The Shriver Brief : Poverty Law Commentary & Insights : Sargent Shriver National Center on Poverty Law : Affordable Housing, Healthcare Reform

Public policy is about making choices. It is about making the best use of the scarce resources that are available to accomplish our desired policy result. Resources used one way cannot be used another; we have to make choices. Now, in the midst of the worst national economic crisis since the Great Depression, with meager rates of national economic growth and persistently high and extended periods of unemployment, the stakes riding on our policy choices have never been higher.

The Republicans’ consensus position is clear. Do not raise taxes. In Speaker Boehner’s words, “ It’s a very simple equation. Tax increases destroy jobs.” Grover Norquist’s pledge to oppose any and all tax increases has been signed by 236 of 242 Republican members of the U.S. House of Representatives (98%) and 40 of 47 Republican members of the U.S. Senate (85%).

The first question to ask about the Norquist no tax pledge is whether it is fair, that is, is it fair that the wealthy pay no more than they do now and that our budget deficit be reduced solely by decimating programs that most Americans need? Simply considering where the gains in wealth have gone over the past 30 years, the answer is hell no, that's not fair.

From 1979 to 2007, income grew by 95% among the wealthiest 20% of Americans while it grew by only 25% among the other 80% of Americans. Even more shocking, income among the top 1% of Americans grew by 281%. Put another way, for every dollar of real economic growth generated over the past 30 years, 58 cents has gone to the top 1% of households. Case closed.

But fairness does not end the inquiry. Indeed, if raising taxes on the wealthy would hurt the economy and destroy jobs, as Speaker Boehner contends, then while it might be fair it would not be good public policy. The fact is, however, that concentrating wealth in the hands of the few is not only unfair, it is ruinous to the economy. 

That is why the bipartisan Congressional Budget Office (CBO), in its January 2010 report, “Policies for Increasing Economic Growth and Employment in 2010 and 2011,” concluded that extending the Bush tax cuts for the wealthy, when compared to other policy alternatives, would be the worst possible way to spur economic growth and job creation. The reason, according to the CBO, is simple. When the economy is weak, spending is needed to stimulate it. But wealthy people, given an extra dollar, are much more likely to save it while lower income people are much more likely to spend it, and spending it is what increases demand, spurs economic growth and creates jobs.

The CBO report compared the impact on economic growth and job creation of various policy alternatives. The CBO found that compared with extending the Bush tax cuts for the wealthy:

• Extending unemployment insurance benefits would generate 5 times as much economic growth and create 4 times more jobs.
• Reducing employees’ payroll taxes would generate 2 times as much economic growth and create 1.5 times more jobs.
• Reducing employers’ payroll taxes would generate 3 times as much economic growth and create 3 times more jobs.
• Investing in infrastructure would generate 4 times as much economic growth and create 3 times more jobs.
• Providing aid to states for purposes other than infrastructure would generate 3 times as much economic growth and 2 times more jobs.

The jobs plan announced by President Obama on September 8 includes all of the elements that the CBO found would stimulate economic growth and create jobs. His proposal would extend unemployment insurance benefits for another year; halve the payroll tax paid by employees to 3.1% through 2012; create new reductions in payroll taxes for certain employers; invest in infrastructure including building, repairing and modernizing roads, bridges, railroads, airports and 35,000 schools; and provide aid to states to pay for teachers and first responders.

The deficit reduction plan proposed by President Obama on September 19 would largely pay for his jobs plan, and reduce our long-term budget deficit, by ending the Bush tax cuts for wealthy Americans.

Earlier this year, Congressman Paul Ryan proposed a long-term budget and deficit reduction plan. Ryan’s plan would have dismantled Medicare and turned it into a private insurance voucher program with massive cost shifts to beneficiaries. It also would have cut funding for the Supplemental Nutrition Assistance Program (formerly Food Stamps) by nearly 20% and converted it into a block grant completely unresponsive to increased need during a recession.

Ryan’s proposed budget was the first salvo in the new Congress’s economic mantra of achieving deficit reduction and stimulating the economy solely by cutting spending while abiding by their pledge to Grover Norquist never to raise taxes. This dogma, so misguided and destructive to restoring our country’s prosperity, was put in perspective by David Stockman, President Reagan’s leading economic adviser as his Director of the Office of Budget and Management, in his assessment of Ryan’s plan:

"I think the biggest problem is revenues. It is simply unrealistic to say that raising revenue isn't part of the solution. It's a measure of how far off the deep end Republicans have gone with this religious catechism about taxes."

The author wishes to thank Shriver Center policy intern Michael Elsen-Rooney for his research assistance.

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Last week the Census Bureau released data on the national poverty rate. As was discussed in our recent blog about this data, the number of people in poverty in 2010 was the largest in the 52 years for which poverty estimates are available. There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009, and the nation's official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009.

This week, the American Community Survey (ACS) data were released. The ACS is a sort of mini-census conducted annually that polls roughly three million homes per year. This survey provides demographic, social, economic, and housing data for states, congressional districts, counties, and other localities. In other words, it provides much more data on what is happening at local levels.

According to the ACS, real median household income fell between 2009 and 2010, decreasing by 2.2 percent from $51,190 to $50,046. No state showed an increase in real median household income. 

The ACS data also show a continued decrease in employment. Between 2008 and 2010 the nation experienced a 4.9 percent decline in the employment/population ratio, from 71.5 percent in 2008 to 66.6 in 2010. In fact, all of the 50 largest metropolitan areas, except New Orleans–Metairie-Kenner, Louisiana, experienced a significant decrease in their employment/population ratio during this time period.

Although the recession was “officially” over by mid-2009, the nation’s employment ratio continued to decline between 2009 and 2010, dropping from 68.2 percent to 66.6 percent. Although this decline was smaller than the 3.3 percent decline that occurred between 2008 and 2009, the overwhelming majority of the 50 largest metropolitan areas (43) continued to experience declines between 2009 and 2010. 

