[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]
THE ECONOMIC AND SOCIETAL
COSTS OF POVERTY
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JANUARY 24, 2007
__________
Serial No. 110-2
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
CHARLES B. RANGEL, New York, Chairman
FORTNEY PETE STARK, California JIM MCCRERY, Louisiana
SANDER M. LEVIN, Michigan WALLY HERGER, California
JIM MCDERMOTT, Washington DAVE CAMP, Michigan
JOHN LEWIS, Georgia JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts SAM JOHNSON, Texas
MICHAEL R. MCNULTY, New York PHIL ENGLISH, Pennsylvania
JOHN S. TANNER, Tennessee JERRY WELLER, Illinois
XAVIER BECERRA, California KENNY HULSHOF, Missouri
LLOYD DOGGETT, Texas RON LEWIS, Kentucky
EARL POMEROY, North Dakota KEVIN BRADY, Texas
STEPHANIE TUBBS JONES, Ohio THOMAS M. REYNOLDS, New York
MIKE THOMPSON, California PAUL RYAN, Wisconsin
JOHN B. LARSON, Connecticut ERIC CANTOR, Virginia
RAHM EMANUEL, Illinois JOHN LINDER, Georgia
EARL BLUMENAUER, Oregon DEVIN NUNES, California
RON KIND, Wisconsin PAT TIBERI, Ohio
BILL PASCRELL JR., New Jersey JON PORTER, Nevada
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama
Janice Mays, Chief Counsel and Staff Director
Brett Loper, Minority Staff Director
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C O N T E N T S
__________
Page
Advisory of of January 17, announcing the hearing................ 2
WITNESSES
Sigurd R. Nilsen, Ph.D., Director, Education, Workforce, and
Income Security, U.S. GAO...................................... 7
Harry J. Holzer, Ph.D., Professor at Georgetown University and
Visiting Fellow at the Urban Institute, Georgetown University
Public Policy Institute........................................ 34
David R. Jones, President and Chief Executive Officer, Community
Service Society of New York, New York, New York................ 37
Ron Haskins, Ph.D., Senior Fellow, Economic Studies and Co-
Director, Center on Children and Families, The Brookings
Institution.................................................... 41
Jane Knitzer, Ph.D., Director, National Center for Children in
Poverty, New York, New York.................................... 50
SUBMISSION FOR THE RECORD
Child Welfare League of America, statement....................... 104
Eberstadt, Nicholas, American Enterprise Institute, statement.... 110
Legal Momentum, New York, NY, statement.......................... 118
MacGregor, Theo, and Jerrold Oppenheim, joint statement.......... 120
Schlimm, Richard, Wisconsin Community Action Program Association,
Madison, WI, letter............................................ 126
Zero To Three Policy Center, statement........................... 129
THE ECONOMIC AND SOCIETAL
COSTS OF POVERTY
----------
WEDNESDAY, JANUARY 24, 2007
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The Committee met, pursuant to notice, at 10:07 a.m., in
room 1100, Longworth House Office Building, Hon. Charles B.
Rangel (Chairman of the Committee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
January 17, 2007
FC-2
Chairman Rangel Announces a Hearing on
the Economic and Societal Costs of Poverty
House Ways and Means Committee Chairman Charles B. Rangel today
announced the Committee will hold a hearing on the economic and
societal costs of poverty. The hearing will take place on Wednesday,
January 24, in the main Committee hearing room, 1100 Longworth House
Office Building, beginning at 10:00 a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
FOCUS OF THE HEARING:
There are 37 million Americans living in poverty, an increase of
over 5 million since the year 2000 (after prior years of steady
decline). The average weighted poverty threshold in 2005 (latest data
available) was $15,577 in annual income for a family of three and
$19,971 for a family of four. Poor Americans suffer various hardships,
including reduced access to economic and educational opportunities,
substandard housing, inadequate diet, greater levels of crime
victimization, and diminished health. Less recognized, however, are the
costs poverty exacts on society as a whole. Nevertheless, studies
indicate that poverty reduces our Nation's economic growth and directly
increases crime, health and other expenses absorbed by all Americans.
The Committee's hearing will examine the nature and extent of these
costs.
In announcing the hearing, Chairman Rangel said, ``We have a clear
moral imperative to address poverty. It is a stain on our Nation's
legacy to have one of the highest child poverty rates in the
industrialized world. But we also should be driven by self-interest.
Poverty is a drag on our economy, and it causes or worsens a variety of
other costly social problems. Simply accepting, or even ignoring high
rates of poverty is likely more expensive for our Nation than any
comprehensive effort to address the problem.''
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Chairman RANGEL. The Committee will come to order. This
morning we are going to have witnesses to share with us the
impact of poverty on our economy and how it relates to future
economic growth.
We have 37 million Americans in poverty, millions more only
one step away from poverty. It just seems to some of us that if
we are going to grow our way out of debt, we cannot be impeded
by the fiscal consequences of poverty, lack of education and
unemployment. We have experts who come here not with bleeding
hearts, but trying to share with us what the costs of poverty
are now, as well as their projected costs, so that we can try
to find out whether, from an economic point of view, it would
make sense to make some initial investments to stop the
hemorrhage.
I would like to recognize the ranking Member, Mr. McCrery,
for whatever remarks he would like to make.
Mr. MCCRERY. Thank you, Mr. Chairman. Again, I have
prepared remarks that I will submit for the record, and I will
summarize those as we will ask the witnesses to summarize their
testimony.
Certainly all of us agree that too many of our citizens in
the United States are living in poverty, and we all want to
reduce that number or have that number reduced. The question
is, how do we do it?
In the 1996 Welfare Reform Act, we included a very strong
work requirement that was successful in moving literally
millions of people into work, and the result of that was a
dramatic reversal in the growth of the rate of poverty. We also
included in that legislation an emphasis on marriage and
encouraging folks to get married to have children, and those
two items, work and marriage, seem to be the most important
indicators of preventing poverty.
So, while we look at programmatic changes at the Federal
level, I hope that this Committee will continue to look at the
importance of work and family, work and marriage when it--as it
relates to the reduction of poverty.
Thank you, Mr. Chairman.
[The prepared statement of Mr. McCrery follows:]
Prepared Statement of The Honorable Jim McCrery,
a Representative in Congress from the State of Lousiana
I think we would all agree that too many Americans today live in
poverty. At the same time, we have made great strides in reducing
poverty over the past ten years, and it is important to learn from our
experience.
Poverty rates fell in 2005 after rising in the years following the
2001 recession. Today's poverty rates--both overall and child poverty--
are below the levels seen throughout all of the 1980s, and most of the
1990s. But with 37 million Americans still poor in 2005, it is
important to ask what works to reduce poverty, and what doesn't, and
what should we be doing to make further progress.
From the mid-1960s through the mid-1990s, the Federal government
spent literally trillions of dollars on programs designed to reduce
poverty. While these programs offered many poor Americans cash and
other assistance, the overall poverty rate, after declining in the late
1960s, generally stabilized at between 12 and 14 percent.
Republicans, and many Democrats, now realize that promoting work
and healthy marriage are the key steps to reducing poverty.
The evidence suggests the pro-work reforms in the 1996 welfare
reform law, coupled with generous work supports like the Earned Income
Tax Credit, and a strong economy, have spurred record numbers of poor
parents to go to work and lift their families out of poverty.
Since the 1996 welfare reforms, child poverty has fallen 13
percent, and over 1.4 million children have been lifted from poverty.
Poverty has declined sharply among blacks and Hispanics, and in
families headed by single mothers. By 2001, our Nation recorded the
lowest poverty rate in U.S. history for black children. That number--30
percent--was still far too high, but it was a remarkable improvement
from 41.5 percent in 1995.
While poverty rose somewhat following the 2001 terrorist attacks
and recession, today's rate remains below levels throughout the 1980s
and most of the 1990s. And that's using the ``official'' definition of
poverty--which ignores tens of billions of dollars in tax credits,
welfare, food, and housing benefits millions of poor families receive.
In fact, numerous studies, based on solid Census Bureau data and taking
into account all the income poor households receive, suggest the
``real'' poverty rate is closer to 5 percent, instead of today's
``official'' poverty rate of nearly 13 percent. That is likely the most
accurate picture of the persistent poverty rate, as well. The fact is,
most poor families in America don't stay poor for long, which is
important in the context of how can we best help poor parents lift
their incomes and improve their children's prospects.
But despite the remarkable progress we have seen on the work side
of the equation, we have seen less progress in building strong, married
families. That is exactly what we need to make long-term progress
against poverty, and especially among families that are most likely to
be in poverty year after year.
In 2004, a record number of babies--nearly 1.5 million--were born
to unmarried parents. Despite recent progress, today almost one-half of
first unwed births are to teenagers. The odds that these children will
be poor are extraordinarily high. For example, a recent study found
that a child born to an unmarried teen mother who has not finished high
school is nine times more likely to be poor than if the mother is a
married adult who has finished high school. Overall, nearly four in ten
children are born to unmarried mothers today; in some communities the
share of unmarried births is 70 percent or more.
That's why Republicans reprogrammed some welfare funds last year to
support faith-based and other private groups interested in promoting
more healthy marriages and stronger families. These programs provide
voluntary services and supports for teens, couples, and parents
designed to inform them about the benefits of marriage--for them and
their children. If these efforts are successful, young families will
have dramatically improved chances of getting out of poverty and into
the economic mainstream.
Chairman RANGEL. Thank you.
I would like to concur because sometimes poverty and
unemployment is an impediment to the institution of marriage,
and so I want to work with you on that aspect of the problem.
We have an outstanding panel this morning. Dr. Sigurd
Nilsen is the Director of Education, Workforce, and Income
Security for the United States Government Accountability Office
(GAO); Dr. Harry Holzer, a Professor at Georgetown University
at the Public Policy Institute; my long-time friend, David
Jones, President and CEO of the Community Service Society of
New York (CSS)--who, I would like to report, coordinates his
statistical data from many institutions in New York; and I am
working with him, with Columbia Teachers College, with New York
University, and any other institutions that would want to
coordinate the data that we have.
Also joining us is Dr. Ron Haskins. Dr. Haskins, is Senior
Fellow, Economic Studies and Codirector of the Center on
Children and Families at the Brookings Institution. Also, Dr.
Jane Knitzer, Director, National Center for Children in Poverty
(NCCP) in New York.
As you may know, all of you will have 5 minutes to
summarize your testimony. That would give us an opportunity to
ask questions that are on our minds, and all of your testimony,
your written testimony, will be entered into the record without
objection.
[The prepared statement of Mr. Weller follows:]
Prepared Statement of The Honorable Jerry Weller, a Representative in
Congress from the State of Illinois
Today's hearing reviews a critical topic--poverty. Even as our
Nation has made progress in reducing poverty through welfare reform and
other pro-work policies, too many children and families live in poverty
today. So it is important to consider what has worked, what has not,
and what more we need to do to prevent more children from growing up in
poverty.
We have seen that pro-work Republican welfare reforms reduced
poverty following the 1996 welfare reform law, which encouraged more
work and less welfare dependence. Through 2005, the most recent year
available, the overall poverty rate fell 7 percent, child poverty fell
13 percent, and over 1.4 million children left poverty. Poverty
declined sharply especially among African Americans and Hispanics, and
in families headed by single mothers.
Previously, we saw how massive government spending didn't solve
poverty. The U.S. spent literally $5 trillion on welfare, food, health,
and housing for the poor since President Johnson declared war on
poverty in the 1960s; yet progress against poverty generally stalled
after 1970. A key lesson is that massive government spending alone
won't eliminate poverty.
One reason why spending alone won't eliminate poverty relates to a
key cause of poverty--the decline of marriage and increased number of
nonmarital births. The steady decline of marriage in the past
generation has greatly contributed to higher poverty, especially among
children. As Robert Rector of the Heritage Foundation put it in
testimony before this committee in 2005, ``Nearly 80 percent of long
term child poverty occurs in broken or never-married families. Each
year government spends over $200 billion on means-tested aid to
families with children; three quarters of this aid flows to single
parent families.''
A recent report by the nonpartisan Congressional Research Service
(``Children in Poverty: Profile, Trends, and Issues,'' January 16,
2007) drives home this point in terms of the number of children raised
in poverty today due to changing patterns of marriage and childbearing
in the past generation: ``(I)n 2005 the child poverty rate was 17.1
percent, but had family composition in 2005 been the same as in 1960,
the overall adjusted child poverty rate would have been 12.4 percent;
instead of the observed 12.3 million children being counted as poor in
2005, the number of poor children estimated by this method would have
been 8.9 million, or 3.4 million fewer than the number observed.''
To put this into perspective, in the decade following work-based
welfare reform about 1.4 million children have been removed from
poverty; if we were able to restore past patterns of marriage and
childbearing, the effect in terms of removing children from poverty
would be roughly two and a half times as great.
I am struck by the similarities between the report released at this
hearing about the costs of child poverty and another report released in
2005 about the costs for children associated with changing family
structures. This report by Paul Amato of Penn State University (``The
Impact of Family Formation Change on the Cognitive, Social, and
Emotional Well-Being of the Next Generation,'' Fall 2005) compares
family structure and adolescent well-being, by various measures
including repeating a grade, delinquency, violence, smoking, and
attempted suicide: ``The results are striking. Adolescents living with
single parents consistently report encountering more problems that
those living with continuously married parents. Thirty percent of the
former reported that they had repeated a grade, as against 19 percent
of the latter. Similarly, 40 percent of children living with single
parents reported having been suspended from school, compared with 21
percent of children living with continuously married parents. . . . The
increase in risk associated with living without both parents ranged
from about 23 percent (for being involved in a violent altercation) to
127 percent (for receiving emotional therapy).'' (p. 86)
Clearly, we won't be able to solve child poverty without reversing
the decline in marriage and ensuring more children live in stable,
married households.
Despite these high hurdles, it is important to note that most
poverty is temporary. Most of the poor are not ``trapped'' in poverty
for long. One out of three U.S. households experienced poverty in at
least one year of a recent 13-year stretch. But only one out of 20
families was poor in at least 10 years, and only one out of 60 stayed
poor in all 13 years. So the ``permanent'' poverty rate is less than 2
percent, even though the ``official'' annual poverty rate is about 13
percent.
A related set of issues involves how we measure poverty, which
includes several obvious flaws.
First, current methods of measuring poverty effectively ignore tens
of billions of dollars in taxpayer benefits meant to reduce poverty. In
effect, this makes families appear poorer than they really are,
inflating the number in poverty. If such benefits and associated income
available to poor households were counted as income, studies suggest
the ``real'' poverty rate would drop to as low as 5 percent, instead of
today's official poverty rate of nearly 13 percent.
A second flaw involves the use of income data, as opposed to data
about how much households spend--which some argue is both more reliable
and a better indicator of child wellbeing. One study (Bruce D. Meyer
and James X. Sullivan, ``The Well-Being of Single-Mother Families after
Welfare Reform,'' Brookings Institution, August 2005) found that
``First, consumption is probably measured with less error than income
for poor families, and is more strongly associated with other measures
of well-being such as health and housing conditions. Second, there is
overwhelming evidence that income is underreported by these mothers and
that the underreporting, especially of income from welfare and other
transfer programs, has increased in recent years.'' The study notes
that in 2004 spending by the poorest fifth of American families
exceeded income by 95 percent--in effect, spending was nearly twice as
much as income for this group, which included many families officially
counted as poor, but whose spending patterns suggest they may not be.
We know what works and what doesn't to reduce poverty. Recent
research confirms Republican policies of promoting full-time work and
healthy marriage are the strongest weapons against poverty--both of
which are far more effective than even doubling welfare benefits, or
example. Republicans stand ready to work to strengthen the progress we
have made reducing poverty through promoting work and marriage. But we
will resist those who would simply spend more on welfare benefits or
ease access to welfare checks without work or other measures of
personal responsibility. Such misguided efforts will not only fail to
reduce poverty, but they threaten to undo the progress we have made
under welfare reform. Worst of all, such efforts will lead to more
dependence, more poverty, and ultimately worse outcomes for children.
[The prepared statement of Mr. Porter follows:]
Prepared Statement of The Honorable Jon Porter, a Representative in
Congress from the State of Nevada
Good Morning, Mr. Chairman. I am pleased that the committee is
holding today's hearing on the economic and societal costs of poverty.
I share your concern that poverty is a major issue of concern to the
United States and the world.
As leaders we have a moral responsibility to reduce poverty. We
also have a responsibility to reduce poverty responsibly. As Congress
continues to address this issue that we see everyday in our districts,
we need to recognize the importance of a vibrant business community and
a robust educational system. If we fail to utilize these sectors of our
society in providing tools to the impoverished, we have failed. We
cannot treat the symptoms of poverty alone. We must treat the syndrome
itself.
Again, Mr. Chairman, thank you for calling this hearing today on
this most important issue. I look forward to the testimony of our
witnesses and am hopeful that we can work together in addressing this
important issue.
We will start with Dr. Nilsen.
STATEMENT OF SIGURD R. NILSEN, PH.D., DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Dr. NILSEN. Chairman Rangel, thank you, Mr. McCrery and
other Members of the Committee. I am pleased to be here today
to discuss a report requested by Chairman Rangel, that is being
issued today from GAO, that summarizes the findings from recent
economic research on the linkages between poverty and economic
growth.
While the empirical research is limited, recent studies
point to the negative association between poverty and economic
growth consistent with the theoretical literature's conclusion
that higher rates of poverty can result in lower rates of
economic growth. For example, one study found that economic
growth is slower in U.S. metropolitan areas characterized by
higher rates of poverty when compared with metropolitan areas
with lower rates of poverty. Another study using data from 21
wealthy countries found a similar negative relationship between
poverty and economic growth.
In the United States, poverty can impact economic growth by
affecting the accumulation of human capital. Research has shown
that accumulation of human capital is one of the fundamental
drivers of economic growth. Human capital consists of the
skills, abilities, talents and knowledge of individuals as used
in employment. Therefore, schooling at the secondary and higher
levels is a key component for building an educated workforce
that is better at learning, creating, and implementing new
technologies.
Health is another important component of human capital, as
it can enhance workers' productivity by increasing their
physical capabilities, such as strength and endurance, as well
as their mental capacities, such as cognitive functioning and
their reasoning ability. Improved health increases workforce
productivity by reducing incapacity, disability and the number
of days lost to sick leave.
The accumulation of human capital can be diminished when
significant portions of the population have experienced long
periods of poverty or were living in poverty at a critical
developmental juncture. For example, research has found that a
slowdown in human capital development is most heavily
concentrated among youth from impoverished backgrounds. When
individuals who have experienced poverty enter the workforce,
their contributions may be restricted or minimal while others
may not enter the workforce in any significant way.
In addition, the economic literature suggests that poverty
can affect economic growth due to its association with crime,
violence and social unrest. It is suggested that when citizens
engage in unproductive criminal activities, they deter others
from making productive investments or their actions force
others to divert resources toward defensive activities. The
increased risk due to insecurity can unfavorably affect
investment decisions and, hence, economic growth in areas
afflicted by concentrated poverty.
In addition, people living in impoverished conditions
generate costs for the Government, which spends billions of
dollars on programs to assist low-income individuals and their
families.
Economic research suggests that individuals living in
poverty face an increased risk of adverse outcomes, such as
poor health and criminal activity, both of which may lead to
reduced participation in the labor market. Health outcomes are
worse for individuals with low incomes than for their more
affluent counterparts. Lower-income individuals experience
higher rates of chronic illness, disease and disabilities and
also die younger than those with higher incomes. While
mechanisms by which poverty affects health are complex,
research suggests that adverse health outcomes are due in part
to more limited access to health care as well as more exposure
to environmental hazards and engaging in risky behaviors.
For example, research has shown that increased availability
of health insurance, such as Medicaid for low-income mothers,
led to a decrease in infant mortality. Likewise, exposure to
high levels of air pollution from living in urban areas close
to industrial areas or highways can lead to acute health
conditions.
In conclusion, maintaining and enhancing economic growth is
a national priority that touches all aspects of Federal
decision-making. Our report highlights that economists have
long recognized the strong association between poverty and a
range of adverse outcomes for individuals, and empirical
research has also begun to help us better understand the impact
of poverty on our Nation's economic growth. The
interrelationships between poverty and various adverse social
outcomes are complex, and our understanding of these
relationships can lead to vastly different interventions to
address each specific outcome. Furthermore, any such
interventions could take years or even a generation to yield
significant and lasting results, as the greatest impacts are
likely to be seen among children.
Nevertheless, whatever the underlying causes of poverty may
be, economic research suggests that improvements in the health,
neighborhoods, education and skills of those living in poverty
could not only have impacts far beyond individuals and
families, but lead to improving the economic well-being of the
Nation as a whole.
Mr. Chairman, this concludes my prepared statement. I would
be happy to answer questions.
Chairman RANGEL. Thank you so much.
[The prepared statement of Dr. Nilsen follows:]
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Chairman RANGEL. Dr. Holzer.
STATEMENT OF HARRY J. HOLZER, PH.D., PROFESSOR AT GEORGETOWN
UNIVERSITY AND VISITING FELLOW AT THE URBAN INSTITUTE,
GEORGETOWN UNIVERSITY PUBLIC POLICY INSTITUTE
Dr. HOLZER. Mr. Chairman, thank you very much for inviting
me today to speak to the economic costs of poverty to the
United States. I would like to share with all of you some
recent findings from a paper that I coauthored with several
colleagues for the Task Force on Poverty of the Center for
American Progress; and this paper attempts to estimate the
economic costs of child poverty to the United States
Essentially, we try to put dollar figures on all of the costs
that Dr. Nilsen just emphasized.
Like Dr. Nilsen, we focus on several mechanisms by which
poverty reduces economic success in the United States. When
children grow up in poverty, they are more likely as adults to
have low employment and earnings, reflecting their lower skill
levels and their lower productivity in the workforce. They are
more likely to engage in crime; they are more likely to have
poor health later in life. Their reduced productivity generates
a direct loss of goods and services to the U.S. economy.
The crime that they engage in imposes monetary and other
personal costs on their victims, as well as costs to the
taxpayers for administering an enormous criminal justice
system. Their poor health generates illness and early mortality
that requires large health care expenditures, impedes
productivity and ultimately reduces the quality and quantity of
life for poor people.
Now, in each of these three areas--productivity, crime and
health--we reviewed a range of rigorous research studies that
estimate an average statistical relationship between growing up
in poverty and each of those outcomes--earnings, crime and
health. We had to make a number of critical assumptions that
folks might quibble with, but wherever possible, we tried to
make conservative assumptions in order to generate lower bound
estimates for this total cost.
Our results suggest that the costs to the United States
associated with childhood poverty total about $500 billion per
year, or the equivalent of nearly 4 percent of Gross Domestic
Product (GDP). More specifically, we estimate the childhood
poverty each year reduces productivity and economic output by
about 1.3 percent of GDP, poverty raises the costs of crime
each year also by about 1.3 percent of GDP, and poverty raises
health expenditures and it reduces the value of health by about
the equivalent of 1.2 percent of GDP.
If anything, these estimates almost certainly understate
the true costs of childhood poverty to the U.S. economy. For
one thing, we omit the costs associated with poor adults who
did not grow up poor as children. There was no way to
incorporate those estimates. Our estimates ignore all of the
other costs that poverty might impose on the Nation besides
those associated with those specific three factors--low
productivity, crime and health. There are other costs, such as
environmental costs and such as the suffering of the poor
themselves, that we didn't incorporate into our estimates.
What does all of this imply for public policy? Well, the
high cost of childhood poverty to the United States suggests
that investing significant resources in poverty reduction might
be more cost effective over time than we previously thought.
Of course, determining the cost effectiveness of each
policy requires careful evaluation research in a whole variety
of areas. However, a range of policies, including high-quality
pre-kindergarten programs, various school reform efforts,
higher access to higher education for the poor, expansions of
the Earned Income Tax Credit (EITC) and other supports for the
working poor, job training for poor adults, higher minimum
wages, more collective bargaining, special efforts for
disadvantaged youth, marriage promotion and faith-based
initiatives all might potentially be involved in this effort.
Given the strong evidence that already exists on some of these
factors, like high-quality pre-K programs and on the EITC, some
investments through these mechanisms seem particularly
warranted.
At a minimum, the costs of poverty imply that we should
work hard to identify cost-effective strategies of poverty
remediation, and we should not hesitate to invest some
significant resources when these strategies are identified.
Some have already been identified. In the meantime, we should
also experiment with and evaluate a wide range of other
promising efforts.
Thank you.
[The prepared statement of Dr. Holzer follows:]
Prepared Statement of Harry J. Holzer, Ph.D., Professor at
Georgetown University and Visiting Fellow at the Urban Institute,
Georgetown University Public Policy Institute
Mr. Chairman,
Thank you for inviting me to speak today on the economic costs of
poverty to the United States.
I'd like to share with all of you some recent findings of a paper I
coauthored with several colleagues for the Task Force on Poverty of the
Center for American Progress.\1\ The paper attempts to estimate the
economic costs of child poverty in the U.S.
---------------------------------------------------------------------------
\1\ See Harry J. Holzer (Georgetown University and the Urban
Institute), Diane Whitmore Schanzenbach (University of Chicago), Greg
J. Duncan (Northwestern University), and Jens Ludwig (Georgetown
University and the National Bureau of Economic Research. ``The Economic
Costs of Poverty in the United States: Subsequent Effects of Children
Growing Up Poor.'' Center for American Progress, January 2007.
---------------------------------------------------------------------------
Most arguments for reducing poverty in the U.S., especially among
children, rest on a moral case for doing so--one that emphasizes the
unfairness of child poverty, and how it runs counter to our national
creed of equal opportunity for all.
But there is also an economic case for reducing child poverty. When
children grow up in poverty, they are more likely as adults to have low
earnings, which in turn reflect low productivity in the workforce. They
are also more likely to engage in crime and to have poor health later
in life. Their reduced productive activity generates a direct loss of
goods and services to the U.S. economy. Any crime in which they engage
imposes large monetary and other personal costs on their victims, as
well as the costs to the taxpayer of administering our huge criminal
justice system. And their poor health generates illness and early
mortality that requires large health care expenditures, impedes
productivity and ultimately reduces their quality and quantity of life.
In each case, we reviewed a range of rigorous research studies that
estimate the average statistical relationships between growing up in
poverty, on the one hand; and one's earnings, propensity to commit
crime and quality of health later in life, on the other. We also
reviewed estimates of the costs that crime and poor health per person
impose on the economy. Then we aggregated all of these average costs
per poor child across the total number of children growing up in
poverty in the U.S. to estimate the aggregate costs of child poverty to
the U.S. economy. We had to make a number of critical assumptions about
how to define and measure poverty, what level of income to use as a
non-poverty benchmark, and which effects are really caused by growing
up in poverty and not simply correlated with it.\2\ Wherever possible,
we made conservative assumptions, in order to generate lower-bound
estimates.
---------------------------------------------------------------------------
\2\ We define the effects of poverty to be all those associated
with growing up in poor environments, including the effects of being
raised by parents with low incomes, attending poor schools and living
in poor neighborhoods. We also use families with incomes at twice the
official poverty line as the benchmark with which to compare those
living in poverty.
---------------------------------------------------------------------------
Our results suggest that the costs to the U.S. associated with
childhood poverty total about $500B per year, or the equivalent of
nearly 4 percent of GDP. More specifically, we estimate that childhood
poverty each year:
Reduces productivity and economic output by about 1.3% of
GDP;
Raises the costs of crime by 1.3% of GDP; and
Raises health expenditures and reduces the value of
health by 1.2% of GDP.
If anything, these estimates almost certainly understate the true
costs of poverty to the U.S. economy. For one thing, they omit the
costs associated with poor adults who did not grow up poor as children.
They ignore all other costs that poverty might impose on the Nation
besides those associated with low productivity, crime and health--such
as environmental costs, and much of the suffering of the poor
themselves.\3\
---------------------------------------------------------------------------
\3\ Our estimates include the value of lost earnings to the poor
themselves, but not other nonpecuniary costs associated with poverty,
except for estimates of the value of morbidity and early mortality to
the poor.
---------------------------------------------------------------------------
What does all of this imply for public policy? The high cost of
childhood poverty to the U.S. suggests that investing significant
resources in poverty reduction might be more cost-effective over time
than we previously thought. Of course, determining the effectiveness of
various policies requires careful evaluation research in a variety of
areas. But a range of policies--such as universal pre-kindergarten (or
pre-K) programs, various school reform efforts, expansions of the
Earned Income Tax Credit (EITC) and other income supports for the
working poor, job training for poor adults, higher minimum wages and
more collective bargaining, low-income neighborhood revitalization and
housing mobility, marriage promotion, and faith-based initiatives--
might all be potentially involved in this effort. Given the strong
evidence that already exists on some of these efforts (like high-
quality pre-K and the EITC), some investments through these mechanisms
seem particularly warranted.
At a minimum, the costs of poverty imply that we should work hard
to identify cost-effective strategies of poverty remediation, and we
should not hesitate to invest significant resources when these
strategies are identified. In the meantime, we should also experiment
with and evaluate a wide range of promising efforts.
Chairman RANGEL. Thank you so much.
Now we hear from David Jones, President and CEO of the CSS
of New York.
Thank you for being with us.
STATEMENT OF DAVID R. JONES, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, COMMUNITY SERVICE SOCIETY OF NEW YORK
Dr. JONES. Thank you, Mr. Chairman and Members of the
Committee. I am Dave Jones, President and CEO of CSS, an
independent not-for-profit organization, virtually one of the
oldest in the Nation at 160 years. We have been solely
committed to the issues of poverty in the city of New York
during that time.
Our legacy includes the creation of the Nation's first free
lunch program and organizing some of the courses that led to
the creation of the Columbia School of Social Work as well,
much to the advantage of tourists, the first public baths and
the Hospital for Special Surgery in the city, New York. CSS has
always come to the aid of people in need in the city. Thank you
for allowing me to report what is going on in the city of New
York from our research.
Before I start, I would like to commend Congressman Rangel
for focusing on this issue. He has been a lifelong supporter of
people in need in the city.
Almost 42 years ago, the 88th Congress took the
extraordinary step of supporting Lyndon Johnson's antipoverty
agenda. That council report, the Council of Economic Advisers,
in 1965 said they thought they had the means to break poverty
for good, to end it for the next generation of Americans. I
appear before you today to report that at least from New York
City's vantage, it is not happening, that we have to
reinvigorate our efforts if we are going to break a cycle that
seems, if anything, more entrenched than it was before.
My focus today, obviously, is on New York. It has 8 million
people. It has unique challenges, but some of the research, I
think, is illustrative of other areas of the Nation.
CSS research has revealed that 170,000 young people, ages
16 to 24, are out of school and out of work; they are
disconnected. This is a population that rivals many cities in
America. The majority of these youth are black and Latino with
this predicament most pronounced in the Latino community.
In a related study, we examined New York City joblessness.
That study revealed that nearly 40 percent of black men, 16 to
24, in New York City are completely severed from the workforce
and labor market. As Members of the Committee recognize, this
is not unemployment; this is actual job holding in this
category of individual.
Our findings go on. In our latest yearly assessment of
poverty in New York City, we have identified single mothers
falling behind yet again in terms of being a growing segment of
families in poverty despite a major economic recovery in the
city of New York.
Following that, the latest CSS survey of low-income New
Yorkers, the largest such survey in America, finds that while
nearly 60 percent of low-income people are working, they are
reporting significant problems, from losing their apartments to
forgoing health care to having food crises.
That survey led us to collaborate with a local union, Local
32BJ of the Service Employees International Union, to look at
security guards in New York. Of 63,000 security guards,
virtually none of them get a wage of more than $10 an hour, we
couldn't find one that had health insurance, and most of them
report having problems staying in an apartment in any one year.
I think rather than wringing our hands about it, our city
has done something about it. Under Congressman Rangel's
prodding, the mayor created a construction opportunities group,
which started reserving some of the jobs for young men and
women in the categories we are talking about. The City Council
in the city of New York has put $20 million to try to do
workforce development activity, and the mayor has put together
a panel, on which I am honored to serve, which has put forward
$150 million to deal with the problems of chronic poverty in
the city of New York.
This can't be done by a city or locality alone. It is going
to take very aggressive activity by the Congress, and I think
we have to start crafting interventions that can have some
immediate impact. Some of them involved doing some rigorous
skill-based work of developing further kinds of job corps
settings and a renewed commitment to career and vocational
education.
We have to do interventions that will bring young people
who were totally out of the economy into it, and we have to do
even more. This particular Committee has to look at the EITC
and consider whether we may draw more young people into that
purview by expanding the low-income tax credit to include
childless adults between 18 and 24.
Again, I think the description of that panel nearly 40
years ago was right. I think we can do it, but it is going to
take an extraordinary focus to get it done, and I think it has
enormous consequences of what kind of Nation we are putting
together.
Thank you.
[The prepared statement of Dr. Jones follows:]
Prepared Statement of David R. Jones, President and Chief Executive
Officer, Community Service Society of New York, New York, New York
Good morning, Chairman Rangel and members of the Committee. I am
president and CEO of the Community Service Society of New York or CSS,
an independent, not-for-profit organization. Throughout our more than
160-year history, we have been committed to improving the life chances
of New Yorkers living in poverty.
