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The High Public Cost of Low Wages

April 16, 2015 Comments off

The High Public Cost of Low Wages
Source: University of California-Berkeley (Center for Labor Research and Education)

Even as the economy has at last begun to expand at a more rapid pace, growth in wages and benefits for most American workers has continued its decades-long stagnation. Real hourly wages of the median American worker were just 5 percent higher in 2013 than they were in 1979, while the wages of the bottom decile of earners were 5 percent lower in 2013 than in 1979. Trends since the early 2000s are even more pronounced. Inflation-adjusted wage growth from 2003 to 2013 was either flat or negative for the entire bottom 70 percent of the wage distribution. Compounding the problem of stagnating wages is the decline in employer-provided health insurance, with the share of non-elderly Americans receiving insurance from an employer falling from 67 percent in 2003 to 58.4 percent in 2013.

Stagnating wages and decreased benefits are a problem not only for low-wage workers who increasingly cannot make ends meet, but also for the federal government as well as the 50 state governments that finance the public assistance programs many of these workers and their families turn to. Nearly three-quarters (73 percent) of enrollees in America’s major public support programs are members of working families; the taxpayers bear a significant portion of the hidden costs of low-wage work in America.

This is the first report to examine the cost to the 50 states of public assistance programs for working families. We examine working families’ utilization of the health care programs Medicaid and Children’s Health Insurance Program (CHIP), as well as their enrollment in the basic household income assistance program Temporary Aid to Needy Families (TANF). Both of these programs operate with shared funding from the federal government and the states, and in this report we also examine the costs to the federal government of Medicaid/CHIP and TANF, as well as the Earned Income Tax Credit (EITC) and the food stamps program (Supplemental Nutrition Assistance Program, or SNAP). Our analysis includes only the cash assistance portion of TANF, and it does not include costs for state Earned Income Tax Credits, child care assistance, or other state-funded means-tested programs. Overall, we find that between 2009 and 2011 the federal government spent $127.8 billion per year on these four programs for working families and the states collectively spent $25 billion per year on Medicaid/CHIP and TANF for working families for a total of $152.8 billion per year. In all, more than half—56 percent—of combined state and federal spending on public assistance goes to working families.

Earned Income Tax Credit in the United States

April 9, 2015 Comments off

Earned Income Tax Credit in the United States
Source: Urban Institute

The Earned Income Tax Credit (EITC) provides substantial assistance to low-income working families with children. The credit encourages work for many, though may reduce work or wages for some. Counted in the poverty measure, the EITC would have been credited with lifting 6.5 million people out of poverty in 2012. The credit fails to provide substantial benefits to workers without children, is complicated, has a high erroneous payment rate, and creates substantial marriage penalties for some low- and moderate-income couples. Extending the credit to workers without children or replacing it with an individual worker credit could solve some or all of these criticisms.

Warren Buffett’s mobile home empire preys on the poor

April 8, 2015 Comments off

Warren Buffett’s mobile home empire preys on the poor
Source: Center for Public Integrity

Buffett’s mobile home empire promises low-income Americans the dream of homeownership. But Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance, an investigation by The Center for Public Integrity and The Seattle Times has found.

Rich Schools, Poor Students: Tapping Large University Endowments to Improve Student Outcomes

April 8, 2015 Comments off

Rich Schools, Poor Students: Tapping Large University Endowments to Improve Student Outcomes
Source: American Institutes for Research

On January 8, 2015, President Obama initiated a nationwide conversation about community colleges and the education of the “middle class” by proposing a tuition-free community college plan. Although it has received far less attention, the President’s plan also called for effective support services that can help students stay in college long enough to advance their career goals by completing degrees or certificates and/or transferring to four-year institutions.

Rather than free tuition, which already exists for most students who need it, this study maintains instead that proven student support services are what need to be funded. The nation’s need for adequately educated students cannot be met without significant additional financial support, and the report suggests that a fair source for that support is a reallocation to underfunded public institutions of a percentage of the tax-exempt subsidy that the nation’s taxpayers provide America’s wealthiest colleges and universities.

In Search of a Match: A Guide for Helping Students Make Informed College Choices

April 6, 2015 Comments off

In Search of a Match: A Guide for Helping Students Make Informed College Choices
Source: MDRC

This guide is designed for counselors, teachers, and advisers who work with high school students from low-income families and students who are the first in their families to pursue a college education. It offers strategies for helping these students identify, consider, and enroll in “match” colleges — that is, selective colleges that are a good fit for students based on their academic profiles, financial considerations, and personal needs. Many of the suggestions in this guide are based on insights and lessons learned from the College Match Program, a pilot program that MDRC codeveloped with several partners and implemented in Chicago and New York City to address the problem of “undermatching,” or what happens when capable high school students enroll in colleges for which they are academically overqualified or do not apply to college at all.

EU — Material deprivation statistics – early results

April 3, 2015 Comments off

Material deprivation statistics – early results
Source: Eurostat

Eurostat disseminates early results for severe material deprivation rates so that trends in poverty levels can be tracked more closely. 2014 data are available for over half the European Union (EU) Member States, and Iceland. The coverage and the timeliness is expected to increase in the coming years. Latvia and Hungary have provided final data for the early results, while Belgium, Bulgaria, the Czech Republic, Estonia, Greece, Spain, Italy, Malta, Austria, Poland, Portugal, Slovenia, Slovakia, Finland, the United Kingdom and Iceland have transmitted provisional data. Early EU-28 aggregates are not yet available for 2014, as not all Member States have transmitted final or provisional material deprivation variables.

In 2014, of the countries that sent data to Eurostat, early severe material deprivation rates increased for Greece (+1.4 percentage points), Belgium and Spain (both +0.8 pp) and for Malta (+0.7 pp) The rates fell significantly in Bulgaria (-9.9 pp), Latvia (-4.8 pp), Poland (-1.5 pp), Hungary (- 2.9 pp), Estonia (-1.4 pp), Italy and United Kingdom (both -1.0 pp). No large variations were seen in the other countries for which data is available.

Medicaid and Intergenerational Economic Mobility

April 2, 2015 Comments off

Medicaid and Intergenerational Economic Mobility
Source: Institute for Research in Poverty (University of Wisconsin)

Previous research demonstrates that the Medicaid expansions of the 1980s and 1990s had lasting effects on the health, education and labor market outcomes of children. Yet to date there has been no direct test of the effect of Medicaid expansions on intergenerational economic mobility. Using new commuting zone level estimates of economic mobility for children born between 1980 and 1993, we exploit the uneven expansions of Medicaid eligibility across states to isolate the causal effect of this policy change on mobility outcomes. Regression models using simulated state-year specific eligibility criteria as an instrument for expanding coverage demonstrate that increasing the proportion of women aged 15–44 eligible for Medicaid is associated with a reduction in the correlation between the income ranks of parents and their children in adulthood. We further find the Medicaid expansions increased the probability that children born to low-income parents experience absolute upward mobility. These findings suggest early exposure to health insurance may be a key policy lever for promoting intergenerational mobility and economic opportunity.

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