Income and Unemployment in Illinois

In Illinois, median household income, at $52,972, is slightly above the national average of $50,046. Yet, Illinoisan’s still experienced a 3.7 percent decline from last year’s median household income of $54,992. In terms of employment/population ratios, Illinois is again slightly above the national average of 66.6 percent, at 72.2 percent, however, the decrease between 2008 and 2010 shows that the downward trend in this ratio is continuing. In 2008, Illinois’ employment ratio was 72.2 percent, in 2009 it was 68.7 percent, and it’s now at 67.4 percent.

White House Jobs Bill

On September 8^th the President, speaking before a joint session of Congress, unveiled the proposed American Jobs Act bill. The bill, which proposes tax credits for American businesses, and payroll tax cuts for all workers, is intended to get the economy going again. As President Obama stated: "The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed. It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services."

Of particular interest, given the ACS data on unemployment, the bill, which is a combination of tax cuts, investments in infrastructure, funding for job training, and benefit extensions, contains provisions for extending unemployment benefits for the long-term unemployed. The need for job creation and the extension of benefits for those currently unemployed is underscored by the ACS data.

A complete copy of the 2011 American Community Survey data is available from the Census Bureau. A summary and the full text of the American Jobs Act of 2011 are available on the White House website.

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The American Jobs Act uses a variety of mechanisms to help get disadvantaged Americans working again--tax credits, economic stimulus, assistance finding a job, opportunities to get training or work experience, preventing job discrimination, and flexible funding to support innovative initiatives. The size of the bill and the scope of its strategies will hopefully prove sufficient to move the country forward to end the unemployment, disillusionment, and real deprivation that so many of us are experiencing. We have the opportunity to make meaningful investments in our future prosperity while putting people back to work.

Here’s a roadmap to the provisions of the American Jobs Act (AJA) that will help low-income individuals and the long-term unemployed. The draft bill, sent by President Obama to Congress, also includes many other provisions, many of which would create jobs. The White House has a 20-page summary of the whole act, which includes the reasons for the various provisions, and evidence of their bipartisan support. At this time, the House has not scheduled any hearings on the bill. If you’d like more information, read our longer article on these provisions.

1. Tax credits make up half the total cost of the bill, and there are many targeted at businesses and employees. In addition to a payroll tax cut (from 6.2 percent to 3.2 percent) for businesses on the first $5,000,000 in wages, there is a complete payroll tax holiday for hiring new workers or raising wages, up to a limit. Employers can also receive a tax credit for hiring a worker who has been unemployed at least six months in the last year, or who is unemployed veteran.

2. Mandatory reemployment services for recipients of Emergency Unemployment Compensation (EUC is generally weeks 26-79 of unemployment insurance). The federal government will reimburse states for providing services including career and labor market information, individual assessment, career one-stop orientation, and job search counseling. It’s important that the federal government, and states, reduce the burden on individuals by, for example, providing virtual services, flexible scheduling, and supportive services (such as transportation allowances and child care) for individuals at 200 percent or below of the federal poverty line to attend these programs. Additionally, the state may set up an optional self-employment assistance program for recipients of EUC.

3. Reemployment Now Program. States have flexibility to use their share of this $4,000,000,000 allocation on: individual counseling, job search skills training, and case management; innovative programs; wage insurance; administrative costs of the self-employment program; and/or Bridge to Work. Wage insurance partially compensates individuals over age 50 who were receiving EUC when they accept a new full-time job with lower earnings than their previous job. Bridge to Work is a voluntary program where individuals can work for eight weeks at a short-term job placement. Their pay is their unemployment benefits and an additional amount so their total payment equals the minimum wage (a state may also require employers to pay more beyond this amount). Additionally, the state may spend the funds on supportive services, additional wages beyond minimum, and administrative expenses. For employers to stay eligible to receive placements, they must offer at least one participant a full-time job within 24 weeks, and states may (and should!) add conditions for employer participation.

4. Short-Time Compensation Programs. Many states currently have a work-sharing unemployment insurance program in place, and under this statute those states may continue their program, and new states can create a program with the federal government. Employees who lose 10-60 percent of their hours (or state can lower the 60 number), at participating employers, receive a pro-rata share of their unemployment insurance.

5. Pathways Back to Work Fund. This fund will provide workforce development funds, often delivered through the Workforce Investment Act (WIA) infrastructure, but with different outcome measures. The changed measures will hopefully address the tendency of the current WIA outcome measures to discourage service of those individuals who face the greatest barriers to work or school, while still providing accountability and transparency.

a. $2,000,000,000 to “subsidized employment to unemployed, low-income adults.” The funds may also be used for supportive services for participants, such as transportation and childcare.

b. $1,500,000,000 to provide summer and year-round employment opportunities to low-income youth. The funding must be used for “summer employment opportunities for low-income youth, ages 16 through 24, with direct linkages to academic and occupational learning, and may include the provision of supportive services, such as transportation or child care, necessary to enable such youth to participate” and “year round employment opportunities,” for out of school youth. The priorities for funding are employment opportunities in either emerging or in-demand occupations in the public or nonprofit sector, and “linking year-round program participants to training and educational activities that will provide such participants an industry-recognized certificate or credential.”

c. $1,500,000,000 of “competitive grants . . . to local entities to carry out work-based training and other work-related and educational strategies and activities of demonstrated effectiveness to unemployed, low-income adults and low-income youth to provide the skills and assistance needed to obtain employment.” Some examples from statute are: on-the-job training; apprenticeships; other activities combining work and skills training; sector-based training; subsidized employment; and integrated basic education and training. The priority for the funding will go to proposals in areas of high poverty and high unemployment.

6. Fair Employment Opportunity Act of 2011. Would prohibit discrimination against the unemployed in advertizing, considering candidates, and hiring.

7. Transportation Job Training. $50,000,000 in competitive grants for transportation jobs training.  Of the total $10,000,000 would go to assist minority businesses in competing, on an equal basis, for contracts and subcontracts.

