Safety Net Programs Show Holes in the System

Moving people from public assistance to financial independence is a delicate matter. It involves coordinating so many competing elements - child care, food, transportation, utilities, rent, clothing and incidentals. Many families rob Peter to pay Paul, skating by month to month, living paycheck to paycheck because the low-skill, low-wage jobs where they have found employment do not pay a living wage, a salary that will support families with children. The working poor have to make very difficult choices - to keep the lights on or to buy food (pantries and food aid agencies across the country are experiencing shortages presently); to repair the car or to buy medicine for the sick kids; to pay the rent or to fill up the gas tank to get to work. And at least in Memphis, public transportation is not a viable option for many people. Erratic bus schedules and inconvenient bus lines make getting to and from work - with kids and groceries in tow - a mighty challenge.

So some states are trying to help their working poor, the people who have moved from public assistance to paid employment but who are still having trouble getting by. States are giving monthly cash stipends to working adults to help them make ends meet.

From the New York Times article:

The women are pioneers in an emerging social experiment as states across the country try to go beyond simply moving people off welfare. Over the last two years, officials in Arkansas and at least a dozen other states have announced plans to extend the safety net — through monthly cash payments — to thousands of low-income workers struggling to gain a foothold in the work world. Arkansas provides poor working parents with $204 a month, plus bonuses for staying employed, for up to two years. Oregon offers $150 a month for up to a year. Virginia gives $50 a month for up to a year. And the California Legislature is considering a plan, proposed by Gov. Arnold Schwarzenegger, to provide $40 a month to 41,000 working families that receive food stamps. “The goal had been getting parents off of welfare,” said Jack Tweedie of the National Conference of State Legislatures, who counsels states on poverty issues and has advised Arkansas officials. “The emphasis now is much more on work and helping parents stay in work.”

This is a laudable effort. Strengthening the safety net for working families - the adults who are trying their best to get on and stay on their feet - is of utmost importance. It is the right thing to do to care for families with children. Unfortunately, these cash-assistance efforts miss the point: many jobs in our country do not pay a living wage. They do not have a career ladder that provides upward mobility for families. They are jobs for an expendable workforce, often without benefits or full-time employment. They are jobs that do not pay enough for a family to get a leg up and out of poverty, or even low-income status.

An adult earning minimum wage - $5.85/hour - working full-time, year-round will still only make $12,000 per year. For a family of three, the Federal Poverty Level is just over $17,000 - which means that even if there are two adults earning minimum wage in full-time, year-round work, their combined annual income will only be $24,000, which still puts them squarely in the low-income bracket. The added cash-assistance boost will help a little bit, but not enough to address the root causes of poverty: a well-maintained system of institutionalized poverty in which the growing divide between the very rich and the very poor spans wider every year. Barbara Kellerman from the Harvard Kennedy School of Government discusses this divide here.

What we have is a compensatory system, a well-maintained welfare state that subsidizes poverty rather than addressing the problems at its roots. While well-intentioned, programs that throw $40 or $150 here and there at families in need may help temporarily, but they hardly speak to the deeper problems of servitude and cheap labor which keep people from moving up in their careers. State-sponsored charity will not help families in the long run. It will not help the children in these families who are growing up in poverty, in schools where many of their peers are in the same situation, in communities marred by poverty and desperation.

What we need is comprehensive wage reform where all jobs pay a living wage - $10 an hour with benefits or $12 an hour without benefits - and in doing this, families can become financially independent, care for their children, plan for the future and not have to make difficult choices about which bills to pay this month and which to put off until next month.

For more about safety nets and who picks up the pieces when lives fall apart because of sporadic or underpaying and precarious employment, read The Missing Class.

The following is my favorite passage from the book:

Those of us who want women to be able to stand on their own feet do not like to hear that the children the women leave behind during the workday may be doomed to repeat the lives of their poor mothers. But in a world where high-quality child care is available only to the wealthy or the lucky, a child's prospects can be irreparably damaged if her mother disappears for many hours every day, leaving her in the care of someone who lets drug addicts into the house. What matters more, the mother's shot at present-day security or the next generation's potential for future success? At the moment, we may be addressing the problems of the parents, only to see a "sacrificed generation" emerge, a cohort of children condemned by poor schooling or entanglement in the criminal justice system to a life not unlike the one their parents were running hard to escape (p177).

