Poverty Is a Problem We Can Address

August 6, 2014

California’s poverty rate is higher than that of all other states, based on the US Census Bureau’s Supplemental Poverty Measure. So it’s not surprising that Californians are increasingly concerned about poverty, and many see it as an intractable problem. More than two-thirds of state residents (68 percent) think that poverty is a big problem facing our society, up from 57 percent eight years ago — a rise that paralleled the increase in poverty during the Great Recession. In addition, fewer than half of Californians (46 percent) believe that policymakers can do much to address the problem.

But poverty is a problem we can address. That’s the key message of the newly released CBP report, Five Facts Everyone Should Know About Poverty. This report shows that we’ve made significant gains reducing poverty in the past, and it provides evidence that anti-poverty efforts continue to be effective today. Tax credits for working families, food assistance, and unemployment insurance, among other policies, lifted an average of nearly 4 million Californians a year — including 1 million children — out of poverty in the wake of the recent recession. This is a significant accomplishment, and it suggests that California can reduce poverty further by making greater investments in what’s already working.

What will it take to cut poverty further?

Reducing poverty will require a broad-based effort to address the various factors that contribute to families’ economic hardship. One of the most significant of these is low-wage jobs. The majority of families living in poverty are working families, which means that poverty is largely a problem of low pay. That’s not surprising given that California’s minimum wage remains a poverty-level wage, in spite of its recent increase to $9 per hour. A mother who works full-time, year-round at the minimum wage brings home just over $18,000 per year. That’s an income well below the federal poverty level for a family of three and just a quarter of what we estimate that a family needs to support a modest standard of living in California.

In our report, we recommend two ways policymakers can boost workers’ earnings in order to lift more families out of poverty. First, they can continue to gradually raise the state’s minimum wage — even beyond the increase to $10 per hour that is scheduled for 2016 — and then tie it to inflation so it keeps pace with increases in the cost of living. Second, they can create a refundable state Earned Income Tax Credit (EITC), which would help low-income working families keep more of their earnings and better meet their basic needs.

The federal EITC is one of the most effective tools for cutting poverty. In fact, it pulls more children out of poverty than any other federal policy. Half the states have created their own EITCs to further leverage the benefits of the federal credit, and establishing a refundable state EITC in California would be as easy as adding one line on state tax forms. This simple measure could bring nearly 170,000 Californians out of poverty each year, according to estimates from the Center on Budget and Policy Priorities.

As with any new policy, lawmakers are certain to ask whether California can afford to create a refundable state EITC. But a better question is whether California can afford not to invest in a policy that is proven to cut child poverty more than any other measure. Allowing poverty to persist is extremely costly, both in human and economic terms. Children who grow up in poverty don’t have a fair chance to reach their full potential. They face numerous obstacles that make it harder to do well in school and get good jobs as adults. That means poverty doesn’t just set children on a path toward future hardship, it also puts California’s future workforce at stake.

The good news, however, is that when low-income families’ incomes are boosted through public supports like tax credits, their children tend to attain higher levels of education and perform better academically. They may even earn more in the future. In other words, investing in proven anti-poverty strategies has a long-term payoff that makes the investment well worth its upfront cost.

Cutting poverty lays the groundwork for a stronger economy and a more prosperous future for all of us. That’s why policymakers should make reducing poverty a key state priority. And that’s also why we at the CBP have launched an initiative to greatly expand our work on poverty over the next couple of years. Watch for our additional reports on key poverty-related issues, including analysis and commentary that will help policymakers determine and prioritize policy options to expand economic opportunity and generate more broadly shared prosperity in our state.

— Alissa Anderson

A County-by-County Look at CalFresh Use in California

July 31, 2014

Five years after the Great Recession officially ended, more than one in 10 Californians now rely on the federal Supplemental Nutrition Assistance Program (SNAP) — called CalFresh in California — for food assistance. This rate has risen slowly but steadily since 2011.

CalFresh benefits are available to most households with low incomes, generally defined as at or below 130 percent of the federal poverty line (about $24,000 for a family of three). Caseloads thus closely track trends in poverty rates.

However, California is tied with Wyoming for the lowest SNAP participation rate among all states. In addition, undocumented immigrants are ineligible, as are seniors and people with disabilities who receive a Supplemental Security Income/State Supplementary Payment (SSI/SSP). Taken together, this means that the share of Californians in poverty has been higher than the share receiving food assistance.