Our legacy of achievement includes such innovations as setting up
the prototype for the free school-lunch program; starting the first
shelter for homeless men; organizing the Society for the Ruptured and
Crippled, now New York City's Hospital for Special Surgery; and
organizing courses in social work that evolved into the Columbia
University School of Social Work.
Thank you for inviting me to share with you my thoughts on poverty
in our Nation, in particular what we have witnessed in New York City.
Let me begin by commending you, Congressman Rangel, for your
exemplary service to our Nation, the passion you bring to this
institution, and your lifelong commitment to those in need. We stand
ready to assist you and this committee in any way we can to strengthen
our national resolve to address poverty.
Forty-two years ago the 88th Congress took the monumental step of
supporting President Lyndon Johnson's anti-poverty agenda. It was a
hopeful time, as is evident in the 1965 annual report of the Council of
Economic Advisers that stated: We have the means to break the bonds
that tie today's children to the poverty of their parents. With proper
measures, we could eliminate poverty in the next generation.
I appear before you today to suggest while some progress has been
made, we must return to the task at hand and reinvigorate our efforts
on behalf of the poor. My focus today is on the dimensions of poverty
in New York City, what we are facing on the ground. And, while the
magnitude of the challenge we face is unique due to the sheer size of
our city, I know that similar conditions exist in urban communities
across the country.
In 2005, CSS issued a report that revealed 16 percent of young
people in our city, ages 16 to 24 years old, are neither enrolled in
school nor employed.\1\ These nearly 170,000 young people--a number
that rivals the total population of Providence, Rhode Island--are what
researchers have deemed ``disconnected,'' separated from any
opportunities that could lead to a life of self-sufficiency and
achievement.
---------------------------------------------------------------------------
\1\ See Out of School, Out of Work . . . Out of Luck? New York
City's Disconnected Youth at http://www.cssny.org/pubs/research/
poverty.html.
---------------------------------------------------------------------------
The report found that the city's Black and Latino youth--
particularly young men--are twice as likely as Whites and Asians to be
out of school and out of work. This predicament is most pronounced in
the Latino community, where four in ten young men are disconnected.
Low-income young men of color are being left out of the city's
growing prosperity. And therein lies the problem: Growing the economy
is not enough to correct this situation. The presence of so many
disconnected young people of color not only endangers families and
communities. It also jeopardizes the city's economic growth.
We need a comprehensive policy to address the needs of disconnected
youth. It must reflect the realities of today's economy, penetrate
populations of young people who are outside of mainstream institutions,
and provide targeted investments with measurable outcomes. Ultimately,
the goal must be to create a well-defined path to economic security for
these young people.
And we need a second chance policy specifically to reach out to
young men and women who have dropped out. For those with deep
educational deficits, this will not be a cheap, quick fix. Short-term,
superficial training programs don't make up for 12 years of inadequate
education. It will require a more focused approach, with a series of
steps from rigorous skill development in a Job Corps type setting, a
renewed emphasis on vocational and technical education, to transitional
jobs in public service or emerging sectors of the economy.
Our attention must also focus on individuals who can find no place
in our labor market. CSS released a report in 2004 that revealed the
magnitude of Black male joblessness in New York City that reverberated
through the media and city government.\2\ The report found that nearly
half of all Black men were jobless in 2003.
---------------------------------------------------------------------------
\2\ See A Crisis of Black Male Employment: Unemployment and
Joblessness in New York City, 2003 at http://www.cssny.org/pubs/
research/poverty.html.
---------------------------------------------------------------------------
And as the members of this committee know, joblessness is not the
same as unemployment. Our jobless figures account for all Black men of
working age, including those who have dropped out of the job market, a
growing group that the government's unemployment statistics ignores.
Since that initial finding, the situation has improved somewhat.
Our latest figures show nearly 40 percent of the city's Black men are
jobless, a number that is still unacceptable.\3\ That's about 250,000
people, more people than in many of the cities and small towns or
counties represented by members of this committee. Clearly, in addition
to engaging Black men in the labor market, we must also re-commit to
nondiscriminatory practices and government oversight and enforcement
mechanisms.
---------------------------------------------------------------------------
\3\ See Unemployment and Joblessness in New York City, 2005 at
http://www.cssny.org/pubs/research/poverty.html.
---------------------------------------------------------------------------
This isolation from opportunity is not limited to Black men. Our
most recent annual examination of poverty in New York City revealed
that single mothers heading households comprise a larger share of
families in poverty.\4\ It is another example of why there is not an
easy fix or a one-size-fits-all solution that can be applied across the
spectrum of crises we are encountering.
---------------------------------------------------------------------------
\4\ See Poverty in New York City, 2005 at http://www.cssny.org/
pubs/research/poverty.html.
---------------------------------------------------------------------------
CSS is also confronting the problems of the working poor. Working
poor ought to be an oxymoron, but in fact it is an ever-expanding group
of Americans.
We conduct an annual survey of New York City's low-income
residents, aptly named ``The Unheard Third'' since one-third of the
city's residents live in or near poverty. As far as we know, this is
the only regular survey of low-income opinion and attitudes in the
Nation.\5\ It gives us vital information for our work since we get
direct feedback from our primary constituency.
---------------------------------------------------------------------------
\5\ See http://www.cssny.org/research/unheardthird/index.html.
---------------------------------------------------------------------------
Our latest survey found that nearly 60 percent of low-income New
Yorkers were working, nearly half working full time. A report CSS
produced and commissioned by the Service Employees International Union,
Local 32BJ, on New York City's private security guards, reinforced our
survey data on the working poor.\6\
---------------------------------------------------------------------------
\6\ See Shortchanging Security: How Poor Training, Low Pay and Lack
of Job Protection for Security Guards Undermine Public Safety in New
York City at http://www.cssny.org/pubs/research/poverty.html.
---------------------------------------------------------------------------
New York City's 63,000 private security guards provide the first
line of defense for tenants and visitors in office buildings as well as
retail stores, schools, and religious institutions. Almost 95 percent
are non-union. Over eight in ten are male and mostly men of color. The
median hourly wage for guards in the New York City area is only 55
percent of the median for all workers in the New York metropolitan
area. Most labor without a single day of paid sick leave and few
receive health benefits on the job. The result is a workforce with low
morale and high turnover.
What we have learned from the aforementioned example is that unions
continue to play an important role in securing livable wages and
benefits and raising workplace standards to the benefit of workers and
employers. The absence of unions leaves hard-working men and women with
little protection from the often-arbitrary actions of employers and the
unpredictable nature of market forces.
We also need to reward legitimate, steady work. The Earned Income
Tax Credit has been one of our most successful policies in making work
pay and especially in drawing more low-income parents into the labor
force and enabling them to rise out of poverty. But the EITC leaves out
exactly the group with the highest rates of joblessness. The Earned
Income Tax Credit should be extended to childless adults ages 18 to 24,
comparable to that available to parents of two children.
To their credit, our city's elected leadership has reacted
responsibly to what CSS, and other organizations, have identified as a
crisis in our city.
Mayor Bloomberg recognized the possibilities for employment in the
city's burgeoning construction industry. But it was Chairman Rangel who
induced the mayor to create the Commission on Construction Opportunity.
And we have seen the results of the commission's work: a new High
School for Construction Trades, Engineering, and Architecture that
opened last fall; and 40 percent of construction industry
apprenticeships earmarked for formerly excluded groups and
individuals--an unprecedented agreement with the city's trade unions.
The New York City Council, under the leadership of former Speaker
Gifford Miller and continued by Speaker Christine Quinn, has piloted
the New York City Works program--a citywide effort to stem the tide of
joblessness by identifying prospects for employment, providing job
preparation, and connecting individuals to work. So far, nearly $20
million has been earmarked for this program.
Likewise, Mayor Bloomberg's Commission for Economic Opportunity, on
which I served, is a significant milestone for our city.\7\ The
commission took a targeted approach, focusing on three distinct groups
of the poor in New York City: working poor adults, young adults ages 16
to 24, and children age five and under. The mayor has committed $150
million to develop policies that address their immediate needs and
create avenues for sustained mobility throughout the course of their
lifetimes.
---------------------------------------------------------------------------
\7\ See http://www.nyc.gov/html/om/pdf/ceo_report2006.pdf.
---------------------------------------------------------------------------
This is a start. With the proper political will, we can turn hope
into reality. Imagine an America where poverty is not accepted as a
permanent condition. I am encouraged that the 110th Congress will,
without the rancor of partisan rhetoric, see fit to build upon the
tremendous legacy of the men and women who served in this institution
four decades ago. Our finest hour has yet to come but the clock is
ticking. As was expressed in 1965: we do have the means to break the
bonds that tie today's children to the poverty of their parents.
I can provide copies of our reports or survey findings to the
members of the committee or the committee staff. And I'll be happy to
answer questions about our experiences in New York City and the
implications across urban communities throughout our Nation.
Thank you.
Chairman RANGEL. A long-time staffer and friend of this
Committee and well-known author, Dr. Ron Haskins, who is now
the Codirector of the Center on Children and Families with the
Brookings Institution. Welcome back to your Committee.
STATEMENT OF RON HASKINS, PH.D., SENIOR FELLOW, ECONOMIC
STUDIES AND CODIRECTOR, CENTER ON CHILDREN AND FAMILIES, THE
BROOKING INSTITUTION
Dr. HASKINS. Thank you so much, Mr. Chairman and Ranking
Member McCrery and Members of the Committee.
Before I came to Washington, I used to think the name of
this Committee was the ``Powerful'' Committee on Ways and Means
and only when I got here did I find out that ``powerful'' was
just how you are regarded by other people. So, it is a great
privilege to be here, and I greatly appreciate your invitation.
I also want to congratulate the Committee for starting with
poverty. I think poverty is a very serious problem. I spend
most of my life now studying poverty and inequality and social
mobility, and I am extremely pleased that the Committee is
going to, not just in this hearing but in subsequent hearings,
perhaps develop a legislative agenda, hopefully bipartisan.
This Committee, of course, was really the source of the
1996 welfare reform bill, which has had dramatic impacts on
poverty. I think you could argue that it is the most effective
thing we have ever done at the Federal level, and it was, in
the end, a bipartisan bill even though many of the prominent
members of this Committee did not support it, it has been quite
successful; and I hope that that same outcome can be achieved
this time, that this Committee can work together and create an
antipoverty strategy.
I would like to make three brief points about the report.
First, it is a superb report--I am referring now to the Holzer
report. It is a superb report. All of the authors are extremely
prominent professionals and scholars, and I think there could
be other people who can pick a nit here and there, as Harry
said, but I think all experts that study this material would
agree that poverty is a serious problem, that it does have
long-term impacts on the economy; and if we could reduce
childhood poverty, there would be positive impacts on the
economy.
I doubt anybody would argue very much with $500 billion. I
think it is a reasonable outcome.
I would like to point out two things that are very
important. First, the $500 billion figure does not include the
cost of anything that we would do to eliminate poverty. We
already spend well over $600 billion on means-tested programs.
So, we would have to spend more, presumably, unless we can make
those programs more efficient, to actually reduce poverty. So,
we should not think that we are going to suddenly realize a
windfall of $500 billion if we could eliminate childhood
poverty, because it is going to cost something.
Secondly, do not think that the implication of this report
is that if we gave a bunch of money to people, that poverty,
childhood poverty, would be reduced. The logic of the report
is, not only do poor people need more money, but they have to
change in every other way to make them more like nonpoor
people. The parenting behaviors have to change, the
neighborhoods have to change, the schools have to change; and
in my estimation, this puts us right back where we started.
This Committee and other Members of Congress and members of the
private sector, like Mr. Jones, still have to figure out what
we should do to reduce poverty.
In that regard, I think we actually have learned something.
If members would like to look at Chart 3 in my testimony, I
think this will give you a very good clue about what we have
learned and about the strategies that we should pursue.
First, I want to call your attention--these are three bar
graphs in two sets, one set for 1990 and one set for 1999.
These bar graphs are--it is a broad measure of poverty, but it
is one that is used by the Census Bureau, so there is no tricky
stuff here.
Dr. HASKINS. Notice each--the bar graph in each set; these
are moms who were never married, the most likely to be poor,
the least likely to have a high school education. In 1990,
their market poverty rate--think of it as life in the state of
nature--was 50 percent. Half of them were poor and their
children were poor.
In 1999 it was 39 percent, and that figure went down
specifically because of earnings, probably a net increase of 2
million mothers in the labor force, granted, working minimum-
wage jobs, but earning enough to take themselves and their
children out of poverty.
Now look at what happens when you add government programs.
When you add the cash programs and the cash in kind, not
including the tax programs, poverty drops to 37 percent in
1990, but it still drops quite considerably in 1999. Then when
you add the tax benefits, especially earned income tax
benefits--and other benefits as well, but especially the EITC--
it has no impact in 1990 because of the low levels of work.
However, because of the high levels of work in 1999, poverty
still goes down even further to 25 percent.
So, think of this: 25 percent, 37 percent, why? For three
reasons:
First, we used the market. We insisted that people have
market incomes. Government is not going to do anything.
Secondly, individual responsibility, in this case work. We
insisted that people do the responsible thing, namely quit
welfare and go to work. It is not good to be on welfare, you
should work. We sent very clear signals that were originated
from this Committee that people had to go to work.
Third, we supported them once they began to work with
government programs, especially EITC but also child care, to
some extent food stamps, which we changed very substantially in
2002.
In short, this is a deeply bipartisan approach. For
Republicans, there is personal responsibility, the Republicans
like to emphasize. For Democrats, there is a crucial role for
Government. I would say to this Committee that whatever you do
to attack poverty, that you need to focus on these three
bulwarks of any antipoverty strategy, and especially on more
work. I suggest some things in my testimony about how we could
do that, especially marriage, and especially education and, in
particular, preschool.
Thank you, Mr. Chairman.
Chairman RANGEL. Thank you. Thank you.
[The prepared statement of Dr. Haskins follows:]
Prepared Statement of Ron Haskins, Ph.D., Senior Fellow,
Economic Studies and Co-Director, Center on Children and Families,
The Brookings Institution
Chairman Rangel, Ranking Member McCrery, and Members of the
Committee:
My name is Ron Haskins. I am a Senior Fellow at the Brookings
Institution and a Senior Consultant at the Annie E. Casey Foundation. I
also spent 14 of the interesting years of my professional life working
for this Committee and I am very grateful to have this opportunity to
testify during today's hearing on poverty and the economy.
The report by my friend Harry Holzer and his colleagues that you
are releasing today is a challenging and exceptionally interesting
product of sophisticated social science methods.\1\ I suspect that
economists and other experts would challenge some of the assumptions
underlying the report and might come up with slightly different results
than those reported by Holzer. But I think the conclusion that if we
eliminated childhood poverty we would save on the order of $500 billion
a year because of increased labor, reduced crime, and reduced need for
health care is reasonable. Regardless of the exact level of savings,
nearly every expert would grant that eliminating poverty would produce
economic benefits and that the benefits would be substantial. In short,
I applaud this report, especially because it gives us yet another
reason to do everything possible to reduce poverty.
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\1\ Harry J. Holzer and others, ``The Economic Costs of Poverty in
the United States: Subsequent Effects of Children Growing Up Poor''
(Washington, D.C.: Center for American Progress, January 2007).
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I would, however, like to emphasize a cost that is not part of the
calculations made by Holzer and his colleagues. Even if we reduce
childhood poverty and prevent some of the costs childhood poverty
imposes on the economy, whatever actions we take to end poverty would
themselves have substantial costs. Thus, even if $500 billion is an
accurate estimate of the costs of childhood poverty, we would need to
spend money to reduce childhood poverty in order to reduce its long-
term costs. In 2005 we spent well over $600 billion on programs for
poor and low-income individuals and families\2\ and yet the child
poverty rate was 17.6 percent.\3\ It's anyone's guess how much more we
would have to spend to greatly reduce the current child poverty rate.
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\2\ Congressional Research Service, Domestic Social Policy
Division, Knowledge Services Group, Cash and Noncash Benefits for
Persons with Limited Income: Eligibility Rules, Recipient and
Expenditure Data, FY2002-FY2004, CRS Report for Congress (Washington,
D.C.: Author, March 2006).
\3\ Carmen DeNavas-Walt, and others, U.S. Census Bureau, Income
Poverty, and Health Insurance Coverage in the United States: 2005,
Current Population Reports, P60-231 (Washington, D.C.: Government
Printing Office, 2006), Table B-2.
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Further, the report tells us little about the causes of poverty, or
more important for this committee, how it could be reduced. My concern
here is directed especially to those who think that poverty is a random
event that strikes indiscriminately, that our economy or our schools
are the primary causes of poverty, or that the only difference between
the poor and the middle class is money. The poor are poor in large part
because they make decisions that greatly increase the likelihood that
they will be poor. Yes, many of the poor begin life with
disadvantages--lousy neighborhoods, bad schools, single-parent
families--that are difficult to overcome. But both research and
experience show that many people born with disadvantages manage to
overcome them.
Another complication arises. I think Professor Holzer and his
colleagues would agree that in order to realize the gains to the
economy they calculate would require changes in the behavior of both
poor parents and poor children. Indeed, the underlying implication of
their analysis is that the savings they estimate can only be achieved
if we can figure out a way to boost poor children into an entirely
different developmental trajectory than the one that currently limits
their potential. We can have a big argument about whether it is
possible to achieve this kind of impact on children, but virtually
every student of poverty thinks that just giving money to poor parents
would not be enough. Professor Susan Mayer of Northwestern University,
in a remarkable study cited by Professor Holzer and his colleagues,
found that influencing child outcomes requires more than just money.
The title of her book, What Money Can't Buy, hints at her message that
``once basic material needs are met, factors other than income become
increasingly important.'' \4\
---------------------------------------------------------------------------
\4\ Susan E. Mayer, What Money Can't Buy (Cambridge: Harvard,
1997), p. 148.
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This point is worth emphasizing. The nature of Professor Holzer's
analysis is to compare productivity, crime, and health of children from
poor families with children from non-poor families.\5\ It is inherent
in the logic of their analysis that any differences they find in the
labor force productivity, health, or criminal behavior of children from
poor and non-poor families cannot be attributed just to family
differences in income. The authors are admirably explicit about this
point:
---------------------------------------------------------------------------
\5\ Actually, the comparisons in the study are between poor
children and children from families at twice the poverty level (about
$30,000 for a family of three in 2006). Thus, the full savings they
estimate would not be achieved unless we could develop policies that
brought the families of poor children to twice the poverty level.
[Our estimates] include not only the effects of low parental
income, but also of the entire range of environmental factors
associated with poverty in the U.S., and all of the personal
characteristics imparted by parents, schools, and neighborhoods
to children who grow up with them or in them. . . . Of course,
in defining poverty this way, we also assume that the entire
range of negative influences associated with low family incomes
would ultimately be eliminated if all poor children were
---------------------------------------------------------------------------
instead raised in non-poor households. (p. 6)
I think we have some fairly good ideas about how to influence
children's development, but no intervention has shown that it is
possible to have these sweeping effects on the child's home,
neighborhood, and school environment. In short, I would not expect to
be designing interventions any time soon that will enable us to capture
a major portion of the $500 billion Professor Holzer estimates is lost
to our economy every year because children are reared in poverty.
[GRAPHIC] [TIFF OMITTED] T4734A.026
Rather than chase a goal that is far out of our reach to eliminate
child poverty, a more modest but potentially more effective set of
strategies lies close at hand. Figure 1 portrays the results of an
analysis performed by Isabel Sawhill, my colleague at Brookings. Based
on Census Bureau data for 2002, the analysis systematically varies
factors correlated with poverty and then, based on the magnitude of
each factor's correlation with poverty and on data from a random sample
of Americans, estimates how changing that factor would change the
poverty rate.\6\ The figure shows the impact on poverty of assuming
everyone works full time, of increasing the frequency of marriage to
match the rate that prevailed in 1970, of assuming everyone completed
high school, of reducing family size so that no family had more than
two children, and of doubling cash welfare. As you can see by the
height of the bar graphs, the most effective way to reduce poverty
would be to increase work levels; the second most effective way would
be to increase marriage rates. Increasing education, reducing family
size, and doubling cash welfare are much less effective in reducing
poverty.
---------------------------------------------------------------------------
\6\ Adam Thomas and Isabel Sawhill, ``For Richer or for Poorer:
Marriage as an Antipoverty Strategy,'' Journal of Policy Analysis and
Management, 21(4): 587-599; Ron Haskins and Isabel Sawhill, ``Work and
Marriage: The Way to End Poverty and Welfare'' (Welfare Reform and
Beyond Brief #28), Washington, D.C., Brookings, September 2003.
[GRAPHIC] [TIFF OMITTED] T4734A.027
This analysis, like the study being released today by the
Committee, is based on statistical manipulations of data and not what
actually happens when something in the environment (such as work or
marriage rates) changes. But, thanks in large part to this Committee,
the Nation has conducted a huge experiment that shows what happens to
poverty rates when more people work. In the welfare reform legislation
of 1996, welfare rules were dramatically changed so that mothers on
welfare had to look for work or have their cash benefit reduced or even
terminated. In addition, mothers were confronted with a 5-year time
limit. In part because of these new rules, the mid- and late-1990s saw
the largest increase ever in work by females heading families. As many
as two million poor mothers left or avoided welfare and found jobs.
Figure 2 shows what happened to child poverty during the period of
increased employment by single mothers. Child poverty declined for
seven consecutive years beginning in 1993, falling by nearly 29 percent
over the period. Black child poverty fell even more, by about 32
percent, reaching its lowest level ever. Even after some mothers lost
their jobs during and following the recession of 2001 and child poverty
increased, it peaked in 2004 (it declined again in 2005) at a rate that
was more than 20 percent below its mid-1990s peak.\7\
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\7\ Ron Haskins, Work over Welfare: The Inside Story of the 1996
Welfare Reform Law (Washington, D.C.: Brookings, 2006), Chapter 15.
---------------------------------------------------------------------------
In line with the prediction of the Sawhill analysis, these results
present a vivid demonstration that poverty can be reduced by people
making the right decisions--in this case the decision to go to work.
Congress and President Clinton encouraged work; many poor mothers went
to work; child poverty dropped.
Another decision that people make that greatly increases their odds
of living in poverty is the decision to have a baby outside marriage.
Children in female-headed families are four or five times more likely
to be poor as children living with their married parents.\8\ The
Brookings analysis referred to above shows that if we had the marriage
rate we had in 1970, we could reduce poverty by well over 25 percent.
The analysis does not assume any higher levels of employment or any
government spending above the level that actually occurred in 2002. The
analysis proceeded by randomly matching single men and single women
with the characteristics (including employment and income) they
actually had in 2002. The matches, based on age, education, and race,
proceeded until enough virtual marriages had been created to equal the
1970 marriage rate. Clearly, the decision to marry by millions of young
adults could have a major impact on poverty rates. As it is now, the
decision not to marry and to have babies outside wedlock contributes
greatly to the high level of poverty in America, especially the poverty
level among children.
---------------------------------------------------------------------------
\8\ According to tables from the U.S. Census Bureau, in 2005 the
poverty rate among children living in married-couple households was 7.4
percent; the rate for children living in households headed by females
was 38.0 percent. Thus, the poverty rate among children in female-
headed households is 5.1 times greater than among children living with
a married couple.
---------------------------------------------------------------------------
Dropping out of high school is yet another individual decision that
has a major impact on poverty. As Figure 1 shows, we could reduce
poverty by about 15 percent if everyone would simply finish high
school. Of course, if more youth went on after high school and achieved
2-year or 4-year degrees, the impact of education on poverty would be
even greater.
So far, I have emphasized work, marriage, and education because not
only are these effective levers to manipulate to fight poverty, but
they are all primarily under the control of individuals. The major
lesson from welfare reform is that increased personal responsibility is
vital to reducing poverty. No matter what we do as a nation to fight
poverty, increased levels of responsible decision-making by individuals
should be at the heart of our strategy. If we can increase the number
of parents who decide to work, if we can encourage young people to
marry before having children, and if we can help young people complete
high school or even achieve additional years of schooling beyond high
school, we will greatly reduce poverty and realize the economic gains
predicted by the Holzer report.
I am emphatically not arguing that we should create a brave new
world in which disadvantaged individuals must slog it out in a low-wage
economy without help from government. Government has a vital role to
play. But government is already doing a lot. Members of this Committee
undoubtedly hold a wide range of views about how much government should
do to help the poor and what particular actions government should take
to fight poverty. But since roughly the 1980s, the legislative and
executive branches of the Federal government have dramatically shifted
the focus of American social policy. As Kate O'Beirne testified before
this Committee during the 1995 hearings on welfare reform, the
watchword of the old welfare system seemed to be ``Spend more, demand
less.'' \9\ But the welfare reform legislation of 1996 has brought
dramatic change. Now low-income families are expected to work, but when
they do the Federal government meets them in the labor market with a
host of work-conditioned benefits including the Earned Income Tax
Credit (EITC), a partially refundable child tax credit, child care, a
worker-friendly food stamp program, and Medicaid coverage. In the bad
old days, a poor mother who left welfare for low-wage work could
actually lose money--and lose her family's Medicaid coverage as well.
Now she can get up to $4,500 in cash from the EITC, she might qualify
for the refundable part of the child tax credit, she could qualify for
around $1,500 in food stamps, her children are covered by Medicaid as
long as she has low earnings, and there's a very good chance her child
care would be covered.
---------------------------------------------------------------------------
\9\ Haskins, Work over Welfare, p. 126.
[GRAPHIC] [TIFF OMITTED] T4734A.051
Figure 3, based on data taken from the Ways and Means Green Book,
shows how successful the policy shift to mandatory work combined with
federal work supports has been.\10\ The figure compares progress
against poverty among children living with their unwed mothers in 1990
(the first set of graphs) and in 1999 (the second set of graphs). The
first bar shows that before any government transfer programs, the
poverty rate based just on market income was 50 percent in 1990 but
only 39 percent in 1999. The 1999 market poverty rate was more than 20
percent lower than the comparable rate in 1990 because so many more
unwed mothers were working in 1999. The second bar shows what happens
when non-tax transfers from cash welfare, food stamps, and housing are
added to family income. These programs took a big bite out of poverty
in 1990, causing it to fall from 50 percent to 37 percent. But the same
programs also had a major impact on poverty in 1999, despite its lower
initial level, causing it to fall from 39 percent to 30 percent. When
tax benefits, notably the EITC, are added to income, there is virtually
no impact on poverty in 1990. But in 1999, the EITC and other tax
benefits brought poverty down by another 5 percentage points or 15
percent. As can be seen by comparing the last bar in each set, the
combined effect of government programs in 1990 was to bring poverty
down by about 25 percent, from 50 percent to 37 percent. But the impact
of government programs in 1999 was even greater, reducing poverty by
over 35 percent--despite the fact that increased incomes from work by
mothers had caused the market poverty rate to be 20 percent lower. It
would be difficult to imagine a clearer demonstration that the new
federal strategy of requiring personal effort and then rewarding it
with work-contingent benefits is functioning just the way this
Committee and Congress hoped it would.
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\10\ Committee on Ways and Means, 2004 Green Book (Washington,
D.C.: U.S. Government Printing Office, 2004), table H-21.
---------------------------------------------------------------------------
The beauty of what has happened to work and poverty in America over
the past decade is that our current approach to fighting poverty is
deeply bipartisan. For Republicans there is the reliance on personal
responsibility and the market; for Democrats there is the use of
government programs to provide work incentives and boost incomes. If
the Members of this Committee base their decisions on how to fight
poverty on the lessons of the past, they will build their policies on a
foundation with three bulwarks that would make the policies inherently
bipartisan: jobs in the private sector (even if they are low-wage),
work requirements to spur individual responsibility, and government
programs that support work (``make work pay'').
My Brookings colleague Isabel Sawhill and I have just completed
work on a paper that is part of a larger Brookings project designed to
bring attention to critical issues of foreign and domestic policy that
should be addressed by candidates during the 2008 presidential
campaign.\11\ Our paper is based in part on an issue of the journal The
Future of Children that Brookings and Princeton University publish
twice a year. Our next issue contains eight specific recommendations,
made by some of the Nation's leading scholars, about policies to fight
poverty. Here are brief descriptions of four proposals for fighting
poverty that meet the criteria of building on the low-wage economy,
spurring individual responsibility, and supporting work:
---------------------------------------------------------------------------
\11\ Ron Haskins and Isabel Sawhill, ``What a Winning Presidential
Candidate Should Do About Poverty and Inequality'' (Washington, D.C.:
Brookings, forthcoming).
Raising work levels is a proven strategy for reducing
poverty. Yet the only federal program that has strong work requirements
is Temporary Assistance for Needy Families. The Federal government
should work with states and local housing authorities to increase the
incentives for work in both the food stamp and housing programs.
Simulations like the Sawhill analysis cited above show
that increasing marriage rates could have a major impact on poverty.
However, there is only modest evidence that programs such as marriage
education will increase marriage rates or strengthen families.
Fortunately, the Bush administration has funded a series of scientific
studies, now being conducted by highly qualified research companies, to
examine a range of marriage programs working both with young unmarried
parents and with young married parents. In addition, the Administration
has recently funded over 120 marriage programs around the Nation. The
Ways and Means Committee should follow the progress of these research
and demonstration programs and from time-to-time conduct hearings to
examine the findings. If the programs are effective in building strong
families and boosting children's development, they should be expanded.
A large number of poor and low-income men, especially
minority men, continue to have serious problems in the labor market and
to exhibit low rates of marriage, high rates of impregnating their
unmarried partners, low rates of paying child support, and high rates
of crime and imprisonment. The primary government program for these
young men is child support enforcement, which uses all available
means--including incarceration--to force them to pay child support. A
reasonable approach to helping these young men would be to use both
prison release programs and interventions implemented through the Child
Support Enforcement program to provide incentives for work. In
addition, Congress should provide funds for a few states to experiment
with large-scale demonstrations of the effects of providing these young
males with a large income supplement comparable to the EITC;
The intervention program that has the best evidence of
having long-term impacts on children's development is high-quality
preschool.\12\ Evidence from model programs shows that preschool can
reduce placements in special education and retentions in grade, boost
school graduation rates, reduce delinquency and crime, reduce teen
pregnancy, and increase college attendance, among other effects. But
there is little or no evidence that large-scale programs like Head
Start can produce these long-term effects. More than forty states now
spend their own money on preschool programs, indicating a high level of
state commitment to preschool. Congress should offer additional funding
to a few states that agree to coordinate all their child care and
preschool funding, to focus on boosting school readiness, to cover all
poor 4-year-olds (or both 3- and 4-year-olds), to use highly qualified
teachers, and to submit their programs to third-party evaluations.
Although model programs show what can be accomplished, we do not yet
have the knowledge to implement effective large-scale programs.
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\12\ Ron Haskins, ``Putting Education into Preschools,'' in Paul E.
Peterson, ed., Generational Change: Closing the Test Score Gap (Lanham,
Maryland: Rowman & Littlefield, 2006); Jens Ludwig and Isabel Sawhill,
``Success by Ten'' (Washington, D.C.: Brookings, forthcoming).
I believe the Ways and Means Committee should be commended for
opening its agenda for the 110th Congress by examining poverty. We have
learned a lot about fighting poverty in the past decade. If we build on
what we have learned, and especially if we conduct large-scale
demonstrations of new ideas based on the bipartisan principles outlined
above, I think it is possible to further reduce poverty and to realize
some of the savings to the Nation's economy so impressively documented
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in the Holzer report.
Chairman RANGEL. Now we will hear from Dr. Jane Knitzer,
Director of the NCCP, from New York.
Thank you for being with us.
STATEMENT OF JANE KNITZER, PH.D., DIRECTOR, NATIONAL CENTER FOR
CHILDREN IN POVERTY
Dr. KNITZER. Thank you, Mr. Chairman and Members of the
Committee. My name is Jane Knitzer; I direct the NCCP at
Columbia University, located in Congressman Rangel's district,
and I personally am a constituent.
I am going to highlight seven take-home messages from
demographic analyses, neuroscience and economic research that
have profound implications for shaping policies to promote
future productivity.
One, we are talking about a large part of the future
workforce, 39 percent of America's children, 28 million
children, live in low-income families.
Two, most low-income children already have parents who
work, 55 percent of them full-time, full-year, but they do not
earn enough money to support a family. It takes twice the
poverty level, even minimally.
Three, the younger the child, the greater the risk of
poverty. Forty-three percent of children under 6 live in low-
income families compared to 35 percent of adolescents. We know
from research that experiencing poverty in early childhood is
the most harmful to children.
Four, economic hardship has been repeatedly linked to
adverse health education and other outcomes, even in children,
the kind that you just heard described in adults. By age 4--and
it starts really early. By age 4, poor children are 18 months
behind developmentally and by age 10, they have not caught up.
These children have more mental health problems, they are more
likely to drop out of school and become part of the disengaged
youth.
Five, money matters for children's outcomes. Increased
income has been linked with better school readiness and
achievement and with reduced behavior problems, some of it, in
our welfare research findings. Families with more money can
invest in more resources to promote cognitive development, and
they are less stressed and depressed, which impacts how
children develop socially and emotionally which, in turn,
relates to how well they become workers.
Six, the earliest relationships matter more than we ever
understood. Neuroscientists are teaching us that the earliest
relationships, starting in infancy, shape the hardwiring of the
brain, which in turn shapes later learning, the ability to
manage emotions and even the immune system.
