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Poverty, Income Security and the Safety Net

Income Security

Contemporary followers of Jesus are challenged to stand in solidarity with those most in need – people on the economic margins and the especially vulnerable. Catholic Social Tradition is clear that we have a special obligation to these people and must stand with those who are vulnerable, defend those who cannot defend themselves, and assess lifestyles, policies and social institutions in terms of their impact on those who lack the economic means to advance their own cause. Because poorer members of U.S. society do not have the same resources as wealthier, more powerful members, we must work to ensure that those who are economically marginalized enjoy all human rights, such as the right to life, nourishing food, safe housing, affordable comprehensive medical care, quality education, and employment that provides a living wage as well as all the civil and political rights that enable people to attain their human rights.

Pope John Paul II, both in Centesimus annus and in Octogesimo adveniens made it clear that economic as well as political rights apply to everyone everywhere. In the latter encyclical he was especially descriptive: “…stifling oppression constantly gives rise to great numbers of marginal persons, ill-fed, inhumanly housed, illiterate and deprived of political power as well as of the suitable means of acquiring responsibility and moral dignity.”

And the current pope, Francis, in Evangelii gaudium, reiterates this concern for those who are poor: “…today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills… The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.” (53-54)

NETWORK believes that an important way to foster economic rights is through our nation’s safety net, which has been damaged recently and is in danger of unraveling.

Unemployment is unconscionably high (4.2 million in July 2013). The long-term unemployed (those jobless for 27 weeks or longer) comprise 37% of this number. Yet, there has not been additional funding to means-tested programs.

A major new study, led by Christopher Wimer and Liana Fox, researchers at the Columbia  Population Research Center, was released in December 2013. It presents clear evidence that the government “safety net,” which includes food stamps (SNAP), the Earned Income Tax Credit (EITC) and unemployment insurance, has made significant progress in easing the plight of those who are poor in the 50 years since the launch of the War on Poverty in 1964. According to the new research, the safety net helped reduce the percentage of Americans in poverty from 26% in 1967 to 16% in 2012. The results were especially striking during the recent economic downturn, when the poverty rate increased only 0.8% despite a massive increase in unemployment. Our economy itself, without the role of government programs (i.e. the safety net), has failed to improve the lives of those who are very poor over the past 50 years. This study shows that without the safety net, 29% would be in poverty today, compared with 26% in 1967.

It is important to note that the Columbia researchers used the most recent change in the measure of poverty made in 2010 by including the expenses people in poverty actually face and the benefits they receive from the government instead of the older measure of income. Using this measure, they have traced the evolution of the poverty rate and found the percentages listed above.

One of the remarkable findings of the researchers was that the recent financial crisis and Great Recession saw very little change in the poverty rate (only 0.8%) despite massive unemployment because the safety net was expanded to include more generous unemployment insurance and food stamps (the latter change ended on November 1, 2013) as well as tax credits. During less serious recessions prior to the Great Recession the poverty rate increased much more. Wimer said that without an expanded safety net during the last few years, the percentage of people falling into poverty would have increased by at least 5 or 6 %. (Trends in Poverty with an Anchored Supplemental Poverty Measure, December 5, 2013, Columbia Population Research Center)

In his testimony before the House Budget Committee on Poverty and the Safety Net on January 28, 2014, Robert Greenstein, Director of the Center on Budget and Policy Priorities, cited numerous studies and statistics demonstrating the positive effects on poverty of key safety-net programs. In total, the safety net kept 41 million people, including 9 million children, out of poverty in 2012 (the last full year when U.S. Census data was available). Together, the EITC and the Child Tax Credit kept 10.1 million people, including 5.3 million children, out of poverty in 2012. Unemployment benefits also reduce poverty significantly, especially when unemployment is high. In 2012, SNAP kept 4.9 million people, including 2.2 million children, out of poverty. Further, SNAP has been a bulwark against deep poverty for many families. In addition to reducing poverty, the safety net helps seniors, people with disabilities, and low-income adults and children access affordable healthcare through Medicare, Medicaid and CHIP.

Beyond reducing poverty, alleviating hardship, and giving millions of Americans access to healthcare, the safety net has other positive effects such as positive educational and health benefits.

Unfortunately, large racial disparities persist. The child poverty rate among African-Americans (29%) and Latinos (30%) was about 20 percentage points higher than the rate for non-Hispanic white children in 2012. To follow the story in just one jurisdiction, Washington DC has witnessed the rise in poverty among nearly all African Americans and Latinos, while the rise of affluence has occurred only among whites and some African Americans. A 2012 U.S. Census report shows that the District’s poverty rate for school-aged children jumped from 24.8% in 2007 to 30.9% in 2012. Nationally, in 2012, 27.6% of African-American households lived in poverty, nearly triple the 9.8% white rate, according to another Census Bureau report.

