PART
8: The Torn Social Safety Net in America and the New Working Poor
By Allen Stansbury, Senior Associate, Center for Community Futures, Berkeley,
CA
As America’s middle class income declined they are forced
to turn to elsewhere for support and that place is usually the Federal and
State government social safety net. Not only have they turned to the
government’s safety net, but also to local non-profit service providers and
local charities. While in some instances, the need has doubled in the last few
years the global recession has caused declines in government funding for both
direct and indirect services and decreases in the endowments of charitable
organizations.
The turn-about from middle class income to poverty was a
long time coming but when the housing bubble burst and global financial recession
fully set-in the middle class felt its full affect: loss of jobs meant loss of
wages and benefits, soon housing, medical and food were in short supply each
loss feeding the other in a downward spiral sending more people into the social
safety net in America.
As unemployment hit 8-12% payouts from Unemployment
Insurance more than doubled resulting from the huge impact of the global
recession on job retention and job creation.
Unemployment insurance claims peaked in 2010 and since there has been a
steady, albeit, a slow decline in the weekly claim reports. Long term (more
than 27 weeks) peak at 43.8% of all unemployment claims in 2010. But, many claims have been longer, much
longer showing the degree and extent of the global financial recession
particularly on the middle class.
The 2008 farm bill renamed the Food Stamp Program as the
Supplemental Nutrition Assistance Program, or SNAP has experienced a huge
increase in the number of people eligible for this program especially those who
were middle class. Imagine today that 1
of 7 Americans (47 million) are surviving on food stamps where before in 2000
about 17 million, mostly the poor needing this.[1]
Now, communities and neighborhoods once
thought to be solid middle and upper income, immune from economic downturns
have turned to food stamps as their primary source of food.
Take for instance Staten Island, NY. In the
fall of 2012 the local Staten Island
newspaper, SILive
reported “The 47,131 Islanders who
got help paying for groceries (but no other form of assistance) represented a
quadrupling since June, 2000, when 10,263 Islanders received the benefit.” Staten Island is, or was, thought to be a very
middle class New York City borough of about 470,000.
By far the majority of SNAP recipients are working, not
those on welfare or retired. Many of
these are working several minimum wage jobs, just to live day to day. To show how little income is being made, to qualify
for SNAP recipient’s annual household
income for one must be less than $1,211 per month; less than $1,640 for a household
of two; $2,069 for three people and $2,498 per month if four people live in the
household (as of October 1, 2012). Those
on social security are automatically eligible.
For most middle income families with children this income
level is not enough to feed a family. Children attending public schools are
eligible for the USDA lunch program. Twenty percent of households with children
are “food insecure” according to USDA
surveys. During 2010-11 more than
half of fourth-graders nationwide (52 %) qualify for the Supplemental Nutrition
Assistance school lunch program.
Already the safety net of SNAP, unemployment insurance
and other programs are stretched to the limit. Programs such as Welfare to Work
require a pool of jobs in order that it is successful. Given the job creation
climate since 2007 many recipients have become ineligible. Consequently, the new working poor have few
resources to fall back on, making the former middle class even poorer.
In addition to the increased need of the new working poor
for Federal programs there is also an equally huge demand for programs offered
by America’s non-profit human service providers. Many of not most are slicing
services to those in need in the face of widespread cuts in both state and
federal government financial support.
Urban
Institute’s 2009 survey of about 3500 non-profit (IRS 501c.3) government contracted
service providers found that cutbacks of federal, state and local government contracts,
along with reductions in contributions and investment income, and charity
donations due to the global recession caused these agencies to scale back their
operations. Their published report
concluded that the decline in funds caused a “hollowing of organizational
capacity that may take years to rebuild, if ever.” They had to cut back services like food, job
training, and child care while demand for these services continues to rise.
The UI
survey found 82 % of the human service non-profits participating in the
survey reported that they scaled back their operations to the point that: 21 %
reduced programs or services; 17 % served fewer people; 50 % froze or reduced employees’
salaries; 39 % drew down their reserves; 23 % reduced health insurance,
retirement contributions, and other employee benefits; and 22 % borrowed or
increased lines of credit.
Another recent study published by the
Urban Institute clearly confirms that the social safety net is more than
every needed many middle class families that have lost jobs or found lower
paying jobs, or have lost their assets resulting from the global recession. However, with the huge debt that the US
government undertook bailing out the banks and financial institutions, the Troubled
Asset Relief Program’s (TARP) program and the American Recovery and
Reinvestment Act (ARRP) stimulus package these programs are either being
eliminated or unable to meet the demand.