The recent census numbers show the number of Americans living in poverty is at an all time high. The national unemployment rate stands above 9%, with no new jobs created last month at all. This country needs a strong push to help unemployed workers find jobs and get the economy moving. This plan offers help to strapped communities and states by making investments in our future prosperity.

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Over 43 million American workers are unable to take even a single day of paid leave when they are sick or need to take care of ill family members. This number is being slowly chipped away at as cities and states pass paid sick leave legislation. On September 12, Seattle became the fourth city to pass a mandatory paid sick leave ordinance, granting Seattle workers the right to take paid time off without punishment or retaliation when they or a family member are ill or need to attend a medical appointment. Paid sick leave legislation is supported by over two thirds of registered voters, and new research on San Francisco’s paid sick leave ordinance reveals that an overwhelming majority of workers and employers are satisfied with it.

San Francisco – A Case Study

Data from San Francisco point to the overall benefits of mandated paid sick leave. The Institute for Women’s Policy Research released a comprehensive study of the effects of San Francisco’s current Paid Sick Leave Ordinance (PSLO) on both employees and employers. The study analyzed the responses of 1,194 employees and 727 businesses to survey questions regarding their experiences under the new PSLO. Passed in 2006, the ordinance allows workers to accrue one hour of paid sick leave for every thirty hours of paid work, up to nine days per year. Up to nine days of unused leave can carry over to the next year. Workers can request paid leave for either personal health reasons or to care for family members.

Over half of the employees interviewed reported “experiencing benefits” from the PSLO, even though two-thirds of employees worked somewhere that granted some type of paid sick leave before the passage of the ordinance. Employees also reported that their employers were more supportive of them taking paid sick leave and that they were better able to care for themselves and their families. Significantly, most employees took far fewer paid sick days than they were legally allowed, suggesting that employees view paid sick leave as more of an insurance policy than guaranteed time off. They also saved time off for when it was most needed, for example, workers with families were more likely to take days off to care for sick children.

Not only did employees benefit from the PSLO, but employers also reported no detriment. Two-thirds of the employers interviewed said they were satisfied with the ordinance, and almost all said they had noticed no productivity decreases. Although few employers noted any immediate benefits from the PLSO, research has shown that there might be long-term benefits for employers—workers with access to paid sick leave are more likely to report higher satisfaction with their jobs than workers without it. Higher satisfaction can lead to increased productivity and less turnover, which can save employers money. And early data indicates that after passage of the PSLO, San Francisco’s percentage growth in employment stayed strong and even exceeded the surrounding counties’.

Paid Sick Leave in the States

Although many employers do currently grant paid sick leave, many still do not. Of those employers who do, most do not allow time off to take care of family members’ health needs, and some retaliate against workers who use their leave by cutting hours, docking pay, or issuing demerits that can lead to dismissal. Paid sick leave legislation has been introduced in Congress and in almost half of the states in the U.S. But it has become law only in San Francisco, Washington, D.C., Connecticut, and now Seattle. Grassroots campaigns around the country have been gaining traction, with Denver set to vote on an ordinance in November. In Illinois, the Healthy Workplace Act was introduced in the last legislative session, although it failed to pass out of the General Assembly. The bill would benefit the 45 percent of private sector employees in Illinois who currently do not have access to any paid sick leave—over two and a half million people. Workers, both full and part-time, would earn up to seven paid sick days per year, with one hour of leave earned for every 30 hours worked. Paid sick days could be used for personal illness, to care for an ill family member, or for medical appointments, and employers could not punish employees for taking advantage of the paid leave.

Federal Paid Sick Leave legislation

Federal paid sick leave legislation has been gaining support since its first introduction in 2004. The Healthy Families Act was reintroduced in Congress in May in both the U.S. House and Senate, and is currently in committee. The bill would allow paid leave for personal health reasons, to take care of a sick family member, or for domestic and sexual violence survivors to recover or seek assistance. Lawmakers and employers should consider the positive outcomes in San Francisco and guarantee workers the important right to paid time off by supporting efforts to institute paid sick leave in Illinois and nationally.

More information about what’s going on in Congress and in the states is available at Family Values @ Work  and the National Partnership for Women and Families.

To voice your support for the federal Healthy Families Act, contact your Senators and Representative.

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We have all heard the catchy FreeCreditReport.com jingles on TV, but have we really stopped to think about how credit information is used and how it is dividing the country? Due mainly to the recent fiscal crisis, 25 percent of Americans had low credit scores in April 2010, compared to a historical average of 15 percent.

The Fair Credit Reporting Act (FCRA) entitles everyone to receive one free credit report a year. Yet, for-profit sites, such as Freecreditreport.com, with its catchy jingle and commercials, claim to be free but are not. Only the website annualcreditreport.com actually provides free credit reports as required under the law. 

A credit report, however, is not the same as a credit score. A credit report lays out your financial history, loans you have taken out, credit cards in your name, and details about your payment history and whether you have filed for bankruptcy, been sued, or had a foreclosure. A credit score, on the other hand, is the number assigned to you that represents your riskiness for repayment. Credit scores typically range from 300 to 850; the higher the number, the lower the credit risk a consumer is considered. And while a consumer is entitled to one free credit report a year under FCRA, the FCRA does not entitle you to a copy of your credit score, what lenders base their lending decisions on, for free. New rules implementing credit score disclosure requirements under the Dodd-Frank Act, which became effective on July 28^th, will enable consumers who are denied credit or offered a higher-than-usual interest rate to find out the reasons by getting a free look at their credit scores. The regulations require financial institutions to send consumers a free copy of their credit score with factors that have decreased their score when they aren’t given the best loan terms and lowest rates after applying for a credit card or a home loan. Yet, this isn’t the same as simply receiving a free score once a year as is the case with your credit report. The Credit Score Fairness Act, which has been introduced in previous sessions of Congress, would have changed this and entitled to consumers to free copies of both their credit report and credit scores, but Congress has yet to pass this legislation. 