A study called Adverse Childhood Experiences has linked
problems in childhood with increased cardiovascular problems,
hypertension, diabetes, et cetera, done by the Kaiser
Foundation.
Seven, according to economists as well as brain science,
investing in high-quality early childhood experience has long-
term, major economic payoff, and I think everybody has
mentioned that. So, I won't go into that. My testimony gives
examples and the Committee on Economic Development has been
doing a great deal of analysis of this.
So, the take-home messages that are critical, for future
productivity, we need to make work pay for families now, not
just for adults; but adults are parents, and what happens now
is that as families earn more and lose the work support
benefits, they fall back into poverty.
We have developed a tool, the Family Resource Simulator, at
NCCP that tracks this in 12 States across the country. As they
earn more, do the American thing, work harder, they lose
benefits. Some earn twice as much and they end up with very
little disposable income. This does not set a good model for
their children.
Two, make sure that all low-income young children enter
school with the skills they need to learn whatever setting they
are in, and regardless of the work status of their parents.
Right now, 17 percent of children are actually in State-funded
preschool programs. The vast majority of children are in child
care settings, but child care is largely seen as a work support
for parents, not essentially a productivity support for the
next generation. We must invest in quality child care that
includes the same access to high quality early learning
experiences.
Three, we need to invest in infants and toddlers and their
families, particularly those where the relationships are at
risk. We must expand programs like Early Head Start. We are now
serving 62,000 children in the United States of America in
Early Head Start, even in the face of the brain science.
Finally, for the highest-risk children, particularly those
in poverty and extreme poverty, we need to consistently make
both parenting supports and work supports a focus. Right now,
we focus on work and not the parenting supports that these
higher-risk families need. We often talk about children and
adults separately. We need to focus policies on families,
particularly for the highest risk.
I thank you very much, and I would be happy to respond to
any questions.
Chairman RANGEL. Thank you.
[The prepared statement of Dr. Knitzer follows:]
Prepared Statement of Jane Knitzer, Ph.D., Director, National Center
for Children in Poverty, New York, New York
Thank you, Mr. Chairman and members of the committee for this
invitation to testify today. I am the Director of the National Center
for Children in Poverty (NCCP). NCCP is a public interest organization
at Columbia University's Mailman School of Public Health, with offices
in Congressman Rangel's Congressional District. NCCP's mission is to
promote the health, economic security, and well-being of America's most
vulnerable children and families. NCCP uses research to identify
problems and find solutions at the state and national levels.
My remarks today focus on what we need to do for the next
generation now to ensure the future productivity of our economy. To set
the stage, I will provide some key facts about child poverty, highlight
why child poverty matters for the future of the economy, and share
lessons from research about new strategic ways to address child poverty
and to ensure a productive future workforce. I will conclude with some
broad recommendations based on NCCP's research on how best to improve
family economic security and increase the odds that poor and low-income
children will become productive earners.
Child Poverty in America, 2007
Child poverty is widespread. Overall, 39 percent of America's
children--more than 28 million children--live in low-income families,
that is with income below twice the poverty level. This puts them at
risk of not making it in the global economy, not having the educational
skills they need, not being healthy both mentally and physically, and
not being effective parents when they become adults.
Nationally, 18 percent, or nearly 13 million children are poor by
official standards. Half of these children are in families with incomes
at or under $10,000.
Another 21 percent of children live in families with incomes
between 100 and 200 percent of poverty. Although not poor by official
standards, these families face material hardships and disadvantages
that are similar to those who are officially poor. Missed rent
payments, utility shut offs, inadequate access to health care, and
unstable child care arrangements are common. These families are but one
or two crises away from official poverty (National Center for Children
in Poverty, 2006).
Most low income children have parents who work. As the recent GAO
report finds, the majority of the parents of these children work--55
percent of children in low-income families have a parent who works
full-time, 52 weeks a year. The problem is they do not earn enough
money to support a family, even when they work more. They are held back
by low-wage jobs that provide few benefits and few prospects for
advancement, even when they have a high school degree or even some
college. Three quarters of low-income children have parents with at
least a high school diploma, but this no longer guarantees economic
success (National Center for Children in Poverty, 2006).
Research shows that it takes an income of about twice the poverty
level to provide even basic necessities for a family, $40,000 for a
family of four, not the official $20,000, and, depending upon the local
cost of living, it can take even more. It takes a full-time job at more
than $19 an hour to produce an annual income of $40,000, or two full-
time jobs at nearly $10 an hour (Cauthen, 2006).
Not having enough money reduces the odds that children will have
access to the kinds of resources and experiences that are essential for
children to thrive and to grow into productive adults. Too often they
lack access to the things that higher-income parents routinely provide
for their children--high quality health care, stimulating early
learning programs, good schools, money for college as well as books and
other enriching activities. Instead, low-income parents struggle with
more basic choices: When the money runs out, is it heat or the medical
bills? Is it good child care or unstable arrangements that cost less?
Is it keeping young children indoors and out of unsafe parks, risking
obesity?
The younger the child, the greater the risk of poverty. 20 percent
of children under age 6--1 in 5--live in poor families; 16 percent of
children age 6 or older live in poor families. In half the states, more
than 20 percent of children under age 6 are growing up in poverty,
whereas only 13 states have a child poverty rate for children up to age
18 that is as high. The pattern is the same for low-income children: 42
percent of children under age 6 live in low-income families, whereas 33
percent of adolescents live in such families. Research tells us that
experiencing poverty in early childhood, along with persistent poverty,
is the most harmful to children.
States' poverty and low-income rates vary considerably. There is
considerable state variation in the rate of children in low-income
families. In the states represented on this committee for example, the
percentage of low-income children varies from 24 percent to 44 percent
of all children in the state. This suggests the possibility of a
combined state and federal policy agenda providing incentives to states
to implement poverty reduction strategies.
Why Child Poverty Matters for Future Productivity
Economic hardship has been linked to a myriad of adverse
educational, health and other outcomes for children that limit future
productivity. Low-income children face elevated health, educational,
environmental and family risks that jeopardize their successful
transition to adulthood, with African American, Latino and American
Indian children facing compounded risks (Shonkoff, 2000). For example:
Health
Good health is the foundation for healthy development. Low-income
children are more likely to be in fair or poor health (Centers for
Disease Control analysis of 2001 National Health Interview Survey--
NHIS) and to lack access to quality health care. Low-income children
are not as likely as their well-off peers to receive preventive health
care and their parents are less likely to receive guidance about child
development. Three percent of low-income families report receiving
advice and education from their physician compared to more than half
for more affluent families (Young, 1996). Even with Medicaid and the
State Children's Health Insurance Program (SCHIP), 11 percent of poor
children lack access to health insurance, and for the first time in
more than a decade, the number of uninsured children is increasing
(See: www.statehealthfacts.org).
Education
Researchers repeatedly document that there is a direct linear
relationship, in the aggregate, between family income and children's
achievement. Higher family income leads to higher academic achievement
(Gershoff, 2003; Lee & Burkham, 2002).
Less well known is that the achievement gap is real and significant
from children's earliest years. Both math and reading scores are
negatively related to poverty at kindergarten entry and for the most
part, poor children either do not catch up or the gap worsens. A review
of national data sets on preschool and child care shows that at age 4
years, poor children are 18 months below the developmental norm for
their age group. By age 10, that gap is still present. Of particular
concern is that there is a dramatic difference in early language by
income. By the time children from middle-class families are in the
third grade, they know about 12,000 words. Children in low-income
families with undereducated parents have vocabularies of 4,000 words
(Klein & Knitzer, 2007).
Mental Health
Healthy social and emotional development is a core ingredient of
successful adulthood. But low-income children are disproportionately
exposed to circumstances that pose risks to such development.
Low-income children, especially young children, are more likely to
be exposed to parental depression and other parental adversities
including substance abuse and domestic violence. These risk factors
have been linked with an array of short and long term consequences for
children, including depression, acting out behavior, and significant
school problems.
For older children, the toll poverty takes is reflected in higher
rates of diagnosable disorders, along with learning problems (Knitzer &
Cooper, 2006) that frequently translate into school drop out and
sometimes child welfare and juvenile justice involvement. Two-thirds of
youth with mental health problems drop out of high school (Wagner,
2005).
What Research Says Can Help
It is widely accepted that high quality education is a major
pathway out of poverty. But research also points to two other critical
ingredients that promote future productivity.
Adequate Family Income
Too often, discussions about children and poverty focus only on the
risks associated with poverty--low educational achievement, social and
behavioral problems, and poor health--and then the policy solutions
follow suit. While it is critically important to address these
problems, it is equally important for children's growth and development
to address poverty itself. In short, money matters.
More than a decade of research shows that increasing the incomes of
low-income families--without any other changes--can positively affect
child development, especially for younger children (Cauthen, 2002).
Experimental studies of welfare programs offer some of the strongest
evidence to date about the importance of income. For example, welfare
programs that increase family income through employment and earnings
supplements have consistently shown improvements in school achievement
among elementary school-age children; other studies have also shown
links between increased income and improved school readiness in young
children (Dearing, McCartney, & Taylor, 2001).
In contrast, welfare programs that increase levels of employment
without increasing income have shown few consistent effects on
children. Moreover, findings from welfare-to-work experiments show that
when programs reduce income, children are sometimes adversely affected
(Cauthen, 2002). Other studies have shown links between increased
income and reductions in acting out disorders in low-income children
and youth (Costello, Compton, Keeler, & Angold, 2003). And it's not
just the amount of income that matters but also its predictability and
stability over time; research has shown that unstable financial
situations can have serious consequences for children as well (Cauthen
2002; also Wagmiller, Lennon, Kuang, & Aber, 2006).
Research suggests that income, controlling for other factors,
affects children primarily through two mechanisms. The financial
investments that parents are able to make in their children--both to
meet basic needs as well as to invest in materials, activities, and
services that are developmentally enriching--are critical for child
development. The inability to make such investments helps to explain
why poverty negatively affects children's cognitive development.
Likewise research shows that low levels of family income negatively
affect children's social and emotional development by increasing levels
of parental stress and depression and by affecting parenting behavior.
Healthy Relationships in the Early Years
Developmental research has for two decades pointed consistently to
the importance of parents and to other ``protective'' relationships
(Luthar, 2003) for all children of all ages. It also teaches us that
the more risk factors, whether demographic (single parent family, low
maternal education) or environmental (parental substance abuse,
community violence), absent effective interventions, the more likely
children are to experience poor long-term negative outcomes.
Recent neuroscience research has dramatically deepened these
understandings and focused attention on what happens in the earliest
years. There are three core take home messages that have especially
profound implications for how we design programs and use public dollars
to improve school outcomes and future productivity of children and
youth. All findings point in the same direction--a strengthened focus
on young children.\1\
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\1\ For further information, see the National Scientific Council
for the Developing Child Web site: www.developingchild.net.
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The earliest experiences shape the hard wiring of the brain. Early
experiences and relationships interact with genetics to shape the
``architecture'' of the brain. How the early brain develops impacts
later learning, the ability to mange emotions and even the immune
system. Depending upon the early experiences, that architecture is
either sturdy or fragile. When it is sturdy, children are more likely
to grow up and be productive, when it is not, they risk problems not
just as children, but also into adulthood.
The active ingredient in early brain development is relationships.
When relationships with primary caregivers (including families, but
also child care providers, home-visitors and teachers) are
appropriately nurturing, stimulating and stable, young children thrive.
When they are not, young children show signs of early learning,
language and social and emotional challenges. At the extremes are the
infants, toddlers and young children who experience ``toxic stress,''
that is, exposure to persistently harmful environments, inconsistent
caregiving, abuse and abandonment. Research documents how these
experiences frequently leave life long scars (Luthar, 2003).
Once brain circuits are built, it becomes harder to change them.
That is why adults who learn a language as adults even if fluent
continue to have an accent. It is harder to change a four year old than
a baby, and harder to change an adolescent than a four year old. It is
also much more costly. Children who do not develop the skills to
succeed in the early grades, particularly the social and emotional
skills, are more likely to end up as problem learners and later
dropouts (Raver & Knitzer, 2002). Estimates are that between one-
quarter and one-third of children are at risk of early school failure.
The potential health costs of poor early experiences are also high.
Children who experience high levels of stress, as adults, turn out to
be at much greater risk for cardiovascular diseases, diabetes,
hypertension and substance abuse (Fellighetti, Anda, & Nordenberg,
1998).
What Economists Say About the Return on Investments in the Earliest
Years
Economic analyses of three high-quality intensive early childhood
demonstration programs that have followed children as they became
adults reinforce the rationale for increased, strategic early childhood
investments.\2\ While the program specifics differed, each of the
programs: began early in children's lives; had clearly focused goals
that emphasized the whole child; maintained sustained contact with the
children--often including through their transition to elementary
school; had teachers who were well educated, trained, and compensated;
had small class sizes and high teacher-child ratios; and, involved and
supported parents intensively (Galinsky, 2006).
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\2\ Longitudinal studies of three model projects serving low-income
children and families--the High/Scope Perry Preschool Project, the
Abecedarian Project, and the Chicago Child-Parent Centers--have
followed participants into adulthood, comparing their adult earning and
other outcomes with those of randomly chosen or comparable non-
participants (Reynolds, 2002; Schweinhart, 2004; and Ramey, 2000).
---------------------------------------------------------------------------
By early adulthood, participants generally had: higher IQ's and
mathematical ability; higher academic achievement; reduced need for
special education, lower grade retention rates, fewer school drop outs.
At age 21, those in one preschool program studied were more than four
times more likely than non-participants to be enrolled in a 4-year
college degree program; were less likely to be unemployed and more
likely to have higher earnings; had lower juvenile and adult crime
rates; were less likely to depend on public assistance, and less likely
to be a teenage parent.
Economists are examining the implications of these findings to
address the problem of lower skills and motivation among disadvantaged
children, their diminished productivity as adults, as well as their
costs to society. One study estimates that by age 21, participants in
its preschool program earned an average of $20,517 more than non-
participants, and that the public saved a net of $19,097 on grade
retention, special education, child welfare, juvenile and adult justice
expenditures (Reynolds et al., 2004).
Other analyses found that disadvantaged children from ages 8-13
with low levels of parental investments (time, activities, and family
resources) without preschool had a 29 percent chance of graduating from
high school. With preschool, the chance of high school graduation rose
to 53 percent (Heckman & Masterov, 2004).
The implication is clear. If we address poverty in the earliest
years--when it is in fact most widespread in this country--and apply
the lessons from this research on investments in the early years, we
stand the greatest chance of changing in a positive way what happens to
a child in a poor or low-income family and subsequently, that child as
an adult.
The Policy Implications
I would like to conclude with some broad recommendations that our
research at the National Center for Children in Poverty indicates must
shape the future policy dialogue about how to improve outcomes for the
close to 40 percent of children who live in low-income families.
Ensure that families have enough resources to raise their children
in ways that will promote future productivity. For the next generation
to thrive, we need to make sure that parents have enough money to raise
their children, whether it be through income, refundable tax credits,
benefits, or some combination of all the above, as well as
opportunities for increased education.
We need to make work pay for children and families now in order to
promote future productivity. This is a different rationale than is
usually offered for investments in the current workforce. But given
that research findings show the positive impact of increased family
income on children, it is an important one. Many low-income families
qualify for ``work support'' benefits (e.g., earned income tax credits,
Medicaid, child care assistance) that can help make up the difference
between low earnings and a basic family budget. But these benefits are
means-tested, so as earnings increase--particularly as they rise above
the official poverty level--families begin to lose eligibility even
though they are not yet economically self-sufficient. The result is
that working and earning more may not leave a family better off. In the
worst case, higher earnings can actually lead to a family doing worse
financially. A tool developed by the National Center for Children in
Poverty, the Family Resources Simulator (www.nccp.org/modeler/
modeler.cgi), provides concrete examples of this phenomenon.
With the help of work support benefits, a single-mother of two in
Chicago can cover the cost of basic necessities for her family by
working full-time earning about $15,000 a year. But as she earns more,
the family loses its food stamps and child care subsidy, benefits less
from the Earned Income Tax Credit, begins to incur premiums for public
health coverage. The result? The family is no better off financially at
$36,000 in earnings than it was at $18,000 (Cauthen, 2006). So what
message does this send to children? They see their parents working hard
and not getting ahead. This should not be the American way.
Ensure that every low-income child has access to quality early
education and care and for poor or otherwise at risk children access to
comprehensive programs like Early Head Start from birth through age 3.
We need to make sure that all low-income children enter school with
the skills that they need to learn, whatever setting they are in and
regardless of the work status of their parents. The states are moving
to increase funding for pre-k, but the reality is that overall, low-
income young children still have significantly less access to any
formal early childhood program than their more affluent peers (a
pattern that has not really changed over the years) and only 17 percent
of 4-year-olds have access to state-funded pre-k. In fact, most
children are in some kind of child care setting, but child care is seen
as a work support, not a next generation productivity support. Thus,
although over 30 states include child care as part of their delivery of
pre-k services, when parent's employment status changes, children lose
eligibility, and lose the relationships that they have come to count
on. Only 20 states certify eligibility for child care for one year. Yet
we know that continuity of relationships reinforces positive brain
circuitry.
We need to invest in a new set of intentional, integrated policies
to promote healthy brain development in children from birth to three
that are designed with brain science in mind, starting with an
expansion of Early Head Start. We lose too much time if we what until
four. It is shocking, when juxtaposed against brain science that we
have a national Early Head Start program that is serving only 62,000
children, even though we have research that shows that for most of the
children enrolled, Early Head Start improved parenting practices and
behavioral and cognitive outcomes. We also know that when children in
Early Head Start continue with high quality child development and early
learning programs, they maintain their gains and the achievement gap is
reduced. Yet as 3-years-olds, half of the Early Head Start sample were
not in programs that supported the gains of the first two years. This
is not smart investing, given what we know from brain science.
For the highest-risk children, particularly those in poverty and
extreme poverty, we need to consistently make both parenting and work a
focus of our policies, right now, rather than just work or just
children. For example, there has been important attention in workforce
and TANF policies to ``barriers to employment''--low education, poor
work histories, substance abuse and domestic violence, and, in reality,
if not in law, mental health issues. These ``barriers to employment''
are also ``barriers to effective child development'' and hence to
future productivity of the children. The children in these families are
at special risk; they are the most likely not to have health care, to
have developmental delays that are not identified, and not to be
enrolled in formal early childhood programs. But TANF does not require
attention to the children in the families as part of a family plan.
Similarly, as part of a broad poverty reduction strategy, we need
to make it possible for states to use current entitlement dollars in
ways that actively promote healthy development. Right now, states have
to engage in fiscal contortions to pay for what science says is needed.
For example, maternal depression, which cuts across class and race, is
an anchor risk factor, negatively impacting behavior, cognitive
functioning and language development. Studies show that rates of
depression in low-income mothers are very high--in the 40 percent
across multiple studies.
However, parents of poor children can only access treatment if they
are Medicaid-eligible. The average eligibility rate for working parents
is 65 percent, for non-working parents, 42 percent. State eligibility
rates for non-working parents (those who are most likely to have
unaddressed health and mental health problems) vary. In five states the
eligibility rate is under 20 percent of the Federal poverty level
(FPL); in 26 states it is between 20 and 50 percent of the FPL, in 9
states it is between 50 and 100 percent of the FPL, and in the
remaining 9 states, it is between 101 percent and 200 percent of the
FPL. (Forthcoming NCCP report).
______
The policy challenge is large. It is to reassess our work support
policies through a lens that integrates a stronger focus on children,
and to strengthen our child focused policies to have a stronger focus
on families. Before we lacked the science and the economic analysis to
justify attention to children before they become costly problems to
society. But now, we have data that says we can reduce the societal
costs of child poverty across generations if we are smarter about
making different kinds of up front investments in our public policies.
I very much appreciate this opportunity to testify before you and
NCCP would be happy to work with the Committee staff to provide any
additional information that might be useful.
References
Cauthen, N. K. (2002). Policies that improve family income matter
for children. New York, NY: National Center for Children in Poverty,
Columbia University Mailman School of Public Health.
Cauthen, N. K. (2006). When work doesn't pay: What every
policymaker should know. New York, NY: National Center for Children in
Poverty, Columbia University Mailman School of Public Health.
Costello, E. J, Compton, S., Keeler, G., Angold, A. (2003)
Relationships between poverty and psychopathology: A natural
experiment. Journal of the American Medical Association, 290(15), 2023-
2029.
Dearing, E., McCartney, K., & Taylor, B. A. (2001). Change in
family income-to-needs matters more for children with less. Child
Development, 72, 1779-1793.
Fellighetti, V. J., Anda, R. F., Nordenberg, D., et al. (1998). The
relationship of adult health status to childhood abuse and household
dysfunction. American Journal of Preventive Medicine, 14(4), 245-258.
Galinsky, E. (2006). The economic benefits of high-quality early
childhood programs: What makes the difference? Washington, DC:
Committee for Economic Development.
Gershoff, E. T. (2003). Low-income and hardship among America's
kindergartners (Living at the Edge, No. 3). New York, NY: National
Center for Children in Poverty, Columbia University Mailman School of
Public Health.
Heckman, J. J. & Masterov, D. V. (2004). The productivity argument
for investing in young children (Invest in Kids Working Group Working
Paper No. 5). Washington, DC: Committee for Economic Development.
Klein, L. & Knitzer, J. (2007). Promoting effective early learning:
What every policymaker and educator should know. New York, NY: National
Center for Children in Poverty, Columbia University Mailman School of
Public Health.
Knitzer, J. & Cooper, J. (2006). Beyond integration: Challenges for
children's mental health. Health Affairs, 25(3), 670-670.
Lee, V. E. & Burkham, D. T. (2002). Inequality at the starting
gate: Social background differences in achievement as children begin
school. New York, NY: Economic Policy Institute.
Luthar, S. S. (Ed.). (2003). Resilience and vulnerability:
Adaptation in the context of childhood adversities. Cambridge, UK:
Cambridge University Press.
National Center for Children in Poverty. (2006). Basic facts about
low-income children: Birth to age 18. New York, NY: National Center for
Children in Poverty, Columbia University Mailman School of Public
Health.
Ramey, C. T., 2000. Persistent effects of early intervention on
high-risk children and their mothers. Applied Developmental Science,
4(1), 2-14.
Raver, C. C. & Knitzer, J. (2002). Ready to enter: What research
tells policymakers about strategies to promote social and emotional
school readiness among three- and four-year-old children. New York, NY:
National Center for Children in Poverty, Columbia University Mailman
School of Public Health.
Reynolds, A. J, Temple, J. A., Robertson, D., & Mann, E. A. (2002).
Age 21 cost-benefit analysis of the Title I Chicago child-parent
centers (Discussion Paper No. 1245-02). University of Wisconsin-
Madison, Institute for Research on Poverty, Table 5A.
Schweinhart, L. J. (2004). The High/Scope Perry Preschool Study
through age 40: Summary, conclusions, and frequently asked questions.
Ypsilanti, MI: High/Scope Press.
Shonkoff, J. P. & Phillips, D.A. (Eds.). National Research Council
& Institute of Medicine. (2000). From neurons to neighborhoods: The
science of early childhood development. Washington, DC: National
Academies Press.
Wagmiller, R., Lennon, M.C., Kuang, L., Alberti, P. & Aber, J.L
(2006). The dynamics of economic disadvantage and children's life
chances. American Sociological Review, 71(5): 847-866.
Wagner, M. (2005). Youth with disabilities leaving secondary
school. In Changes Over Time in the Early Post School Outcomes of Youth
with Disabilities: A Report of Findings from the National Longitudinal
Transition Study (NTLS) and the National Longitudinal Transition Study-
2 (NTLS2) (pp. 2.1-2.6). Menlo Park, CA: SRI International.
Young, K. T., Davis, K., & Schoen, C. (1996). The Commonwealth Fund
Survey of Parents with Young Children. New York, NY: Commonwealth Fund.
Chairman RANGEL. Let me thank the panel. None of you have
any differences about the negative impact that poverty has on
our society. I hope that you would help us by reaching out to
your colleagues suggest to us what kind of programs you think
should be given priority.
When we created the Empowerment Zones, as some of you know,
we asked the communities to get together with local and State
governments and the private sector to come up with a plan; and
at this point, those discussions should include social agencies
when they ask what they would do in their community to deal
with this problem? What impact they think this would have in
their community?
It is unfortunate that poor people don't carry the type of
stigma of emergency and national security and those things as
others do. Hurricane Katrina is a classic example of this. We
are now dealing with this from an economic viewpoint, a
national security viewpoint. Certainly, we are concerned that
poverty and its continuation could have a negative impact on
the strong economic growth we will need if we are going to try
ever to get our great Nation out of debt.
Mr. Jones, we hear a lot about the great economic recovery
we are going through now, and that one would believe that
unemployment is down to 4.5. Your report indicates it is over
40 percent. Could you share with us the reason why we have this
disparity in the reports?
Dr. JONES. Well, I don't think this is new news, certainly
to the people on this panel, that basically unemployment looks
at people who are actively seeking work. What we have in New
York and I think we have in other urban areas is a number of
different cohorts of people who are not in the workforce for a
variety of reasons.
We are just finishing another examination of--actually, a
qualitative examination of why people are out of work, and we
are starting to get a very wide range of reports back.
One of them that was a shock is, there are a lot of people
who are out of work, particularly the African-American men, who
are reporting health-related problems. They are guys my age who
basically start to have--who did heavy labor and have never
been out of work, basically they never had a lot of skills and
suddenly they run into a problem of having a bad back. So, you
have this whole cohort of particularly African-Americans with
limited skills, men who can't participate in the workforce
because they don't have skills to do anything but heavy labor
and no employer in New York can bear the health care costs of
taking an employee who has those. That is one.
The other is we have an enormous problem of dropouts in the
city of New York. About--more than 50 percent of young people
never graduated, less than 10 percent of African and Latino
males ever get a Regents degree, which is sort of the lowest
level you need to really go on, and many of them just can't
compete in the low-wage workforce. They are trying, which is
interesting--we hear again and again, these people--these young
people are not trying to sit around; they just can't find a
door open.
Another cohort has to be admitted, which is the problem
of--under the Rockefeller drug laws in New York, a lot of young
people made mistakes early on, and in New York particularly for
black and Latino young men, once that happens, you are
basically never going to work again.
I was somewhat hopeful that if we took work as the solution
for welfare reform, we would certainly want to beat up our
former prisoners, but that doesn't seem to be the way it is
going; and they are not working, they are becoming a real drain
and damage to the communities they are in. Those are just some
of the things.
This is a complex issue, but that 40 percent is reality.
The 4.5 percent is basically people actively trying to get work
and doing it the right way, but we have a real problem in New
York, and we think it is a real urban problem at the very
least.
Chairman RANGEL. I am working with the Conference of
Mayors, and they will be compiling the cost to the cities for
that 40 or 50 percent that we are talking about.
Dr. Haskins, what number did you use in terms of the moneys
that we are now expending for the poor, that you said has to be
considered when we talk about reducing poverty? What was that
number?
Dr. HASKINS. According to the CRS, State and Federal
dollars on programs that are means tested, it is over $600
billion. It was $583 billion in 2004.
Chairman RANGEL. Now, it is my understanding that that
reflects the inflated medical costs, at least half of it does.
Dr. HASKINS. I don't think it is quite half, but it is
substantial, and that is the biggest increase.
Chairman RANGEL. Okay. I would like----
Dr. HASKINS. There are many other areas as well.
Chairman RANGEL. You have spent your life in this thing,
and after marriage and health care, you must have some ideas on
what it takes to stop poverty at some stage. Maybe it is before
the kid gets to kindergarten; maybe it is at that stage that
something is done.
You are right, it is complex, and it takes into
consideration a lot of other issues besides throwing money at
the problem. We need you at the table, as well as economists,
to find out what return we are going to get on our investment,
because quite frankly, if we can just give money to the poor to
keep them from having crime and going to the hospital and
imposing a large cost on the economy, that is the way to handle
it.
If, however, our job is to make certain that we are saving
some money and get productive people into the labor force as we
move into a global market, then we have to look at the problem
in terms of what this Committee would want to do. We must
determine what can we do to work together to resolve this
problem and make certain that we never run away from the
individual responsibility, or the community's responsibility,
to say one size doesn't fit all, and to not expect the Federal
Government alone to bring a solution to the problem, but
instead to be a part of that solution.
So, I wish all of you in some way would share with us what
you would do, because someone had suggested earlier asking the
mayors if they assumed this was their responsibility. Mayor
Bloomberg is going out of his way to see what role can the
private sector play with these kids that obviously are not
going to succeed in the public school system as we know it.
These institutions are not job preparation facilities. They
prepare students to get into universities, and if they don't
make it, there is no door left to the kids in the street as it
relates to getting back on board into the education system or
labor force.
In other words, unlike me as a high school dropout, I had a
second chance through the GI Bill (P.L. 346, Chapter 268).
There are no second chances out there for these kids, and it
would seem to me that if we can find some way where they don't
need a second chance and get it done the first time--it may be,
in my opinion, that the private sector that knows how to go
into developing countries and doesn't ask for degrees and
General Equivalency Diplomas, but just is able to know what
they need in order to be successful; that as the mayor got
together with the developers in the city of New York and the
unions, it turns out that with the baby boomers retiring and
with the Irish and Italians who have had locks on the jobs,
their kids going to school, it turns out there is a labor
shortage in the construction trades. So, it came at the right
time.
I would like to believe that the Verizons and the cable
companies have ways to develop high wage producing occupations
if we can initially help these kids get into these jobs.
So, I want to thank all of you and hope that you do send
some papers in to me. Don't be surprised if in a more informal
setting we ask you to come to develop something, always
remembering that the major problem that we are going to face in
this Congress is, we have to be fiscally responsible, and at
the same time make certain that we stop things from
hemorrhaging so that it causes more damage in the future than
if we did make the investments now.
You have been a terrific panel. I would like to yield to
Mr. Stark--I am sorry, Mr. McCrery.
Mr. MCCRERY. Thank you, Mr. Chairman.
Dr. Haskins, let's explore for just a minute this question
of current Federal and State programs designed to assist poor
families and poor individuals. You use the figure of $600
billion a year right now that State and Federal Governments are
spending on income-related programs. Mr. Stark pointed out that
over half of that is medical care, and that is correct, a
little over half of that figure is medical care, whether it is
Medicare, Medicaid or charity hospitals or whatever it might
be.
Then the second-highest category is cash which--there are a
number of ways that we give cash to low-income people, whether
it is the earned income credit or direct cash payments under
Social Security Insurance or other programs, or welfare; and
then the next highest is food and then housing.
Well, I think we have just ticked off the main elements of
being poor. How do you define being poor? Well, if you don't
have a roof over your head, if you don't have housing, if you
don't have food on your table, if you don't have access to
health care, you are poor. So, the money that Mr. Stark talked
about is important. That is an important expenditure for the
poor, just as is housing, just as is food and, yes, cash. The
total of all that is about $600 billion this year that the
Federal and State governments are spending, no small sum. I
think most people in this country would be surprised to learn
that we are spending that much on income-related programs.
Now let's talk about some of the things that you mentioned
as being most important, Dr. Haskins, in reducing poverty.
Could you review the progress that has been made in reducing
poverty since the 1996 Welfare Reform Act?
Dr. HASKINS. Yes. I think the key to understanding it is
that most of the progress was made among female-headed
families, which is where the probability of being poor is four
or five times as high as in a married-couple family. So, if the
Nation is going to make progress against poverty, that is a
very good place to focus and that is what we did.
The Census Bureau data shows absolutely clearly that these
mothers, and I say maybe an increase of 2 million left welfare
and got jobs, mostly in the low-wage economy; their average was
about $7.50 or $8 an hour. If you look at the Census Bureau
data, you can see every year between 1993 and 2000 their earned
income from welfare, defined as housing, food stamps and cash,
decline, and every year their earnings and EITC increased; and
if you put them together, they were better off by about 25
percent. As a result of that, of course, the kids, fewer of the
kids were poor. Their mothers worked and took their kids out of
poverty.
So, child poverty had a sustained 7-year decline, again
based primarily on earnings, not on government benefits, and in
fact, the biggest benefit, EITC, doesn't even enter into these
calculations because of our rules, the way we compute poverty.
Child poverty declined, poverty in female-headed families
reached by far its lowest level ever, and black child poverty
reach its lowest level ever. Even after 4 consecutive years of
increase from 2000 to 2004, because of the recession, child
poverty is still 25 percent below where it was in 1993 when the
decline started.
Mr. MCCRERY. Are there still many families on welfare in
this country where one or both parents don't work?
Dr. HASKINS. Yes. Mostly it is one parent. The States
reported to Department of Health and Human Services (HHS)--the
States kind of dispute this data, but they reported that about
60 percent of the families who were still getting cash welfare,
keeping in mind that that is down by over 60 percent, but of
the ones still remaining, about 60 percent, according to the
States, did nothing.
This is completely against the spirit and the letter of the
bill that we passed in 1996. The deal was, half of them are
always going to be engaged in work or work preparation, and the
States didn't do it. That is why I think that this Committee
and the Congress responded, and HHS wrote a tough regulation
that is now causing all kinds of difficulty out there.
Mr. MCCRERY. So, how did Congress respond to that? How did
Congress respond to that declining number of welfare recipients
put in the workforce?
