From Poverty to Prosperity: A National Strategy to Cut Poverty in Half

Transcription

1 From Poverty to Prosperity: A National Strategy to Cut Poverty in Half Mark Greenberg Executive Director, Task Force on Poverty Center for American Progress

2 This presentation Key findings and recommendations from Center for American Progress Task Force on Poverty Opportunities and Strategies for State Legislatures in Addressing Poverty

3 CAP s Poverty Task Force After Katrina, Center for American Progress convened a Poverty Task Force a diverse group of experts and leaders. CAP Task Force one of a number of poverty-related initiatives that have begun in last several years. Task Force Charge: Make the case for why the nation should address poverty. Make recommendations for what should be done about it.

4 Task Force Members Angela Glover Blackwell, Founder and CEO, PolicyLink (co-chair) Peter B. Edelman, Professor of Law, Georgetown University (co-chair) Rebecca Blank, Dean, Gerald R. Ford School of Public Policy, Henry Carter Adams Collegiate Professor of Public Policy, University of Michigan Linda Chavez-Thompson, Executive Vice President, AFL-CIO Reverend Dr. Floyd F. Flake, President, Wilberforce University Wizipan Garriott, Law Student, Board President of the He Sapa Leadership Academy Maude Hurd, National President, ACORN Charles E. M. Kolb, President, Committee for Economic Development Meizhu Lui, Executive Director, United for a Fair Economy Alice M. Rivlin, Senior Fellow and Director, Greater Washington Research Program, Brookings Institution Barbara J. Robles, Associate Professor, Arizona State University Robert Solow, Professor Emeritus, Massachusetts Institute of Technology Dorothy Stoneman, Founder and President, YouthBuild USA Wellington E. Webb, Former Mayor of Denver

5 Poverty in America 1 in 8 Americans are poor million people. Official measure about $20,000 for family of four. Most people believe cost of makings ends meet is about twice that amount or more. Nearly 1 in 5 children are poor. 1 in 4 jobs do not pay enough to support a family of four at the poverty line. 1 in 3 Americans are poor at some point in a 13-year period. 5 percent are poor for at least 10 in 13 years.

6 Poverty in America (2) Wealth is even more unequal than income; asset poverty is extensive: Top 1 percent has 19 percent of national income; bottom quintile has 3.4 percent. Top 1 percent has over one-third of nation s net worth; bottom two quintiles has less than 1 percent. In 2001, 37 percent of American households were asset-poor. Poverty in US high compared with other developed nations New UNICEF report: using relative income measure, US ranks 24 th of 24 nations on child poverty.

7 Why We Should Reduce Poverty: Adding an Economic Argument Task Force commissioned Harry Holzer, Dianne Schanzenbach, Greg Duncan, Jens Ludwig, to examine economic costs of poverty. The Economic Costs of Poverty in the United States: Subsequent Effects of Children Growing Up Poor concludes: Costs associated with persistent childhood poverty total about $500 billion annually equivalent of nearly 4 percent of GDP: Costs about evenly divided between lost adult productivity and wages, increased crime, and higher health expenditures.

8 A National Goal Task Force recommends national goal of cutting poverty in half over the next 10 years, setting the nation on a course to end poverty in a generation. National goal would express importance, establish clear standard against which to measure progress. Goal is ambitious but achievable. Between , poverty fell by 42%; between , poverty fell by 25%. In UK, national goal of ending child poverty by 2020 has contributed to dramatic progress. From to , child poverty has fallen by more than half in absolute terms, 18 percent on a relative measure.

9 A Four-Pronged Strategy Promote decent work: People should work, and work should pay enough for workers and families to avoid poverty, meet basic needs, save for future. Provide opportunity for all: Children should grow up in conditions that maximize their life chances. Adults should have opportunities to connect to work, get more education, live in good neighborhoods, move up in the workforce. Ensure economic security: Americans should not fall into poverty when they cannot work or work is unavailable, unstable, or pays too little. Help people build wealth: People should have assets that protect them during unstable periods and permit them to climb the ladder of economic mobility.

