those groups that were most affected by the 1996 welfare reform.”  The 1996 law replaced Aid to Families with Dependent Children, which primarily provided cash assistance to eligible families, with the Temporary Assistance for Needy Families (TANF) block grant, which provided states with a fixed level of funding which they could use for many different purposes.

The report found that the rate of extreme poverty doubled for households overall but nearly tripled for female-headed households, which make up the bulk of the TANF caseload.

As we’ve explained, TANF’s ability to reach poor families has eroded severely in the past decade and a half.  Whereas, in 1996, TANF provided cash assistance to 68 families for every 100 poor families with children, by 2010 it provided cash assistance to only 27 families for every 100 families in poverty.  Families that have reached welfare time limits are not eligible for any federal cash assistance, and many have serious mental or physical health issues that leave them jobless for long periods.

Also, the sharp decline in the value of TANF benefits over time means that many TANF recipients remain extremely poor.  Benefits are below half of the poverty line in every state.  For a family of three, benefits are only about $2 per person per day in Mississippi and Tennessee and only slightly more than $2 per person per day in Alabama and South Carolina, for example.

Co-author Edin is an authority on the ways in which extremely poor households scraped by day-to-day in the pre-welfare-reform era.  Today, say Shaefer and Edin, “it is unclear how households with no cash income — either from work, government programs, assets, friends, family members, or informal sources — are getting by even if they do manage to claim some form of in-kind [i.e., non-cash] benefit.”

Research has shown that poverty in childhood has a long and harmful reach.  Even modest changes in family income for young children in poor families significantly affect their educational success — and may have a big effect on their earnings as adults.

Debunking the “Entitlement Society” Myth

February 10, 2012 at 11:44 am

Contrary to claims that government benefit programs are creating a dependent class of Americans who are losing the desire to work and would rather collect government benefits than find a job, a major report we issued today finds that these programs’ benefits go overwhelmingly to people who are elderly, disabled, or members of working households.

As it states:

Contrary to "Entitlement Society" Rhetoric, Over Nine-Tenths of Entitlement Benefits Go to Elderly, Disabled, or Working Households

Some conservative critics of federal social programs, including leading presidential candidates, are sounding an alarm that the United States is rapidly becoming an “entitlement society” in which social programs are undermining the work ethic and creating a large class of Americans who prefer to depend on government benefits rather than work.  A new CBPP analysis of budget and Census data, however, shows that more than 90 percent of the benefit dollars that entitlement and other mandatory programs spend go to assist people who are elderly, seriously disabled, or members of working households — not to able-bodied, working-age Americans who choose not to work.  This figure has changed little in the past few years.

In a December 2011 op-ed, former Massachusetts Governor Mitt Romney warned ominously of the dangers that the nation faces from the encroachment of the “Entitlement Society,” predicting that in a few years, “we will have created a society that contains a sizable contingent of long-term jobless, dependent on government benefits for survival.”  “Government dependency,” he wrote, “can only foster passivity and sloth.”  Similarly, former senator Rick Santorum said that recent expansions in the “reach of government” and the spending behind them are “systematically destroying the work ethic.” . . .

Such beliefs are starkly at odds with the basic facts regarding social programs, the analysis finds.

Our analysis covers Social Security, Medicare, Medicaid, unemployment insurance, SNAP (formerly known as the Food Stamp Program), SSI, Temporary Assistance for Needy Families (TANF), the school lunch program, the Children’s Health Insurance Program (CHIP), the Earned Income Tax Credit, and the refundable component of the Child Tax Credit.

The only major entitlement programs that are not included are veterans’ programs and military and civil service retirement, which critics presumably do not have in mind when they warn of the dangers of the “entitlement society” in fomenting dependency and sloth.  In any event, including these programs doesn’t change the above 91 percent figure.

The data dispel several other common misperceptions.  For example:

  • Contrary to claims that entitlements take heavily from the middle class to give to people at the bottom or shower benefits on the very wealthy, the middle 60 percent of the population receives close to 60 percent of the entitlement benefits, while the top 5 percent of the population receives about 3 percent of the benefits.
  • Non-Hispanic whites receive slightly more than their proportionate share of entitlement benefits.  They accounted for 64 percent of the population in 2010 and received 69 percent of the entitlement benefits.

Click here for the full report.