Dr. HASKINS. Congress asked HHS to define the categories,
who worked, that were laid out but not defined in the 1996 law
and then to have regulations about how we would actually count
those various activities--I believe there were 12 of them--and
that the States would have to report better data. In other
words, they are tightening it up to make sure that the States
are actually doing what they promised to do in 1996.
Of course, there was a big complaint, especially over the
data reporting requirements; and that is all a big issue right
now. I think it would be great for this Committee to have
hearings and look into this in some detail.
Mr. MCCRERY. Then, Dr. Haskins, we passed the Deficit
Reduction Act (P.L. 109-171) which put new work requirements
for the States for their welfare loads; isn't that correct?
Dr. HASKINS. Well, that is what I was referring to.
Actually, what the act did was tell HHS to define work, because
a lot of stuff was being counted as work that wasn't work, and
then to get better data to make sure the States were actually
doing it.
That was the general strategy of the reconciliation bill.
Mr. MCCRERY. Thank you.
Chairman RANGEL. Thank you.
Mr. Stark.
Mr. STARK. Thank you, Mr. Chairman. I heard testimony from
Dr. Haskins this morning about increasing the marriage rates to
the level of 1970, yet in 1970, the poverty rate was 15
percent, and 6 years earlier immediately before President
Johnson's Great Society, the poverty rate was 22 percent with a
marriage rate that is higher than today.
In the 1990s, the poverty rate decreased and the marriage
rate did as well. So, it is hard for me to believe that the
marriage rate alone would have any impact on poverty. It seems
to me marriage promotion is simply something that works in
theory, such as when academics randomly match single men and
women in virtual marriages, sort of like playing grand theft
auto on the Brookings' computers. I think it is interesting but
it is right up there with abstinence training and a bunch of
these wacky issues that don't mean much in the modern
environment.
I would like to ask Dr. Knitzer if she could expand in her
testimony on the importance of early childhood education, on
children's health care and the problems created by the
Temporary Assistance for Needy Families program (TANF), when
people actually may increase their income some and then lose
vital assistance, which makes them actually more poor than when
they started. I think that is something that bears pointing out
to the Committee.
Dr. KNITZER. I think that it is really important to think
about two different types of challenges that we face through
the children's lens. One is, there are a lot of families who
just need either higher wages or benefits that don't disappear
as they start to earn more money and need stable income. We
also know that instability of income, volatile incomes, is not
particularly good for outcomes for children.
On the income side, there was a very interesting
experiment, by chance, on a reservation in North Carolina. They
had been tracking the mental health of children there, and that
is when the casinos came in, and many of the families had an
increase in money because of that, and the mental health issues
and the school performance of the children improved. That was
just a natural experiment; that was because of increased money.
So, we have to really pay attention to what money can do.
The second, I think, really powerful set of learnings--and
this is about the earliest relationships; and, for example, in
those 60 percent of TANF families who aren't working, we have
to take a look at those women. Many of those women have been
traumatized. They experienced major depression, substance
abuse, domestic violence. Unless we help them deal with those
things both as adults and as parents, they are not going to be
on a successful pathway to work; and I think that we know that
both the health of the adults and the children in poverty is
significantly worse.
The other thing that is striking, when you compare the
health access of poor children to more affluent children, is
that they don't have as good preventive care and their parents
don't get as much developmental guidance.
So, we also know that it takes not just early education but
health, social emotional competence, all domains of
development, physical skills, to produce a healthy child. The
early learning, there have been remarkable strides in starting
at 4, but as I said, for the poorest families, 4 is too late.
We have to focus on the relationships.
Mr. STARK. Thank you very much.
Thank you, Mr. Chairman.
Chairman RANGEL. I have talked with the ranking Member, and
we recognize those that are on the lower tier are not getting a
chance to question. So, I want you to know, in the future, we
will try to work out something where we can start off with the
lower tier and try to compensate for that.
Meanwhile, because of the difference in the number of
people that are here, I will be calling on two of the majority
to one in the minority to try to work that out. Mr. Herger?
Mr. HERGER. Thank you, Mr. Chairman.
Dr. Haskins, we had some comments that came up that perhaps
marriage doesn't matter, and I would like to refer to a study
from CRS which reported on its Children in Poverty: Profile,
Trends, and Issues, January 16, 2007, that says, quote, ``In
2005, the child poverty rate was 17.1 percent, but had family
composition in 2005 been the same as in 1960, the overall
adjusted child poverty rate would have been 12.4.''
So, instead of 17.1, it would have been 12.4. Instead of
the observed 12.3 million children being counted as poor in
2005, the number of poor children estimated by this method
would have been 8.9 million, or 3.4 million fewer than the
number observed on page 19.
Also, there is a Heritage study that indicates that nearly
80 percent of long-term child poverty occurs in broken or
never-married families, and that each year the Government, as
you have mentioned, spends several billions of dollars on
means-tested aid to families with children which--three-fourths
of this aid flows to single parents and families.
Dr. Haskins, has there been a trend towards more child-
bearing outside of marriage? Has this changed in recent years?
Doesn't the significant impact of marriage and child-bearing
decisions on poverty suggest that there is a large behavior
component to poverty in the United States?
Dr. HASKINS. Yes. We have about one out of four American
children at any given moment living in a single-parent family.
Their poverty rates are four to five times as high as kids in
married-couple families, and if it is a non--if it is a single-
parent family created by a nonmarital birth, the probability of
poverty is even higher.
Since we passed the legislation in 1996, although the rate
of increase in nonmarital births has leveled off, if you look
at the graph, it clearly levels off, but it is still
increasing. So, it is increasing at a much lower rate. I would
call that progress; you have to slow it down before you can
turn it around, and this plays a huge role in poverty, yes.
I would like to say your question bears a relationship with
Mr. Stark's question. I would like to first say that marriage
is not a wacky idea, as most members of this Committee, I
think, would recognize from their own personal lives, but
secondly this analysis that we did at the Brookings Institution
is exactly like the analysis you cited from the Congressional
Research Service (CRS). By the way, our estimate was that
marriage rates from 1980, if they prevailed today, or actually
2002, would reduce poverty 27 percent--their estimate was 28
percent.
Dr. HASKINS. There are a number of other academic studies
by scholars all over the country, certainly not conservative
scholars, who come up roughly the same as us. There is no doubt
that if we did nothing else except increase marriage rates,
poverty would drop, and it would drop substantially. There is
no doubt.
Mr. HERGER. Well, would you conclude from that that we
should, as a Congress, be--at least be taking, attempting to do
what we can to increase this, increase marriage? What steps
have been taken in recent years, starting with the 1996 welfare
reform law, to strengthen families and promote more marriages?
Dr. HASKINS. There were several provisions--I count about
10 or 11--that were directed especially at nonmarital births,
such as causing young ladies who have babies outside marriage
to live at home and to go to school. Otherwise, they would not
qualify for welfare benefits.
There was a huge debate about other provisions like the
family cap and not giving cash to moms under 18 that was
eventually removed on the Senate floor. There were a number of
other provisions in the bill as well.
Marriage was one of the goals, and the States were free to
spend on marriage. Frankly, there was nothing mandatory in the
bill to increase marriage rates per se.
Some States have undertaken activities. I would say we have
two or three or four times the number of activities going on at
the State level, often involving churches and private
organizations, nonprofit organizations, that attempt to either
strengthen existing marriages or promote marriage upon young
couples who have babies but are not married.
So, there is a lot more going on. They have not been well
evaluated. We don't know if they are successful, but there
certainly is a lot more going on now than there was in the
past.
I mentioned several things in my testimony that I think we
should do. The Congress has done things such as reduce the
marriage penalty, and I think we could do more things like
that. I think the most important thing is that the
Administration has paid for large-scale demonstrations to find
out if you can promote marriage and if that impacts on
children's development, very much in accord with the report. It
would be very consistent with the thrust of this report.
So, there is a lot going on, and we should do more.
Mr. HERGER. Thank you, Dr. Haskins.
Chairman RANGEL. Thank you.
Mr. Levin.
Mr. LEVIN. Listening to this, I often wonder what we are
arguing about. Truly. I don't think anybody questions the
impact of marriage rates on poverty. The question is, is
Congress or any other Government agency in a position to impact
the marriage dynamic within our society? Mr. Haskins, you
yourself say in your testimony that there is only modest
evidence that the programs have any impact. At the same time,
we have testimony here--I just read one piece of it--only
62,000 children are in national Early Head Start programs.
So, we have some fairly strong evidence that doing things
like that will have some impact; and, somehow, we get polarized
and you all on the Republican side start talking about marriage
programs. Well, we are not----
Mr. MCCRERY. Will the gentleman yield?
Mr. LEVIN. Sure.
Mr. MCCRERY. It wasn't we who brought up terms like
radical--Mr. Stark is the one who--whacky, ideas like that, Mr.
Levin. It wasn't us.
Mr. LEVIN. He wasn't talking about----
Mr. MCCRERY. He wasn't talking about marriage and impact on
poverty? I believe he was.
Mr. LEVIN. He was talking about programs of the Federal
Government that attempt to impact on the rate of marriage. I
heard--look, we have talked about this. We are good friends. I
heard your opening remarks with the emphasis in those opening
remarks, and I don't understand why we fall into this kind of
polarization. I don't understand it.
Dr. Haskins, you and I have talked about this, and we
talked about welfare reform. Look, we have a shortage of data
as to what has happened to people who have left welfare, who
have gone to work and how many of them remain in poverty. We
don't really know this.
We know that a substantial number of them are working in
minimum wage and, therefore, are likely to be still in poverty,
which doesn't mean that it isn't wise for them to move from
welfare to work.
Then we get into arguments as to whether we should raise
the minimum wage so that people who have moved from welfare to
work, by working, work their way out of poverty; and we get
into arguments about whether we should provide them training so
they can move up the economic ladder.
So, we can just fall into this pit of polarized talk, if
you want, but we are not challenging the economic benefits in
terms of the poverty rate for those who are married and those
who are not.
So, let me just ask the panel, do you want to comment on
this discussion? Anybody want to say a word? Dr. Holzer and
then Dr. Nilsen? Briefly, because there is just a minute left.
Dr. HOLZER. I think the issue of wage levels is very
important and has not been mentioned in this panel before you
raised it. The average wages of less-skilled workers in our
economy for the last 30 years, adjusting for inflation, have
been declining for men with a high school diploma. They have
been declining even more for men without a high school diploma.
So, lots of people grew up--lots of children grow up in
families with one or two parents with even a full-time worker
and they are still in poverty because the wages their parents
earn are not sufficient to get them out of poverty.
Even marriage--we focus on marriage, and those of us who
agree that marriage certainly matters for the poverty rate--I
don't understand. It is very hard to raise marriage rates
dramatically without improving the marriageability of a lot of
these young people, especially the young men. Their
attractiveness as marriage partners is going to be very low if
their earnings are going to be very low.
In fact, a lot of these young people, especially the ones
that David Jones described, very early in life they looked down
the road and they see a lack of opportunity for earning of
higher wage; and their incentives to take school seriously and
to take the labor market seriously and stay out of trouble,
those incentives diminish.
As we talk about all these issues, as we talk about
marriage and schooling, I think it is very important to keep in
mind what is going to improve the ability of these young people
to earn higher wages, to see those higher wage opportunities.
How can we link not only skill-building opportunities but link
those skills to jobs that actually exist in the labor market
that pay above poverty level wages and maybe how can we even
improve the number of jobs in different sectors of the economy
that give young people this opportunity.
Mr. LEVIN. Thank you.
Dr. KNITZER. To shift the frame for a minute, we know that
it takes twice the poverty level for a family to provide basic
necessities to their child so they can thrive. So, if we want
to shift and say what does it take for the next generation to
thrive, that is what we should be aiming.
If you are talking about a family with two parents, it
takes $19 an hour if one parent is working and two parents at
$10 an hour to get to that $40,000 level. So, we have to really
be quite concrete about with we are talking about.
That is two comments on the economic side.
The other thing I want to say----
Chairman RANGEL. The gentleman's time has expired, and we
have so many people who have to be heard. Thank you so much.
Dr. McDermott.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
The great hope and promise of the United States is
certainly the American dream; and everybody in this room,
practically speaking, has been a beneficiary of it. We know
that millions of people haven't.
I commend the Chairman for bringing this issue up right
after the State of the Union message. It is an issue that we
will deal with in the Income Security and Family Support
Subcommittee and hope that, with the Chairman's support, we can
go some distance with it, because it is an issue that faces
this country.
I have been talking with Mr. Weller about trying to find
the common good, because poverty isn't Democrat or Republican.
It is people. Whether you are talking about food or clothing or
shelter or sense of personal security, that is not a political
party issue.
We basically need to begin to deal with this. There are
really three fundamental questions we have to ask.
One is, does work provide the opportunity and mobility that
we expect? Dr. Haskins talks about we got everybody off welfare
and now they are working. Well, are they getting out of
poverty?
The second one is, do we have adequate access to job
training to succeed in this globalized economy?
Finally, can we provide an adequate lifeline to people when
they fall out of the workforce in order to bring them back in?
Now I would like to start with the issue that we just heard
about. We know real wages have declined, despite the economic
expansion. The President's talk last night--witnesses said here
today the first time in the history that poverty grew for four
straight years during an economic recovery.
Now the first slide shows that these are the people--these
are the children in families where somebody is working, and
they are still in poverty. That largest section up there, if
you look at it, that section right there, is the section of
people whose parents--one-third of the parents are working full
time. The kids are in poverty. The other third up there is
people whose parents are working part-time, and then you have
the third who are the slackers. They are not doing anything.
They are just sitting around, can't get into the workforce.
So, that is where these poverty--these kids that are living
in poverty are from.
The second thing is that we know that education has a
tremendous impact on personal income. Forty-seven percent of
the kids living in poverty have a parent that didn't finish
high school. There is a direct correlation between levels of
education and how you do, and we know that that also has to do
with kids' health care. If the parents have education, they
also know more about health care and take care of their kids so
they go to school healthy and well-fed and so forth.
The third slide we have measures ourselves against the rest
of the world. Now this is the slide that shows you how much we
spend on programs for poverty, and you will see the United
States is right down here. We spend practically nothing. Only
Mexico spends less per capita on the poverty section of our
society. It again directly correlates the lowest rates of
poverty are in the countries that spend the most money--Sweden,
Norway, Netherlands--and then you get to the United States way
out here with Mexico.
My question is to--Dr. Haskins said we don't need more
money, so there is no sense in asking him, but if we could end
the Iraq war 1 month early and had $8 billion, where would the
members here put it? What would be your priority for spending
$8 billion in the present circumstance? You could start, Dr.
Holzer, Mr. Jones, and Ms. Knitzer and then go back to----
Dr. HOLZER. One comment on the spending, I think you are
right, that I think the right way to think about how much we
spend----
Chairman RANGEL. Let me say, we won't have time for a lot
of comments, because the gentleman has 26 seconds left, but we
are going to yield to your expertise but please take into
consideration the time restrictions we have. Thank you.
Dr. HOLZER. I will say simply then, directly in response to
your question, I would spend a good chunk of that money on
education, not just pre-K but K through 12, high-quality career
and technical education, apprenticeship programs linking young
people to good jobs, as well as things like expansion of the
EITC to folks that have low earnings capacity.
Dr. JONES. I clearly join Dr. Holzer, but I would also talk
about the disconnected youth. I think this is a national
problem. If you are talking about marriage problems and why
young men aren't marriageable, if they are not working, not in
school, we have to find intense programs to start to move them
into some kind of work readiness and income production.
Mr. MCDERMOTT. Dr. Knitzer? Dr. Haskins doesn't want to
spend money.
Dr. KNITZER. I would focus part of it on Early Head Start
and part of it on health, in addition to what we just said, but
Early Head Start because it helps parents and children build
new kinds of relationships, including dads, that leads to other
good things, including marriage.
Mr. NILSEN. I just want to say, I agree with the comments
here, dividing the money up between those which will have more
immediate impacts like skilled training and those investments
that will have a longer term payoff like investing in the
health care of children.
Mr. MCDERMOTT. Thank you.
Chairman RANGEL. Mr. Haskins.
Dr. HASKINS. I would spend several billion of it doing
large-scale experiments that would provide an EITC-like wage
mechanism that would apply especially to men so you wouldn't
have to have a dependent child. I think you boost the men's
reward for work, and it would have exactly the same effect that
it had for women.
Mr. CAMP. Thank you, Mr. Chairman. Thank you for having
this hearing.
I would note that the last slide that my colleague showed
was really the spending of the percent of GDP, and the United
States has a very large GDP, so the percentage of spending is
actually quite large in terms of poverty.
My question is really based on trying to get the accurate
information; and the question I have is, Dr. Haskins, what kind
of income and benefits get counted or get excluded in
determining official poverty rates?
Dr. HASKINS. Primarily two categories, anything that is in
kind, such as housing and food stamps, that is 60 or so
billion, and anything through the Tax Code. So, that includes
EITC and the child tax credit. So, it is well over $100
billion.
Mr. CAMP. So, these items are not counted as benefits to
individuals when calculating poverty rates, even though they
are taxpayer-provided benefits?
Dr. HASKINS. Correct.
I would point out to you, Mr. Camp, that the Census Bureau
was well aware of this and they developed several alternative
definitions of poverty which are really spectacular. If you
look at those definitions, you will see that the actual poverty
rate is often 10 percentage points--not percent--percentage
points lower, which is about 50 percent if you include all
these other benefits.
Mr. CAMP. So, the, quote, unquote, official poverty rate is
at what level?
Dr. HASKINS. Right now, the overall rate is something like
13 percent or 17 point something.
Mr. CAMP. You are saying that the U.S. Census Bureau's
research says that if taxpayer-funded benefits were counted in
determining the poverty rate, what level would it be at?
Dr. HASKINS. Not just for children, but the overall poverty
rate would be about 50 percent lower. For children, it would be
not quite that much.
Mr. CAMP. So, it would be significantly lower than the
statistics we are given in this Committee?
Dr. HASKINS. Right, the official poverty rate. Correct.
Mr. CAMP. Well, then if Congress followed through on Dr.
Holzer's recommendation, I would agree it is a very worthy
study to increase EITC. That would have no effect on the
poverty rate, since it is not counted anyway.
Dr. HASKINS. Which is precisely why the Census Bureau does
these alternative measures although I do think it would have
some effect. You know why? The same reason I think we ought to
have an EITC for males, is their work ethic would increase and
their earnings would count. So, there would be some effect but
much less than you would have if you counted the whole thing.
Mr. CAMP. Well, I appreciated your testimony and the figure
you had about showing the comparison between poverty rates and
actually the government policy we have--we had and the fact
that requiring work and having work-related or work-contingent
benefits has actually dramatically reduced the poverty rates
between '90 and '99. I think that was a very helpful approach.
So, Dr. Knitzer, I realize you said money matters, and it
sounds as though money does matter, but the way the money is
spent matters more, and that when there are work-related
benefits and a work requirement, do you agree with the data
that shows that poverty rates declined between '90 and '99,
children particularly?
Dr. KNITZER. What I meant was that having resources matters
for child development outcomes. Having families having
resources matters. There are clearly problems with poverty
measures. They undercount benefits. They undercount taxes.
There are lots of problems with that, and we are all aware of
that. That is why we talk about twice the poverty level,
because that is what research shows is necessary for a child to
thrive.
Mr. CAMP. Thank you.
Dr. Haskins, it seems as if we are trying to make important
policy in this area that we would need the most accurate
information before us. Why do we have one arm of the
Government, the Census Bureau, saying we need to include these
benefits yet the, quote, official rate does not? Is there any
explanation for that?
Dr. HASKINS. I think I can give you a political answer.
There are billions of dollars of government benefits that are
dependent on the official poverty rate. If we change the
official poverty rate, it would have disproportionate impacts
on less politically powerful States.
Everybody on this Committee is well aware of what happens
when Congress gets into a formula fight about how the money is
going to be distributed. I really think that is the primary
reason.
Mr. CAMP. Thank you.
Thank you very much, Mr. Chairman.
Chairman RANGEL. When was the last we updated the
definition of poverty as you and Mr. Camp described it?
Dr. HASKINS. I must have missed your first word. There is a
question there?
Chairman RANGEL. Yes. When? When was the last time the
definition of poverty was updated as you and Mr. Camp discussed
it?
Dr. HASKINS. I would not use the word ``updated.'' The
Census Bureau has something like 12 or 13 years ago heard all
these criticisms. In fact, the National Academy wrote a 500-
page book about all the problems and recommendations about
poverty. What they did----
Chairman RANGEL. Let me frame the question this way: The
definition that you gave of what poverty is today, when was
that created? When was that defined as poverty?
The reason I ask the question is because it was created
sometime in the '90s and I assume--'60s, rather--that there has
been a lot of changes since then. If that is so, we hope you
will help us in trying to get a definition that would be more
appropriate as we deal with the lives and the communities and
the economy of our great Nation.
Dr. HASKINS. The official poverty rate was developed, I
believe, 1965. Since then, the Census Bureau, because of all
these problems, has developed the alternative measures.
Primarily, I believe they started that in the '80s, and some of
their data series go back to the '80s. So, you can see the
poverty rate by a lot of different definitions.
Chairman RANGEL. Yes, but you professionals should not
accept that, and the Congress should not have you dealing with
different definitions. We all are trying to find out the best
data we have available, and we are going to help you to get it.
Dr. HASKINS. Mr. Rangel, I would agree to join you to
change the definition of poverty, but, honestly, I don't think
it will pass the Congress, because it will have a huge impact
on how money is distributed among the States.
Chairman RANGEL. Well, then if we can't do it, then we
can't use poverty as a definition, now can we? We are not
talking the same language. Everyone will use the figures most
favorable to whatever their point is.
Dr. HASKINS. People always cherry-pick their data. That is
nothing new.
Chairman RANGEL. All right. We will try to get away from
it.
Mr. CAMP. Mr. Chairman, I have the Census Report 2004 that
calculates poverty in different ways. It might be helpful. I
would like to have unanimous consent to place that in the
record.
Chairman RANGEL. Without objection.
Mr. CAMP. Thank you.
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Chairman RANGEL. Mr. Neal is not here. Mr. Lewis is here,
Mr. McNulty, then Mr. Becerra.
I called his name first, Mr. Lewis, and then----
Mr. LEWIS OF GEORGIA. Thank you very much, Mr. Chairman.
Let me thank members of the panel for being here this
morning.
We are about a year and a half out from Katrina. I would
like to know--I don't think the President of the United States
last night in the State of the Union mentioned Katrina at all.
When you saw hundreds and thousands of Americans struggling to
survive in New Orleans a year and a half ago, what came to your
mind? Was it race or poverty? What happened in New Orleans,
could it have happened in any other American city? Could it
happen in New York or Boston or someplace else?
Dr. JONES. I think for us in New York there is no question.
We knew that a catastrophe of this sort in New York would lead
to very much the same thing. People were asking why people were
carrying things on their back out of their homes. There is no--
when we survey people of how much income reserves they have in
their whole household, most of them report they have less than
$100 in total reserve. Their furniture is it. So, I didn't see
the outcome being much different for--at least as I looked
through New York and some of its neighborhoods. There is no
cash in these neighborhoods. There are no reserves. Any kind of
disaster like that will wipe people out immediately. There is
no backstop.
Mr. LEWIS OF GEORGIA. Other members of the panel?
Dr. KNITZER. Yes. I think it really focuses on the
importance of the development of assets and individual
development accounts and children's development accounts and
building up the reserves of some of these families.
These are families, even at the low-income level, twice the
poverty level, who are one or two crises away from this. When
you don't have any public transportation, as New Orleans didn't
and the South didn't, it is very difficult for these families
to survive.
Mr. LEWIS OF GEORGIA. Other members?
Dr. HOLZER. Even before Katrina, poverty rates in New
Orleans were very high, employment levels were low. A lot of
the issues, a lot of the costs that we have been talking about
were there. It just means that those families were so much more
vulnerable when the disaster occurs.
I think it also indicates that even in many cities around
the country predisaster they need to increase the employment
levels; and once we include some employment and earnings and
skills, presumably assets would rise and people would be less
vulnerable to these potential catastrophes.
Mr. LEWIS OF GEORGIA. Other members of the panel would like
to comment?
Mr. Jones, let me just ask you, does the unbelievable
economic condition of many African American males in our large
urban centers and maybe in rural areas prompt them not readily
to get married because they cannot support a family?
Dr. JONES. Again, I am more of a practitioner than a
researcher.
Mr. LEWIS OF GEORGIA. People get married, I believe,
because they fall in love and they get married. I am not so
sure the Government should be in the business of trying to
force people to get married if you are not in love.
Dr. JONES. This is my personal sense. I am very nervous
about trying to legislate morality. I have worked in the
corporate sector. I have worked for one of the largest law
firms in America. I have worked in Government. I see morality
being about level across groups. It is a little more difficult
when you don't have any money, but for suddenly us to start
imposing our value system because people are poor is a little
insulting, to say the least.
If you read the history--and we do; I go back 160 years--
this is very similar to the discussion of the Irish in New York
and the condemnation by the Herald Tribune that they weren't
quite human because they didn't seem to marry and they drank a
lot. Don't do this again just because these groups happen to be
on their uppers and they don't have enough reserves.
So, I am very concerned more about that 170,000, 200,000
young men and women who have no jobs, no skills and no
education who are being pumped into New York and other
societies and then we start wondering about a lot of single
parents because there is no incentive to marry someone who is
not working and not in school.
So, there--I think there is a lot of stuff here that it
can't be just dictated here. I would rather focus on the things
that we can work on, which is getting people skills, education
and support, rather than getting into their morality.
Mr. LEWIS OF GEORGIA. Thank you.
Thank you, Mr. Chairman.
Chairman RANGEL. Mr. Becerra.
Mr. BECERRA. Thank you, Mr. Chairman; and thank you all for
your testimony.
Let me ask a quick question; and, Mr. Jones, perhaps you
can answer this best.
Minimum wage, we are talking about--I am over here----
Dr. JONES. I am sorry. I am not good--my kids make fun of
me because I can't track.
Mr. BECERRA. The minimum wage, $5.15 an hour today, hasn't
been increased in 10 years. It is by far the lowest it has been
since the 1960s. What effect would an increase to the modest
amount of $7.25 an hour by 2008 or '09 have on those 37 million
people who we say are living in poverty?
Dr. JONES. This is where it gets a little separate from New
York. I can say what we have seen as we have moved toward
minimum wage, it does have a boost, particularly on that
category of workers--when we have--start looking at security
guards at 63,000, you started to see inching up of their wage
rate. It does have an impact.
What seems to be a very little for us can be the difference
in terms of someone holding on by their fingertips to some kind
of rental housing. So, I don't think it is something to be
dismissed. I think a move toward minimum wage is something that
we have to, at least coming from what I am trying to serve, we
support.
Mr. BECERRA. I am sympathetic to what you are saying,
because, coming from Los Angeles, where our minimum wage is
above $7.25 an hour today, obviously, in an urban area that is
as costly as New York or Los Angeles, you wouldn't be able to
live on $7.25, let alone $5.15.
Let me ask another question; and perhaps, Dr. Holzer, you
can answer this one.
The President has enacted several tax cut measures since
2001. My understanding is that, so far, we have seen about $2
trillion in the tax cuts that have gone out. For the 37 million
people who are living in poverty that we are talking about and
the 9 million or so of those 37 million being children, how
much have they received in those $2 trillion in tax cuts that
this Congress has enacted for President Bush?
Dr. HOLZER. I don't know the exact numbers on that. I think
we do know that 40 to 50 percent of the dollars in tax cuts of
the top 1 percent of the earnings distribution; there have
been, also been cuts at the bottom, and there was an expansion
of the child tax credit that did provide some benefits to low-
income people.
Mr. BECERRA. That was actually a proposal proposed by the
Congress, not so much the President.
Dr. HOLZER. Most of us thought that was a good thing.
So, there are some pieces of the tax cut I think that are
more beneficial than others, but a lot of dollars have been
thrown to the very top end, and I think the unanimity on this
panel really that there are some investments--no one is talking
about throwing cash at low-income people. We are talking about
investments to improve people's skills, improve their
connections to the labor market and create better incentives
for work. A good chunk of that money I think could have been
better spent on the kinds of initiatives that all of us here
support.
Mr. BECERRA. Thirty-seven million people in poverty in
America. That is 13 percent or so percent of our population. Is
it fair to say that less than 13 percent of the tax cuts went
to those 37 million people?
Dr. HOLZER. Yes, I believe so.
Mr. BECERRA. Let me ask this. In terms of the definition--
and this I will ask Mr. Nilsen--the definition of poverty and
the discussion that took place with Dr. Haskins, can you tell
us what your examination of this issue leads you to conclude if
we were to examine what the National Academy of Sciences said
about the definition of poverty and what would happen to people
in their classification as living in poverty if we changed the
definition?
Mr. NILSEN. Most of the research we looked at used the
current definition of poverty; and, as Mr. Haskins said, there
is a lot of controversy over that definition because it was
developed in 1965 and largely has just been indexed for
inflation.
In the 1990s, the National Academy of Sciences issued a
report, 1995, that suggested some changes to the measurement of
poverty, as Mr. Haskins said, add in other benefits as income
that people get, like the EITC, food stamps and other things.
The other thing their proposal did was to adjust downward
for taxes like Social Security that people paid, other costs of
employment, transportation, child care and other things and
also index it or change it for the cost of living in various
geographic areas.
Mr. BECERRA. What was the net result?
Mr. NILSEN. The net result of this was raising the
proportion of the population in poverty. I have some statistics
from 1998, and I think the latest Census Bureau report from
2003 shows about the same thing, poverty went up from about
12.7 percent to about 14 percent.
Mr. BECERRA. Thank you. I appreciate that.
Thank you, Mr. Chairman. I yield back.
Chairman RANGEL. Thank you.
Mr. Ramstad.
Mr. RAMSTAD. Thank you, Mr. Chairman; and thank you for
holding this hearing, Mr. Chairman, on these very compelling
issues.
I have always thought that one of the most noble objectives
of the public sector--or the private sector, for that matter--
is to reduce childhood poverty and the corresponding hunger,
childhood hunger.
Before I got into public service back in the late 1970s, I
co-founded a major food bank in Minnesota in the Twin Cities
and have worked in the food bank network for 27 years, and
nothing grabs me more than----
Chairman RANGEL. Gentlemen, the bells indicate that we have
two votes, which means there will be 20 minutes. We will have
10 minutes to stay here. Could the members who haven't inquired
indicate how many are willing to come back after the votes?
Okay. Could I ask the witnesses after this query to stay for
another 20 minutes after? I really appreciate that.
I am sorry to interrupt.
Mr. RAMSTAD. Not at all, Mr. Chairman.
Nothing bothers me more than to hear what is commonly
accepted by the--I think it is the consensus of the studies
that show at least 3 million children in America go to bed
hungry every night. So, I appreciate the attention that is
being brought to this issue, the focus that we are bringing
here today, and I certainly appreciate the five experts on this
panel.
I would like to direct the question to you, Dr. Holzer. In
trying to find a solution, I think we have reduced childhood
poverty somewhat through welfare reform, and we can debate
that, but I think the indices of poverty have improved. I want
to focus on a more narrow issue. In your testimony, Dr. Holzer,
you mentioned that faith-based initiatives can play a key role
in reducing childhood poverty in concert with other--other
factors. Can you elaborate on the types of faith-based
initiatives that you believe are effective, again in
combination with other policies, to reduce childhood poverty?
Dr. HOLZER. Well, I would like to offer a friendly
amendment to the summary of what you said. I listed faith-based
initiatives as being one of many options that potentially could
be useful in this area. I don't think--to my knowledge, I
haven't seen rigorous evaluation evidence of faith-based
programs. I think they might potentially work, certainly with
certain disadvantaged populations like ex-offenders and the
need to reintegrate them into society, or young people, young
men at high risk of dropping out or who have already dropped
out and we are trying to reintegrate them perhaps before they
become incarcerated.
I believe there is much potential for faith-based programs
to provide assistance there as well as many non-faith-based
programs. There is a role at the table. I would like to see
those roles evaluated, among many others.
Mr. RAMSTAD. I haven't studied it in a macro sense, as you
experts have, but I certainly anecdotally know I can attest to
what you state.
Thank you very much for your response and all of you for
your testimony this morning; and, Mr. Chairman, I would like to
yield to our ranking Member.
Mr. MCCRERY. Thank you.
Mr. Jones, I just want to make it clear that nobody here
today has talked about the value of marriage as it relates to
poverty in moral terms. I certainly don't. That is not my point
at all.
I am looking at data that has been prepared by you and--not
you, but Dr. Holzer and others over the years that clearly
indicate an advantage to two-parent families. You go down--
repeated grades, suspended from school, delinquency, violence,
therapy and attempted suicide--in every instance, the rate of
incidents among those from one-parent families as opposed to
two-parent families is double, or 50 percent higher.
So, we are just--we would like to work with you and others
who have experience in the field and try to find ways that we
could maybe make it more attractive to young men--or to
couples--to get married. We do that through the tax system, we
do that through programs, faith-based programs and others. That
is all I am asking, is work with us here.
Dr. JONES. I absolutely will, Congressman. I don't disagree
that I like married couples in my communities. I just want to
set the preconditions so that is possible. I don't think we
have a fundamental difference.