The working poor

The New York Times is reporting today on the effect of the economic downturn on America's working poor - the bootstraps folks who are self-employed, the entrepreneurs who teach music lessons and do handiwork, the fabric of the country who work for themselves and who hold jobs that once gave them ample overtime hours that gave their family a cushion of income, a buffer that gave them a sense of security which is eroding paycheck by paycheck.

Says the New York Times, "The gradual erosion of the paycheck has become a stealth force driving the American economic downturn. Most of the attention has focused on the loss of jobs and the risk of layoffs. But the less-noticeable shrinking of hours and pay for millions of workers around the country appears to be a bigger contributor to the decline, which has already spread from housing and finance to other important areas of the economy."

One woman's monthly income has decreased by one-quarter - while she once could depend on $600 per week, she now makes do on $450 per week. Trips to the store are rationed. Families visit parks instead of museums. Parents take their children to thrift stores instead of the mall. (Heck, I'm shopping at ICB on Jefferson these days...) This decline has brought her salary from $31,000 to $23,000 - where once she was middle-income, she is now considered low-income, a phenomenon described in The Missing Class, a book about America's near poor.

According to the February 2008 Tennessee Labor Report, 20,000 people in Memphis City are unemployed (6.7%) - and this might be a conservative figure given that this only measures people who have actively sought work in the past few weeks. What about other people who have given up looking for work?

People who could once make it on one income are now taking part-time jobs to supplement what they've lost in earnings. This means more children spend less time with their parents, more families are stressed by financial worries, more families have fewer buffer resources to fall back on in case of emergencies or special occasions - a sick child, a flat tire or a prom.

The Missing Class in Memphis

The National Center for Children in Poverty says that 100% of the federal poverty level is an inaccurate measure of poverty - that actually it's closer to twice that, or 200% FPL. "The Missing Class" looks at the group of folks between 100-200% FPL as equally fragile families who are one paycheck from disaster.

There is already consensus in classifying children living at or below 200% FPL as "vulnerable" and our assessment as such is supported by the fact that children up to 185% FPL are eligible for free and reduced price lunches in schools. But based on her definition of the poor and the near-poor, she doesn't find much distinction - they live in the same neighborhoods and face many of the same issues together. The difference between who makes it to the next level, who has financial success and achievement and makes it beyond poor or near-poor, is often determined by whether or not there are viable childcare options...

The Missing Class
by Eyal Press

Sociologist Katherine Newman is best known for her richly documented, fine-grained portraits of the working poor. In books such as No Shame in My Game and Chutes and Ladders, she has chronicled the experiences of low-wage workers struggling against formidable odds to lift themselves out of poverty. Unlike many economists, Newman focuses less on statistics than on the barriers and opportunities people encounter in their daily lives, shedding light on the fault lines of the nation's class divide through intimate accounts of families and neighborhoods. In her forthcoming book, The Missing Class, written with Victor Tan Chen, Newman has turned her attention to the travails of the "near poor," a vast pool of workers who are neither officially destitute nor comfortably middle class. Recently, Nation contributing writer Eyal Press caught up with her at her home in Manhattan.

Who are the "near poor"?

The near poor are people with household incomes between $20,000 and $40,000 a year for a family of four, or 100 to 200 percent of the poverty line. And there are actually almost twice as many of them as there are people under the poverty line--57 million in the US. They represent, on the one hand, an improvement, forward motion, the promise of upward mobility. But their lives are not stable. They truly are one paycheck, one lost job, one divorce or one sick child away from falling below the poverty line.

Are the members of this class in a more precarious situation today than, say, ten or twenty years ago?

More precarious than in the late 1990s, yes, but not twenty years ago. The reason is that we had this golden period between about 1997 and 2002, when we had record low unemployment, high growth, low inflation, and that's part of what propelled these people forward--employers were looking for more of them, and opportunities opened up. That's less the case today.

What kinds of neighborhoods do the people you're describing live in?