This is regrettable for several reasons. First, the current credit reporting system is fraught with inaccuracies. A 2008 Federal Trade Commission (FTC)-sponsored pilot study found that about 31 percent of people who reviewed their credit report found errors that they wanted to dispute. Unfortunately most people find out about inaccuracies after they have already been negatively affected. Moreover, the process of disputing the errors can be timely and costly to consumers. Easier access to both credit reports and scores, would allow people to catch errors earlier thereby avoiding credit score markdowns and harmful repercussions that arise from low scores.

Second, the use of credit information and credit checks has expanded beyond its original purpose. According to Fair Isaac Corporation, the company that pioneered credit scores, a credit score is an “objective measurement of your credit risk” for such things as car and home loans. In other words, credit scores were originally intended to be used solely as a representation of a consumer’s likelihood of repaying a loan. Yet, credit reports and scores are being increasingly used by landlords, insurance companies, utility companies and, most notably, by employers. A January 2010 survey conducted by the Society for Human Resource Management found that 60 percent of companies use credit reports to inform hiring decisions, up from 24 percent in 2004. This new phenomena has become a catch-22—people need a job to get credit, but they can’t get a job if they have bad credit or no credit at all. How are people supposed to climb out of poverty if they are not able to gain employment and work towards improving their credit in order to obtain assets? Five states, including Illinois, have recognized this problem and have banned the use of credit checks by employers for hiring and firing decisions, and 22 more states are considering similar legislation.

Another problem with credit scores is that they appear to be contributing to the already widening national racial wealth divide. There has been evidence that some companies have used credit checks as a way to discriminate against minorities by using these checks to preclude minority workers from getting higher level jobs. For example, the Department of Labor won a case against Bank of America in which the bank was found to have discriminated against African-Americans by using credit checks to hire entry-level employees. Similarly, a recent study done by the Woodstock Institute looked at zip codes and consumers’ average credit scores. The study showed that predominately African-American communities were almost four times as likely to have individuals with credit scores in the lowest range as predominantly white communities. Individuals with lower credit scores have a harder time acquiring loans for homes, cars, accessing credit cards and other low cost loan products, leaving them less likely to attain assets.  

Finally, what about the estimated 50 to 70 million Americans  who have no credit score at all? Given the prominence, both good and bad, that credit scores and reports are playing our lives, this segment of the population lacks the key (i.e., credit score) to the mainstream financial industry. If alternative credit data, such as paying rent, utility bills and medical bills on time were included in the data reported to credit bureaus, un-scored consumers could be brought into the credit industry. Unfortunately, those who are un- or underscored are most likely to forego paying things like utility bills to pay for food instead. If this information were included although they would have a credit report and credit score, it would most likely be a bad score. The question of how to best serve this population still remains, but some credit reporting agencies, such as Experian, have begun reporting the use of rental data in its calculation of consumers’ credit scores. Whether this will benefit or hurt consumers has yet to be seen, especially since Experian will also report delinquent rental payments.   

In sum, policy makers and advocates need to consider the preeminence of credit reports and scores in recent years, the effect on consumers of these changes, and to ensure that consumers are adequately protected.

This blog post was coauthored by Ali Terkel.

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During this past week, workforce groups from all over the nation have been highlighting the importance of adult education programs in providing opportunities for low-income and low-skilled Americans. Adult Education and Family Literacy Week underscores the vital need for adult education programs, so that any American who works hard can gain the training and education they need to improve their lives. These programs are important to a just and prosperous society and warrant sustained investment and innovation.

Research shows that employer demand for educated workers is growing—by 2018, 63 percent of all employment will require at least some college education. Yet in 2010, over 15 million adults ages 25 years and older had less than a high school degree (Table 2). Education remains one of the most important factors in determining an individual’s well-being, as well as that of their children, but basic skills deficiencies prevent many adults from navigating higher education and the workplace and affect their ability to thrive, especially in hard economic times. In August 2011 14.3 percent of those without a high school diploma were unemployed, compared with 8.2 percent of those with at least some college.

For many of these low-skilled adults, the adult education system is the primary source for opportunities for skill upgrading. Adult education provides literacy and numeracy services, GED preparation, English language proficiency, and other services to help adults not only gain basic skills to succeed in further higher education, but also to enter career paths that lead to family sustaining wages. According to the new census data, the median annual earnings in 2010 for adults 25 years and older with less than a high school degree was $25,856, where those with a bachelor’s degree earned $55,804. Research has also shown that for each year of postsecondary education, an adult is more likely to be employed, lead a healthier life, and have children who are better prepared to succeed in their own schooling.

More skilled workers are critical for businesses and the economy, too. Sixty-one percent of U.S. employers say it is difficult to find qualified workers to fill vacancies at their companies. More skilled workers would not only allow employers to fill jobs in sectors important to local and regional economies, but workers would also contribute more to the overall economy by expending their earned wages—over a lifetime, workers with at least a high school diploma will contribute at least $300,000 more than high school drop outs. In the current fiscal crisis plaguing the nation, low educational attainment coupled with increased demand for skilled workers has negative consequences for individuals, states, and our economic recovery as a whole.

The recession and subsequent jobless recovery are accelerating the shift to jobs that require postsecondary education, but public funding for education, training, and support services has been inadequate with growing need. Federal adult education under Title II of the Workforce Investment Act provides for basic skills instruction to 2.4 million undereducated adults – but that is just three percent of the 93 million American adults with low basic skills. Not only have these programs endured a decade of decimation in their federal funding, but state fiscal crises are further reducing funding and hindering alignment of adult education and workforce development services. Without targeted strategies to educate more low-skilled Americans as demand for skills grows, the U.S. will continue to lag behind in measures of educational attainment and economic competitiveness.

Fortunately, a number of states, including Illinois, have recognized the need for building the skills of the workforce, and have launched pioneering approaches to reach low-income and low-skilled adults. Bridge programs are an innovative strategy that helps adults succeed in education by integrating basic skills instruction, which is contextualized to a particular industry or occupation, with higher-level academic content or technical skills training. The Shifting Gears Initiative, funded by the Joyce Foundation, has spearheaded bridge model creation and career pathways development in the state. You can learn more about specific bridge programs in Illinois and their outcomes here.