Mr. MCCRERY. No debate. We can't force people to get
married and shouldn't. If we work together maybe we can find
ways to make it more attractive.
Dr. JONES. I am very willing, sir.
Chairman RANGEL. Mr. Pomeroy.
Mr. POMEROY. Thank you, Mr. Chairman, for this hearing. It
has been a topic we haven't talked about, I believe, during the
entire time I have been on the Committee on Ways and Means as a
focused matter of the hearing. We heard a lot about, have seen
a lot of fancy statistics about this economy, but I believe
that poverty has not come under the focus that you brought, Mr.
Chairman. I appreciate it.
My time is very short, so I just ask a single question. The
President last night indicated that we couldn't address health
care reform without the Tax Code. I would like to basically
take up, play off of that and talk to you about poverty and the
major assault this Congress needs to have against poverty. Is
that through the Tax Code or is it through funding programs
that provide assistance?
My sense is that--and I have supported EITC in the past,
and I continue to believe strongly in it. I think it is
somewhat ineffectual, not nearly as effective as direct
program--as a matter of fact, we have a lot of people in the
poverty ranks not filing and are not in taxable circumstances
because of their low income.
So, as you talk to the Ways and Means, the tax-writing
Committee, where would you counsel us in terms of an assault on
poverty--the Tax Code or the appropriations process or both? If
so, what aspects should we look at in this Committee?
Thank you.
Dr. HOLZER. I would differ a little bit with your
presumption that the EITC hasn't been effective. Remember, the
EITC is a refundable tax credit, so even with people with no
Federal tax liability benefits, I think the evidence--I think
all of us agree the evidence is overwhelming that it has
improved work incentives and has helped direct income. So, I
think the EITC, especially on this Committee, ought to be on
the table and can be expanded in a number of ways.
Mr. POMEROY. I just want to clarify. I have supported the
EITC, continued to. It hasn't worked as perfectly as I would
have liked, the number of people who are eligible who haven't
claimed credit. That is my only point of reservation with it.
Dr. HOLZER. I think the take-up rates in low-income
families are relatively high right now, and a lot of mechanisms
have been developed. H&R Block going into communities and
making them more aware of the potential. I think the EITC can
be a very potent force for improving work incentives for people
outside the system right now.
Having said that, there are other programmatic efforts as
well to help prepare people, pre-K programs that all of us have
talked positively about, programs in the schools, et cetera,
that ought to be--I don't know we think it ought to be an
either/or choice. I think the EITC is a very important
mechanism. There are others as well.
Chairman RANGEL. We will recess for 15 minutes.
[Recess.]
Chairman RANGEL. If the Committee will come to order, we
are going to start with Mr. Blumenauer.
Unfortunately, there are going to be additional votes; and
so, if Members do come back, we will be able to hear from them.
We can start, and we will be here as long as we can, but the
next recess would have to be an adjournment because of the
voting records.
Mr. Blumenauer.
Mr. BLUMENAUER. Thank you. Thank you, Mr. Chairman; and I
appreciate your focus on poverty for the Committee.
I would like to--if I could just pose two questions to the
panel and seek at some point your feedback. There isn't time to
hear from you all, for which I apologize, but I would like to
at least put on the table two concepts.
One, there is evidence that investment in some of the
programs that you all have mentioned, we can quantify returns.
I have heard, for example, early childhood, that the return can
be up to seven to one or more for each dollar invested. We know
that there are programs dealing with children's health that are
remarkably productive.
What I would hope is that you might reflect for us and
provide either to the Committee, or at least me, observations
you have about the capacity we have to capitalize on the
savings, how we might advance-fund some of the problem, some of
these issues that relate to poverty.
I have been struck that when it comes to the physical
infrastructure that we are very good at capturing value. Tax
increment financing has helped revitalize communities because
we know that there is going to be value that is captured and we
have certified, smart people in the financial community who
have enough confidence that they can identify, capture and have
that increment returned.
Now part of it is how we design bond instruments. People
are pretty sophisticated about that. There is a moral
obligation to repay. Certificates of participation are building
physical infrastructure across the country without really
having general obligation bonds, for instance. I wonder if you
could reflect and perhaps provide to me and the Committee areas
where such early investment might have the greatest potential
for long-term savings.
If you have some thoughts about mechanisms that we might
employ to enforce the fiscal discipline that we have with
fiscal, with--excuse me, with physical infrastructure, to do it
with our human infrastructure.
If at some point you want further elaboration from me, my
staff or I will be happy to follow up with you. I have had
these conversations, for example, with Governor Corzine
thinking that might be really great, somebody with his
background, Goldman Sachs, Governor of New Jersey now facing
these issues, that there might be some folks who can help us
explore this.
My second question deals with the notion that the poor pay
more. It is not just putting money in their hands. I was
struck, Mr. Jones, with your point about the security guards,
people who are gainfully employed, but they are working for $7,
$8, $9 an hour. They can't afford health insurance. Yet in New
York I would venture to say they are probably the only people
who are paying full retail if they have got an appendectomy,
that people with health insurance pay less--not just because
the insurance pays it, but the rate that is charged for the
operation is a fraction of what this poor person or this
working poor person pays.
The reference of the EITC, I agree, terrific boon for the
working poor and near poor, but we have people who have abused
the poor in terms of how that is exploited, and they pay more
of a percentage of their income for very simple returns than
people with complex returns who are very wealthy.
I could go on. There are studies that show the poor pay
more for a gallon of milk; they pay more on a capital basis for
inferior housing.
I would love to have your guidance in some feedback for
policy changes we could consider to deal with the phenomena
that the poor and 100 million who are struggling for the middle
class actually end up paying more for transportation, for
housing, for health care, for mortgages, they get steered to
sub-prime lending, that you might help us think about ways with
no new subsidy we could help the poor and near poor squeeze
more out of their investment.
Mr. Chairman, I appreciate your indulgence, but these are
two areas that I would love to work on with you and the
Committee that would actually help them get more without
spending more tax dollars.
Chairman RANGEL. Very well-framed questions. I hope that
the panel would share their responses with you, with the
ranking Member and me.
We have a 15-minute vote, and so what I would like to do is
to give 2 minutes to the people that have come back--Mr.
Tiberi, Mr. Davis and Mr. Weller--2 minutes apiece because we
have to adjourn.
Mr. Tiberi.
Mr. TIBERI. Thank you, Mr. Chairman.
Dr. Holzer, I will be brief. How do you determine or what
does it mean to grow up poor for the purposes of your report?
Dr. HOLZER. Different studies define that in different
ways. What most of us did is we took a variety of studies that
either looked at an individual point in time, say on crime, if
you are growing up in a family below the poverty line or in the
bottom 20 percent of the income distribution, what is the
greater likelihood that you will engage in criminal activity?
So, there are some studies that do it that way.
There are other studies, more on the earnings side, that
look at, on average, the fraction of years your family spent
below the poverty line in your childhood years or your average
family income averaged over many years and whether that income
averaged below the poverty line or not.
So, different studies do it in different ways.
Mr. TIBERI. So, if I--just a quick question. If I grew up
in a household where I was eligible for the free and reduced
lunch program in a public school in Columbus, Ohio, would that
be defined as poor?
Dr. HOLZER. I don't know the particular details of that
program.
Again, most of these studies either used the poverty line
or the bottom decile or quintile of incomes distribution.
Mr. TIBERI. Anyone else?
Dr. HASKINS. Well above poverty, school lunch is well above
poverty.
Chairman RANGEL. Mr. Davis.
Mr. DAVIS. Thank you, Mr. Chairman.
Dr. Holzer, I direct this question to you. One of the
reasons I think we tend to get bogged down in the debate we had
early in the morning about the impact of culture versus the
impact of policy is because we tend to presume that a large
number of people who are poor in this country, that it is a
fixed identifiable class of people, it is the same people over
a period of time; and I wonder if that is accurate.
I am going to ask you a quick question. What percentage of
people in poverty have been in that condition for more than say
18 months?
Dr. HOLZER. I don't know the answer off the top of my head.
Ron might.
Dr. HASKINS. I will send you a study. There is one very
good study based on, roughly speaking, about if you are in
poverty at a given point about half the people are out within
18 months.
Mr. DAVIS. The relevance of that, actually, I think
undercuts a lot of the points that you were making earlier, Dr.
Haskins. If we have way too permeable a border between class in
this country and too many people keep slipping from middle
class into poverty, it strikes me we need to figure out policy
that is very targeted toward closing those portals.
Second point, the data--if I am reading this correctly, 28
percent of people who have some level of postsecondary
education or higher end up below the poverty line. I am sure
some of those people are becoming alcoholics or developing
mental illness or something such as that, but that is
presumably a narrow class of people.
Do any of you want to quickly comment? What does this say
about our--a very basic thing. We are getting people into
college, they are dropping out of college, and this is an
amazing number to me. Any of you want to comment on that?
Dr. JONES. I can only talk from the New York experience.
The community college system is really showing an incredible
attrition rate. People are coming in on the front end; and,
interestingly enough, it is not necessarily their level of
educational attainment as they come in. The economics make it
impossible for them to stay in place.
That seems to be the big driver. They come in, they try to
get set, and then they can't sustain it economically.
Chairman RANGEL. Mr. Weller.
Mr. WELLER. Thank you, Mr. Chairman; and I commend you for
conducting this hearing.
The question you had asked earlier on is, we are looking
for ideas that work. I would note that welfare reform, which
was a product of this Committee, a bipartisan effort passed by
a Republican Congress, signed into law by a Democrat President,
was a bipartisan product. Dr. Haskins, of course, played a big
role in that. Today, 1.4 million fewer children are living in
poverty because of welfare reform. So, clearly, the initiatives
in that were successful; and I hope we can build on that.
Earlier, we had a discussion regarding marriage, two-parent
households and the difference that makes. There is an
interesting statistic here today about 36.2 percent of all
households in America are headed by a female-headed household,
single parent, but they represent 61 percent of all the
families living in poverty today.
There was a discussion earlier where one of the panelists
made the comment that if we encourage marriage as part of our
policy, we are somehow imposing our moral values on others. I,
for one, believe it is a good idea to encourage the father of a
child to take responsibility, because personal responsibility
is a good thing if we are going to rebuild families and rebuild
communities and bring children out of poverty.
Dr. Haskins, what are--the States are innovative
laboratories. What are some of the ideas out there that appear
to be working, whether in the District of Columbia or elsewhere
in the States, where there are initiatives which are actually
encouraging the father to take responsibility and to provide a
two-parent household, whether they are living together in holy
matrimony or just living together so Mom and Dad are in the
same home providing a loving home for that child and helping to
lift them out of poverty? What is working out there?
Dr. HASKINS. Five seconds. Two things that are
interesting--there are many, many, many, but two interesting
things. One is that the District of Columbia is establishing
accounts that if young couples, they can save money and they
get a match and if they get married and stay married for a
certain period of time they get to have the match for the
money. So, it is an inducement. It doesn't force them to do
anything, but it is an inducement to marry.
A second thing is that there is definitely a marriage
penalty, very good research on this now from the cash programs,
not the EITC but from the cash programs. So, the District was
about to implement a program that Mayor Williams had worked out
with Brownback in which the mother would get a year's worth of
benefits if she got married.
So, let's say she is getting $3,000 in cash from TANF. If
she got married normally, she would lose that money. She would
get a check for $3,000.
Unfortunately, we are not going to be able to do that,
because it is going to be cut in the appropriations process.
That is the kind of thing that the States are looking to do.
Mr. WELLER. Thank you, Doctor.
I realize I am limited on time. Thank you, Mr. Chairman.
Chairman RANGEL. Mr. Meek.
Mr. MEEK. Thank you, Mr. Chairman.
I want to thank all of our witnesses for coming before us,
and I am glad that we are talking about poverty in America.
We know that we have poverty throughout the world; and to
be able to move this issue forward, in my opinion, we have a
great challenge, because to do anything about poverty--we have
already made the statement as a Congress in a pay-as-you-go
kind of rule that we have adopted here is to live within our
means; and if we are going to do something new, how are we
going to pay for it? Looking at it from that light--and then we
have this war that is costing quite a bit of money, that is
kind of getting the benefits of poverty in rural and urban
America of individuals enlisting to get--to be able to get a
higher education, to be able to go into the area of providing
money for their family.
I am of the belief for those States--as we passed this
devolution of taxation down to the States and they are having
to balance their budgets, tuition rates go up. That makes it
even more difficult for those that are financially challenged
in our country to be able to make ends meet.
I just want to hear from a few of you on the panel how you
believe we can move towards not only discussion but action here
on Capitol Hill of finding the dollars--where are we going to
get it from--to be able to resolve some of the issues that we
are facing?
One of you mentioned--and I am sorry, opening statements,
it was like 2 hours ago--mentioned the EITC. How do we continue
to add on to that and where do we get the money from? That is
the question. We know we have the super-wealthy getting the big
breaks right now. What amount of money can be moved from those
areas to be able to help us with our poverty issues, especially
in U.S. cities?
I thought that was a softball.
Dr. HASKINS. Ignoring political feasibility, there are
many, many programs that have been shown by evaluations not to
produce good results. I will mention one right off the bat is
title 1.
Now it is under--congressional rules get in the way here,
because it is not under your jurisdiction, but title 1 is
billions of dollars every year that--and, I don't know, hundred
and maybe 200 billion dollars have been spent since it was
enacted in 1965, and their evaluation after evaluation after
evaluation, no effects.
Another program that enjoys very weak political support are
farm subsidies. Now we spend something like $25 billion a year
on farm subsidies, and as far as I can tell there are no--very
few positive effects and lots of negative effects.
So, the point is, in this era of budget scarcity, we are
going to have to cut programs in order to invest the money more
productively; and that is what we should do.
Dr. HOLZER. I would add also two options. One is to save
money on other expenditures that Ron emphasizes and there is
generating more revenue, and allowing the tax breaks at the
very high end of the income spectrum to expire would generate
some revenue.
Dr. HASKINS. I swore on a stack of Bibles I would never say
that.
Dr. HOLZER. I am sure.
Mr. MEEK. I see the red light is on. That is the quickest 5
minutes. I don't know if we are going by 5 minutes, Mr.
Chairman.
Chairman RANGEL. No, 2.
Mr. MEEK. Oh, 2. I am sorry. I thought it was--okay.
Chairman RANGEL. We do that for members who had to vote.
Mr. MEEK. I thought it was because I was on the bottom row
here. I am just joking.
Thank you, Mr. Chairman. I am glad that the Chairman said
we are going to continue this discussion, because this is a
square table kind of discussion, and we are going to have to
make some decisions, and we are going to have to have some
results.
So--I am sorry, Mr. Nilsen. You wanted to say something?
We have to have some results, and I am along the lines of
thinking where can we get the money and make the justification
to the American people and to the Congress?
You talk about the political will to be able to change some
things that are not working, to be able to identify those
dollars that are already in the pool. I believe it will be much
more difficult to--maybe in the 109th Congress you could step
out and borrow money from foreign nations to pay for programs
here and even put us further into debt. Since we don't have--we
don't want to do that, we have to find within what is not
working and do the tweaking that we need to do that is going to
make the ultimate change in rural and urban America and in
suburbia.
This is where the rubber meets the road, and I am excited
about being here part of this discussion. I am looking forward
to not only receiving more information from you all, but future
meetings maybe in a workshop setting that the Chairman has
already spoken of on a bipartisan basis would be able to help
us make conclusions to get ourselves out of this situation. As
long as Iraq is going on, there is going to continue to be a
major sucking sound, pulling the will or the means to be able
to carry out a way to work towards some sort of resolution on
poverty in America.
Thank you, Mr. Chairman. I yield back.
Chairman RANGEL. Mr. McCrery.
Mr. MCCRERY. No more questions. Thank you very much, panel,
for coming.
Chairman RANGEL. Well, this is just the beginning. I hope
that all of you will share with us--and we will contact you--
anything you can think of that will show the economic impact on
the economy. We have to think differently. This is not a moral
or spiritual thing. It is for the national security of our
great country. Since we find the economists know how to do
things creatively, we are going to have to get everybody on the
same page, because an emergency is an emergency and we have to
deal with it.
I can't thank you enough for the expertise that you brought
to this. I apologize for the votes on the House floor
interfering with this hearing, and I would want the record to
remain open for at least 2 working days for the other members
to get their statement in the record.
Please feel free to get in touch with me and the ranking
Member if you come up with anything that you think that could
be helpful to us.
This meeting will stand adjourned.
[Whereupon, at 12:45 p.m., the hearing was adjourned.]
[Submissions for the Record follow:]
Statement of Child Welfare League of America
The Child Welfare League of America (CWLA), representing public and
private nonprofit, child-serving member agencies across the country, is
pleased to submit testimony to the Ways and Means Committee this
morning. The issue of the economic and social costs of poverty to our
country is one that deserves a great deal more attention than it has
received in recent years. The attention of this congressional committee
and the priority that Chairman Rangel has placed on this issue is
greatly appreciated and is to be commended. We look forward to working
with you on this and related issues in the coming months.
Parents and other caregivers require certain economic resources to
provide their children with proper nutrition, adequate housing, and
sufficient health care. Although economic resources provide no
guarantee of a child's healthy development or well-being, poverty is
correlated with a wide range of negative outcomes that begin in
childhood and can forever impact a child's future.\1\ Children raised
in poverty are likely to experience more risks and have fewer
protective factors and resources than children living above the poverty
threshold.\2\
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\1\ Lieberman Research Worldwide. (1999, April). Assessing public
opinion and perceptions regarding child abuse in America: Final report.
Prepared for the Child Welfare League of America, Washington, DC.
\2\ Parker, S., Greer, S., & Zuckerman, B. (1988). Double jeopardy:
The impact of poverty on early child development. The Pediatric Clinics
of North America, 35(6), 1227-1240.
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Many children raised in poverty begin their lives at a disadvantage
because of inadequate prenatal care, poor maternal nutrition, or birth
complications. They often also face a wide array of familial and other
environmental obstacles, including low levels of parental education,
increased levels of familial stress, poor social support, and limited
community assistance. Compared with other children, children living in
poverty are more likely to experience difficulty in school and have a
higher high school drop-out rate. Poverty during early childhood may be
more damaging than poverty experienced later in life because much of
the foundation for learning is built in the early years. Poor children
score lower on measures of vocabulary, language skills, understanding
of number concepts, organization, and self-regulation. In addition,
children living in poverty are more likely to become teen parents, and,
as adults, earn less and be unemployed more frequently.\3\
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\3\ Ibid.
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CWLA believes that as a country we must confirm our commitment to
prevent child abuse and neglect and to support children who have been
abused and neglected. A fundamental building block to reaching this
goal is to tackle poverty head-on.
POVERTY AS A NATIONAL ISSUE
In August 2005, for a brief moment, the Nation's attention was
focused squarely on the issue of poverty in America. Everyone's eyes
were glued to their television screens as the levees broke in New
Orleans, Louisiana, and significant tragedy unfolded. Images of
individuals and families trapped by floodwaters and testimony of those
mourning the loss of loved ones, homes, and personal belongings
destroyed any ideas of poverty as merely an illusion. This attention
was unfortunately fleeting, however, and the commitments that had been
made to address the poverty issue quickly faded.
In fact, if you were living in Washington, DC, on that August 2005
day, you might have attended a forum hosted by the prestigious
Brookings Institute that included a panel discussion interpreting the
meaning of the new census data on poverty. As has been the case in
other discussions and in other forums over the last several years, much
of that discussion focused on how we measure poverty and whether or not
it is as severe as some would argue. We will not continue that debate
here because, in our view, poverty is severe and the United States is
not doing enough to combat the issue.
CWLA sees poverty as a serious matter that impacts individuals
across the country and shapes the direction we are headed as a nation.
Poverty touches on our economic preparedness, the effectiveness of our
schools, the health of our Nation, and--most significantly to CWLA--the
welfare of our Nation's children.
In 2005, the national poverty rate stood at 13%.\4\ For children
under the age of 18, the poverty rate was higher at 18%, which meant
that approximately 12.8 million of our Nation's children were being
raised in poverty.\5\ For children under the age of 5, the percentage
was even higher at 21%.\6\ One out of five children in the critical
child developmental period of 0 through 5, then, live in poor
conditions that will certainly affect their chances at future success
and well-being.
---------------------------------------------------------------------------
\4\ U.S. Census Bureau, 2005 American Community Survey. (2005).
Data profiles: Selected economic characteristics. Retrieved January 23,
2007, from http://factfinder.census.gov/servlet/ADPTable?_bm=y&-
geo_id=01000US&-qr_name=ACS_2005_EST_G00_DP3&-ds_name=
&-redoLog=false&-format. Washington, DC: Author.
\5\ Ibid.
\6\ Ibid.
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POVERTY AND CHILD ABUSE
According to the CWLA Standards of Excellence for Services for
Abused or Neglected Children and Their Families, neglect is defined as
``Failure of parents or other caregivers, for reasons not solely due to
poverty, to provide the child with needed age-appropriate care,
including food, clothing, shelter, protection from harm, supervision
appropriate to the child's development, hygiene, education, and medical
care.''
In 2004, the most recent data available, an estimated 3 million
children were reported as abused or neglected and received an
assessment or screening to determine whether or not there was evidence
of abuse or neglect. Approximately 872,000 children were substantiated
as abused or neglected.\7\
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\7\ U.S. Department of Health and Human Services, Administration on
Children, Youth, and Families. (2006). Child maltreatment 2004 (Table
2-1). Retrieved January 23, 2007, from www.acf.hhs.gov/programs/cb/
pubs/cm04/index.htm. Washington, DC: U.S. Government Printing.
---------------------------------------------------------------------------
Of the 872,000 substantiated cases of abuse or neglect, 62.4% of
these children experienced neglect, 17.5% were physically abused, 9.7%
were sexually abused, 7% were psychologically maltreated, and 2.1% were
medically neglected. Nearly three-quarters (or 72.9%) of child victims
age 0 to 3 years were neglected--higher than any other age category.\8\
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\8\ U.S. Department of Health and Human Services, Administration on
Children, Youth, and Families. (2006). Child maltreatment 2004.
Retrieved January 23, 2007, from www.acf.hhs.gov/programs/cb/pubs/cm04/
index.htm. Washington, DC: U.S. Government Printing.
---------------------------------------------------------------------------
In 1996, the U.S. Department of Health and Human Services released
the Third National Incidence Study (NIS) of Child Abuse and Neglect.
The NIS is a congressionally mandated, periodic research effort to
assess the incidence of child abuse and neglect in the United States.
The fourth study is currently underway. The NIS gathers information
from multiple sources to estimate the number of children who are abused
or neglected and to provide information about the nature and severity
of the maltreatment, the characteristics of the children, perpetrators,
and families, and the extent of changes in the incidence or
distribution of child maltreatment since the previous NIS.
In the 1996 study, a significant correlation was found between the
incidence of maltreatment and family income. It found that 47% of
children with demonstrable harm from abuse or neglect and 95.9% of
endangered children came from families whose income was less than
$15,000 per year.\9\
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\9\ Sedlack, A. J. & Broadhurst, D. D. (1996). Third national
incidence study of child abuse and neglect: Final report. Washington,
DC: U.S. Department of Health and Human Services.
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Children from families with annual incomes below $15,000 as
compared to children from families with annual incomes above $30,000,
were over 22 times more likely to experience some form of maltreatment
that fit the study's harm standard and over 25 times more likely to
suffer some form of maltreatment as defined by the endangerment
standard.\10\
---------------------------------------------------------------------------
\10\ Ibid.
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Children from families in the lowest income bracket were 18 times
more likely to be sexually abused, almost 56 times more likely to be
educationally neglected, and over 22 times more likely to be seriously
injured from maltreatment than children from higher income
families.\11\
---------------------------------------------------------------------------
\11\ Ibid.
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The stress created by living in poverty may play a distinct role in
child abuse and neglect.\12\ Parents who experience prolonged
frustration in trying to meet their family's basic needs may be less
able to cope with even normal childhood behavior problems. Those
parents who lack social support in times of financial hardship may be
particularly vulnerable. Parents who are experiencing problems with
employment are frequently rated by child protective services staff as
being at moderate to high risk of child maltreatment.\13\
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\12\ Gil, D. G. (1970). Violence against children. Cambridge, MA:
Harvard University Press.
\13\ English, D. (1994). Risk assessment: What do we know? Findings
from three research studies on children reported to child protective
services. In Center for Advanced Studies in Child Welfare and the
Center for Urban and Regional Affairs, Children of the shadows--The
state of children in neglecting families: Conference proceedings.
Minneapolis, MN: University of Minnesota; National Research Council.
(1993). Understanding child abuse and neglect. In G. B. Melton & F. D.
Barry, Protecting children from abuse and neglect: Foundations for a
new national strategy (pp. 132-134). New York: Guilford Press.
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POVERTY AND KINSHIP AND FOSTER CARE
These findings suggest that we could help alleviate the flow of
children into other parts of the child welfare system by addressing the
core issue of poverty. For those children who are in care, the
challenges and the issue of poverty are no less significant. As of
September 30, 2004, 509,662 children were in foster care in the United
States.\14\ Foster care, when it is the most appropriate service for a
child, should provide a child with protection, care, and nurturance for
a temporary period of time while services are provided to the child's
parents in order to deal with the problems that led to placement.
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\14\ Child Welfare League of America. (2006). Special tabulation of
the Adoption and Foster Care Analysis Reporting System (AFCARS).
Washington, DC: Author.
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When a child cannot remain in his or her own home, it is critical
that the child welfare system work to provide that child with
permanence. All children deserve to be a part of, or have a connection
with, stability and families that are intended to be permanent. Family
foster care and foster care services should emphasize safety and the
well-being of children; recognize that the family is a fundamental
foundation of child rearing; and acknowledge the importance of a
comprehensive, child-centered, family-focused, culturally competent
approach. To fulfill their vital role, then, public child welfare
agencies need to ensure that children in care are protected and cared
for and that they receive the services they need. The agency should
also ensure that the families of the children in care receive services
directed toward early reunification with their child or, as an
alternative, another permanency goal.
To meet these goals, it is clear that families must have the needed
support to help foster children. According to the National Survey of
America's Families (NSAF), only 39% of out-of-home care provider
families have incomes that place them beyond 200% of the poverty level.
Among all families--in-home, foster, and kinship--those involved with
the child welfare system are five times more likely to have income at
only 50% of the poverty level than families in the general
population.\15\
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\15\ U.S. Department of Health and Human Services, Administration
on Children, Youth, and Families. (2005). CPS sample component wave 1
data analysis report. National survey of child and adolescent well-
being. Washington, DC: Author.
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The needs of children in foster care and the support their families
provide to them is only made more challenging by the fact that less
than half of the children in care are eligible for federal support. A
child in foster care is eligible for federal support only if that child
was removed from a family that would have been eligible for the now
nonexistent Aid to Families with Dependent Children (AFDC) as it
existed in July 1996.
According to 2005 calculations by the Congressional Research
Service (CRS), this outdated eligibility, which erodes every year,
means ``that in as many as 25 states, eligibility for the Title IV-E
foster care program may only be established for children removed from
families with incomes less than half the Federal poverty level (roughly
$8,000/year for a family of three).'' \16\
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\16\ Congressional Research Service. (2005). Child welfare
financing: An issue overview, Congressional Research Service report for
Congress. Washington, DC: Stoltzfus, Emilie.
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Another significant and growing part of the child welfare system is
the use of kinship care and kinship settings. By definition, kinship
care is the full-time care, nurturing, and protection of children by
relatives, members of their tribes, godparents, stepparents, or any
adults who have a kinship bond with a child. This definition is
designed to be inclusive and respectful of cultural values and ties of
affection. Beyond its formal definition, what kinship care provides is
an opportunity for a child to grow to adulthood in a familial
environment. For many children, it is also a lifeline to a safe and
productive future. It is, therefore, the type of care that we must
nurture and promote in every way possible.
Over six million children are living with a relative who serves as
their caregiver, with approximately four-and-a-half million of these
being grandparents. According to the last census, nearly two-and-a-half
million grandparents report that they are primarily responsible for
their grandchildren. The same census survey reveals that nearly 20% of
these grandparents live in poverty.\17\
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\17\ S. Census Bureau. (2000). Census 2000 summary file 1: Table
P28, relationship by household type for population under 18 Years.
Available from www.factfinder.census.gov. Washington, DC: Author.
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When Congress enacted the Adoption and Safe Families Act (ASFA) in
1997, it gave formal recognition to kinship placements as a permanency
option even though that same act did not extend federal funding to
these placements. The increased urgency that ASFA placed on the goal of
permanency also influenced the increased use of kinship placements.
These families are a vital support for millions of children and are a
key to ensuring the safety and permanency, as well as the nurturing and
well-being, of these children.
Although we have seen a decrease in the poverty rates amongst these
families from the end of the last decade and through 2002, the
percentage of children in a kinship setting living in poverty is still
too high. According to an Urban Institute analysis,\18\ the poverty
rate for children living in public kinship care or kinship care
provided through the child welfare system is 18%. That is the same as
the overall child poverty rate for children under 18. For private
kinship care--those kinship families not coming through the public
child welfare system--the poverty rate is 31%. When compared to non-kin
foster parents, kinship families are much more likely to be low income
(defined as 200% of the poverty level or lower), single, and older. In
all instances, poverty certainly creates additional burdens and
challenges for these families who have opened their homes and are
providing a vital service to these children. If we continue to adhere
to the goals of the Federal Adoption and Safe Families Act and we
recognize kinship placements as a permanency option as we should, we
must provide accompanying federal financial support.
---------------------------------------------------------------------------
\18\ Main, R., Macomber, J. E., & Geen, R. (2006). Trends in
service receipt: Children in kinship care gaining ground. Washington,
DC: Urban Institute.
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YOUTH AFTER FOSTER CARE
For too many older children in foster care the exit from the system
will come only when they reach the age of 18. More than 22,000 young
people leave foster care annually because they age out of the
system.\19\ Although data is sometimes sparse, we know of common
challenges for these young people from several studies. In one national
survey, 25% of foster youth reported having been homeless at least one
night in the two-and-a-half to four years after exiting foster
care.\20\ In a national survey, only 54% of former foster youth had
completed high school,\21\ and in another study, 3 in 10 of the
Nation's homeless adults reported a foster care history.\22\
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\19\ Child Welfare League of America. (2006). Special tabulation of
the AFCARS. Washington, DC: Author.
\20\ Cook, R. (1991). A national evaluation of title IV-E foster
care independent living programs for youth. Rockville, MD: Westat Inc.
\21\ Ibid.
\22\ Roman, N. P. & Wolfe, N. (1995). Web of failure: The
relationship between foster care and homelessness. Washington, DC:
National Alliance to End Homelessness.
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FOSTER CARE AND EDUCATION
Children and youth in foster care are also challenged when it comes
to education outcomes. Placement in out-of-home care may create issues
around mobility and stability in a child's education arrangements. For
example, a three-year study of youth aging out of care by Chapin Hall
indicated that over one-third of young adults reported five or more
school changes.\23\ Another study of the Chicago school system (also by
Chapin Hall) indicated that over two-thirds of children and youth
included in the study had switched schools shortly after their initial
placement.\24\ This kind of instability, along with the challenges of
poverty, creates greater barriers to successful education outcomes.
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\23\ Courtney, M. E., Terao, S., & Bost, N. (2004). Midwest
evaluation of the adult functioning of former foster youth: Conditions
of youth preparing to leave state care. Chicago: Chapin Hall Center for
Children at the University of Chicago.
\24\ Smithgall, C., Gladden, R. M., Howard, E., Goerge, R., &
Courtney, M. (2004). Educational experiences of children in out-of-home
care. Chicago: Chapin Hall Center for Children at the University of
Chicago.
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A 2001 Washington state study is typical of other research in its
findings, which showed that youth in foster care attending public
schools scored 16 to 20 percentile points below nonfoster youth in
statewide standardized tests at grades three, six, and nine.\25\ Over
one-third of young people in a Midwest Study had received neither a
high school diploma nor a GED by age 19, compared to fewer than 10
percent of their same-age peers in a comparable national sample.\26\ In
addition, other studies have demonstrated that such outcomes continue
to have an impact as these youth attempt to succeed at the post-
secondary education level. The Northwest Alumni Study found that of the
foster care alumni studied, 42.7 percent completed some education
beyond high school, 20.6 percent completed any degree or certificate
beyond high school, 16 percent completed a vocational degree and 1.8
percent completed a bachelor's degree. This completion rate for a
bachelor's degree compares to 24 percent among the general population
of the same age as those surveyed in the study.\27\ CWLA believes that
these results offer strong evidence that efforts to improve the
education outcomes for these children and youth in foster care must be
a part of our national strategy to improve education and to reduce
poverty.
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\25\ Burley, M., & Halpern, M. (2001). Educational attainment of
foster youth: Achievement and graduation outcomes for children in state
care. Olympia, WA: Washington State Institute for Public Policy.
\26\ Courtney, M.E., Dworsky, A., Ruth, G., Keller, T., Havlicek,
J., & Bost, N. (2005). Evaluation of the adult functioning of former
foster youth: Outcomes at age 19. Chicago, IL: Chapin Hall Center for
Children at the University of Chicago.