Like the poor, the near poor tend to live in places that have serious problems of infestation--rodents, cockroaches--which means they have very high rates of asthma, childhood asthma in particular, and high rates of lead exposure, since their apartment buildings are older. They are also in neighborhoods with fewer consumer options, places not well served by the big chain stores that have the lowest prices. So basically the poor and the near poor are soaked--everything they buy is more expensive than it should be. It's like a huge tax on them, and there are also health consequences--your access to a decent diet is compromised; it's harder to get fresh fruits and vegetables. Problems like obesity are very pronounced in this population. But the neighborhoods of the near poor are less segregated and have a more diverse income mix than those of the "real" poor.

You call this a "missing class." Is it missing from the consciousness of Republicans or Democrats?

Pretty much both. John Edwards wrote the foreword to this book, so it's on his radar screen, but I haven't heard anybody else talk about these people, neither Republicans nor Democrats. I don't think the political parties reach out to them very much.

Yet I take it that what happens in Washington does have an impact on their lives.

Some of the policies set in motion over the past decade have had a particularly pronounced effect on the near poor. For example, welfare reform propelled a lot of people into the labor market. Meanwhile, No Child Left Behind created a system of high-stakes tests for kids in the public school system. Nobody was thinking about what these two policies would mean when they collided behind the closed doors of a family. But in a family, these things are colliding all the time: the demand placed on parents to be in the labor market and the demand placed on kids to pass those high-stakes tests, which they're far less likely to do if parents aren't around to take them to the library, read to them, look over their homework. There are stories in the book about mothers who had been able to go to their kids' schools, couldn't go anymore, didn't realize they were falling off the deep end, and then that kid ends up on Rikers Island.

Is there more, or less, awareness today of the challenges facing the working poor than when you began your research?

There's greater recognition now that we actually have a population called the working poor. I think that attempts to beat back some of the more successful policy innovations, like the earned-income tax credit, have failed in part because there's recognition that these people exist, that they should be supported and that we need to do something about their health insurance. What I don't see is much attention to fostering mobility out of working poverty. We seem to feel that as long as we've taken people off public assistance, our job is done. But it isn't done--it isn't good enough in a country as wealthy as this to replace welfare-dependent poverty with working poverty.

Yet welfare reform has not led to the disaster some people predicted. Haven't those who feared this, including yourself, been proven wrong?

What I didn't anticipate, and I don't think anyone anticipated, was that in the late '90s we would have really tight labor markets, a roaring economy, very high growth, very low inflation. We basically had the opposite of a perfect storm--we had perfect weather, and that provided a lot of mobility opportunity even for the people I study. But welfare reform won't receive its real test until we see a big recession and we can see what happens to people without any safety net beneath that. We haven't seen that, so it's not easy to know what it would mean.

In your previous book, Chutes and Ladders, you told the stories of two groups: the "high flyers," who succeeded in climbing out of poverty, and the "low riders," who didn't. What was the main difference between them?

For the most part the difference is explained not by their desire for upward mobility but by their family circumstances. Everybody wants a better job and everybody is willing to work for it. But women who had children and no one to help them with those kids were much more likely to get trapped--they couldn't get more education, which limited their job options; their contact with the labor market was more fragile and episodic. Whereas the people who could afford childcare or who worked out elaborate arrangements with extended family members were able to stay on the job, get more training and move upward.

That sounds like an answer conservatives would love--it's all about family.

But when we say it's about family, we're really talking about the burdens people face in simultaneously trying to combine family responsibilities with the demands of the labor market. And we don't make it easy for them to do that. In Italy, you have access to full-time, high-quality childcare from the time your child is an infant. Similarly in France. A lot of families I studied who didn't make it out of poverty were the ones where the childcare options were so dangerous they couldn't leave their kids, so they ended up dropping out of the labor market, which isn't good for them or for their children. I don't think conservatives have much of an answer to this. The only answer I hear them giving is that poor people shouldn't have children at all.

If you could take the platform of the Democratic candidate for President and insert three provisions for the missing class into it, what would they be?

Universal, high-quality, early-childhood education would be very high on my list, because the more we can do for kids when they start out to level the playing field, the better off the whole country will be in the long run. Universal healthcare would be hugely important, not only because of its health consequences but because it frees up income for other things. And opening up and maintaining access to higher education, because the people on the losing end of this economy are the poorly educated. Instead, I fear we're going in the opposite direction--we're seeing increases in public higher-education tuition, which will make it very hard for new generations to succeed.