Chances are, you know someone who lacks a degree or who would benefit from developing more skills in math, reading, or English language to help them find a job, or a better job. You can help support that person and raise awareness of the importance of adult education. Here are many ways you can get involved and make a difference in the lives of adult learners.  

This post was coauthored by Jessica Palek.

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According to the annual poverty data released by the Census Bureau yesterday, there were 46.2 million Americans living in poverty in 2010, up from 43.6 million in 2009 (an increase of 2.6 million). In other words, more than1 in 6 Americans were poor in 2010. This is the highest number since the Census Bureau began gathering data 52 years ago, superseding last year’s all-time high.

The national poverty rate climbed to 15.1 percent in 2010, an increase over 2009’s rate of 14.3 percent. This is the fourth yearly increase. The South was hit hardest, as its poverty rate climbed by 1.2 percent—twice the rate of any other region in the country.

Experts believe that these figures understate the real level of poverty in the U.S. For example, many more young adults are staying or moving back home because they can’t find jobs, and others have doubled up with friends and relatives. If only their incomes, as opposed to the entire household’s, are counted, then instead of the official poverty rate of 8.4 percent, 45.3 percent would be in poverty.

Additionally, the government’s methodology for determining poverty inadequately measures the real poverty rate in America. The federal poverty line of $22,314a yearfor a family of four and $11,139 for an individual is based on methodology designed in the early 1960s that fails to capture people’s spending and living needs in today’s economy.

The Census Bureau will release a Supplemental Poverty Measure in October 2011. This new measure, which the Bureau announced last March, is intended to provide an alternative, modernized measure of economic well-being. It will use a more accurate measure of a family’s income by including income from government programs (e.g., tax credits, nutritional support, housing and energy assistance), while deducting expenses (e.g., child support obligations, child care costs, work expenses, taxes and medical costs). It will not replace the official poverty measure and will not be used to determine eligibility for government programs. 

Income
Middle-class American families’ income fell in 2010. The median household income fell 2.3%, or $1,154, in 2010, adjusting for inflation. Overall, median income has changed very little compared to rising consumer prices over the last 30 years. Adjusted for inflation, the middle-income family earns only 11% more than they did in 1980, while the top 5% richest Americans saw their incomes surge 42%.

Income inequality has also increased. The top-earning 20 percent of Americans—those making more than $100,000 each year—received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968. Between 1999 (the year that household incomes peaked before the 2001 recession) and 2010, income at the 50^th and 10^th percentiles declined 7.1 percent and 12.1 percent respectively, while the decline in income at the 90^th percentile was only 1.5 percent. Although there was no change in the income ratios in the 90^th to 10^th percentile, the 90^th to 10^th percentile income ratio increased from 10.42 to 11.67 percent. Households in the top 20 percent by income saw incomes fall by 0.7 percent, while those in the bottom 20 percent saw incomes fall by over six times as much—4.5 percent—in inflation-adjusted dollars.

Households in the Midwest, South and West experienced declines in real median income between 2009 and 2010. On the other hand, median household income for the Northeast stayed about the same. More detailed state-by-state data will become available when the Census Bureau releases the American Community Survey next week on September 22^nd.

Interestingly, the data note that, because more families have “doubled-up households,” the poverty statistics may significantly under count actual household poverty levels.Doubled-up households are defined as households that include at least one "additional" adult: a person 18 or older who is not enrolled in school and is not the householder, spouse, or cohabiting partner of the householder.

In spring 2007, prior to the recession, doubled-up households totaled 19.7 million. By spring 2011, the number of doubled-up households had increased by 2 million to 21.8 million, and the percent rose by 1.3 percentage points from 17 percent to 18.3 percent. Nearly 6 million young adults age 25-34 (14.2 percent) resided in their parents' households, compared with 4.7 million (11.8 percent) before the recession, an increase of 2.4 percent. As noted earlier, while it is difficult to precisely assess the impact of doubling up on overall poverty rates, the poverty rates for young adults age 25-35 would go from 8.4 percent to 45.3 percent if only their income was considered rather than the entire family’s income. 

Minorities
The Census Bureau poverty data show the poverty rate for African-Americans increased faster than for the rest of the population and was just over 27 percent. Blacks and Hispanics were hit particularly hard by the recession. The rate of blacks living in poverty climbed by 1.6 percent, and Hispanics’ rate increased by 1.3 percent. In comparison, the white poverty rate grew by 0.7 percent, and the Asian poverty rate actually fell by 0.4 percent.

One recent analysis concluded that the gap in wealth between white households and households of blacks and Hispanics was the largest in 2009 since the government began publishing data on this topic a quarter century ago. According to the report, about a quarter of all Hispanic (24%) and black (24%) households in 2009 had no assets other than a vehicle, compared with just 6% of white households.

Health Insurance Coverage 
The Census Bureau’s report also showed that the number of people without health care coverage rose to 49.9 million last year from 49.0 million in 2009, though the percentage of uninsured was from the 2009 rate of 16.3 percent. The Northeast and the Midwest appear to have had the lowest uninsured rates in 2010.

The increase in the number of people without health insurance is due mostly to working-age Americans who lost employer-provided insurance in the weak economy. Between 2009 and 2010, the percentage of people covered by employment-based health insurance declined from 56.1 percent to 55.3 percent, while the percentage covered by government health insurance increased from 30.6 percent to 31.0 percent. Reaching a new low, this is the tenth year of decline in the share of people with employer-provided insurance. Interestingly, however, the percentage covered by Medicaid (15.9 percent) was not statistically different from 2009. Moreover, an additional 2% of young adults age 18-24 gained coverage due to the health care reforms that allow them to remain under their parents’ health insurance until the age of 25.

