More About Erica Williams

Erica Williams

Erica Williams joined the Center in August 2009 as a Policy Analyst with the State Fiscal Project

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


Child Poverty Remains High, But States Can Make a Difference

September 19, 2014 at 12:55 pm

Update, September 22:  We’ve corrected the map in this post. 

More than half of the states plus the District of Columbia had child poverty rates of 20 percent or higher last year (see map), new data from the Census Bureau’s American Community Survey show, and in some states — like New Mexico and Mississippi — poverty affected as many as one in three kids.  Such extensive child poverty unnecessarily damages the prospects of millions of children.

Relative to their better-off peers, poor children have poorer health, do less well in school, and complete fewer years of education.  Over the long term, they are more likely to have chronic bad health and to work fewer hours and earn less as adults, which can contribute to a vicious cycle of poverty.

In addition, the stress of hunger, unsafe neighborhoods, and unstable housing, among other hardships that many poor families face, can have harmful physiological effects on children’s still-developing brains.  This “toxic stress” can impede their social and emotional development and ability to learn.

States have a range of effective tools to reduce child poverty and the associated hardships. They can, for instance:

  • Raise the state minimum wage in conjunction with creating or improving the state’s earned income tax credit.
  • Provide quality early childhood education to help boost the future prospects of children in poor families while allowing their parents to work and build a better future for them.
  • Connect more poor children to a full range of federal supports, including nutrition, housing, and health care.

Poverty Above Pre-Recession Levels in 47 States, New Census Data Show

September 18, 2014 at 4:46 pm

Poverty remained above pre-recession levels last year in 47 states plus the District of Columbia, our analysis of Census data issued this morning shows (see chart).  In some states, the increase was substantial — in Arizona, California, Florida, Georgia, and Nevada, poverty rates were four to five percentage points higher in 2013 than in 2007.  The stubbornness of high poverty rates in the wake of the Great Recession underscores the need for states to do more to help working families make ends meet.

Poverty rates in the states not still above pre-recession levels, Alaska and the Dakotas, weren’t statistically different from 2007.

Unequal wage growth and rising income inequality have played key roles in preventing more substantial improvements in poverty.  For workers earning low pay, wages are right where they were 40 years ago after adjusting for inflation, according to the Economic Policy Institute.  And since the recession’s official end in 2009, most workers’ wages have fallen, while workers at the top have seen some growth.

States have tools to help to address low wages and rising income inequality.  They can create or improve state earned income tax credits (EITCs), which promote work and reduce poverty and can improve low-income children’s chances of success both in school and, later, in the workforce.  States can also raise their minimum wage — the federal minimum wage is 22 percent below its peak value in 1968, after adjusting for inflation — and index it to inflation.  Improvements in these two areas are complementary for reasons we explain here, reaching a broader population than the EITC or minimum wage alone and keeping many more families out of poverty.

Two Policy Tools States Can Use to Build a Broader Recovery

September 3, 2014 at 3:35 pm

Low-wage workers need a boost.  In the last few years, their wages have fallen sharply and now are no different than they were 40 years ago, adjusted for inflation (see chart), leaving millions struggling to afford basics like decent housing in safe neighborhoods, nutritious food, reliable transportation, and quality child care.  As we detail in a new paper, states can use two effective policy tools to help working families and individuals meet their basic needs and pursue a path to financial stability:  state earned income tax credits (EITCs) and minimum wages.  The two work best when states strengthen them at the same time.

State EITCs and minimum wages help make work pay for families who earn low wages.  They increase income, widen the path out of poverty, and reduce income inequality.  They also help to build a stronger future economy because lifting family income for young, low-income children can result in improved learning and educational attainment and higher future earnings in adulthood.

While each policy is effective in its own right, state EITCs and minimum wages build upon each other’s effectiveness in boosting the prospects of low-wage working families.  State policymakers should improve them in tandem.  Here’s why:

  • State minimum wages and EITCs reach overlapping but different populations.  State EITCs primarily target low-income families with children and are available to working families earning more than three times a full-time minimum wage worker’s annual salary of $14,500.  The minimum wage goes to the very lowest-wage workers, regardless of factors like family income, family status, or age.
  • Increasing both at the same time provides added support to the working families who need it most.  Together, a minimum wage boost and a robust state EITC can move families beyond poverty and further down the road to economic security.  Also, a minimum wage increase provides the added benefit of increasing the EITC for some families.
  • The benefits of the two policies are timed differently.  An expanded minimum wage increases every paycheck, which helps with routine expenses, like food, monthly bills, and rent.  State EITCs are paid at tax time and can be used for larger, one-time expenses, like car repairs or a security deposit.
  • Improving both together allows the public and private sectors to share the cost of boosting incomes for those who work.  The EITC is a cost largely borne by state government, and by extension state taxpayers.  The state minimum wage is borne principally by the private sector, especially employers and consumers.  Improving both policies spreads the cost of making work pay more broadly than does either policy alone.