As we blogged about this year, poverty rates vary widely by county. The same is true of the share of the population using CalFresh in each county, as the map below shows. The highest rates of CalFresh use are in the counties with the highest poverty rates, such as San Bernardino (18 percent enrolled in the program), Imperial (20 percent), and many Central Valley counties (most with rates higher than one in seven). In Tulare County, one in four residents are receiving CalFresh. In San Mateo and Marin, around 4 percent do.

(Click here to see full county data for 2013 and the two prior years.)

Even as job growth picks up, some counties are faring worse than the state overall. High rates of food assistance in many places show a clear need for policies and programs that reduce poverty.

One of the most important points isn’t captured in the map: Nearly half of those eligible for CalFresh — estimated at 3.2 million people — are not receiving it. Recent efforts to expand access and streamline enrollment should bring help to those who need it. These efforts include ending time-consuming and stigmatizing fingerprinting requirements, and reaching out to newly enrolled Medi-Cal recipients who are likely eligible for food assistance.

Some counties have begun to employ targeted outreach programs to increase participation among underserved populations, especially seniors, non-English-speaking households, and people who are homeless. Comparing county performance over time may yield key lessons on what works to improve access for different segments of the population.

Stay tuned for more analysis of CalFresh data by county, including a special focus on children.

— Miranda Everitt

Budget Agreement Includes Some Advancements for Low-Income Families, but Greater Investments Are Needed

June 30, 2014

The 2014-15 budget agreement (read our initial analysis here) includes a number of investments and policy changes that will help alleviate economic hardship among California’s lowest-income residents, who suffered disproportionately during the recession and who have continued to be left behind in the economic recovery. However, given the magnitude and breadth of the cuts made to California’s core public services and systems — cuts which low-income families and children bore the brunt of even as the state’s poverty rate reached nearly 25 percent — much bolder action is needed to set California on a path toward more broadly shared prosperity. Here’s a quick assessment of how well the budget package addresses the needs of low-income Californians at a time when poverty and long-term unemployment remain high.

The budget agreement makes some advancements for low-income Californians. For example, it:

  • Increases the maximum grant for CalWORKs, which provides modest cash assistance and job-related services to low-income families with children, by 5 percent effective April 1, 2015. This increase, together with the 5 percent increase that took effect March 1, will restore most of the grant cuts made since 2008-09 and will help very-low-income parents with children make ends meet as they search for work or build skills to broaden their employment options.
  • Dedicates funds to help families participating in CalWORKs to obtain safe, affordable, and stable housing. This assistance is extremely important given that the maximum monthly CalWORKs grant for a family of three doesn’t even cover the average cost of a studio apartment priced at “fair market rent” in California.
  • Prevents a substantial reduction in CalFresh food assistance benefits that was slated to occur under recent changes in federal law. As we pointed out in a blog post earlier this year, more than 300,000 households would have lost an average of $62 per month in food assistance absent state action — a cut equal to nearly one-third of the average CalFresh household’s benefits.
  • Expands eligibility for CalFresh by taking advantage of a federal option called “broad-based categorical eligibility.” In a prior blog post, we detailed how this policy change would remove a significant barrier to food assistance access primarily for low-income working families who spend much of their incomes on necessities like child care and housing and thus have little left over for food.
  • Lifts the lifetime ban that prevents parents with certain drug felony convictions from receiving CalFresh food assistance and CalWORKs income support, job-related services, and child care. This change could benefit thousands of low-income children whose parents are currently prohibited from participating in these programs.
  • Provides funding to restore 13,000 child care and preschool “slots” for California children and includes provisions that would make these programs more affordable for some families. Watch for an upcoming blog post for more detail on these policy changes.

However, even with these advancements, the budget agreement places greater emphasis on paying down debt and saving for a rainy day than it does on reinvesting in our communities. Although state revenues are projected to increase more than previously anticipated, policymakers left in place deep cuts to many vital programs and services as well as policy changes that restrict economic opportunities for low-income Californians. For example, the budget package:

  • Does not fully address low-income families’ critical need for affordable, high-quality child care and preschool. The budget agreement restores only a fraction of the 110,000 child care and preschool slots eliminated since 2007-08. With potentially close to 200,000 children on waiting lists for slots, this level of investment doesn’t come close to meeting existing demand.
  • Does not reinstate the statutory cost-of-living adjustment (COLA) for CalWORKs grants that was eliminated in 2010-11. Without an annual COLA, CalWORKs grants have been gradually losing purchasing power, making it harder for families to afford basic necessities. Moreover, the grant increase included in the new budget agreement doesn’t go far enough to help low-income families with children escape poverty. Even after the increase takes effect, the maximum monthly grant for a family of three will be about $700 — equal to just 43 percent of the poverty line, well below the deep-poverty cut-off of half the poverty line.
  • Does not restore grant cuts or reinstate the annual COLA for the SSI/SSP Program, which provides modest cash assistance to 1.3 million low-income seniors and people with disabilities. Policymakers eliminated the COLA in 2010-11 after suspending it several times in prior years and reducing the state’s portion of the grant to the minimum level allowed under federal law. The amount of assistance individuals lose each month due these cuts is equivalent to more than three weeks of groceries – a significant loss, particularly given that SSI/SSP participants are not eligible for CalFresh.
  • Does not restore a 10 percent cut to payments for certain Medi-Cal providers that began to be implemented late last year. Maintaining this cut not only reduces the amount of federal Medicaid funds that flow into the state, but also could discourage some health care providers from participating in Medi-Cal, thus potentially impeding access to care for millions of low-income Californians as enrollment rises.
  • Does not restore a reduction in the total hours of care that In-Home Supportive Services (IHSS) consumers can receive. IHSS helps more than 450,000 low-income seniors and people with disabilities remain safely in their own homes, preventing the need for more costly out-of-home care. IHSS consumers were hit with an 8 percent across-the-board cut in total hours effective July 2013, and this reduction is scheduled to scale back to 7 percent effective July 1, 2014. The budget agreement leaves this cut in place.

With the highest poverty rate in the nation, California has much work to do to expand economic opportunity. This work is critical: our state’s future prosperity will be largely determined by the extent to which we invest in families, children, and communities today. Fortunately, with state revenues projected to continue their rebound, California should be well positioned to make those investments. We’ll look to policymakers to take advantage of this opportunity and present bolder strategies for leading our state toward long-term economic growth and more broadly shared prosperity. As debates on poverty and economic opportunity unfold in coming weeks and months, watch for additional CBP commentary and analysis on the key policy choices facing our state and what they mean for low-income families.

— Alissa Anderson

Food Assistance: A Proven Tool for Reducing Hunger and Poverty

May 20, 2014

Advocates from around the state are coming to Sacramento this week to raise awareness of hunger in California. On Wednesday, Hunger Action Day, a select committee will examine how inadequate nutrition can be detrimental to children’s development and discuss policies to prevent hunger early in life.

This issue is particularly timely given the sharp increase in recent years in the number of people facing hunger or the threat of hunger. The share of US households considered “food insecure” — unable to regularly afford nutritionally adequate meals — reached an all-time high in the wake of the Great Recession as millions of workers lost their jobs and struggled to feed their families on reduced incomes. Food insecurity increased in nearly every state during the downturn, but California saw the fourth-largest jump, and between 2010 and 2012, an average of nearly one in six of the state’s households faced hunger or the threat of hunger. An astounding 25 percent of California’s children lived in households that were unable to afford sufficient food at some point in 2010, up from 17 percent of children in 2006.

SNAP’s History of Success

The recent rise in food insecurity is cause for concern, but our nation’s past efforts to reduce hunger show that it’s possible to reverse this trend. In the 1960s, before food assistance was widely available, it was common for children in impoverished communities to show signs of severe malnourishment — such as distended bellies or wasting — that today are typically associated with extreme poverty in developing nations. In fact, just two generations ago, some infants born to very-low-income families in the US would die of hunger. Today such tragedies are rare in our nation thanks to the creation and expansion of food assistance programs. The nation’s largest program, the Supplemental Nutrition Assistance Program (SNAP, known as CalFresh in California) can be credited with largely eliminating severe hunger and malnutrition in the US.

Research shows that SNAP not only reduces hunger, but also it functions like an immunization, protecting young children from illness. It also cuts children’s odds of being underweight and at risk of developmental delays. And SNAP’s benefits appear to last into adulthood. A recent academic paper found that children from disadvantaged families who had access to food assistance early in life were significantly less likely to suffer from serious, chronic health conditions as adults. Furthermore, the girls in these families were better able to support themselves as adults: they generally achieved higher levels of education, had higher earnings, and were less likely to need public assistance as adults.

Food assistance also is one of the most powerful tools for reducing poverty. By boosting families’ food budgets and thus freeing up income for other necessities, SNAP lifted 4.7 million people nationwide — including 2.1 million children — above the poverty line in 2011. CalFresh kept nearly 800,000 Californians out of poverty that year, including 380,000 children — effectively cutting the child poverty rate by about 4 percentage points.