The number of uninsured people isn’t likely to decrease if the unemployment rate remains high. Despite the historic Affordable Care Act health care reform legislation passed last year, many Americans will remain uncovered for a while because many of the Act’s primary expansions in coverage will not take effect until 2014. 

Children and the Elderly
The share of children under 18 living in poverty also jumped to 22% from 20.7% in the previous year. In 2010, 16.4 million children younger than 18 lived in poverty, compared with 15.5 million in 2009.

Historical Impact of Recessions 
These data cover the first full calendar year after the technical end of the  December 2007-June 2009 recession. The data are bleak but not surprising.

Given that in 2010 the unemployment rate was 9% and the number of Americans who were unemployed for 6 months or more was at an all-time high, the single most important factor in the increase in poverty may be the increase in the number of people who did not work at all last year. Since the start of the recession in 2007, the number of men working full time, year-round with earnings has decreased by 6.6 million, and the number of women has declined by 2.8 million.

Taken together, the data all point to the severe and widespread financial strains of a nation in the throes of an economic crisis. And the Census data report, coming shortly after President Obama’s proposed package of $447 billion in tax cuts and spending to revive job growth and the recovery contained in the American Jobs Act, is almost certain to intensify the debate over the government’s role in helping the poor and unemployed at a time of budget deficits and painful cutbacks in public services.

As the poverty rate approaches levels not seen since Lyndon B. Johnson launched the War on Poverty in 1965, it is crucial that American families tell Congress just how important such government safety nets have been to their economic well-being. The 2010 data show that there has been a sharp increase in those households that are in “deep poverty” (i.e., households living at less than half of the federal poverty level). Deep poverty has risen to an estimated 6.3%—20.5 million people—an increase of more than 25% since 2000. This number is an indicator of “disconnected” households with little meaningful attachment to employment.  As experts note, as government programs to assist those Americans suffering from this economic downturn are cut, it won't take much for “deep poverty” to claim a share of the population the country hasn't seen in over three decades. If that happens, the current poverty numbers, as astounding as they are, will seem meager.

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Partisan politics are alive and well in Washington. The fate of the Consumer Financial Protection Bureau (CFPB) is being held hostage by 44 Republican senators who won't budge until they get their way.  

The CFPB was established by the Dodd-Frank Wall Street Reform Act to provide oversight of and enforce laws about the consumer financial market. Although President Obama nominated former Ohio Attornery General Richard Cordray to be the CFPB’s Director of the CFPB earlier this summer, the agency officially opened its doors July 21, 2011, without a confirmed director. Yet, without a director the CFPB cannot fully protect consumers since, by statute, it cannot enforce laws against “non-bank financial intuitions such as pay day lenders” and other members of the predatory fringe financial markets until a director has been confirmed.

Last Tuesday, during Cordray’s nomination hearing, the ranking Republican on the Senate Banking panel, Senator Richard Shelby, called the hearing "premature," saying that the panel shouldn't be considering any nominee until Democrats take their demands for accountability more seriously. Republicans are blocking Cordray's nomination not because of his credentials, but rather as part of a power play with the White House. Even before Cordray’s nomination, 44 Republican senators sent the President a letter stating that they refused to vote for anyone to become the Director unless they get what they want --- restructuring of the CFPB to make it less powerful.

Illinois Senator Mark Kirk is among the 44 senators opposing Cordray's nomination. Kirk was also one of only six senators who supported legislation to repeal the Dodd-Frank Act in its entirety, as well as  bills to create a board structure for the CFPB instead of a single-director structure. Obviously Kirk is neither listening to his constituents nor looking out for their financial well-being. According to a recent AARP and Center for Responsible Lending poll, 74 % of all respondents (including 73% Independents and 68% Republicans) responded affirmatively that they support having a single agency with the mission of protecting consumers from financial companies.

Richard Cordray is caught in the middle of these outlandish political tactics. As a result, the American people are not getting the protection from financial markets that they should be getting and that the Dodd-Frank Act requires. As Representative Barney Frank, a Massachusetts Democrat who was one of the chief authors of the law that created the bureau, explained, Republican opposition is the legislative equivalent of an “arsonist having set a fire and objecting to a building’s inhabitants using the fire exit.”

During the confirmation hearing Senator Bob Corker, a Tennessee Republican, said that his big opposition to the CFPB is that there's no way to challenge a decision by the consumer bureau, unless a particular rule "threatens the stability of the financial system." Under current law the bureau can be overturned by a two-thirds vote of a panel of financial regulators if any of its regulations threaten the stability of the financial system, which Corker called a "high hurdle." When asked by Senator Corker if Cordray thought that veto power over the bureau's decisions was a high hurdle, Cordray replied "It is a high hurdle, but not an inappropriate one." Consumer advocates agree.

The Shriver Center, along with Woodstock Institute and Illinois PIRG, issued a joint statement prior to the hearing explaining that a strong, independent agency is needed because banking regulators were more concerned about the health of financial firms than about consumer abuses, such as subprime mortgages, in the years leading up to the housing market crash. As the groups stated: “If Senate Republicans fail to vote for Cordray … it will prove that they still favor a flawed financial system over ordinary Americans … and [is] another indication that they are willing to resort to extortion … to get their way even to the detriment of a fair financial system and the still fragile economic recovery.”

It’s beyond time that politicians stop focusing on their agendas and start keeping their constituents’ needs in sight instead.

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Last night, President Obama finally drowned out the summer’s budget deficit political circus with an impassioned speech and serious proposal to deal with our real American crisis – the jobs deficit. Between the jobs lost in the recession, and the growth of the American population, the National Employment Law Project calculates that we have a deficit of more than 11 million jobs. The President will send Congress a bill called the American Jobs Act, which would pump a half billion dollars into the economy in 2012 through jobs-creating programs, infrastructure investments, and tax credits. The priority of this funding must be strengthening the American middle class, including creating on-ramps for those who have worked hard, but never been able to get there yet. The President’s proposal will enable us to create jobs now by making critical investments in our nation’s future prosperity. You should contact your representative immediately to ensure that Congress passes it right away.

