Hardship in America, Part 3: Homelessness Growing Among Families with Children

November 22, 2011 at 4:11 pm

The number of homeless families has been growing in recent years, but major programs that have proven effective at helping families find stable housing will serve fewer of them next year because of limited funding.

Since the recession began in late 2007, the number of homeless families with children living in temporary shelters has risen by 28 percent, to nearly 170,000 families in 2010, according to the Department of Housing and Urban Development (HUD).  Roughly four times as many families are living “doubled-up” or in other unstable home situations, school enrollment data from the Department of Education data suggest.

Numerous studies have documented the harmful long-term impact of housing instability on children.  Compared to other kids, children whose families are homeless or living in unstable homes:

  • Perform less well in school, are more likely to repeat a grade, and are less likely to complete high school — and the effects worsen with cumulative moves.
  • Experience higher rates of mental health problems and developmental delays.
  • Will more likely have physical health problems such as asthma or ear infections.  (The Center for Housing Policy provides helpful summaries of the research here and here.)

Equally well-documented, housing assistance dramatically improves housing stability for low-income families that receive it.  A recent study of families with children eligible for welfare assistance, for example, concluded that housing vouchers reduced the incidence of homelessness among these families by 75 percent.  (Housing vouchers, which are federally funded, enable low-income households to rent modest housing in the private market at an affordable cost.)

Due to funding limitations, however, only about 1 in 4 eligible low-income families receives a housing voucher or other type of federal rental assistance.

Moreover, even fewer families will likely receive rental assistance in the future.  Congress provided $1.5 billion for homelessness prevention in the 2009 Recovery Act, which likely averted an even sharper increase in family homelessness in 2010 (see graph), yet most local housing agencies will exhaust these funds well before the end of next year.  Also, in HUD’s fiscal year 2012 budget, total funding for programs will fall by $3.7 billion (9 percent) below the 2011 level.  Hardest hit are public housing and programs that promote the production of affordable housing.  But even programs that fared relatively well in the budget, such as the Housing Choice Voucher program, will likely serve fewer families next year due to inadequate funding.

Related Posts:

Hardship in America, Part 2: Safety Net Withering for Poor Families with Children

November 22, 2011 at 2:15 pm

The Great Recession has exposed both the strengths and weaknesses of our nation’s safety net.  The Supplemental Nutrition Program (SNAP, formerly food stamps) and Medicaid have shown  that safety-net programs can, if designed properly, push back against increased hardship during a downturn by responding automatically to sharp and sudden increases in need.

Unfortunately, the same cannot be said of Temporary Assistance for Needy Families (TANF), which provides cash assistance to low-income families with children who have nowhere else to turn for help.

TANF’s effectiveness as a safety net depends both on the extent to which very poor families are enrolled in it and on the level of benefits that they receive.  TANF has been performing inadequately in both areas for some time, but the situation has worsened during the downturn:

  • Few very needy families receive TANF benefits. In 1996, for every 100 poor families with children, 68 received cash assistance through the Aid to Families with Dependent Children program, which TANF replaced.  In 2009, for every 100 such families in poverty, only 27 received cash assistance through TANF.  Between December 2007 and December 2009, state TANF caseloads increased by just 13 percent nationally, lagging far behind the increases in SNAP caseloads, the number of unemployed, and the number of people in families with children that live below the poverty line.
  • TANF benefit levels are low and falling. Cash assistance benefits have fallen by 20 percent or more in 34 states since 1996, after adjusting for inflation (see chart).  In the median state, a family of three receives just $428 per month.  The majority of states now provide TANF benefits that are below 30 percent of the poverty line.

Worse, six states and the District of Columbia have cut their TANF benefit levels since August 2010, our new report shows, reducing assistance for more than 700,000 low-income families that represent over one-third of all low-income families receiving such assistance nationwide.

TANF benefits thus are increasingly inadequate to help poor families meet basic needs, like housing. In every state, the monthly TANF benefit level for a family of three is less than the estimated cost of a modest two-bedroom apartment.

The much-touted 1996 bipartisan welfare reform deal, which created TANF, sought a balanced approach:  to require able-bodied recipients to work or prepare for work while maintaining a safety net for parents who were unable to work due to a short-term crisis, a work-limiting disability, or the lack of available jobs.  (Many of the families that receive assistance include a disabled household member and most have limited job skills, which makes finding a job in a weak economy that much harder.)  Unfortunately, the program’s safety-net aspect is getting weaker with every passing year.