How California Can Build on SNAP’s Success

California’s policymakers can reduce hunger and poverty even more by expanding food assistance to additional families. Currently, California ties with Wyoming for the lowest SNAP participation rate. Estimates suggest that 3.2 million Californians are eligible for the program but are not enrolled. If every eligible Californian participated, millions of state residents would be better able to afford sufficient food and many would be lifted out of poverty. What’s more, because CalFresh is 100-percent federally funded, maximizing program participation would draw an estimated $3.5 billion in additional federal food assistance benefits into the state, providing a significant boost to California’s economy as well as its families.

State policymakers should be commended for taking a number of important steps in recent years to boost participation in CalFresh, but there are additional actions they could take to further increase enrollment. For example, California could establish a stakeholder advisory committee to identify and recommend effective strategies to improve statewide CalFresh participation, service, and performance.

California could also expand so-called “categorical eligibility,” a simplified enrollment process intended to boost participation in CalFresh. Legislation signed into law last year established categorical eligibility for households with individuals enrolled in Medi-Cal, the state’s health care program for low-income Californians. Specifically, this legislation enables households who have a connection to Medi-Cal and whose gross incomes somewhat exceed the CalFresh eligibility requirement — falling between 130 percent and 200 percent of the poverty line — to qualify for CalFresh as long as they meet the program’s net income test, meaning that their incomes, after subtracting certain expenses such as child care, remain at or below the poverty line. (For a family of three, 130 percent to 200 percent of the poverty line corresponds to an annual income of between about $24,000 and $38,000.) As a next step, the Legislature could approve the Governor’s recent proposal, included in his revised budget, to broaden categorical eligibility to all households — not just those with a connection to Medi-Cal — whose incomes meet these requirements. This proposal would remove a significant barrier to CalFresh enrollment primarily for low-income working families who spend much of their incomes on necessities like child care and housing and thus have little left over for food.

In addition to boosting CalFresh participation, policymakers could take action to prevent a pending reduction in food assistance benefits. Recent changes in federal law imposed restrictions on state “Heat and Eat” policies, which boost SNAP benefits for families who also participate in a federal energy assistance program. Absent state action, these restrictions are expected to result in a significant loss of CalFresh benefits — $62 in federal funds per month, on average, for hundreds of thousands of California households. (To put this cut in perspective, the average CalFresh household receives just $200 of food assistance per month.) California policymakers could prevent this substantial cut by adopting the Governor’s recent budget proposal to increase state funding for energy assistance by the amount needed to comply with the new federal requirements. While implementing this proposal would cost the state $10 million, it would prevent California from losing $300 million in federal funds — a substantial bang for the buck.

Why This Matters Now

Boosting participation in food assistance programs is especially critical now given California’s severe drought, which is expected to cause food prices to rise, making it harder for low-income Californians to feed their families. Research suggests that a mere $10 increase in weekly food costs can significantly boost the share of households facing hunger of the threat of hunger.

Moreover, the emergency food providers that many families turn to when they can’t afford enough to eat are anticipating significant challenges ahead. If the drought causes food supplies to drop, food banks expect that they’ll run out of food before serving all of their clients, particularly if demand for their services increases due to higher food prices. Already many food banks have reported increased demand for assistance due to recent cuts to SNAP benefits.

Increasing CalFresh participation has always been a policy win-win given its potential to substantially reduce hunger and poverty while boosting the state’s economy. But with food prices likely to rise in the near future, the case for taking prompt action has never been stronger.

— Alissa Anderson

Taking on Poverty and Inequality: CBP Conference Plenary to Discuss the Key Role of Public Policy

February 4, 2014

There is a growing awareness among policymakers and the public of the serious challenges of high poverty and widening income inequality, both in California and nationally. At the CBP’s annual conference on March 6 in Sacramento, our luncheon plenary will have an expert panel discussing what poverty and inequality mean for California and its communities, as well as the kinds of policy choices that could combat financial hardship and help workers and their families climb the economic ladder.

This luncheon plenary — “Taking On Poverty and Inequality: How Public Policy Can Help Address These Challenges and Promote Greater Social Mobility” — will feature:

Sasha Abramsky, author of The American Way of Poverty: How the Other Half Still Lives, selected by the New York Times Book Review as a Notable Book of 2013.

Sylvia Allegretto, co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, and author of several landmark studies on employment, earnings, and wealth trends.

Vanessa Aramayo, director of the California Partnership and one of our state’s leading voices for policy change that addresses root causes of poverty.

Don’t miss this chance to hear insights on — and get your questions answered about — how California can take real steps toward making a bright economic future possible for all.

Register today for our 2014 conference, Raising the Bar: How Smart Policy Choices Can Create Shared Prosperity in California. Be sure to register by February 13 — less than two weeks away — to take advantage of the early-bird discount.

— Steven Bliss