The proposals in American Jobs Act are tried and true strategies, which have had the support of members of both political parties. The bill looks to our nation’s immediate needs but does so with a long-term goal in mind – an American “economy that creates good, middle-class jobs that pay well and offer security.”

President Obama promised that the cost of the bill will be paid through a deficit reduction plan he will introduce in ten days. The outline of the plan represents a balanced approach of increasing revenue and making additional spending cuts on a responsible timeline. These cuts must not harm the most vulnerable among us. It also will include tax reform so that the wealthiest Americans and the most profitable corporations pay their fair share. The President will also propose changes to Medicare and Medicaid. We need to see the specifics of these proposals. They must make smart changes that assure that America’s seniors and low-income individuals and families have access to quality health care for decades to come.

About half the cost of the bill is a relatively modest proposal to extend and expand the payroll tax cut. Currently workers pay 4.2% of their income to fund Social Security, but that will rise back to 6.2% at the end of the year if Congress takes no action. The proposed cut would halve the payroll tax paid by employees through 2012 to 3.1%, saving a worker who makes $50,000 per year about $1,500. The bill also would cut the payroll tax paid by small businesses for the first time. Early estimates suggest these will cause employers to add 50,000 jobs per month. Additionally, all business would get tax credits for hiring workers, especially the long-term unemployed and veterans, for giving raises, and for making capital investments. Payroll taxes go to funding Social Security, and the President indicated that the amount saved by individuals and businesses would have to be paid in through other sources of government revenue. The challenge is that we still have to continue to support Social Security and ensure its long-term viability as one of the most important anti-poverty programs in America.

The American Jobs Act also funds major infrastructure investments, including building and repairing roads, bridges, railroads and airports, and repairing and modernizing 35,000 school buildings, through a public-private fund that picks projects with two criteria: “how badly a construction project is needed and how much good it would do for the economy.” The construction industry is ripe for adding workers, including women and minorities, who have historically been underrepresented. Additionally, it provides funding for critical workers that states have cut – teachers and first responders.

The bill has many other important provisions. There are several key provisions to help the long-term unemployed. First, the bill would extend unemployment insurance another year. Without this extension, millions of Americans who have been out of work for 6 months or more would lose their benefits starting in January, and would stop spending those benefits in their communities, further damaging the economy. Second, it would prohibit employers from discriminating against someone just because they are unemployed. Third, it creates a $4,000 tax credit for businesses that hire someone who’s been looking for work for 6 months or more. However, the proposal to create a work program along the lines of Georgia Works is concerning because recipients of unemployment insurance are placed at work sites where they are supposed to be trained, but may instead just be free labor to a corporation.

The American Jobs Act seeks to create economic opportunity for all. Right now we have a crisis where young people can’t find summer work, or first jobs. This summer, the smallest proportion of youth were working compared to any summer since the Bureau of Labor Statistics started recording this data in 1948. This long-term, early unemployment is doing serious damage to their lifetime economic prospects, and we’ve seen the rioting that youth hopelessness, poverty, and unemployment have caused in England this summer. President Obama’s proposal would create more opportunities for young people and low-income and disadvantaged Americans who want to work by connecting them with training and jobs through the creation of the Pathways Back to Work Fund. We need more details on the size and scope of this program.

The American people expect the politicians in Washington to make real choices to get our economy growing again. The American Jobs Act will create jobs now through smart investments in our future prosperity, and will be funded by fair increases in revenue from big business and the wealthiest Americans. That’s true to our American values of shared sacrifice and equal opportunity.

The circus is over. Congress, go back to work. America needs you to pass the American Jobs Act, so we can get back to work too.

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With a penchant for equating criminal activity with the participants of various anti-poverty programs, it’s not surprising James Bovard recently took aim at one of the most important federally-assisted housing programs—the Section 8 “Housing Choice Voucher” program. Bovard’s August 17, 2011 Wall Street Journal piece “Raising Hell in Subsidized Housing” blames the Section 8 housing subsidy program for increased crime, allowing criminal-minded Section 8 tenants to stave off evictions by falsifying claims of domestic violence, and, oh yes, argues that the Obama Administration is responsible for the alleged failings of this more-than-40-year-old, Republican-created program. 

Bovard’s blaming of Housing Choice Voucher holders for the rise in crime in their communities is not unlike Hanna Rosin’s widely discredited 2008 American Murder Mystery piece in the Atlantic Monthly. Like Bovard, Rosin’s claim of a link between crime and voucher participants made dangerous assumptions and stereotypes about program participants. Both writers also conveniently avoided reviewing empirical research to support their claims of a Section 8 to crime connection. Indeed, a new study commissioned by HUD found that Section 8 Housing Choice Vouchers do not bring crime when they move to a new community.

In reality, the Section 8 housing subsidy programs provides 2 million low-income Americans with a chance to afford their housing, find new opportunities, and escape poverty. Rigorous admission screening practices and lease compliance laws make participants some of the most scrutinized tenants in the country. 

In this era of debt ceilings and super committees, Bovard’s rant might help rally budget hawks to push for the end to this program. Even without Bovard’s allegations gaining traction, the federal assisted housing programs are part of a package of discretionary spending programs that could face draconian budget cuts totaling $1.2 trillion beginning in 2013 should the super committee fail to reach agreement.  With cuts that significant, low-income Americans who rely upon Section 8 programs to make their housing affordable could actually lose their housing subsidies. These households would then join the millions of families across the country who are considered “housing burdened”—paying up to 100% of their income towards rent, and being forced to choose between utilities, food, transportation, and medicine in order to stay housed. Worse still, they would join the ranks of the homeless. So that’s the real danger here—not some mob of people with Section 8 subsidies wreaking havoc on a community—but pushing law-biding low-income Americans into even deeper poverty.