\27\ Pecora, P., Kessler, R., Williams, J., O'Brien, K., Downs, C.,
English, D., White, J., Hiripi, E., White, C.R., Wiggins, T., & Holmes,
K. (2005). Improving Family Foster Care: Findings from the Northwest
Foster Care Alumni Study Alumni Study. Seattle, WA: Casey Family
Programs.
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HEALTH STATUS OF CHILDREN AND PARENTS
Children and parents living in poverty are less likely to have
access to adequate health and mental health care. The lack of
comprehensive health services for both children and parents increases
entry into the child welfare system and makes it more difficult for
children in the system to attain long-term health, stability, and
permanency.
The first three years of life are crucial to a child's brain
development and early mental health status.\28\ There are an astounding
number of children living in poverty during this critical period.
Moreover, the 2005 U.S. Census Survey reported 11.2% of children as
uninsured, despite widespread eligibility for Medicaid or SCHIP.\29\
Lack of health insurance or limited health insurance coverage
contributes needlessly to an increasing number of children in the child
welfare system with an unmet health need as well as placement of
children in the child welfare system solely to obtain essential mental
health services.\30\ The data demonstrates a greater need for outreach
to meet the needs of these children by increasing enrollment in
eligible health insurance programs and ensuring comprehensive access to
health and mental health resources under them. Increased access to
health and mental health care improves a child's chance for
permanency.\31\
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\28\ National Child Welfare Resource Center for Family Centered
Practice. (2003). Family centered child welfare. Washington, DC:
Author.
\29\ DeNavas-Walt, C., Proctor, B., and Hill Lee, C. (2006).
Income, Poverty, and Health Insurance Coverage in the United States:
2005. Current Population Reports (pp. 60-231). Washington, DC: U.S.
Government Printing Office.
\30\ United States General Accounting Office. (2003, April). Child
welfare and juvenile justice: Federal agencies could play a stronger
role in helping states reduce the number of children placed solely to
obtain mental health services. Report to Congressional Requesters (14).
Washington, DC: Author.
\31\ Vandivere, S., Gallagher, M., and Anderson Moore, K. (2004).
Changes in children's well-being and family environments. Snapshots of
America's Families III, No. 18. Washington, DC: Urban Institute.
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Poverty also correlates with increased rates of mental illness and
substance abuse among parents,\32\ leaving them less ready to handle
the stressors associated with raising children. The children of parents
with substance abuse or mental health concerns are therefore more
likely to be victims of abuse or neglect. Availability of comprehensive
mental health care reduces caregiver stress and increases a child's
chance for healthy development and stable placement.\33\ Helping
children to overcome the obstacles created by the presence of poverty
in their early lives means increasing services to address the mental
health and substance abuse treatment needs of these children and their
parents.
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\32\ DeBellis, M. D., Broussard, E. R., Herring, D. J., Wexler, S.,
Moritz, G., & Benitez, J. G. (2001). Psychiatric co-morbidity in
caregivers and children involved in maltreatment: A pilot research
study with policy implications. Child Abuse & Neglect 25(7): 923-44.
Chicago: The International Society for Prevention of Child Abuse and
Neglect.
\33\ McCarthy, J. (2003). Creating effective systems for mental
health care and services. Best Practice Next Practice. Washington, DC:
National Child Welfare Resource Center for Family Centered Practice.
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CWLA POLICY RECOMMENDATIONS ON PROPOSED LEGISLATION
The booming economy in the 1990s resulted in increases in overall
income levels and modest declines in poverty levels relative to
economic gains. The percentage of U.S. children living in families with
high incomes grew to 29.7% in 2000, while one in three children (34%)
lived in families with medium incomes.\34\
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\34\ Federal Interagency Forum on Child and Family Statistics.
(2002). America's children: Key national indicators of well-being,
2002. Washington, DC: U.S. Government Printing Office.
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The progress made at the end of the last decade, however, has
either plateaued or reversed. Poverty remains prevalent and
debilitating for millions of U.S. children, youth, and families.
Children are almost twice as likely to live in poverty as Americans in
any other age group.\35\ The extent of inequality in the distribution
of earned income since the 1970s has dramatically increased. While
workers with higher schooling levels and more experience have enjoyed
increases in their inflation-adjusted earnings, the real earnings of
younger and less-educated workers have fallen sharply.\36\
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\35\ National Center for Children Living in Poverty. (2002). Child
poverty fact sheet. New York: Columbia University.
\36\ Hofferth, S. L. (1998). The American family: Changes and
challenges for the 21st century. In H. M. Wallace (Ed.), Health and
welfare for families in the 21st century. Sudbury, MA: Jones and
Bartlett.
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Although secure parental employment may provide access to health
care and reduction of some stressors, poor working parents often face
multiple pressures that negatively impact their ability to adequately
care for their children. When they are exhausted from low-paying jobs
and enervated by the sheer demands of coping with inadequate resources,
parents find it harder to be consistent in discipline, to be responsive
to children's needs, and to provide a range of socially and
educationally stimulating experiences.
SOLUTIONS
Providing a broader and better financial situation for
low-income families will give these families adequate resources that
positively affect child development, especially for younger children.
CWLA therefore supports federal strategies that seek to increase low
family incomes and include income supports, such as increasing the
Earned Income Tax Credit and raising the minimum wage.
CWLA supports enhancements in programs such as the
Temporary Assistance to Needy Families. This enhancement, however, must
assist parents in reaching more and better paying jobs and not just
focus on arbitrary work rates and punitive measures for failure to
work.
CWLA supports the enhancement of child care and preschool
readiness programs, high school completion programs, and other
educational supports to increase opportunities for the Nation's poorest
children and youth.
CWLA supports increased investments in prevention,
intervention, and treatment services to reduce the negative impact of
poverty on children and youth and on the larger culture. This includes
the expansion of home visiting programs and full funding of prevention
and intervention programs such as the Child Abuse Prevention Treatment
Act and the Promoting Safe and Stable Families program.
Congress needs to reauthorize and strengthen the State
Children's Health Insurance Program, including the provision of funds
necessary to avoid shortfalls and expand coverage to more uninsured
children.
Congress must preserve the Federal guarantee of Medicaid
as an entitlement program for low-income children, youth, and families
and prevent any cuts that would result in reduced benefits and
restricted eligibility for beneficiaries. Coverage for youth leaving
foster care should be required to age 21.
In the reauthorization of the education act, the No Child
Left Behind law, Congress must include initiatives that will assure and
strengthen the access of foster children to public education and
eliminate current barriers to stability and a foster child's ability to
continue in his or her current school setting.
CWLA believes we cannot succeed in reducing the number of
children in care without greater federal support. We must fix the
financing mechanisms for children who are in the child welfare system.
This means extending Title IV-E funding to kinship placements and
replacing the outdated eligibility requirements for foster care and
adoption assistance currently tied to the now nonexistent AFDC program
as it existed in July 1996.
CONCLUSION
CWLA appreciates the opportunity to offer our testimony to the
committee in regard to the issue of poverty. The fact that the Ways and
Means Committee, under the leadership of Chairman Rangel, has held this
hearing as one of its first hearings demonstrates a commitment to child
welfare by the chairman and the committee. This gives CWLA hope that
this country will once again seriously confront the challenge and the
need to reduce poverty and improve the lives of children and families
throughout the United States of America.
Statement of Nicholas Eberstadt, American Enterprise Institute
For well over a century, with ever-expanding scale and scope, the
United States government has been generating statistics that might
illuminate the plight of society's poorest and most vulnerable
elements. From the beginning, the express objective of such efforts has
always been to abet purposeful action to protect the weak, better the
condition of the needy, and progressively enhance the general weal.
First unveiled in early 1965, shortly after the launch of the Johnson
administration's ``War on Poverty,'' the poverty rate is a measure
identifying households with incomes falling below an official ``poverty
threshold'' (levels based on that household's size and composition,
devised to be fixed and unchanging over time). Just months after its
debut, the War on Poverty's new Office of Economic Opportunity (OEO)
designated the measure as its unofficial ``working definition'' of
poverty. By August 1969, the Bureau of the Budget had stipulated that
the poverty thresholds used in calculating American poverty rates would
constitute the Federal government's official statistical definition for
poverty. It has remained so ever since.\1\
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\1\ For informative background on the origin and evolution of the
poverty rate, see Gordon M. Fisher, ``The Development of the Orshansky
Poverty Thresholds and Their Subsequent History as the Official U.S.
Poverty Measure,'' U.S. Census Bureau Poverty Measurement Working
Papers (May 1992, partially revised September 1997).
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U.S. government antipoverty spending has come to be calibrated
against, and made contingent upon, this particular measure. Everywhere
in America today, eligibility for means-tested public benefits depends
on the relationship between a household's income and the apposite
poverty threshold. In Fiscal Year 2002, perhaps $300 billion in public
funds were allocated directly against the criterion of the ``poverty
guideline'' (the Department of Health and Human Services' version of
poverty thresholds).\2\ Given its unparalleled importance--both as a
touchstone for informed public discussion and as a direct instrument
for public policy--the reliability of the official poverty rate (OPR)
as an indicator of material deprivation is a critical question. How
faithfully, in other words, does our Nation's poverty rate describe
trends and patterns in the condition that most Americans would think of
as poverty?
---------------------------------------------------------------------------
\2\ Douglas J. Besharov and Peter Germanis, ``Reconsidering the
Federal Poverty Measure: Project Description,'' http://
www.welfareacademy.org (June 14, 2004), 5. Poverty guidelines are based
on poverty thresholds but differ from them in that they are more
currently updated to reflect intervening changes in price levels and
have a slightly more simplified schema for determining household
eligibility levels, with fewer categories for family size and
composition than are found in the Census Bureau's poverty threshold
tables.
---------------------------------------------------------------------------
Although our official poverty rate is now by and large taken for
granted, having become widely regarded with the passage of time as a
``natural'' method for calibrating the prevalence of material
deprivation in American society, the measure itself was originally an
ad hoc improvisation--and arguably a fairly idiosyncratic one--and in
practical terms appears to be a problematic descriptor of poverty
trends and levels in modern America. For one thing, its reported
results do not track well with other indicators that would ordinarily
be expected to bear directly on living conditions across the Nation. In
fact, over the past three decades, the relationship between the OPR and
these other indicators has been perversely discordant.
While the official poverty rate suggests that the proportion of the
American population living below a fixed ``poverty line'' has
stagnated--or increased--over the past three decades, data on U.S.
expenditure patterns document a substantial and continuing increase in
consumption levels for the entire country--including the strata with
the lowest reported income levels. And while the poverty threshold was
devised to be measuring a fixed and unchanging degree of material
deprivation (i.e., an ``absolute'' level of poverty) over time, an
abundance of data on the actual living conditions of low-income
families and ``poverty households'' contradicts that key presumption--
demonstrating instead that the material circumstances of persons
officially defined as poor have improved broadly and appreciably over
the past four decades.
In short, America's most relied-upon metric for charting a course
in our national effort to reduce and eliminate poverty appears to offer
unreliable, and indeed increasingly misleading, soundings on where we
are today, where we have come, and where we seem to be headed.
History of a Calculation
The schema and framework for estimating official poverty rates in
the United States today are basically the same as in 1965. Annual OPRs
are still determined on the basis of poverty thresholds maintained and
updated by the U.S. Census Bureau; official poverty status is still
contingent upon whether a household's measured annual pretax money
income exceeds or falls below that stipulated threshold. While a number
of minor revisions have been introduced, the original approach of
computing poverty rates on the basis of poverty thresholds and annual
household income levels remains entirely intact. The most significant
change in the original poverty thresholds is their annual upward
adjustment to compensate for changes in general price levels. In 1969,
the Bureau of the Budget directed that the poverty line would
thenceforth be pegged against the Consumer Price Index (CPI) and ruled
that the CPI deflator would also be used to establish official
``poverty thresholds'' back to 1963, the base year for the original
study.
As of 2005, the U.S. official poverty rate is the single longest-
standing official index for assessing deprivation and material need in
any contemporary country. That fact alone makes it unique. But
America's OPR is unique in another sense, as well. For although a
multitude of governments and international institutions have pursued
quantitative efforts in poverty research over the past two decades, and
have even fashioned particular national and international poverty
indices, none has elected to replicate the United States' approach to
counting the poor. This curious fact is not often remarked upon by U.S.
statistical authorities--but it is not only worth bearing in mind, it
is also worth pondering as one evaluates the U.S. poverty rate and its
long-term performance.
Stark Numbers
Estimates of the official poverty rate for the United States are
available from the year 1959 onward. For the total population of the
U.S., the OPR declined by nearly half over this period, from 22.4
percent in 1959 to 12.7 percent in 2004, and dropped by roughly similar
proportions for America's families, from 20.8 percent to 11.0 percent.
Measured progress against poverty was more pronounced for older
Americans (the OPR for persons 65 and older fell from 35.2 percent to
9.8 percent) but more limited for children under 18 (27.3 percent vs.
17.8 percent). For African Americans, the official poverty rate
declined by almost three-fifths--by over 30 percentage points--between
1959 and 2004, but in 2004 remained over twice as high for whites.
One may note that most of the reported reduction in overall U.S.
poverty, according to this federal poverty measure, occurred at the
very beginning of the series--that is to say, during the first decade
for which numbers are available. Between 1959 and 1968, the OPR for the
total population of the United States fell from 22.4 percent to 12.8
percent, or by more than a point per year. In 2004, by contrast, the
U.S. poverty rate was only imperceptibly lower than it had been in
1968--and actually slightly higher than it had been back in 1969.
Indeed, to judge by the official poverty rate, the United States
has suffered a generation and more of stagnation--or even
retrogression--in its quest to reduce poverty. Figure 1 illustrates the
situation. For the entire U.S. population, the lowest OPR yet recorded
was for the year 1973, when the index bottomed at 11.1 percent. Over
the subsequent three decades, the OPR nationwide has remained steadily
above 11.1 percent, often substantially; in 2004, the rate reported was
12.7 percent.
Between 1973 and 2004, the official poverty rate did decline for
older Americans as a whole (16.3 percent vs. 9.8 percent) and for
persons living alone (25.6 percent vs. 20.5 percent); it also declined
for African Americans overall (31.4 percent vs. 24.7 percent). But for
the rest of the country, the official poverty rate was in general
higher at the start of the new century than it had been in the early
1970s. Measured poverty rates, for example, were higher in 2004 than
they had been in 1973 for children under 18 (14.4 percent in 1973 vs.
17.8 percent in 2004) and for people of working ages, i.e. 18 to 64
(8.3 percent vs. 11.3 percent). The nationwide OPR for U.S. families
likewise rose over those years (from 9.7 percent to 11.0 percent).
Outside of the South, where the OPR registered a slight decline (from
15.3 percent to 14.1 percent), poverty rates were higher in every
region of America in 2004 than in 1973. Overall poverty rates for non-
Hispanic whites--so-called Anglos--were also higher than they had been
in 1973 (7.5 percent vs. 8.6 percent). No less striking, the overall
poverty rate for Hispanic Americans was exactly the same in 2004 as in
1973--21.9 percent--implying that the circumstances of this diverse but
often socially disadvantaged ethnic minority had not improved at all
over the course of three full decades.
Taken on their face, these stark numbers would seem to be a cause
for dismay, if not outright alarm. To go by the official poverty rate,
modern America has failed stunningly to lift the more vulnerable
elements of society out of deprivation--out from below the income line,
according to the author of the Federal poverty measure, where
``everyday living implied choosing between an adequate diet of the most
economical sort and some other necessity because there was not money
enough to have both.'' This statistical portrait of an apparent long-
term rise in absolute poverty in the contemporary United States evokes
the specter of profound economic, social, and political dysfunction in
a highly affluent capitalist democracy. All the more troubling is the
near-total failure of social policy implied by such numbers, for
despite the War on Poverty and all subsequent governmental antipoverty
initiatives, official poverty rates for the Nation have mainly moved in
the wrong direction over the past three decades.
Other Measures
Although the official poverty rate is accorded a special official
status as an index of poverty conditions in modern America, it is by no
means the only available indicator that might provide insight on
poverty conditions and material deprivation in the country. Many other
indices bearing upon poverty are readily available, and their trends
can be compared with the reported OPR. Curiously, the official poverty
rate does not seem to exhibit the normal and customary relationship
with any of these other poverty proxies.
Table 1 illustrates the problem. It contrasts results for the years
1973 and 2001 for the official poverty rate and several other
indicators widely recognized as bearing directly upon the risk of
poverty in any modern urbanized society. (The choice of these two
specific end-years is admittedly and deliberately selective--but it is
a selection that highlights the underlying contradictions discussed
below.)
In the period between 1973 and 2001, for example, per capita income
in the United States rose very significantly in real (inflation-
adjusted) terms: by roughly 60 percent, according to estimates from the
Census Bureau's CPS series. By the same token, the measured rate of
unemployment for persons 16 and older was somewhat lower in 2001 (4.7
percent) than it had been in 1973 (4.9 percent). As for educational
attainment, America's working-age adults clearly had completed more
years of schooling in 2001 than in 1973. In 1973, nearly 40 percent of
U.S. adults 25 or older had no high school degree; by 2001, the
corresponding fraction was under 16 percent.
Then there are the trends in spending by government at the Federal,
state, and local levels on means-tested benefit programs: that is to
say, public antipoverty outlays. Between Fiscal Year 1973 and Fiscal
Year 2001, real spending on such programs more than tripled, leaping
from $153 billion to $484 billion (in constant 2002 dollars). One can
make arguments for excluding the health and medical care component from
the measure of antipoverty program spending; doing the sums, nonhealth
antipoverty spending would still rise in constant 2002 terms from $109
billion in 1973 to $231 billion in 2001, or by 57 percent per
capita.\3\ These data, one must emphasize, account for just the
government's share of anti-poverty programs: Private charitable
donations provide additional resources for meeting the needs of
America's poor, and those resources are considerable. In the year 2001,
total private philanthropic giving was estimated at $239 billion--in
real terms, 156 percent more than in 1973; and in real per capita
terms, an increase of over 90 percent. Although we cannot know the
exact proportion of these private funds earmarked for poverty
alleviation, it seems safe to say that antipoverty spending by both the
public and the private sectors increased very significantly on a real
per capita basis between 1973 and 2001.
---------------------------------------------------------------------------
\3\ Derived from Vee Burke, Cash and Noncash Benefits for Persons
with Limited Income: Eligibility Rules, Recipient and Expenditure Data,
fy2000-fy2002, Congressional Research Service Report rl32233 (November
25, 2003), Table 5, and Statistical Abstract of the United States 2004-
2005, Table 2.
---------------------------------------------------------------------------
Per capita income, unemployment, educational attainment, and anti-
poverty spending are factors that would each be expected to exert
independent and important influence on the prevalence of poverty in a
modern industrialized society--any modern industrialized society. When
trends for all four of these measures move conjointly in the direction
favoring poverty reduction, there would ordinarily be a strong
expectation that the prevalence of measured poverty would decline as
well (so long, of course, as poverty was being measured against an
absolute rather than a relative benchmark). Yet curiously, the official
poverty rate for the United States population was higher for 2001 (11.7
percent) than for 1973 (11.1 percent).
Needless to say, this is a discordant and counterintuitive result
that demands explanation. Further examination, unfortunately, reveals
that the paradoxical relationship between the poverty rate and these
other indicators of material deprivation in Table 1, while perverse, is
not at all anomalous. To the contrary: For the period since 1973, the
U.S. poverty rate has ceased to correspond with these other broad
measures of poverty and progress in any common-sense fashion. Instead,
the poverty rate seems to have become possessed of a strange but deeply
structural capriciousness: For while it continues to maintain a
predictable relationship with these other indicators, the relationship
is by and large precisely the opposite of what one would normally
expect for a poverty indicator.
Clearly, something is badly amiss here. And unless someone can
offer a plausible hypothesis for why U.S. data series on per capita
incomes, unemployment rates, adult educational attainment, and anti-
poverty spending should be collectively flawed and deeply biased for
the post-1973 period, the simplest explanation for these jarring
results would be that the officially measured poverty rate happens to
offer a highly misleading, or even dysfunctional, measure of material
deprivation and has, moreover, been doing so for some considerable
period of time.
A Major Discrepancy
The implicit assumption that a poverty-level household's annually
reported money income will equate to the level of its annual
expenditures represents an additional problem with the official poverty
rate. The original methodology estimated ``poverty thresholds'' to
designate consumption levels consonant with poverty status, and matched
these against annually reported household incomes--but it made no
effort to determine the actual consumption levels of those low-income
households. Instead, it posited an identity between reported money
income and expenditures for these families. To this date, the method by
which the official poverty rate is calculated continues to presume an
identity between measured annual money incomes and annual expenditure
levels for low-income households. Yet this presumption is dubious in
theory, and it is confuted empirically by virtually all available data
on spending patterns for America's poorer strata.
Families and individuals base their household budgets not just on
the fortunes (and uncertainties) of a single year, but instead against
a longer life-course horizon--stabilizing their long-term living
standards (and smoothing their consumption trajectory) against the
vagaries of short-term income fluctuations. Such behavior naturally
suggests that the marginal propensity to consume will tend to be
disproportionately high for lower-income households--and for the
perhaps considerable number of households where expected ``permanent
income'' exceeds current income (i.e., ``transitory income''), current
consumption will likewise exceed current income if financial
arrangements permit.\4\
---------------------------------------------------------------------------
\4\ The concept of transitory income can be traced back at least as
far as Milton Friedman and Simon S. Kuznets, Income from Independent
Professional Practice (National Bureau of Economic Research, 1945),
Chapter 7, where the term itself was perhaps coined. Consumer behavior
theory would suggest that annual incomes would equate to annual
expenditures in the lowest income strata only where those low income
levels were in fact consonant with a household's expectations of its
long-term financial outlook--or where institutional barriers prevented
the household from financing additional near-term consumption.
---------------------------------------------------------------------------
From the standpoint of empirics, U.S. survey data provides evidence
of a major discrepancy between reported annual expenditure levels and
reported annual income levels for poorer households in the United
States--a disproportion that seems to have been widening steadily over
the decades since the official poverty rate was first devised. These
trends are evident from the Consumer Expenditure (CE) Survey, produced
by the Bureau of Labor Statistics (BLS). In 2002, constant expenditures
for the poorest fifth (lowest income quintile) of U.S. households were
77 percent higher than they had been for the poorest fourth (lowest
quartile) in 1960-61; between 1972-73 and 2002, real expenditures for
the lowest quintile of households increased by 57 percent.
It is striking that real levels of household expenditures for the
poorest fifth of U.S. households have risen by over half during a
period in which the official poverty rate should also have risen (from
11.5 percent of the population in 1972-73 to 12.1 percent in 2002)--and
during which, according to the same CE survey data, real incomes for
the poorest fifth of U.S. households reportedly fell. The contradiction
is explained, in proximate terms, by a dramatic increase in the ratio
of expenditures to income for poorer U.S. households. By 1972-73, the
poorest fifth of households were spending nearly 40 percent more than
their annual income--and by 2002 were spending well over double their
reported annual income.
Temporary Poverty
The stark and increasing mismatch between reported annual incomes
and reported annual expenditures for low-income households in
contemporary America may go far in helping to explain why the official
poverty rate--predicated as it is on reported annual money income--
seems so very out of keeping with other data series bearing on the
incidence of material deprivation in modern America. But how is this
widening gap to be explained?
One hypothesis for the growing discrepancy between income levels
and expenditure levels for poorer Americans might be that low-income
Americans are ``overspending''--i.e., going ever deeper into debt. By
the reasoning of this surmise, the apparently widening gap between
income and expenditures reported for poorer Americans, far from being
an artifact, would represent an all-too-genuine phenomenon: an
unsustainable binge that must eventually end, with ominous consequences
for future living standards of the vulnerable and the disadvantaged.
On its face, this hypothesis might seem plausible. In the event,
however, it appears to be confuted by data on the net worth of poorer
American households. If expenditures for lower-income households were
being financed through a steady draw-down of assets or accumulation of
debt, we would expect the net worth of poor Americans to decline
steadily over time in absolute terms. No such trend is evident from the
two government data sources that attempt to estimate the net worth of
poorer Americans: the Census Bureau's Survey of Income and Program
Participation (SIPP) and the Federal Reserve Board's Survey of Consumer
Finance (SCF).\5\
---------------------------------------------------------------------------
\5\ SCF appears to offer more a comprehensive inventory than SIPP
of the various components of household wealth. For a detailed
comparison and evaluation, see John L. Czaijka, Jonathan E. Jacobson,
and Scott Cody, Survey Estimates of Wealth: A Comparative Analysis and
Review of the Survey of Income and Program Participation (Mathematica
Policy Research Inc., August 22, 2003).
---------------------------------------------------------------------------
If the growing statistical discrepancy between incomes and
expenditures for poorer Americans cannot be explained by a growing
indebtedness of lower-income households, how, then, can we account for
it? Three partial explanations come immediately to mind.
Changes in CE survey methods and practices. The growing
mismatch between reported income and reported expenditures for lower-
income households could in part be an artifact of changes in the CE
survey itself.
Income underreporting. A second potential problem,
related to the first, might be a tendency over time toward increased
misreporting of income. As already mentioned, the BLS staff responsible
for the CE surveys carefully note that users should place more
confidence in their expenditure estimates than their income estimates,
especially for the lowest reported income deciles.
Increased year-to-year income variability. The third
possible explanation for a secular rise in the expenditure-to-income
ratio for households in the lowest annual income quintile would be a
long-term increase in year-to-year variations in household income. If
U.S. consumer behavior comports with the ``permanent income''
hypothesis, and if the stochastic year-to-year variability (i.e.,
transitory variance) in American income patterns were to increase, then
we would expect, all other things being equal, that the ratio of
reported annual expenditures to reported annual incomes would increase.
The greater the proportion of ``temporary poor'' in the total
poverty population, the greater the discrepancy between observed income
levels and observed expenditures levels should be within the poverty
population. If poverty is defined in terms of a particular income
threshold, it should be readily apparent that poverty status is not a
fixed, long-term condition for the overwhelming majority of Americans
who are ever designated as poor. Quite the contrary: Since American
society and the U.S. economy are characterized by tremendous and
incessant mobility, long-term poverty status appears to be the lot of
only a tiny minority of the people counted as poor by the official U.S.
measure.
The Census Bureau's longitudinal Survey on Income and Program
Participation (SIPP) documents this central fact. For the calendar year
1999, nearly 20 percent of the noninstitutionalized American population
was estimated to have experienced two or more months in which their
household income fell below the poverty threshold. And at some point
during the four years 1996-1999, fully 34 percent of the surveyed
population spent two months or more below the poverty line. On the
other hand, just 2 percent of the population spent all 48 months of
1996-99 below the poverty line. The long-term poor (or ``permanent
poor''), in other words, accounted for barely one-tenth of those who
passed through officially designated poverty at some point in 1999, and
less than 6 percent of those who were counted as poor at any point
between the start of 1996 and the end of 1999.
As might be expected, the incidence of chronic or long-term poverty
varies according to ethnicity, age, household composition, and
location. Whereas just 1 percent of the non-Hispanic white population
is estimated to have spent all of 1996-99 below the poverty line, the
rate was over 5 percent for both African-Americans and Hispanic-
Americans; long-term poverty rates of over 5 percent also typified
female-headed households and persons living alone. Yet even for the
groups with the highest measured rates of long-term poverty, these
permanent poor accounted for a very small fraction of the ``ever
poor'': Fewer than a sixth of the Hispanics counted as poor at any time
during 1999, for example, had been below the poverty line throughout
1996-99.
Given the high proportion of the temporarily poor within the
overall population of those counted as poor, it should not be
surprising that reported expenditures would exceed reported income
among America's lower-income strata, as they apparently do today.
Clearly more research is warranted here. For now, however, we may
note that the curious divergence between reported income and
expenditure patterns that has been recorded in consumer expenditure
surveys for the period since the early 1970s appears to be matched by a
simultaneous reported rise in proportionate year-to-year variations for
families on the borderline of the bottom income quintile.
Incontestably Better Off
By indexing annual changes in nominal poverty thresholds against
the Consumer Price Index, the official poverty rate for the U.S. is, in
principle, devised to track over time a set of fixed and constant
household income standards for distinguishing the poor from the
nonpoor. The OPR was intended to be an absolute measure--one that would
identify people living in conditions determined by a specific and
unchanging budget constraint.
The notion that the official poverty rate tracks a fixed and
unchanging material condition, however, is contradicted by a wide array
of physical and biometric indicators. These data demonstrate steady and
basically uninterrupted improvements in the material conditions and
consumption levels of Americans in the lowest income strata over the
past four decades.
The poverty rate was intended to designate an income level below
which ``everyday living implied choosing between an adequate diet of
the most economical sort and some other necessity because there was not
money enough to have both.'' In purely material terms, today's American
poverty population is incontestably better off than were the
measurement's original poor back in 1965.
To track the changing material circumstances of America's low-
income population, we will follow trends in four areas: 1) food and
nutrition; 2) housing; 3) transportation; and 4) health and medical
care. From the early 1960s through the beginning of the twenty-first
century, American consumers, poor and nonpoor alike, devoted the great
majority of their personal expenditures to these four categories of
goods and expenditures. Between 1960-61 and 2002, food, housing,
transport, and health/medical care together accounted for about 70
percent of mean U.S. household expenditures, and for about 80 percent
of the expenditures of households in the lowest income quintile. And
while the composition of these allocations by category shifted over
these decades, their total claim within overall expenditures remained
remarkably stable. Let us then examine in turn trends in food and
nutrition, housing, transportation, and health/medical care.
Food and nutrition. In the early 1960s--the years for which the
poverty rate was first devised--undernourishment and hunger were
unmistakably in evidence in the United States. Indeed, self-assessed
food shortage was clear from the expenditure patterns of American
consumers: In the 1960-61 consumer expenditure survey, for example, the
marginal propensity of consumers to spend income on food rose between
the lowest and the next lowest income groupings. This poorest grouping
of Americans--accounting for about 1 percent of the households
surveyed--defined a grouping for which foodstuffs were ``luxury
goods.''
For purely biological reasons, a society's most nutritionally
vulnerable groups are typically infants and children. Anthropometric
and biometric data suggest that nutritional risks to American children
have declined almost continuously over the past three decades. Even for
low-income children--i.e., those who qualified for means-tested public
health benefits--those nutritional risks look to have been declining
progressively. According to the National Pediatric Surveillance System
of the CDC, for example, the percentage of low-income children under
five years of age who were categorized as underweight (in terms of BMI
for age) dropped from 8 in 1973 to 5 in 2003. Similarly, the proportion
of medically examined low-income children who presented height-for-age
below the expected fifth percentile level on pediatric growth charts
declined from 9 percent in 1975 to 6 percent in 2003. Blood work for
these same children suggested a gradually declining risk of anemia, to
judge by the drop in the proportion identified as having a low
hemoglobin count.
Housing and home appliances. Statistical information on U.S.
housing conditions and home appurtenances are available today from
three main sources: 1) the decennial census of population and housing;
2) the Census Bureau's American Housing Survey (AHS), conducted in 1984
and every few years thereafter; and 3) the Department of Energy's
Residential Energy Consumption Survey (RECS), initially conducted in
1978 and currently re-collected every four years. Since 1970, the
decennial census has cross-classified household housing conditions by
official poverty status; AHS and RECS also track poverty status and its
correlates in their surveys.
In terms of simple floor-space, the homes of the officially poor
were more spacious at the dawn of the new century than they had been
three decades earlier. In 1970, almost 27 percent of poverty-level
households were officially considered overcrowded (the criterion being
an average of over one person per room). By 2001, according to the AHS,
just 6 percent of poor households were ``overcrowded''--a lower
proportion than for nonpoor households as recently as 1970. Between
1980 and 2001, moreover, per capita heated floor-space in the homes of
the officially poor appears to have increased substantially--to go by
official data, by as much as 27 percent or perhaps even more.\6\ By
2001, the fraction of poverty-level households lacking some plumbing
facilities was reportedly down to 2.6 percent--a lower share than for
nonpoor households in 1970.
---------------------------------------------------------------------------
\6\ RECS 2001 (upon whose figures the calculation above was based)
places the mean heated floor space per poverty household at 472 per
person; the ahs 2001, for its part, indicates a median value of 739
square feet per person for poverty households, although this total
appears to include both heated and unheated floor space and pertains
only to the 55 percent of poverty-level households in single, detached
and/or mobile/manufactured homes. (American Housing Survey 2001, Table
2-3.)
---------------------------------------------------------------------------
Trends in furnishings and appurtenances for American households
similarly record the steady spread of desirable consumer appliances to
poor and nonpoor households alike. From 1970 to the present, poorer
households' access to or possession of modern conveniences has been
unmistakably increasing. For many of these items--including telephones,
television sets, central air conditioning, and microwave ovens--
prevalence in poverty-level households as of 2001 exceed availability
in the typical U.S. household as of 1980, or in nonpoor households as
of 1970. By the same token, the proportion of households lacking air-
conditioning was lower among the officially poor in 2001 than among the
general public in 1980. By 2001, over half of all poverty-level
households had cable television and two or more television sets.
Moreover, by 2001 one in four officially poor households had a personal
computer, one in six had Internet access, and three out of four had at
least one VCR or DVD--devices unavailable even to the affluent a
generation earlier.