Related Posts:

Hardship in America, Part 1: Majority of Poor Children Live in Households with Major Hardships

November 21, 2011 at 4:44 pm

Note:  With Thanksgiving right around the corner, the Center thought this was a good time to look at the latest figures on various indicators of hardship. This is the first in a series of posts on this subject that CBPP will do this week.

Poverty rates rose in 2010 under a variety of poverty measures, as the economic downturn continued and long-term unemployment hit record highs.  Lest anyone doubt that this is a serious problem requiring attention, new CBPP analysis finds that more than half (52 percent) of poor children last year lived in households that faced one or more of the following:

  • hunger (what the Agriculture Department now terms “very low food security”),
  • overcrowded living conditions (more than one person per room),
  • failure to pay rent or mortgage on time, or
  • failure to receive needed medical care.

Poor Children's Households Much More Likely to Experience HardshipThat’s three times the 17 percent rate for households with incomes at or above twice the poverty line, as the graph shows.  (Not all of these hardships affect the children; some affect other household members.)

Fortunately, government assistance can make a difference in poverty — and, it is fair to conclude, hardship.

Earlier this month, Census reported that while poverty rose significantly in 2010 under a new poverty measure (the Supplemental Poverty Measure) that takes both cash income and government assistance into account, government assistance kept poverty from being even higher.

Also, a CBPP analysis found that nearly twice as many people would count as poor in 2010 if one leaves out the income they received from assistance programs.  In particular, a handful of government initiatives enacted in 2009 and 2010 kept nearly 7 million people out of poverty in 2010.

Unfortunately, those initiatives are expiring, many states have cut programs that help low-income families, and some budget-cutters in Congress are targeting such programs for further cuts.

Related Posts:

A Vital Tax Table of the Holiday Season

November 21, 2011 at 4:26 pm

Between Thanksgiving and Christmas, Congress has an important tax policy decision to make.  With the economy still struggling and one in eleven Americans out of work, January 1 would be an awful time to cut every paycheck in America.  But, every paycheck in America will shrink unless Congress acts to extend, and preferably expand, the payroll tax holiday by the end of the year.

Up and down Wall Street, economists are warning about the severe consequences of inaction on payroll taxes and extended unemployment benefits.  Goldman Sachs estimates that expiration of the payroll tax cut would reduce growth by as much as two-thirds of a percentage point in early 2012.  Moody’s Mark Zandi adds that if Congress does not extend the payroll tax holiday and unemployment benefits for 2012, “there will be approximately one million fewer jobs by year’s end.”

Failure to extend the payroll tax cut would hurt workers in nearly every job and income category.  For example, the nation’s 1.4 million truck drivers, whose salaries average $39,450, would pay $789 more in payroll taxes, on average. The nation’s 2.7 million nurses, whose salaries average $67,720, would lose $1,354, on average.

The table below is one that every member of Congress should study:

Failure to Extend the Payroll Tax Cut Would Shrink Paychecks of Working Americans

Related Posts:

Orszag Is Right: Locking in Bush Tax Cuts Not Worth a $1.2 Trillion Supercommittee Deal

November 21, 2011 at 12:36 pm

Former Office of Management and Budget Director Peter Orszag, now vice chairman of global banking at Citigroup, hit the nail on the head when he told Atlantic Media’s Ron Brownstein recently that “There is virtually nothing the supercommittee could plausibly do that could offset the harm from making the [Bush] tax cuts permanent” because of their very large cost.

Some supercommittee proposals would actually have been damaging to long-term deficit reduction.  The plan of Republican Sen. Pat Toomey, for example, would have set tax rates well below the Bush levels and locked them in permanently.  Furthermore, it would have devoted the overwhelming bulk of the revenues from reforming tax expenditures to paying for those lower rates.  The result would have been that both the large potential savings from tax reform and the potential savings from allowing some or all of the Bush tax cuts to expire would have been taken off the table for the future rounds of deficit reduction the nation will need.

While fiscal commission co-chairs Erskine Bowles and Alan Simpson and the Gang of Six called for cutting rates below the Bush levels, their plans would have raised over $2 trillion in net new revenues, and produced about $5 trillion in deficit reduction overall, relative to the current-policy baseline.  By contrast, the Toomey plan would have left most of the needed deficit reduction for the future (it would have achieved, at most, $1.5 trillion in deficit reduction) and secured a scant $300 billion from revenues.

As Orszag noted (and we’ve said before), a supercommittee agreement that locked in unaffordably low tax rates and made it more difficult to raise additional revenues in the future would set back the cause of deficit reduction.

Related Posts: