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NC Budget and Tax Center

This year marks the 50th anniversary of the start of the War on Poverty and Wednesday, January 8th in particular marks the 50th anniversary of LBJ’s speech in which America’s War on Poverty was declared. National media and political figures have been weighing in on whether the War on Poverty has worked, is a “Mixed Bag”, or has missed the mark. The Budget and Tax Center will be launching a blog series this month which will look in depth into the lasting effects of the War on Poverty, its successes, and the challenges that still lie ahead. We’ll also be doing some must-read myth busting as it relates to income and poverty.

What we do know is that the poverty rate has declined since the War on Poverty was declared, and it has declined even more significantly when supplements such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and the Earned Income Tax Credit (EITC) are factored in. What we also know is that even as productivity of workers has increased, wages have stagnated for middle and low income families and inequality has continued to rise.

The War on Poverty and associated safety net programs, which have been a lifeline for millions of families, have done their job to the extent that we have let them. Going forward it is imperative to make adequate and real investments in the programs that we know work in lifting families out of poverty such as the EITC and SNAP, but also to tackle the broader issue of wage stagnation and inequality by ensuring, among other strategies, that we have a minimum wage that reflects the cost of living in the 21st century, and by taking a long hard look at the racial and class inequity that still plagues our nation and our state.

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Food bankBefore you sit down to open presents or enjoy a holiday feast tomorrow or at some other point over the coming days, take a moment or two to read Sarah Ovaska’s Christmas Eve story over on the main Policy Watch site — it’s called “Hungry, with no end in sight.”

After you’ve done that, take a few more minutes to contemplate what it would be like to rely like Sylvia Cameron on a paltry sum in SNAP benefits (i.e. Food Stamps) and the charity of others just to survive and stay nourished each month.

Next, briefly ruminate on the fact that a shocking percentage of your neighbors are in just such a boat — the vast majority of them good, honest, working people (and a huge percentage children).

Finally, if you make it this far, take at least a moment to consider the fact that this situation — one that does not exist in many other modern nations — might just not be the fault of those who are hungry and, in fact, might be, at least in some small measure, all of our responsibility.

You can read Sarah’s article by clicking here.

 

 

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Over the last decade, poverty in our state has been on the rise. UNC Economics Professor Patrick Conway, in his new paper Poverty in North Carolina since 2000, explains that “poverty in North Carolina until 2000 had been a chronic but declining disease,” a trend that has been cruelly reversed.

In the face of this disturbing trend, Conway examines the links between unemployment and poverty, with an important emphasis on the role of unemployment insurance.

The general link between unemployment and poverty is straightforward: conditioning on other factors, those without jobs are more likely to have income falling below the poverty threshold than those with jobs. Those without jobs, however, can be divided into two groups – those who qualify for unemployment compensation and those who do not. Unemployment compensation provides a support that will lift a portion of those receiving it once again above the poverty line.

Conway concludes that unemployment explains only part of the increase in poverty, but that “the unemployment insurance program has played an important role in keeping North Carolinians above the poverty line.”

It’s a timely message, given the lack of action to renew  federal Emergency Unemployment Compensation (EUC), ensuring that long-term unemployed workers in 49 states will lose benefits just in time for the holidays.

Of course, long-term unemployed workers in North Carolina have first-hand experience simply by living in the one state that has been ineligible for EUC for the last four months. Thanks to HB4, which reduced the number of weeks and the amount of state benefits for jobless workers, North Carolina’s long-term unemployed residents also lost access to the federally-funded EUC program.

Where have these cuts taken us? North Carolina is still lagging the nation in job creation and unemployment and even the conservative think tank the American Enterprise Institute is questioning the cuts made to NC’s UI program.

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The good folks at Think Progress published a story yesterday entitled “Your assumptions about welfare recipients are wrong.” It’s a myth-buster worth checking out as we contemplate the realities that confront so many of our fellow Americans — especially during the holiday season.

“The stereotype of the low-income people enrolled in government programs is that they spend the money on frivolities and are unwise with their budgets. But the data proves otherwise. Families who receive public benefits such as housing assistance, welfare cash assistance, food stamps, Medicaid, and Social Security Income (SSI) for the disabled or low-income elderly have much smaller spending budgets than those who don’t receive benefits and spend a bigger portion on the basics such as food, housing, and transportation, according to an analysis by the Bureau of Labor Statistics.

On average, families who are enrolled in these public programs spend less than half of what families who aren’t enrolled spend. They also put a bigger percentage of that money toward food, housing, and transportation, devoting 77 percent of their budgets to these necessities compared to about 65 percent for other families. Meanwhile, they spend less, on average, on some things thought to be luxuries like eating out and entertainment. A family that doesn’t get public benefits spends 4.5 percent of its budget on ‘food away from home,’ while a two-parent family who gets benefits spends 4 percent of its budget on eating out and a single parent spends 3.6 percent. ‘Food away from home spending was higher in both dollar amount and percent of total spending among families not receiving assistance,’ the report notes. Families who don’t need assistance also spend more on entertainment in both dollar and percentage terms and devote more of their budgets to ‘other’ expenses.

Read the rest of the story by clicking here.

NC Budget and Tax Center, Poverty and Policy Matters

At a time when ensuring that all students receive a quality education is more important than ever, students from low-income families are increasingly less likely to experience academic success and educational opportunities than their affluent peers. In fact, students from affluent families are 10 times more likely to graduate from high school and go on to earn a college degree by age 24 compared to students from low-income families.

This skewed outcome alone is startling, but what it projects for North Carolina’s future is even more troubling. With an increasing number of jobs in the state, and nationally, expected to require some level of postsecondary education, we need more of our students from low-income families – who now represent a majority of students in our public schools – graduating from high school and going on to earn a postsecondary credential.

The United States is one of the few advanced nations where more educational resources tend to flow to schools serving better-off children than schools serving poor students, a recent New York Times article highlights. Read More