10 Task Force Recommendations Recommendations in twelve areas, including: Raise minimum wage to 50 percent of average wage Expand Earned Income Tax Credit/Child Tax Credit Support unionization Expand child care, integrate with early education Housing and equitable development policies Connect disadvantaged and disconnected youth Higher education Former prisoners and reentry policies Unemployment Insurance Reforms to means-tested benefits Address high costs of being poor Promote savings for low-income families and workers.

11 Measuring Impacts of Selected Recommendations CAP contracted with the Urban Institute to model impacts of a set of recommendations: Urban Institute used the Transfer Income Model, which uses Census Bureau survey data and detailed information about program rules to simulate tax, benefit, and health programs. Definition of poverty for modeling drawn from recommendations of National Academy of Sciences panel on improved poverty measurement.

12 Four Recommendations 4 recommendations, separately and together: Minimum wage: Increase minimum wage to 50 percent of average non-supervisory wage ($8.40 in 2006). Earned Income Tax Credit: Increase EITC for childless workers, extend it to 18- to 24-year olds who are not full-time students, increase it for families with 3+ children, and exclude half the earnings of the lower-earning spouse if doing so resulted in a larger EITC. Child Tax Credit: Make Child Tax Credit fully refundable so that all low-income children fully benefit Child Care: Make subsidy assistance available to all working families with incomes below 200 percent of the poverty line, and make Child and Dependent Care Tax Credit larger and refundable.

13 Estimated Impacts on Reducing Poverty Minimum Wage EITC Overall Poverty Impact -5% -6% Child Poverty Impact -6% -4% Child Tax Credit Child Care -9% -8% -20% -14.5% Cumulative -26% -41%

14 Effect of Raising Minimum Wage, Expanding EITC, Expanding Child Tax Credit and Child Care Assisance (change in numbers of people above and below poverty line) 6,000, %<200% 4,000,000 2,000, %<150% 200%<300% 300%+ 0-2,000,000 <50% -4,000,000-6,000,000 50%<100% -8,000,000

15 Cost of Implementing Task Force Recommendations: ~$90 billion Some recommendations have little or no cost; others do. $90 billion equals 0.8 percent of GDP. Annual costs to the U.S. associated with persistent childhood poverty alone total $500 billion the equivalent of nearly 4 percent of the GDP. Center on Budget and Policy Priorities calculates that if the 2001 and 2003 tax cuts are extended and relief from the Alternative Minimum Tax is continued, top 1 percent of households will receive more than $1 trillion in tax cuts over the next decade

16 Considerations for Legislatures Crucial role for states this cannot be accomplished by federal government (or government) alone. Some areas e.g., tax policy apply to both. Some areas e.g., early/higher ed, employment/integration strategies are mainly nonfederal. Importance of an overall state strategy Not just anti-poverty legislation, but across a wide range of legislative initiatives. Not just an issue for the Human Services Committee.

17 State Planning Initiatives Connecticut Child Poverty and Prevention Council charged with: Developing and promoting implementation of a ten-year plan to reduce the number of children living in poverty in the state by fifty percent; and establishing prevention goals and recommendations and measuring prevention service outcomes to promote the health and well-being of children and families. Minnesota Legislative Commission to End Poverty In Minnesota by 2020, charged with reporting recommendations to legislature by December Vermont Child Poverty Council charged with examining child poverty in Vermont, making recommendations for improving the financial stability and well-being of children, developing a ten-year plan to reduce the number of children living in poverty in the state by at least 50 percent.

18 From Poverty to Prosperity: A National Strategy to Cut Poverty in Half Mark Greenberg Executive Director, Task Force on Poverty 1333 H Street NW, 10 th Floor Washington, DC (202) mgreenberg@americanprogress.org Special thanks to Avi Perry and Abby Witt for their contributions.