These data cannot tell us much about the quality of either the
housing spaces that poverty level households inhabit or the
appurtenances furnished therein. They say nothing, furthermore, about
nonphysical factors that bear directly on the quality of life in such
housing units--most obvious among these being crime. These data,
however, strongly support the proposition that physical housing
conditions are gradually improving not only for the rest of America,
but for the officially poor as well. In any given year, a gap in
physical housing conditions separates the officially poor from the
nonpoor--but the data for today's poor appear similar to those for the
nonpoor a few decades earlier.
Transportation. At the time of the 1972-73 consumer expenditure
survey, almost three-fifths of the households in the lowest income
quintile had no car. Since the official poverty rate for families in
those years was only about 10 percent, we may suppose that the
proportion of poverty-level households without motor vehicles at that
time was somewhat higher. By 2003, however, over three-fifths of U.S.
poverty-level households had one car or more--and nearly three of four
had some sort of motor vehicle. (The distinction is pertinent, owing to
the popularity and proliferation of SUVs, light trucks, and other motor
vehicles classified other than as cars from the late 1970s onward.)
By 2003, quite a few poverty-level households had multiple motor
vehicles: Fourteen percent had two or more cars, and 7 percent had two
or more trucks. In 2003, to be sure, vehicle ownership was more limited
among the officially poor than among the general public; for the
country as a whole, fewer than 9 percent of households reported being
without any motor transport whatever. The increase in motor vehicle
ownership among officially poor households has followed the general
rise for the American public--albeit with a very considerable lag. As
of 2003, auto ownership rates for poverty-level households mirrored
ownership rates for U.S. families in general in the early 1950s; for
all forms of motor transport, U.S. poverty households' ownership levels
in 2003 matched overall U.S. families' auto ownership levels from the
early 1960s; and poverty households' ownership levels for two or more
motor vehicles paralleled that of the general U.S. public in the late
1950s or early 1960s.
Health and medical care. NCHS data can be used to illuminate two
separate aspects of health status and medical care in modern America:
outcomes and service utilization. The most critical datum for health
status is arguably mortality: All other health indicators are
subsidiary to survival. For babies and infants, the single most
important measure of health status is surely the infant mortality rate.
Between 1970 and 2002, the infant mortality rate in the United States
fell by nearly two-thirds, from 20 per 1,000 live births to 7 per
thousand. The infant mortality rate continued its almost uninterrupted
annual declines after 1973, when officially measured poverty rates for
U.S. children began to rise. The contradistinction is particularly
striking for white babies. Between 1974 and 2001, their infant
mortality rates fell by three-fifths, from 14.8 per 1,000 to 5.8 per
1,000; yet over those same years, the official poverty rate for white
children rose from 11.2 percent to 13.4 percent. (See Figure 2.)
These survival gains were achieved not only in the face of
purportedly worsening poverty status, but also despite unfavorable
trends in biological risk. In 2001, the proportion of white babies born
at high-risk ``low birth weight'' (below 2,500 grams) was actually
somewhat higher than in 1974. Yet despite these troubling trends in
low-birth-weight disposition, infant mortality rates improved
dramatically. Since the inherent biological disparities in mortality
risk between low-birth-weight and non-low-birth-weight newborns did not
diminish over this period, the reasonable inference might be that
medical and health care interventions--changes in the quality and
availability of services--accounted for most of the difference. And
since low-birth-weight infants are disproportionately born to mothers
from disadvantaged socioeconomic backgrounds, a further reasonable
inference is that these improvements in quality and availability of
medical care extended to America's poorer strata, not just the well-to-
do.
Trends in utilization of health care for the poor are further
illustrated by the circumstances of children under 18--more
particularly by the proportion reporting no medical visits over the
year preceding their health interview survey. While the percentage of
children without an annual medical visit is always higher among the
poor than among the nonpoor, steady declines are reported for both
groups--and the declines were substantial. The proportion of children
without a reported annual medical visit, in fact, was significantly
lower for the poverty population in 2002 (12.1 percent) than it had
been for the nonpoverty population 20 years earlier (17.6 percent).
This cannot address the question of preexisting health needs--it could
be that pediatric medical problems were on the rise during this period.
These data thus do not conclusively demonstrate that ``access'' or
``availability'' of health and medical care have been improving. But
they are strongly suggestive of this possibility--all the more so in
conjunction with the salutary trends in health status outcomes.
To summarize the evidence from physical and biometric indicators:
Low-income and poverty-level households today are better-fed and less
threatened by undernourishment than they were a generation ago. Their
homes are larger, better equipped with plumbing and kitchen facilities,
and more capaciously furnished with modern conveniences. They are much
more likely to own a car (or a light truck, or another type of motor
vehicle) now than 30 years earlier. By most every indicator apart from
obesity, their health care status is considerably more favorable today
than at the start of the War on Poverty. Their utilization of health
and medical services has steadily increased over recent decades. The
official poverty rate is incapable of representing what it was devised
to portray: namely, a constant level of absolute need in American
society. The biases and flaws in the poverty rate are so severe that it
has depicted a great period of general improvements in living
standards--three decades from 1973 onward--as a time of increasing
prevalence of absolute poverty.
To state this much is not to assert that material progress for
America's poverty population has been satisfactory, much less optimal.
Nor is it to deny the importance of relative as opposed to absolute
deprivation in the phenomenon of poverty as the poor themselves
experience it. In some quarters, criticism of the various shortcomings
of America's official poverty rate will be taken as evidence of
indifference to the plight of America's disadvantaged and poor. Such an
inference is illogical at best. Proponents of more effective
antipoverty policies should be in the very front ranks of those
advocating more accurate information on America's poverty problem.
Without such information, effective policy action will be impeded;
under the influence of misleading information, policies will be
needlessly costly--and ineffective.
As we have seen, the U.S. federal poverty measure is premised on
the assumption that official poverty thresholds provide an absolute
poverty standard--a fixed inter-temporal resource constraint. Such a
standard should mean that general material conditions for the poverty
population should remain more or less invariant over time. Yet quite
clearly, the material condition of the poverty population in modern
America has not been invariant over time--it has been steadily
improving. The OPR thus fails--one is tempted to say that it fails
spectacularly--to measure what it purports to be tracking over time. As
an indicator of a condition originally defined in 1965, the official
poverty rate seems to have become an ever less faithful and reliable
measure with each passing year. The task of devising a better
statistical lodestar for our Nation's antipoverty efforts is by now far
overdue. Properly pursued, it is an initiative that would rightly tax
both our formidable government statistical apparatus and our finest
specialists in the relevant disciplines. But such exertions would also
stand to benefit the common weal in as yet incalculable ways.
Statement of Legal Momentum, New York, New York
We appreciate the opportunity to submit this statement on behalf of
Legal Momentum, the Nation's oldest women's legal rights organization,
for the Committee's hearing on the important topic of the Economic and
Societal Costs of Poverty. Poverty is one of the main causes of family
hardship. A 2001 study by the Economic Policy Institute found that
about 30% of those below the poverty line experienced critical
hardship, defined as being evicted, having utilities disconnected,
doubling up in others' housing due to lack of funds, or not having
enough food to eat; and that an additional 30% to 45% experienced other
serious hardships.\1\ Compared with families whose income is above 200%
of the Federal poverty level, families whose income is less than 200%
of poverty are more than six times as likely to not have enough food to
eat (12.6% vs. 1.6%); more than five times as likely to miss meals
(17.5% vs. 3.4%); eleven times more likely to be evicted (1.1% vs.
.1%); 50% more likely to skip necessary medical care (12.7% vs. 8.0%);
seven times as likely to have their utilities disconnected (4.1% vs.
0.6%); and three times as likely to have their telephone disconnected
(10.4% vs. 3%).\2\
---------------------------------------------------------------------------
\1\ Boushey & Gunderson, When Work Just Isn't Enough, Economic
Policy Institute Briefing Paper (Washington D.C.: Economic Policy
Institute 2001), available at http://www.epinet.org/briefingpapers/
hardshipsbp.pdf.
\2\ Boushey et. al, Hardships in America, (Washington D.C.:
Economic Policy Institute 2001), available at http://www.epinet.org/
books/hardships.pdf.
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The Children's Defense Fund has estimated that child poverty will
cost our society over $130 billion in future economic output as poor
children grow up to be less productive and effective workers.\3\
Poverty damages children in ways that harm their own and the Nation's
future. Poor children experience increased risk of stunted growth and
anemia, more often have to repeat years of schooling, have lower test
scores and drop out more often. As adults, they earn less and are
unemployed more.\4\
---------------------------------------------------------------------------
\3\ Arloc Sherman, Poverty Matters: The Cost of Child Poverty in
America, (Washington D.C.: Children's Defense Fund 1997), available at
http://www.childrensdefense.org/fairstart-povmat.htm.
\4\ Id.
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Women bear a disproportionate share of the cost of poverty. There
has been a large gender poverty gap in every year since the official
poverty standard was created in the 1960's. In 2005 women were 45% more
likely to be poor than men. As set out in the table we have compiled
from the detailed poverty statistics on the Census Bureau Web site, the
poverty gap persists even when factors such as age, work experience,
education, or family structure are taken into account: aged women are
much more likely to be poor than aged men; women who work outside the
home are much more likely to be poor than men who work outside the
home; single mothers are much more likely to be poor than single
fathers; at every educational level, women are much more likely to be
poor than men with the equivalent education.
----------------------------------------------------------------------------------------------------------------
Poverty Rates for Adult Women and Men in 2005
-----------------------------------------------------------------------------------------------------------------
Increased incidence of
Women Men poverty among women compared
to men
----------------------------------------------------------------------------------------------------------------
All adults (18 or above)................................. 12.9 8.9 45%
Age 65 or above.......................................... 12.3 7.3 67%
Single parents........................................... 36.2 17.6 106%
Worked................................................... 7.0 5.1 39%
High School only......................................... 14.3 9.4 52%
College less than 4 yrs.................................. 10.2 7.0 44%
College 4 yr degree...................................... 4.5 3.6 24%
----------------------------------------------------------------------------------------------------------------
Poverty rates and the gender poverty gap are much higher in the
United States than in other rich countries. One study found that the
United States had the highest poverty rate for female-headed households
among the 22 countries studied, 30.9% compared to the 10.5% average for
the group.\5\ The exceptionally high poverty rate for single mothers in
the United States is not the result of below average work effort. In a
study of single mothers' employment rates (full or part time) in eight
rich countries in the mid-1990's, the 69% rate in the United States was
the highest rate and was twenty percentage points higher than the 49%
average in the other seven countries (United Kingdom, Australia,
Netherlands, Germany, Norway, Finland, Denmark).\6\ In a study
reporting on average annual hours worked by poor single parents around
2000, the 1,087 average hours of work for poor single parents in the
United States was the highest total, and almost twice the 582 average
in the other six countries (Canada, Netherlands, Austria, Germany,
Belgium, Ireland).\7\
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\5\ Pressman, Explaining the Gender Poverty Gap in Developed and
Transitional Economies, Luxembourg Income Study Working Paper No. 243
(Sept. 2000), available at http://www.lisproject.org/publications/
liswps/243.pdf. This study defined poverty as an income less than 50%
of the median income and was based on national income surveys conducted
in the early 1990's.
\6\ Mia Hakovirta, The Income Sources Of Single Parents: A
Comparative Analysis, Luxembourg Income Study Working Paper No. 282
(Nov. 2001), available at http://www.lisproject.org/
publications/liswps/282.pdf.
\7\ Timothy Smeeding, Poor People in Rich Nations: The United
States in Comparative Perspective, Luxembourg Income Study Working
Paper No. 419 (Oct. 2005), available at http://www.lisproject.org/
publications/liswps/419.pdf.
---------------------------------------------------------------------------
One reason for the exceptionally high poverty rates in the United
States is that we invest less in social welfare programs: in 2000 the
United States spent less than 3% of Gross Domestic Product on social
assistance to the non-elderly, and this was less than half the spending
by Canada and Great Britain; less than a third of the spending by
Germany, the Netherlands, and Belgium; and less than a fourth of the
spending by Finland and Sweden.\8\ We have much less generous parental
leave than other rich countries and far less public support for child
care,\9\ and we have allowed our minimum wage to decline to such a low
level that even year round full time work does not guarantee an above
poverty income.\10\
---------------------------------------------------------------------------
\8\ Timothy Smeeding, Public Policy and Economic Inequality: The
United States in Comparative Perspective, Luxembourg Income Study
Working Paper No. 367 (Feb. 2005), available at http://
www.lisproject.org/publications/liswps/367.pdf.
\9\ Jane Waldfogel, ``What Other Nations Do: International Policies
Toward Parental Leave and
Child Care,'' The Future of Children 11(4): 99-111 (2001), available at
http://www.futureofchildren.org/information2826/
information_show.htm?doc_id=79378
\10\ Legal Momentum, Working Women & Increasing Minimum Wage: A
Down Payment on the Future of America's Families, (2007), available at
http://legalmomentum.org/legalmomentum/2007/01/
working_women_increasing_minim_1.php.
---------------------------------------------------------------------------
Our Nation needs to take steps to reduce poverty and the gender
poverty gap. We must find fiscally responsible ways to broaden the
scope of our social welfare programs, including expanding parental
leave and enacting paid leave legislation, increasing governmental and
public support for child care, raising the minimum wage and indexing it
for inflation, and of course continuing to combat sex and race
discrimination.
Statement of Theo MacGregor and Jerrold Oppenheim
Investing in the eradication of poverty in America could increase
the resources of American households by an average of more than $18,000
a year, equivalent to a wage increase of more than 30 percent.
Investments in the eradication of poverty would:
substantially reduce losses due to crime, a large
fraction of which is caused by poverty;
increase incomes to people now unemployed or
underemployed, which would result in new expenditures (including income
and sales taxes) circulating through the economy and becoming income to
others;
reduce the cost of health care, including the cost we all
share of taking care of people who cannot afford health insurance or
medicines;
virtually eliminate the need for societal supports to
ameliorate the most extreme manifestations of poverty.
A study conducted by the authors for Entergy Corporation found
that, in the wealthiest country on Earth, more than 30 million
households try to live on $26,640 or less (60% of current median
income), while the rest live on incomes averaging more than $60,000. In
order to make it to that $26,640 income level, a family would need two
adults working full time at 1\1/2\ times the minimum wage. The average
service job pays only twice the minimum wage, so there are many who
earn less than that. Those folks, although working, are unable to
afford the basics of food, shelter and medicine. And the buying power
of the minimum wage is at its lowest in 50 years. For the poor, there
is not enough income to heat and/or cool their homes, feed their
children, and afford medical care. This discrepancy in incomes, as well
as poverty itself, leads to real and growing costs.
What makes poverty expensive to the rest of us is not social
supports but rather its large but indirect costs, especially in health
care, crime, and lost productivity. Indeed--middle-income supports--
such as Medicare, social security, and income tax breaks--cost the
average family about four times as much as do low-income supports such
as homeless shelters and food. Eliminating the indirect costs of
poverty in the simplest way--directly raising incomes to a low but
decent level (60% of current median income)--would cost $12,047 per
low-income household, or $397.2 billion per year, but would return
almost four times the investment. In other words, the annual cost of
eliminating poverty would be no more than about a quarter of the annual
savings for the average non-low-income family. These calculations are
conservative and leave out many benefits of eradicating poverty, such
as the savings of increased preventive health care and the productivity
lost due to underemployment (employment below skill level).
How do people cope with skyrocketing prices and incomes that are
not keeping pace? American low-income households are the best money-
managers there are. But that is not enough. A study by the National
Bureau of Economic Research shows that, in extreme weather, low-income
families actually eat less--about ten percent less. Other studies show
that another strategy is to skip needed medicines or forego medical
care.\1\
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\1\ We appreciate the opportunity to provide this information to
the Committee. For further information, see the attached full report:
``The Economics of Poverty: Benefits to All
Americans from Investments to Eliminate Poverty'' or go to our Web
site: www.DemocracyAndRegulation.com. We can also be reached by
telephone: 1-978-283-0897 (office), or 1-978-335-6748 (mobile).
---------------------------------------------------------------------------
We do not, however, propose simply raising incomes because, as we
will explain, we think more targeted investments will have even larger
payoffs.
Health Care. For example, increasing health care coverage. Studies
show that the health of individuals in society is strongly and
inversely correlated with inequality of income. The U.S. is the
wealthiest nation on earth--ever--but people live longer in Sweden and
Norway, where incomes are more equal. Japan, which has the longest life
expectancy in the world, also has among the narrowest of income
distributions.\2\ People lower down the income scale in rich, developed
countries have death rates two to four times higher than those nearer
the top of the scale; and the greater the extremes between wealth and
poverty, the greater the health differences.\3\ Economic equality is
thus more important to health than wealth is.
---------------------------------------------------------------------------
\2\ Blane, Brunner and Wilkinson, Health and Social Organization,
pp. 60-61, Routledge, London and New York (1996).
\3\ Richard G. Wilkinson, Unhealthy Societies: The Afflictions of
Inequality, p. 54-56, 76, Routledge, London and New York (1996).
---------------------------------------------------------------------------
Poverty carries with it a much higher risk of illness. The Census
Bureau recently reported that 47 million Americans have no health
insurance at all, and as our study shows, the number with only partial
insurance is about double that. Even the Census Bureau figure is almost
16 percent--a fraction that has been steady or rising steadily in every
year but two of the last 18. Poor uninsured individuals often defer
seeking out care when they are ill. As a result, their illness
progresses and can become needlessly severe. They then require more
expensive care, often through the emergency room or hospitalization.\4\
An estimate from the National Academy of Sciences puts the number who
die each year because they lack health insurance at 18,000.\5\ More
than half of the bankruptcies in the U.S. are now due to medical
expenses, even though a large majority (75.7 percent) had insurance at
the onset of the illness that contributed to the bankruptcy.\6\
---------------------------------------------------------------------------
\4\ Whitney W. Addington, ``No Health Insurance? It's Enough to
Make You Sick--Scientific Research Linking the Lack of Health Coverage
to Poor Health,'' ACP Online, http://www.acponline.org/uninsured/lack-
fore.htm.
\5\ Joan Gralla, ``U.S. Uninsured Health Care Cost Put at $125
Billion,'' Common Dreams News Center, (Reuters, May 11, 2004).
\6\ Himmelstein, et al., ``MarketWatch: Illness and Injury As
Contributors to Bankruptcy,'' Health Affairs (Feb. 2, 2005).
---------------------------------------------------------------------------
Medicaid served 38 million people in 2005,\7\ yet ``more than eight
in ten low-income, uninsured adults do not qualify for Medicaid or
other public health coverage because their incomes are too high . . .
.In 42 states, unless they are severely disabled, they are ineligible
for Medicaid regardless of their income.'' \8\ In addition, most of the
care provided through the Medicaid program goes to low-income elderly
or seriously disabled people who are also covered under Medicare. Only
30 percent of Medicaid costs go to cover low-income children and
pregnant women.\9\
---------------------------------------------------------------------------
\7\ Michelle Chen, ``Poor `Share' More Costs Under Medicaid `Cost
Sharing' Initiatives,'' The New Standard, (June 3, 2005).
\8\ ``Working without a Net: The Health Care Safety Net Still
Leaves Millions of Low-Income Workers Uninsured,'' (Families USA, April
2004). Other public health services include the State Children's Health
Assistance Program and local health clinics.
\9\ ``Future Medicaid Growth is not Due to Flaws in the Program's
Design, but to Demographic Trends and General Increases in Health Care
Costs,'' (Center on Budget and Policy Priorities, Feb. 4, 2005).
---------------------------------------------------------------------------
In addition to all of the uninsured Americans, many more are
``underinsured.'' Nearly two million people under 65 spent more than 10
percent of their pre-tax income on health care.\10\ A Kaiser Commission
study found that uninsured hospital services alone would cost $41
billion.\11\ The same study estimated total costs to be spent on health
care for the uninsured came to $125 billion.\12\ Investing in adequate
health care coverage for all Americans would eliminate these costs to
society.
---------------------------------------------------------------------------
\10\ ``PHC4 FYI--Uninsured Stats Continue to Climb,'' citing
Kathleen Stoll, Director of Health Policy Analysis for Families USA,
(Pennsylvania Health care Cost Containment Council, April 2005), http:/
www.phc4.org/reports/fyi29.htm
\11\ ``PHC4 FYI--Uninsured Stats Continue to Climb,'' (Pennsylvania
Health care Cost Containment Council, April 2005), http:/www.phc4.org/
reports/fyi29.htm; May 2004 report projecting 2005.
\12\ Joan Gralla, ``U.S. Uninsured Health Care Cost Put at $125
Billion,'' Common Dreams News Center, (Reuters, May 11, 2004).
---------------------------------------------------------------------------
Education. ``Poverty prevention is more dependent on education than
on any other factor, as is escape from poverty.'' \13\ Education is the
primary means by which people can lift themselves out of poverty, yet
the amount spent on education targeting low-income children falls far
short of the need. Educating all of our people so that people can take
jobs at higher skill levels would increase the money circulating
throughout our economy. ``The achievement gap between poor and non-poor
children is well-documented. Low-income children consistently fall
behind their peers in test scores, graduation rates, college
enrollment, and other measures of academic success.'' \14\ Head Start
has enrolled over 20,000,000 low-income children since its inception as
a summer program in 1965.\15\ Long-term follow-up studies on a number
of these children have shown that Head Start participants achieve
greater school success and avoid crime as they grow.\16\
---------------------------------------------------------------------------
\13\ S. Levitan et al., Programs in aid of the Poor, p. 274 (Johns
Hopkins Press, 8th ed., 2003).
\14\ Kevin Carey, ``Education Funding and Low-Income Children: A
Review of Current Research,'' Center on Budget and Policy Priorities
(Nov. 5, 2002).
\15\ Joan E. Ohl, ``Head Start: Building on the Pillars of our
Success'' presented at the National Head Start Association Conference,
May 28, 2003.
\16\ Oden, et al., ``Into Adulthood: A Study of the Effects of Head
Start'' (High/Scope Educational Research Foundation, 2005).
---------------------------------------------------------------------------
In an earlier study for Entergy, Oppenheim and MacGregor found that
educating low-income children when they are very young returns about $9
for every dollar spent. Benefits include children staying in school
through high school, developing a work ethic, and getting and keeping
better jobs, with the commensurate rise in pay and associated income
taxes, along with the multiplier effect of putting more money in the
economy.\17\
---------------------------------------------------------------------------
\17\ J. Oppenheim and T. MacGregor, ``The Economics of Education:
Public Benefits of High-Quality Preschool Education for Low-Income
Children'' (Entergy Corp., n.d. [2002]).
---------------------------------------------------------------------------
Employment. Unemployment is devastating for the family depending on
a breadwinner to pay the rent and put food on the table.
Underemployment is also difficult for families in today's economy,
where two full-time salaries at one-and-a-half times the minimum
wage\18\ just make it to the poverty cut-off of 60 percent of median
income.\19\ Almost half of the prisoners in the U.S. are unemployed
when they're arrested, and 70% are functionally illiterate. After
release from prison, they face a wage penalty of as much as 12% for
longer than 8 years. So the cycle continues: low wages, low self-
esteem, more crime. The cost of our judicial, correctional, and
security systems could be substantially reduced by removing the
desperation of unemployment that causes a substantial fraction of
crime.
---------------------------------------------------------------------------
\18\ Minimum wage is $5.15 per hour. Average hours worked for a
service worker is 32.4 hours a week or 1684.8 hours per year. Bureau of
Labor Statistics. The total income would be $26,030.
\19\ $26,640 in 2004. U.S. Census.
---------------------------------------------------------------------------
Unemployment and underemployment push families into poverty.
Families falling into poverty are costly to the Nation because of the
increased costs they cause of crime, health care, and social services.
Thus, as difficult as unemployment and underemployment are for the
families that experience them, unemployment and underemployment are
costly drags on the economy that affect everyone. Some of the costs
that could be avoided by reducing unemployment and underemployment are
taxpayer-financed social supports such as unemployment compensation,
job training, and retraining. In addition, unemployed and underemployed
persons pay less in taxes than if they were fully employed. They also
spend less on job-producing goods and services--the so-called
multiplier effect.
Crime. In societies where inequality of income prevails, violence
is more prevalent than in more equal societies, and the poor are more
likely to commit crimes than the wealthy. During the past 25 years, the
population of people convicted of criminal activity in the U.S. rose
from 1.8 million to 6.3 million--with over two million in prison and
another four million on probation, the highest per capita incarceration
rate in the world.\20\ With more money from full employment at decent
wages, people are less likely to commit crimes, saving society costs of
the judicial system, police, corrections facilities, and security
systems. Added to these costs are the enormous costs to victims, both
persons and businesses.
---------------------------------------------------------------------------
\20\ David Mericle, ``Profiting from Poverty: The U.S. Prison-
Industrial Complex,'' Http://www.impactpress.com/aticles/febmar01/
prisonind020301/html.
---------------------------------------------------------------------------
The total net burden of crime in the United States is estimated to
be $1 trillion annually, or $4,118 for every U.S. resident.\21\
According to The National Center for Victims of Crime, in 2002, crime
was estimated to create $105 billion in medical expenses, lost
earnings, and costs for victim services. Including intangible costs,
such as pain and suffering and a reduced quality of life, brought the
estimated cost of crime to victims to $450 billion annually.\22\ The
costs to society of incarcerating criminals are almost as staggering.
Recent estimates put the cost at $38 billion annually.\23\ The costs of
police and the judicial system at the Federal, state and local levels
add another $110 billion.\24\ The vast majority of prisoners are poor,
but even attributing only 50 percent of crime to poverty and its
effects results in a cost to society from crime committed by poor
people of nearly $661 billion a year. Saving one child from a life of
crime can save society around $2 million. Providing full employment at
a living wage, with health and other benefits, can reduce crime and
save society an estimated $661 annually.
---------------------------------------------------------------------------
\21\ http://www.ncpa.org/pi/crime/pd041100e.html, citing David A.
Anderson, ``The Aggregate Burden of Crime,'' Journal of Law and
Economics (October 1999).
\22\ http://www.ncvc.org/ncvc/
main.aspx?dbName=DocumentViewer&DocumentID=38710, citing Miller et al.
(1996). Victim Costs and Consequences: A New Look. Washington, DC:
National Institute of Justice, U.S. Department of Justice. Online:
http://www.ncjrs.org/pdffiles/victcost.pdf.
\23\ http://www.ncvc.org/ncvc/
main.aspx?dbName=DocumentViewer&DocumentID=38710.
\24\ www.ojp.usdoj.gov/bjs/glance/tables/exptyptab.htm.
---------------------------------------------------------------------------
Housing. Homelessness exploded in the 1980s. Yet current federal
spending on housing assistance programs targeted at low-income
populations is less than 50 percent of 1976 spending levels.\25\ More
than 3.5 million Americans are affected by homelessness for at least
part of the year each year. On any given day, at least 840,000 people
in the United States are homeless--nearly 40 percent of them children.
Over 40 percent of homeless persons are eligible for disability
benefits, but only 11 percent actually receive them. Most are eligible
for food stamps, but only 37 percent receive them. Most homeless
families are eligible for welfare benefits, but only 52 percent receive
them.\26\
---------------------------------------------------------------------------
\25\ ``Overview of Homelessness In America'' National Student
Campaign Against Hunger and Homelessness, http://
www.studentsagainsthunger.org/hunger.
\26\ Jay Shaft, ``U.S. Homelessness and Poverty Rates Skyrocket,''
(Information Clearing House, July 7, 2003), http://
www.informationclearinghouse.info/article4305.htm.
---------------------------------------------------------------------------
More than one in eight households pay more than 50 percent of their
income for housing, and another 2.5 million live in over-crowded or
severely inadequate housing.\27\ These factors contribute to
interrupted educations, lack of adequate health care, persistent
hunger, and higher crime rates. Children living with families that are
homeless attend school less frequently, score lower on standardized
tests, are less likely to graduate from high school and become
productive members of society.\28\
---------------------------------------------------------------------------
\27\ ``The State of the Nation's Housing'' (Harvard University
Joint Center for Housing, June 13, 2005) http://www.jchs.harvard.edu/
media/son2005_fact_sheet.pdf.
\28\ ``A Plan, Not a Dream: How to End Homelessness in Ten Years,''
citing research by Dr. Yvonne Rafferty of Pace University (National
Alliance to End Homelessness, 2000), http://www.endhomelessness.org/
pub/tenyear/cost.htm.
---------------------------------------------------------------------------
Homelessness can both cause and result from serious health care
issues. Homelessness can exacerbate drug and alcohol addictions. Other
major causes of homelessness are unemployment or underemployment; high
housing costs, including rising utility bills; domestic abuse; mental
illness and substance abuse, with lack of treatment services; cuts in
public assistance; and the general state of the economy. The study
calculates the costs of homeless shelters, public housing, and public
subsidies to private housing (including tax expenditures) at $69.1
billion.
Hunger. In addition to being homeless, too many Americans are
hungry. An estimated 14 million American children live in homes where
there is not enough food.\29\ Bread for the World reported that 35
percent of Americans had to choose between food and rent, while 28
percent had to choose between medical care and food, in the first half
of 2004.\30\ Other studies show that money devoted to food by families
is typically the first to be sacrificed. Families will often pay their
fixed payments first, such as rent and utilities, rather than pay for
food.\31\ The direct cost to other Americans to provide food for hungry
people includes: food grants from non-governmental food pantries ($2.3
billion); the Federal Women, Infants and Children (WIC) program ($5.2
billion); Food Stamps ($27.2 billion in 2004); school and other child
nutrition programs ($11.9 billion); and other food assistance ($300
million), for a conservative $46.9 billion.
---------------------------------------------------------------------------
\29\ ``Hunger, Poverty and Nutrition Policy: Childhood Hunger,
Childhood Obesity'' (Tufts University 1995-2005), http://
nutrition.tufts.edu/consumer/hunger/hunger_and_obesity.html.
\30\ ``Overview of Hunger In America'' National Student Campaign
Against Hunger and Homelessness, http://www.studentsagainsthunger.org/
hunger.
\31\ Id.
---------------------------------------------------------------------------
Energy. Poor people cannot afford the full cost of heating and
lighting their homes. Utilities, governments, and social service
agencies have long assisted low-income ratepayers in paying their bills
through such programs as the Low-Income Home Energy Assistance Program
(LIHEAP), charitable fuel funds, levelized billing, discounts, home
weatherization, energy efficiency, energy usage education, and
arrearage forgiveness/debt management. Nevertheless, utility bad debt
costs around $1 billion annually.\32\ American utilities, through their
ratepayers, paid an average of $3 per customer to collect bad debt and,
in some cases, the cost was as high as $10.\33\ If all Americans lived
in weatherized and energy efficient homes, and had the income to pay
their full share of utility bills, all other ratepayers would save
nearly $6 billion in poverty costs, including fuel assistance, lifeline
and other rate assistance; weatherization and efficiency costs; and the
costs of late and unmade payments, such as service disconnections.\34\
---------------------------------------------------------------------------
\32\ Industry Solutions, The CBE Group, http://www.cbegroup.com/
industry/utilities.aspx.
\33\ ``Utility Collections Best Practice: Theory Into Practice''
(Peace Software White Paper, May 2005). http://www.peace.com/industry-
watch/whitepapers/Peace-Collections-Best-Practice.pdf This paper also
states that total utility bad debt written off in the U.S. each year is
as high as $1.7 billion. This study used the more conservative $1
billion.
\34\ LIHEAP Clearinghouse, National Energy Assistance Directors'
Association (NEADA), National Center for Appropriate Technology (NCAT),
National Community Action Foundation (NCAF).
---------------------------------------------------------------------------
Other Social Services. Some additional anti-poverty programs and
initiatives for which the average non-low-income household contributes,
and which are not detailed above but are included in the total estimate
of the cost of poverty, include the following:
Legal Services and other civil legal aid--$573 million;
Transitional Aid to Needy Families (TANF)--$27.5 billion,
federal and states combined;
Supplemental Security Income (SSI)--$42.6 billion;
Earned Income Tax Credit (EITC)--$36.7 billion;
Services to low-income seniors--$1.830 billion;
Other social services--$2.673 billion;
Community Services Block Grants--$636.8 million; and
Community Development Block Grants--$4.116 billion.\35\
---------------------------------------------------------------------------
\35\ Legal Services Corp. fy2005 appropriation; ``Documenting the
Justice Gap in America'' Legal Services. Corp, Sept. 2005; Tax Policy
Center--Urban Institute and Brookings Inst. Joint venture from OMB;
http://www.whitehouse.gov/omb/budget/fy2006/treasury.html; U.S. Dept.
of Health and Human Services--Office of Family Assistance; Center on
Budget and Policy Priorities; http://www.ssa.gov/policy/docs/statcomps/
ssi_monthly/2005-11/table01.html; National Center for Appropriate
Technology (NCAT).
---------------------------------------------------------------------------
INVESTMENT NEEDED TO ELIMINATE POVERTY
The maximum investment needed to eradicate poverty in the United
States is an amount that would raise the income of every low-income
household to the minimum income required to be a non-low-income
household. As explained above, there are investments that are more
effective, as well as more cost-effective, than cash transfers to
eradicate poverty--such as education, job training, nutrition, housing,
and health care.\36\ But even paying people directly to eradicate
poverty is considerably less than the annual benefit that it would
achieve by reducing the costs of crime, health care, unemployment and
underemployment, and transfers and other current investments in low-
income families.
---------------------------------------------------------------------------
\36\ S. Levitan et al., Programs in aid of the Poor at pp. 43, 262
et seq. (Johns Hopkins Press, 8th ed., 2003).
---------------------------------------------------------------------------
Such investment would not even come close to raising incomes to the
self-sufficiency income standard.\37\ These are very detailed
calculations, usually done on a county-by-county, state-by-state basis
that take into account actual expenditures necessary to live a basic
life in various family configurations. Bare bones budgets for a working
family are calculated to include housing, child care, food,
transportation, health care, clothing, household items, and taxes--no
recreation, entertainment, or savings.\38\ In particularly costly
locales, such as along the two ocean coasts, self-sufficiency incomes
can be as high as a state's median income, as, for example, in
Boston.\39\ However, even in Atlanta, the self-sufficiency requirement
for such a family is 90 percent of the state's median income.\40\
---------------------------------------------------------------------------
\37\ See generally http://www.sixstrategies.org/includes/
productlistinclude.cfm?strProductType=
resource&searchType=type&strType=self-sufficiency%20standard.
\38\ E.g., D.Pearce and J. Brooks, ``The Self-Sufficiency Standard
for Georgia'' (Women's Policy Group, 2002).
\39\ Self-sufficiency income required for a single parent with two
children in Boston is $51,284. D.Pearce and J. Brooks, ``The Self-
Sufficiency Standard for Massachusetts'' (Women's Educational and
Industrial Union, 2003). Massachusetts state median income in 1999 was
$50,502. http://quickfacts.census.gov/qfd/states/25000.html.
\40\ Self-sufficiency income required for a single parent with two
children in Atlanta is $37,982. D.Pearce and J. Brooks, ``The Self-
Sufficiency Standard for Massachusetts'' (Women's Educational and
Industrial Union, 2003). Georgia median income in 1999 was $42,433.
http://quickfacts.census.gov/qfd/states/13000.html.
---------------------------------------------------------------------------
Avoidable annual costs of poverty are described in the full report
and fall into four broad categories. These are costs to the society at
large that are caused by the existence of poverty and do not include
the substantial costs to low-income households themselves.
Costs of criminal activity, including property losses, costs of the
judicial and correctional system, and security costs;
Costs of health care, including costs that are preventable by
improving health care and costs of low-income health care that are
spread through the society;
Costs of unemployment and underemployment, including unemployment
compensation, job training, and the multiplier effect of lost economic
activity;
Costs of current anti-poverty investments, including costs for
social services, elderly services, income supports, affordable housing,
food, education, energy and utility supports, and block grants for
community services and community development.
As substantial as these avoidable costs are, they are significantly
understated. For example, this study conservatively did not include:
many state expenditures;
most non-governmental expenditures;
increased risks of damage from fire caused by inadequate
housing;
increased pressure on energy prices caused by energy
waste in leaky homes;
increased property tax receipts caused by needed property
improvements;
increased borrowing costs caused by bad debt and slow
payments of low-income consumers; and
increased vulnerability to disasters such as hurricanes,
causing additional requirements for disaster relief.
An additional benefit of eradicating poverty not fully quantified
is the increased economic activity caused by the multiplier effect of
increased income.\41\
---------------------------------------------------------------------------
\41\ At a multiplier of 2, the impact of an increase in income is
doubled through the economy. This is accounted for in the report only
with regard to unemployment.
---------------------------------------------------------------------------
These costs are shared by all non-low-income households, the number
and median income of which are derived from the U.S. Census. From these
data, it is possible to compute the annual per-household burden of
poverty:
It is also possible to compute a benefit:cost ratio on the
assumption that investments are made to close the income gap in order
to eradicate poverty and thus eliminate the avoidable costs of poverty
described above.
Conclusion. Investments in low-income Americans are among the most
cost-effective investments we can make. Simple cash payments to low-
income families may be among the least cost-effective investments
against poverty in the long-run. Yet, as we show above, even simple
cash payments sufficient to lift all Americans out of poverty would
immediately be returned almost fourfold. Yet, as we have shown
elsewhere, there are investment strategies on behalf of low-income
families with even greater potential payoffs. For example, investing in
weatherization and installing efficient appliances in low-income homes
returns at least seven times the investment.\42\ Investing in the
education of three-and-four-year-olds returns nine times the
investment.\43\ Others have shown that investments in preventive health
care earns a positive return.\44\ Additional study should confirm the
economic wisdom of other investments in low-income families. Indeed, in
many cases, the science is established and the political decision has
been made to create a program. All that remains to do in those cases is
to adequately fund the existing programs.\45\
---------------------------------------------------------------------------
\42\ J. Oppenheim and T. MacGregor, ``The Economics Of Low-Income
Electricity Efficiency Investment'' (Entergy, 2001, rev. 2002).
\43\ J. Oppenheim and T. MacGregor, ``The Economics of Education:
Public benefits of High-Quality Preschool Education for Low-Income
Children'' (Entergy, n.d. [2002]).
\44\ E.g., J. Abramson, M.D., Overdosed America at pp. 49, 166
(Harper Perrennial 2005).
\45\ E.g., ``Millions of eligible children do not receive free or
reduced price lunches.'' S. Levitan et al., Programs in aid of the Poor
at p. 122 (Johns Hopkins Press, 8th ed., 2003). ``Whereas [the job
training program phased out in 2000] ended with sufficient funds to
enroll approximately 1 percent of those who were eligible for its
services, [its replacement program] adult ratio approaches the
infinitesimal.'' Id. at p. 234. Housing programs are inadequately
funded and do not pay enough in many markets to keep housing costs
below 40 percent of income. ``They simply need more resources to meet
the needs of those eligible by cutting interminable waiting lists.''
Id. at p. 272.
---------------------------------------------------------------------------
Weatherization, Head Start, and preventive health care are examples
of under-funded cost-effective investment opportunities that have
already been mentioned. Another example is childhood nutrition. It is
well established that a nutritious breakfast and lunch determines a
child's ability to learn, with significant implications for later
success in life,\46\ just as it is well established that nutrition
during the first two years of life, as well as of pregnant mothers, has
an enormous impact on later health and intellect.\47\ That is why there
is a successful program to provide adequate nutrition to infants and
pregnant mothers.\48\ Similarly, this is the basis for the free and
reduced price school meal program.\49\
---------------------------------------------------------------------------
\46\ E.g., J. Fraser Mustard, ``Health and social capital'' in D.
Blane et al., Health and Social Organization, at p. 306 (Routledge,
1996).
\47\ E.g., M. Wadsworth, ``Family and education as determinants of
health,'' in D. Blane
et al., Health and Social Organization, at pp. 154-156 (Routledge,
1996); J. Fraser Mustard, ``Health and social capital'' in id. at pp.
304-306; V. Lazariu-Bauer et al., ``A Comparative Analysis of Effects
of Early Versus Late Prenatal WIC Participation on Birth Weight:
NYS, 1995,'' 8 Maternal and Child Health Journal 77 (2004),
www.springerlink.com/ (baf1qf55lma12mnqiwgv13qi) / app / home /
contribution.asp?referrer=parent&backto=issue,5,8;
journal,9,38;linkingpublicationresults,1:105600,1; USDA, Economic
Research Service, Effects of Food Assistance and Nutrition Programs on
Nutrition and Health, Volumes 1-4, and Nutrition and Health
Characteristics of Low-Income Populations, volumes 1-4,
www.ers.usda.gov/
Publications/fanrr19-1/.
\48\ www.fns.usda.gov/wic/
\49\ E.g., The ``School Breakfast Program provides nutritious
breakfasts to promote learning readiness and healthy eating
behaviors.'' www.fns.usda.gov/cnd/Default.htm.
---------------------------------------------------------------------------
Later in life, effective vocational training and re-training can
turn a marginal worker into an economic success.\50\ Investing in
decent housing provides the first prerequisite for a homeless family to
even participate in the economy.\51\ All are cost-effective investments
in low-income families that could pay huge dividends if expanded.
---------------------------------------------------------------------------
\50\ ``Some form of postsecondary career preparation has become
essential to earning a family-sustaining income. . . . *** . . . skill
training can be accomplished through apprenticeship or employment with
an employer committed to substantial incumbent training . . . few will
escape poverty or near-poverty in the future without setting foot on a
substantial career ladder and following it upward.'' S. Levitan et al.,
Programs in aid of the Poor at pp. 208-209 (Johns Hopkins Press, 8th
ed., 2003). See generally chapters 5-6. ``Poverty prevention is more
dependent on education than on any other factor, as is escape from
poverty.'' Id. at p. 274.
\51\ ``Marriage is unlikely to occur or last without [affordable
housing].'' S. Levitan et al., Programs in aid of the Poor at p. 271
(Johns Hopkins Press, 8th ed., 2003).
---------------------------------------------------------------------------
It is time for America to invest in eradicating poverty for the
benefit of all Americans.
Wisconsin Community Action Program Association
Madison, Wisconsin 53714
January 24, 2007
Chairman Rangel:
The Wisconsin Community Action Program Association (WISCAP) is the
statewide voluntary association of Wisconsin's 16 Community Action
Agencies (CAAs) and three special purpose agencies with statewide anti-
poverty missions. On behalf of our membership, we thank you for calling
this very important hearing on the economic and social costs of
poverty.
For over forty years, Community Action has been a catalyst for
change and a vital part of the effort to eliminate poverty in Wisconsin
and throughout the United States. CAAs are independent, nonprofit
organizations that are community-based and locally controlled by boards
composed of one-third people experiencing poverty, one-third local
elected officials, and one-third community and business leaders. All
members of WISCAP are nonprofit organizations committed to creating
economic opportunities and community-based solutions to poverty.
In 2005 over 428,000 individuals living in Wisconsin built assets,
developed knowledge and skills, increased economic self-sufficiency, or
met basic needs through the resources offered by Community Action. Our
funding comes from an array of public and private sources, but critical
core support is provided by the Community Services Block Grant (CSBG).
We strongly support reauthorization and full funding of CSBG, without
which Community Action would lose significant capacity to assist low-
income people and their communities.
We are appreciative of this opportunity to discuss the costs and
consequences of poverty and believe that our organizations have the
successful track record, involvement of the poor, and credibility in
our communities to participate in this discussion and play an even
larger role in eliminating poverty in our Nation. Poverty is the cause
of unnecessary and preventable suffering among millions of Americans of
all ages, and the economic and social costs are enormous.
We believe that all Americans are vulnerable to poverty and that
the costs and consequences of poverty have significant effects on
everyone, whether poor or not.
Over the period 2003-2004, Wisconsin had the highest growth rate of
people living in poverty in the United States. About 600,000 people
live in poverty in our state. Please refer to our Web site,
www.wiscap.org for our report ``Poverty Matters: Facing Poverty in
Wisconsin'' and more about the work of Community Action. We believe
that poverty matters and that we can do something about it.
Consequences to Children
The costs of child poverty to society in terms of lost potential,
unnecessary suffering, reduced achievement, and other social ills are
staggering. Children from low-income families are more likely to:
suffer from hunger or inadequate nutrition,
develop learning disabilities,
have untreated vision or dental problems,
become the victim of child abuse or neglect,
be expelled from school or repeat a grade,
attend inferior schools with fewer resources and less-
skilled teachers, and
grow up with less hope and lower expectations.
These concrete hardships can contribute to:
lower verbal and math performance,
higher risk of dropping out of school,
reduced likelihood of going to college,
more involvement in juvenile crime, and
lower skills upon entering the workforce.
Economic Costs and Consequences
Our economy suffers when businesses have difficulty
finding enough skilled workers to compete globally. Poverty greatly
affects people preparing for and entering the workforce. Children who
grow up with a poor education, poor nutrition, and poor health care are
much less likely to escape poverty. Combined with unstable families or
neighborhoods and faced by a chronic lack of opportunities, these
children of poverty are much less likely to join the workforce with
skills that make our economy stronger. We all pay the price. It is
imperative that tomorrow's workers be well educated and well trained.
A growing number of seniors are supported by fewer
workers earning less money. Wisconsin's population is growing older,
and the proportion of younger workers is shrinking. Social Security and
other programs that assist seniors will have to be funded by a
diminishing proportion of workers. But based on demographic and
economic trends, a growing percentage of those future workers will be
low-income. Addressing poverty today in earnest will create a future in
which workers are prepared to pay taxes and contribute their skills.
Health Consequences and Costs
Health costs are soaring, and that affects all of us. Some of the
costs stem from the direct and indirect effects of poverty on the
health of low-income people. Due to inadequate nutrition, stressful or
dangerous environments, lack of health care, and other factors poverty
is associated with higher rates of:
heart disease, asthma, diabetes, hypertension, and
cancer,
injury through violent crime,
premature and underweight births, and infant mortality,
lead poisoning, and dental problems.
These health problems contribute to the soaring cost of health
insurance and medical care. Insurance premiums rise when hospitals must
pass along costs associated with increased use of emergency rooms by
those who have no insurance. Out of necessity, people in poverty often
put off going to a doctor or dentist until a condition worsens and
becomes an emergency. It is more cost-effective to invest upfront by
offering good, affordable, preventive care rather than paying after the
problems move to a crisis stage.
One study found that Wisconsin families who have their insurance
through their private employers pay, on average, $739 more annually in
premiums due to the cost of health care for the uninsured. (Families
USA 2005: ``Paying a Premium: The Added Cost of Care for the
Uninsured,'' Washington, D.C., p. 4)
Women in poverty are much more likely to receive poor prenatal care
and inadequate nutrition and to deliver underweight or premature
babies, which require intensive medical care and incur long-term costs.
These costs, borne by insurance providers and passed along to those who
pay for health insurance, have been estimated at $500,000 for each such
birth.
Other Social and Economic Consequences and Costs
Loss of potential and participation. One of the greatest
tragedies of poverty is the loss of human potential. Growing up in
poverty causes many individuals to fall short of attaining their full
potential, depriving them and their communities of their gifts,
talents, and contributions. People in poverty often feel isolated and
marginalized. They are less likely to vote or participate in civic or
cultural activities. We must recognize the strengths and gifts of the
poor and find ways to help them have hope for a better future.
Crime and the costs of prisons and police. Crime and
incarceration rates correlate with poverty. Although the vast majority
of low-income people are law-abiding, children and youths who grow up
in poverty are statistically more likely to become involved in crime.
This is a powerful argument for upfront investment in education from
early childhood throughout the school years, for community building and
economic development in low-income neighborhoods, and for mentoring,
supportive youth activities, and other measures that counteract the
degrading effects of poverty.
Racial discrimination and structural/institutional
racism. People of color suffer from much higher rates of poverty and
many of its consequences. Gaps in educational achievement,
incarceration rates, ownership of assets, and many other inequities
exacerbate racial divisions in our communities and present real
barriers to self-sufficiency for many people of color.
Family instability. Families in poverty often experience
high levels of stress as parents juggle one or more low-paying jobs,
child-care, getting around without reliable transportation, and other
responsibilities--while struggling to pay the bills. A problem that
would be minor for others, such as a sick child or the breakdown of a
car, can be a major crisis for a parent in poverty.
WISCAP's Principles
All people of Wisconsin and the United States should have these
basic necessities of life:
Economic opportunity--All should have access to the
opportunities and skills they need to obtain employment that offers
health benefits and wages sufficient to lift them and their families
out of poverty. All should have access to the tools they need to build
savings and assets for a secure future.
Affordable housing and energy--All should have decent,
safe, sanitary, affordable, and energy-efficient housing. Those with
accessibility needs should have those needs met.
Food security--All should be able to afford enough
nutritious food.
Health and safety--All should have access to dependable,
affordable health care--physical, mental, and dental--and all should
live free from violence.
A voice in the community--All should have the opportunity
to contribute to a better neighborhood and nation through civic
participation and community involvement.
Education--All should have access to quality, affordable
education throughout their lives so they have opportunities to develop
skills and their personal potential.
Human dignity--All deserve respect as human beings and
should have equal opportunity in the basic aspects of life, regardless
of income, wealth, race, ethnicity, gender, disability, age, religion,
or sexual orientation.
There was a great deal of lip service given to the issue of poverty
when Americans saw the images of the poor after the tragedy of
Hurricane Katrina. But little has changed for the poor throughout our
country since that time. We in Community Action have struggled
alongside the poor for over 40 years, and we are ready to work with our
national, state and local leaders to increase the focus on eliminating
poverty for all Americans. As one step, we strongly support the
reauthorization and full funding of the Community Services Block Grant,
which provides critical core funding for the Nation's Community Action
Agencies.
We must not accept the existence of poverty as something normal or
routine. We believe it is possible, with all of our combined talents
and resources, to eliminate poverty and increase the opportunities
available to all of the people of Wisconsin and the United States. We
believe that there are cost-effective solutions to poverty. Through
efforts that create jobs that pay living wages with benefits, along
with programs that emphasize strategies like prevention, skill
development, access to health care, affordable housing, and community
economic development, we can transform our common future to eliminate
poverty. It is morally imperative and in our personal, social, and
economic interests to do so.
Respectfully Submitted,
Richard Schlimm
Executive Director
______
Members of the Wisconsin Community Action Program Association
ADVOCAP, Inc.
Fond du Lac, WI
CAP Services, Inc.
Stevens Point, WI
Central Wisconsin Community Action Council, Inc.
Wisconsin Dells, WI
Community Action Coalition for South Central Wisconsin, Inc.
Madison, WI
Community Action, Inc.
Janesville, WI
Couleecap, Inc.
Westby, WI
Indianhead Community Action Agency, Inc.
Ladysmith, WI
Lakeshore CAP, Inc.
Manitowoc, WI
NEWCAP, Inc.
Oconto, WI
North Central Community Action Program, Inc.
Wisconsin Rapids, WI
Northwest Wisconsin Community Services Agency, Inc.
Superior, WI
Racine/Kenosha Community Action Agency, Inc.
Racine, WI
Social Development Commission, Inc.
Milwaukee, WI
Southwest Wisconsin Community Action Program, Inc.
Dodgeville, WI
West CAP, Inc.
Glenwood City, WI
Western Dairyland Economic Opportunity Council, Inc.
Independence, WI
Coalition of Wisconsin Aging Groups, Inc.
Madison, WI
Foundation for Rural Housing, Inc.
Madison, WI
United Migrant Opportunity Services, Inc.
Milwaukee, WI
Statement of Zero To Three Policy Center
Chairman Rangel and Members of the Committee:
I am pleased to submit the following written testimony on behalf of
ZERO TO THREE. My name is Matthew Melmed. For the last 12 years I have
been the Executive Director of ZERO TO THREE, a national non-profit
organization that has worked to advance the healthy development of
America's babies and toddlers for close to 30 years. I would like to
start by thanking the Committee for its interest in examining the
economic and societal costs of poverty and for providing me the
opportunity to discuss the interaction between poverty and the healthy
development of our Nation's infants and toddlers and how federal policy
can help address the issues raised.
Some may wonder why babies matter in public policy. Surely they are
the province of their parents or caregivers. Yet, public policies often
affect very young children, policies that are sometimes created with
little thought as to their consequences for this age group. In
addition, many policies focus on the effects of ignoring the needs of
infants and toddlers, for example, by having to address the cognitive
gaps between low-income preschoolers and their more affluent peers or
providing intensive special education services for problems that may
have begun as much milder developmental delays left untreated in a
young baby. Mr. Chairman, my message to you is that babies can't wait--
we know that early intervention and prevention works best and we know
what works to promote healthy development in young children.
The early years create an important foundation for later school and
life success. We know from the science of early childhood development
that infancy and toddlerhood are times of intense intellectual
engagement.i During this time--a remarkable 36 months--the
brain undergoes its most dramatic development, and children acquire the
ability to think, speak, learn, and reason. All babies and toddlers
need positive early learning experiences to foster their intellectual,
social, and emotional development and to lay the foundation for later
school success. These years may be even more critical for young
children living in poverty.
---------------------------------------------------------------------------
\i\ Shonkoff, Jack and Phillips, Deborah. 2000. From neurons to
neighborhoods: The science of early childhood development. Washington,
DC: National Academy Press.
---------------------------------------------------------------------------
One of the most consistent associations in developmental science is
between economic hardship and compromised child
development.ii The malleability of young children's
development and the overwhelming importance of the family (rather than
school or peer) context suggest that economic conditions in early
childhood may be far more important for shaping children's ability,
behavior, and achievement than conditions later in
childhood.iii Lower-income infants and toddlers are at
greater risk than middle to high-income infants and toddlers for a
variety of poorer outcomes and vulnerabilities such as later school
failure, learning disabilities, behavior problems, mental retardation,
developmental delay, and health impairments.iv Babies and
toddlers living in high-risk environments need additional supports to
promote their healthy growth and development.
---------------------------------------------------------------------------
\ii\ Ibid.
\iii\ Ibid.
\iv\ Ibid.
---------------------------------------------------------------------------
Congress must consider the unique needs of very young children and
their families who are living in poverty. Policies should help attack
the intergenerational cycle of poverty by laying the foundations for
early learning and improving prospects of later school success on the
part of the children. We know that intervening early in the life of a
child at-risk for poor development can help minimize the impacts of
these risks. We must ensure that infants, especially those living in
poverty, have time at home with their parents in the first months of
life. We must also ensure that infants and toddlers living in poverty
have access to quality, developmentally appropriate early learning
programs such as Early Head Start or quality child care to help ensure
that they are ready for school.
Portrait of Infants and Toddlers Living in Poverty
There are more than 12 million infants and toddlers living in the
United States. Twenty-one percent--2.6 million--live in poor
families.v After a decade of decline, the percentage of
children under the age of 3 living in low-income families is on the
rise again.vi Between 2000 and 2005, the number of children
of all ages who were poor increased by 11 percent.vii During
the same period, the number of infants and toddlers who were poor
increased by 15 percent.viii It is important to note that
young children are disproportionately impacted by economic stress.
Forty-three percent of children under the age of 3--5.2 million--live
in low-income families (defined as below 200 percent of
poverty).ix
---------------------------------------------------------------------------
\v\ Douglas-Hall, Ayona; Chau, Michelle; and Koball, Heather. 2006.
Basic facts about low-income children: Birth to age 3. September 2006.
http://www.nccp.org/media/ecp06b_text.pdf (accessed February 5, 2007).
\vi\ Ibid.
\vii\ Ibid.
\viii\ Ibid.
\ix\ Ibid.
---------------------------------------------------------------------------
The environmental stresses to which these children are more likely
to be exposed, such as inadequate nutrition, substance abuse, maternal
depression, exposure to environmental toxins, and trauma/abuse can all
negatively influence their development.x For example, the
existence of maternal depression and other adult mental health
disorders can negatively affect children if parents are not capable of
providing consistent sensitive care, emotional nurturance, protection
and the stimulation that young children need.xi Maternal
depression, anxiety disorders, and other forms of chronic depression
affect approximately 10 percent of mothers with young
childrenxii--this number is even higher for families in
poverty. In fact, findings at enrollment from the Early Head Start
Research and Evaluation Project indicate that nearly half (48 percent)
of mothers reported enough depressive symptoms to be considered
clinically depressed.xiii Early and sustained exposure to
the aforementioned risks can influence the physical architecture of the
developing brain, preventing babies and toddlers from fully developing
the neural pathways and connections that facilitate later learning.
---------------------------------------------------------------------------
\x\ National Center for Children in Poverty. 1999. Poverty and
Brain Development in Early Childhood. http://www.nccp.org/media/pbd99-
text.pdf (accessed February 6, 2007).
\xi\ Cohen, Julie., Onunaku, Ngozi., Clothier, Steffanie., and
Poppe, Julie. 2005. Helping young children succeed: Strategies to
promote early childhood social and emotional development. Washington,
DC: National Conference of State Legislatures and ZERO TO THREE.
\xii\ M. O'Hara, Postpartum Depression: Causes and Consequences
(New York, NY: Springer-Verlag Inc., 1994).
\xiii\ Early Head Start Evaluation and Research Project, Research
to Practice: Depression in the Lives of Early Head Start Families
(Washington, DC: U.S. Department of Health and Human Services,
Administration for Children and Families, January 2003).
---------------------------------------------------------------------------
The Importance of Unhurried Time
Welfare to work policy is an area where the importance of infant
and toddler development may not be so obvious, but is a factor that
should be given great weight. The need for infants, especially, to
spend time with their parents should be balanced against society's goal
of moving adults quickly into the workforce. Often, when this need is
considered, it is only in the context of the expense of providing child
care for this group.
According to a groundbreaking report released by the National
Academies of Science, From Neurons to Neighborhoods: The Science of
Early Childhood Development, parents structure the experience and shape
the environment within which a young child's early development
unfolds.xiv Infants and toddlers need unhurried time with
their parents to form the critical relationships with them that will
serve as the foundation for social, emotional, and cognitive
development. The better parents know their children, the more readily
they will recognize even the most subtle cues that indicate what the
children need to promote their healthy growth and development. For
example, early on infants are learning to regulate their eating and
sleeping patterns and their emotions. If parents can recognize and
respond to their baby's cues, they will be able to soothe the baby,
respond to his cues, and make the baby feel safe and secure in his new
world. Trust and emotional security enable a baby to explore with
confidence and communicate with others--critical characteristics that
impact early learning and later school readiness.
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\xiv\ Shonkoff, Jack and Phillips, Deborah. 2000. From neurons to
neighborhoods: The science of early childhood development. Washington,
DC: National Academy Press.
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At-risk infants and toddlers in particular need time with their
parents because their early attachments can help serve as a buffer
against the impact of the multiple risk factors they may face. Early
attachments are critical for infants and toddlers because a positive
early relationship, especially with a parent, reduces a young child's
fear in novel or challenging situations thereby enabling her to explore
with confidence and to manage stress and also strengthens a young
child's sense of competence and efficacy.xv In addition,
early attachments set the stage for other relationships, foster the
exploratory behavior that is so critical to early learning, and play an
important role in shaping a young child's ability to react to stressful
situations.xvi
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\xv\ Ibid.
\xvi\ Ibid.
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The need for time with infants has direct relevance to welfare to
work policies, and Congress should consider the developmental needs of
infants and toddlers in shaping these policies. Excessive mandatory
work requirements for low-income parents who are receiving Temporary
Assistance to Needy Families (TANF) make unhurried time difficult.
While states have the option of exempting parents with infants from
work requirements, many do not take advantage or exempt these parents
for only a few months.
There is evidence to suggest that long hours of maternal employment
in the child's first year, can be a negative factor for infant
development.xvii It is particularly difficult for mothers
with young children living in poverty because of the kinds of jobs they
tend to have (i.e. service jobs), the nontraditional hours they are
often required to work, and the poor quality child care that is
available. Young children living in poverty are much more likely to
have a mother who works nontraditional hours compared with young
children living above the poverty line.xviii Service jobs,
which often entail very low wages, few benefits and nontraditional work
hours, are disproportionately filled by less-educated women who now
comprise a large group of mothers who are entering the labor force as a
result of welfare reform and federal work requirements.xix
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\xvii\ Ibid.
\xviii\ Ibid.
\xix\ Ibid.
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Finally, we know almost nothing about how the TANF program with its
work requirements has affected infants and toddlers, for good or ill.
Some studies have looked at the impact of TANF on older children, but
ignore the impacts on the youngest. I urge Congress to require research
into the impacts this program has on the well-being of infants and
toddlers.
Early Head Start: A Beacon of Hope for Babies Living in Poverty
Comprehensive high quality early learning programs for infants and
toddlers, such as Early Head Start, can help to protect against the
multiple adverse influences that may hinder their development across
all domains. Very young children living in poverty are more at-risk for
a variety of poor outcomes than low-income families. Programs like
Early Head Start not only set the stage for later school readiness and
success, but also for the parent's road to self-sufficiency.
Research from the Early Head Start Research and Evaluation Project,
and its companion follow-up results, concluded that the program is
making a positive difference in areas associated with children's
success in school, family self-sufficiency, and parental support of
child development. For example, Early Head Start produced statistically
significant, positive impacts on standardized measures of children's
cognitive and language development. A smaller percentage of Early Head
Start children scored in the ``at-risk'' range of developmental
functioning. Early Head Start children had more positive interactions
with their parents than control group children. In addition, Early Head
Start significantly facilitated parents' progress toward self-
sufficiency. Although there were not significant increases in income,
there was increased parental participation in education and job-
training activities. The study also found that Early Head Start parents
were more involved and provided more support for learning. Early Head
Start parents were observed to be more emotionally supportive and less
detached than control-group parents. They also provided significantly
more support for language and learning than control-group
parents.xx
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\xx\ U.S. Department of Health and Human Services, Administration
for Children and Families. 2002. Making a difference in the lives of
infants and toddlers and their families. The impacts of Early Head
Start.
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The experience of Early Head Start suggests that exempting parents
of young children from work requirements need not mean an unproductive
period. They can be engaged in activities that are good for their own
development as well as that of their children--if resources are
available. In fact, a few states have channeled TANF funds into
expanding Early Head Start services.
Although the benefits of Early Head Start are clear, the program is
only reaching a small proportion of at-risk children and families.
Currently, only 10 percent of the overall Head Start budget is used to
serve 61,243 low-income families with infants and toddlers in the Early
Head Start program--less than three percent of those eligible. In order
to ensure that the program can serve more eligible babies, Congress
must increase the Early Head Start set-aside to at least 25 percent
over five years and expand funding for Head Start to make those
increases a reality. We can't wait until these at-risk children are
already behind at age four to intervene.
Quality Child Care for At-Risk Infants and Toddlers
Second only to the immediate family, child care is the context in
which early childhood development most frequently unfolds, starting in
infancy.xxi According to 2005 data, 42 percent of one-year-
olds and 53 percent of one-to-two-year-olds have at least one regular
non-parental care arrangement.xxii The increase in the
number of working parents with babies and toddlers comes at a time when
science has demonstrated the critical importance of supporting the
development and learning of children ages birth to three, and makes the
need for quality child care even more significant.
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\xxi\ Shonkoff, Jack and Phillips, Deborah. 2000. From neurons to
neighborhoods: The science of early childhood development. Washington,
DC: National Academy Press.
\xxii\ Schumacher, Rachel, Hamm, Katie, Goldstein, Anne, and
Lombardi, Joan 2006. Starting off right: Promoting child development
from birth in state early care and education initiatives. Washington,
DC: Center for Law and Social Policy and ZERO TO THREE.
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The evidence associating the quality of infant and toddler care
with early cognitive and language outcomes ``is striking in
consistency.'' xxiii High quality child care is associated
with outcomes that all parents want to see in their children, ranging
from cooperation with adults to the ability to initiate and sustain
positive exchanges with peers, to early competence in math and
reading--all of which are key ingredients to later school success.
However, more than 40 percent of infants and toddlers are in child care
rooms of poor quality.xxiv
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\xxiii\ Shonkoff, Jack and Phillips, Deborah. 2000. From neurons to
neighborhoods: The science of early childhood development. Washington,
DC: National Academy Press.
\xxiv\ Cost, Quality and Child Outcomes Study Team. Cost, Quality
and Child Outcomes in Child Care Centers, Public Report, 2nd edition.
(Denver Economics Department, University of Colorado at Denver, 1995).
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Research indicates that the strongest effects of quality child care
are found with at-risk children--children from families with the fewest
resources and under the greatest stress.xxv Yet, at-risk
infants and toddlers who may benefit the most from high-quality child
care are unlikely to receive it--they receive some of the poorest
quality care that exists in communities across the United
States.xxvi Poor quality child care for at-risk children may
diminish inborn potential and lead to poorer developmental
outcomes.xxvii
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\xxv\ Shonkoff, Jack and Phillips, Deborah. 2000. From neurons to
neighborhoods: The science of early childhood development. Washington,
DC: National Academy Press.
\xxvi\ Ibid.
\xxvii\ Ibid.
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Congress should ensure that all babies and toddlers, particularly
those living in poverty, have access to quality child care. An increase
in federal funding for child care would lead to increased investments
in quality and would help to ensure that more low-income infants and
toddlers have access to quality child care settings. More funding needs
to be directed specifically at improving the quality of care for
infants and toddlers, and providing professional development
opportunities with infant-toddler content for early childhood staff who
work with this age group.
Conclusion
During the first three years of life, children rapidly develop
foundational capabilities--cognitive, social and emotional--on which
subsequent development builds. These years are even more important for
infants and toddlers living in poverty. All young children should be
given the opportunity to succeed in school and in life. We know that
all babies, especially those at-risk, need unhurried time in the first
months of life with their parents. We also know that access to
comprehensive, high-quality, developmentally appropriate programs and
services--whether Early Head Start or child care--can serve as a
protective factor for at-risk infants and toddlers.
Too often, the effect of our overall policy emphasis is to wait
until at-risk children are already behind developmentally before
significant investments are made to address their needs. I urge the
Committee to change this pattern and invest in at-risk infants and
toddlers early on, when that investment can have the biggest payoff--
preventing problems or delays that become more costly to address as the
children grow older. We do not need to accept that vulnerable children
will inevitably have already fallen behind at age four and then provide
special education and intensive prekindergarten services to help them
play catch up. We know what at-risk babies need to help them grow up
healthy and ready to learn. I urge the Committee to consider the very
unique needs of babies living in poverty as you address the economic
and societal costs of poverty.
Thank you for your time and for your commitment to our Nation's at-
risk infants, toddlers and families.