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When the Secretary of U.S. Housing and Urban Development (HUD) recently urged public housing authorities (PHAs) to use their discretion to admit applicants with past arrest and conviction records rather than simply exclude them from subsidized housing, we wondered: what happens when discretion means denial?

In a report entitled “When Discretion Means Denial: The Use of Criminal Records to Deny Low-Income People Access to Federally-Subsidized Housing in Illinois,” the Shriver Center reviewed the criminal records policies of nearly all the public housing and Housing Choice Voucher programs in the state as well as over 100 properties participating in the project-based Section 8 program. Concentrating on areas where HUD give PHAs discretion to admit applicants with criminal records, the report identifies four areas where PHAs and project owners are most likely to abuse their discretion. The report also urges HUD to align its programs with its “belie[f] in the importance of second chances” by taking affirmative steps toward ending each of these abusive practices.

Many PHAs and project owners fail to set reasonable limits on how far back to look when considering an applicant’s criminal history.  Even though federal law requires PHAs and project owners to narrow their inquiries to criminal activity that occurred during a “reasonable time” before screening takes place, many admissions policies often give them license to look back as far as they want.  These policies often:

• Have no time limits and simply deny admission to applicants who have certain types of criminal history in their backgrounds.  Without a specific look-back period as a guide, many applicants with criminal records do not bother applying.
  
• Impose permanent bans on people who have been convicted of certain criminal activity. Given that the federal government has chosen to impose permanent bans in only two narrowly tailored instances, however, permanent bans in federally assisted housing should be sparsely used in only the most compelling circumstances.
  
• Use excessively long look-back periods, which essentially function as permanent bans. In two particularly egregious cases, the written admissions policies actually allow owners look back 99 years and 200 years, sending a strong message to people with criminal records—and their families—that they are not welcome in federally subsidized housing.
  
• Rely on minimum look-back periods rather than engage in the usual practice of setting maximum look-back periods. As a result, applicants are deprived of any notice of how long their criminal records will prevent them from accessing federally-assisted housing.

PHAs often rely on arrests as sufficient proof of criminal activity, even where the charges were ultimately dismissed and the arrests never led to convictions. Federal law allows PHAs to deny admission to applicants who have engaged in “criminal activity.” But instead of determining whether criminal activity actually occurred, many PHAs substitute a criminal arrest for criminal activity. This administrative shortcut often deprives people of housing when no wrongdoing may have ever taken place.  Moreover, its effect on reducing crime is questionable. What is certain, however, is that arrest record screening impedes the fair housing choice of racial minorities disproportionately represented in the criminal justice system and therefore highly suspect under the federal Fair Housing Act.

What do these policies look like? About one out of every ten public housing programs in Illinois define “criminal activity” simply by the number of arrests on a person’s criminal record, even if no conviction resulted. The Housing Authority of Edgar County and Massac County Housing Authority, for example, go so far as to deny public housing applicants for a single arrest within the past decade.

More common are PHAs that consider arrests as evidence of criminal activity. Although about half of these admissions policies add that “a conviction for drug-related or violent criminal activity will be given more weight than an arrest for such activity,” the authority to deny admission on the basis of mere arrests remains. As a result, these PHAs are susceptible to violating their duty not to discrimination and their duty to affirmatively further fair housing under the Fair Housing Act. 

Some PHAs and project owners use categories of criminal activity so vague that neither applicants nor administrators fully understand how to apply these standards. Admissions policies usually refer to the three types of criminal activity listed in HUD regulations: drug-related criminal activity, violent criminal activity, and other criminal activity that threatens the health, safety, and right to peaceful enjoyment of other residents. Sometimes, PHAs and project owners supplement this list with vague categories of criminal activity that provide little notice to applicants of the housing provider’s actual standard, such as crimes of “moral turpitude,” an imprecise term that is not defined in the Illinois Criminal Code. 

Other amorphous categories include criminal activity “that indicates that the applicant may be a threat and/or negative influence on other residents” and “criminal activity that will adversely affect the reputation of the Development.” Neither standard reflects any language found in federal statutes or regulations, making them vulnerable to abusive application. Furthermore, a standard based on a building’s reputation strays from a property owner’s legitimate interest in resident safety, further increasing the potential for abuse.

A number of housing providers underuse mitigating circumstances, thus depriving applicants of the opportunity to overcome their past arrest and conviction records. Although HUD regulations require PHAs to consider the time, nature, and extent of a public housing applicant’s conduct, including the seriousness of the offense, more than half of the written admissions policies in Illinois gloss over the fact that applicants could—and in some cases, have the right to—present mitigating circumstances upon being denied for criminal history. Without notice of how to challenge a denial based on a criminal record, many applicants are likely to select themselves out of the admissions process.

In the project-based Section 8 program, consideration of mitigating circumstances is encouraged but not required. One out of four tenant selection plans reviewed explicitly stated that the project owner would not consider an applicant’s mitigating circumstances, thus stacking the odds of admissions against anyone with a criminal record.

Together, HUD, PHAs, and project owners need to ensure that criminal records screening respects the applicant’s right to be free from unwarranted discrimination. More than simply pulling a person’s criminal history, proper screening requires thoughtful consideration and proper balancing of various factors, such as the nature and severity of the offense, the time elapsed since the commission of the offense, and its relationship to a person’s tenancy. In the quest for bright-line rules, however, policies in Illinois today instead allow PHAs and project owners to abuse the discretion given to them by HUD. 

For proper screening to happen, HUD must make clear that housing providers need to look beyond the criminal history or face potential consequences. To help ensure that people with criminal records are not unnecessarily barred from federally subsidized housing, we recommend that HUD, PHAs, and project owners:

1. reign in unreasonable look-back periods;
   
2. end the use of arrests as conclusive proof of criminal activity;
   
3. enact clear standards for reviewing criminal history that have a basis in federal law; and
   
4. ensure that applicants can overcome criminal records barriers by presenting evidence of mitigating circumstances.
   

Only when HUD, PHAs, and project owners take these affirmative steps can discretion lead to admission, not just denial.

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