In 2012, according to census statistics, median household income nationwide was a little more than $51,000, which represents an 8% drop from 2007, when the recession officially began. In most areas today, a family of four needs to earn at least 200% of the federal poverty line in order to provide children with basic necessities.

The Census reports buttress several recent studies showing an uneven recovery from the recession. For example, in September 2013, Emmanuel Saez, an economist at the University of California, Berkeley, said in a report that since the recession ended, family incomes in the top 1% grew by 31% while everybody else’s incomes rose by just 0.4%. Saez said the top 10% of households reaped more than half of all income in the nation, the highest percentage since 1917. (Striking It Richer: The Evolution of Top Incomes in the US, September 3, 2013)

Living in dignity demands a safe and secure place in which to live. According to the 2013 Annual Homeless Assessment Report to Congress, approximately 634,000 people in the U.S. were homeless, largely unchanged from the year before. Much homelessness is due to insufficient housing stock for those households with the lowest income.

To examine the situation from both a national and historical perspective, between 1947 and 1979 the wages of workers at all salary levels grew by roughly the same percentage, but between 1979 and 2007, incomes shifted drastically, with the top 5% of earners seeing annual salary increases more than three times the size of those in the middle, not even including low-income households. Overall, 63% of total income growth went to the top 10% of households between 1979 and 2007, according to research by the Economic Policy Institute (EPI). From 1973 to 2011, employee productivity grew by 80.4% while median hourly compensation after inflation grew by just 10.7%. This is just one of many studies that focus on the growth of inequality in this country. And the situation regarding inequality has not improved since 2007. (http:www.epi.org/publication/unfinished-march-overview - June 18, 2013)

NETWORK has a long history with two programs that provide security to families through income and supports – TANF and refundable tax credits. Temporary Assistance for Needy Families (TANF), formerly called welfare, provides a block grant to states to help low-income families become self-sufficient through income assistance and support services. Refundable tax credits provide incentives for work and give extra income to those families and children with the least opportunities.

Additional means-tested programs on which NETWORK works include:

  • Housing vouchers, which have been radically reduced.
  • Low-Income Home Energy Assistance Program (LIHEAP) funds, which have been cut even though they have only been available to about 30% of those eligible.
  • Funding for Supplemental Nutrition Assistance Program (SNAP, better known as “food stamps”), which has been cut by $8.7 billion in the Farm Bill signed by the President on February 7, 2014. These cuts are on top of the cuts that occurred on November 1, 2013 when the temporary boost to SNAP funds provided by ARRA (the “stimulus” legislation) came to an end. For families of three, the November cut was $29 a month. That’s a serious loss, especially in light of the very low amount of basic SNAP benefits (about $1.40 per person, per meal).
  • Medicaid’s ability to provide medical attention to the most vulnerable, including the elderly in need of nursing care, is also in jeopardy since there have been numerous attempts to de-fund the Affordable Care Act as well as attempts to create spending limits for each person eligible for Medicaid. Only 26 states and the District of Columbia have expanded Medicaid to those making up to 138% of the federal poverty level. The remainder of the states adhere to Medicaid standards in their own respective states in which eligibility for Medicaid averages only about 67% of the federal poverty level.
  • Social Security continues to face proposed changes which would reduce benefits, being of greatest harm to those with the greatest need. Many of these proposals have been part of attempting to revamp entitlement programs.

Poverty levels continue to be shockingly high. Yet Catholic Social Tradition for more than a century has made clear that the impact of national economic policies on poor and vulnerable people is the primary criterion for judging their moral value. More than a dozen key Catholic writings maintain that national military spending seriously distorts national economic priorities and leads lawmakers to neglect programs that benefit those who need assistance the most. Those who are poor have the single most urgent economic claim on the conscience of the nation.

Poverty is not merely the lack of adequate financial resources. It also represents a more profound kind of deprivation – a denial of full participation in the economic, social and political life of society and an inability to influence decisions that affect one’s life. All persons should be able to share in and contribute to the common good. This idea challenges privileged economic power in favor of the wellbeing of all. That so many people are poor in a nation as rich as ours is a social and moral scandal that we cannot ignore. In fact, Pope Francis, in his lifestyle and in his writings, makes clear that capitalism, the modus operandi of this country, is not just broken; it is inherently out of control. Trickle-down economics is a mistaken precept and overlooks the truth about the way that economic elites often act.

Sister Simone Campbell, the Executive Director of NETWORK, testified before Congress on the issue of poverty in this country on July 31, 2013. As she points out, we need a fresh way of thinking about this issue! For more information about her testimony, click here.