Many states have increased their minimum wage and a few states have enacted EITC improvements in 2014.  Three states — Maryland, Minnesota, and Rhode Island — and the District of Columbia have done both.  Other states also should look to advance the two policies at the same time to make the biggest impact for families most in need.

Click here to read the full paper.

More Time Unlikely to Fix Kansas’ Poor Strategy for Growth

July 9, 2014 at 1:35 pm

Heritage’s Stephen Moore argues that Kansas’ tax cuts, which have led to deep revenue declines that will make it harder for the state to invest in education and other drivers of long-term prosperity, just need more time to boost its economy.  But that’s not what proponents argued in 2012, when the legislature enacted the first round of deep income tax cuts.  Governor Sam Brownback said then that the tax cuts (designed by Arthur Laffer, a frequent collaborator with Moore) would be “like a shot of an adrenaline into the heart of the Kansas economy.”

We don’t know whether Kansas will under- or out-perform the U.S. economy in coming years (although the state’s own legislative researchers project slower growth for Kansas relative to the United States in 2015).  But recent experience and academic studies suggest that Kansas hasn’t improved its chances of economic growth by cutting taxes and may well have damaged them.

Our examination of how the big tax-cutting states of the past two decades have fared found that tax cuts aren’t a particularly fruitful strategy for growth:

  • Three of the six states that enacted large personal income tax cuts in the years before the Great Recession of 2007-2009 saw their economies grow more slowly than the nation’s in the following years.  The other three states enjoyed above-average growth, but they are all major oil-producing states that benefitted from a sharp rise in oil prices after the tax cuts.
  • Similarly, the five states with the biggest tax cuts in the 1990s created jobs during the next economic cycle at one-third the rate of other states, on average.  The biggest tax-cutting states also had slower income growth.

Among economic studies, there’s no consensus on the impact of state taxes on economic growth.  Some studies find that higher taxes hurt growth, some find that higher taxes help growth when they finance higher-quality education and better infrastructure, and most find that tax levels have only a minor impact either way.

Other states considering deep tax cuts in pursuit of economic growth should note those facts, as well as the damage that deep tax cuts have already done in Kansas.

Do’s and Don’ts for Stronger State Economies

June 24, 2014 at 1:24 pm

A number of proactive fiscal policies can prime states for a more prosperous future, our updated guide explains.  They include:

  • Target economy-boosting investments.  Research shows that investing in services like education, transportation, and health care promotes economic growth and job quality in the long run.  Maintaining and improving these services requires resources.  States should scrutinize existing spending to find savings, raise revenue when necessary, and bring their revenue systems in line with a 21st century economy, such as by broadening the sales tax base to include more services.
  • Improve fiscal planning.  Strong fiscal planning helps states determine the resources needed to sustain, beyond any one budget year, investments critical to economic growth. That’s why policymakers should budget for the future:  lay out a clear roadmap, ensure that budget impact analyses are credible, and create mechanisms to trigger needed mid-year course corrections.
  • Help struggling families.  Years after the official end of the Great Recession, millions of Americans continue to struggle.  Helping people meet basic needs and move up the economic ladder is critical to a state’s long-term success.  States can do this by protecting and expanding Earned Income Tax Credits, which help low- and moderate-income working families keep more of what they earn to pay for things that help them stay on the job, like child care and reliable transportation. States also should properly fund their unemployment insurance systems and protect supports for the neediest families through Temporary Assistance for Needy Families (TANF).

On the flip side, our guide also recommends that states:

  • Avoid ineffective strategies and gimmicks.  Several states have enacted or considered deep income tax cuts in the name of promoting economic growth.  But these tax cuts typically provide the largest benefits to high-income people, while doing little to nothing for everyone else.  Bad choices in good economic times, these tax cuts are even more unwise when revenues have just barely surpassed pre-recession levels.  The result is less money for services that are fundamental to economic growth, as well as increasingly skewed tax systems in which the lowest-income people pay the biggest shares of their incomes in taxes.