Posts Tagged ‘Under $2 a Day in America Series’

Under $2 a Day in America, Part 3

March 7, 2012 at 5:25 pm

As we have explained, proposals from the President and House Republicans to raise rents on the poorest recipients of federal housing assistance could impose unaffordable burdens on many of them.  Some people might question whether the proposed increases are really that significant:  who couldn’t afford another $20-$25 per month?

Lots of people, as the new study from the National Poverty Center makes clear.

The study reports a 130 percent increase since 1996 in the number of families with children living on less than $2 per person per day.

About 300,000 of these extremely poor families, or about one in five, received housing assistance as of the beginning of 2011, the study notes.  This is consistent with our analysis, based on data from the Department of Housing and Urban Development, that some 330,000 families with nearly 700,000 children — as well as another 150,000 households without children — would face a rent increase under the House proposal.  Even more families would face increases under the President’s proposal.

Let’s take a three-person family that receives federal housing assistance and has a monthly income of $180 (that is, $2 per person per day or $6 per family per day).  If that family pays the current federal $50 minimum rent, the family has about $4.30 a day left after taking out the rent money.  With a rent increase of $25, that family would have about $3.50 a day after taking out the rent money.  At this marginal level of survival, that $0.80 a day reduction can make a big difference in whether a family can afford, say, diapers or the bus fare to a doctor’s appointment.

This study also rebuts the argument from the Administration and House Republicans that rents should go up to reflect inflation since Congress set the $50 minimum rent in 1996.  Yes, rents have gone up in the last 15 years, but incomes at the bottom have not.

As my colleague Jared Bernstein noted recently, a recent Congressional Research Service study found that inflation-adjusted incomes for the bottom 20 percent of the population fell by 6 percent between 1996 and 2006, before the recession did further damage.  And at the very bottom, the new National Poverty Center study shows that during the same period that the minimum rent has been flat at $50, the number of families with children so poor that they will be hurt by a $25 rent increase has more than doubled.

So, while the proposed rent increase may not seem like much to most of us, it would be to hundreds of thousands of our nation’s poorest families.

Under $2 a Day in America, Part 2

March 6, 2012 at 2:44 pm

Yesterday’s post in this series highlighted a recent study from the National Poverty Center showing that the number of extremely poor families — those living on less than $2 per person a day — more than doubled between 1996 and 2011, to 1.46 million.  The number of extremely poor children also doubled, to 2.8 million.

While the study’s findings are extremely troubling, they also show that SNAP (the Supplemental Nutrition Assistance Program, formerly the Food Stamp Program) is a powerful antidote to extreme poverty.

Counting SNAP benefits as income reduces the number of households in extreme poverty in 2011 from 1.46 million to nearly 800,000, the study found (see graph).  And it reduces the number of children in extreme poverty in 2011 by half — from 2.8 million to 1.4 million.

SNAP Cuts Extreme Poverty Significantly

SNAP’s beneficial effects were especially notable after policymakers expanded the program in the 2009 Recovery Act.  As the graph shows, the number of extremely poor households shot up between late 2008 and early 2011, but if you count SNAP benefits, it remained virtually unchanged.

Other studies have also documented SNAP’s powerful poverty-fighting impact.  According to the Census Bureau’s Supplemental Poverty Measure, which counts SNAP as income, SNAP kept more than 5 million people out of poverty in 2010.  SNAP also lessens the severity of poverty for millions of others; if SNAP is counted as income, it lifted 2.5 million children above 75 percent of the poverty line in 2005, more than any other program.

One reason that SNAP is so effective in fighting poverty is that it is focused overwhelmingly on the poor.  Roughly 93 percent of SNAP benefits go to households below the poverty line, and 55 percent go to households below half of the poverty line (about $9,300 for a family of three).  One in five SNAP households lives on cash income of less than $2 per person a day.

Another reason for SNAP’s effectiveness is that, unlike cash assistance, it is broadly available to almost all households with low incomes.  SNAP eligibility rules and benefit levels are, for the most part, uniform across the nation.  And, SNAP is structured as an entitlement, which means that anyone who qualifies under program rules can receive benefits.

SNAP alone, of course, cannot cure extreme poverty or the hardships to which it contributes.   Even with the help that SNAP provides, the Agriculture Department estimates that some 2.2 million households with children suffered from hunger at some point in 2010.  But SNAP is doing much to ameliorate these terrible problems.

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.