The consequence to the US middle class is that there are practically no
or very few safety net programs to fall back on thus causing them to sink
further into poverty.
Part 8: The Dots…Selected Safety Net Trends in the US:
1980-2010
1.
Since 1969 dependence on government benefits has
more than doubled. In 2009, all government benefits accounts for 17.6% of
personal income according to the NY
Times Geography of Government Benefits.
·
Additionally, the NY Times found that:
o Unemployment insurance percent of personal
income more than doubled from .5% to 1.1% between 1979-2009
o Medicare had the largest growth
percentage in personal income: 1.5% in 1979, increasing to 4.1% in 2009
o Medicaid increased from 1.1% to 3.1%
between 1979-2009
o In
1979 Social Security benefits was of
personal income 5% and 2009 it stood at 5.6% of personal income
o In
1979 income support (food stamps)
was 1.4% declining until 1999 then doubled to 2.9% in 2009.
o Veterans benefits were .7% of personal
income declining to .4% between 1979 and 2009
·
A study of the Safety Net by the Urban
Institute found that the majority of unemployed families had at least one
family member enrolled in Medicaid
in both 2005 and 2009 an increase resulting from the global recession of
2007-09.
·
This same UI study also found that there was 5
percentage point increase in public assistance receipt for two-parent families
between 2005 and 2009 resulting from the global recession of 2007-09.
2.
The
official poverty rate of elderly persons was 37.1 %, in 1959, more than
twice the 17.4 % rate for adults 18 to 64. By 1999, the rate for the elderly
had fallen to 7.0 %, lower than the 9.1 % rate for adults.
3.
Social
Security, turns78 in 2013, benefits 57 million Americans as the single most important source of income for its elderly
beneficiaries, contributing on average two-thirds of income for recipients over
age 65.
·
For more than one-third of them, Social Security
constitutes 90 percent or more of income. (see Chart 1 below).
·
Without Social Security, 44% of the elderly in
the US would be classified as poor compared to the 9% that currently are
classified.
4.
Welfare to Work (otherwise
known as PRWORA) replaced cash assistance to the poor with training and job
placements in 1996.
·
WTW implementation caused almost a 50% decrease
in those receiving welfare by the end 2001.
·
In 1985 14% of low-income families with children
received cash payments through welfare, 1995 this dropped to 11.5%. After WTW,
this dropped to 7% in 2003, half of 1985.
·
However, for WTW to work requires that there are
available jobs and as a result of the collapse of the housing bubble and the
global financial recession jobs were very difficult to find for those in the
program, thus making them ineligible for the program.
5.
Temporary
Assistance for Needy Families (TANF)
·
Rates of public assistance, mostly Temporary
Assistance for Needy Families (TANF) recipients among all unemployed families
with children actually declined for both low-work[2]
and more-work families.
·
24 % of low-work unemployed families received
public assistance in 2009 compared with 29 % in 2005.
·
At the same time, public assistance increased
among two-parent family recipients between 2005 at 26.7% and 2009 at
49.7%.
·
The declines in public assistance receipt likely
stem from longer-term trends of lower take-up rates and tougher enrollment
procedures in many states. They also reflect higher receipt of unemployment
benefits. Unemployment benefits generally far exceed public assistance
benefits, and families with unemployment benefits would not also qualify for
public assistance in most states.
6.
Unemployment
Insurance – table below shows the total number of those on unemployment
insurance between January 2007 and January 2012.[4]
See chart 4 below of those unemployed 27 months or more.
7.
Food
and Nutrition
o In
1998 11.8 % or 12,188,000 households in the US experienced food insecurity, in
2011 it was 14.9% or 17,853, 000 households.
o Food
insecurity in households with children is 20.6% in 2011, up from 14.8% in 1999.
o Food
insecurity means that meals are missed or foregone in order to pay for
something else. A missed meal by children causes a major distraction away from
school and their studies or if enough meals are missed malnutrition sets in.
·
By the end of 2011 nearly 47 million or about 1
in 7 (over 14%) Americans were receiving SNAP benefits. This is nearly a 50%
increase from October 2008. In Mississippi more than 20% lived on food stamps
in 2008.[5]
o This
trend continued through the middle of 2012 with a record expenditure of $75.6
billion for FY2010-11 according to the USDA.
o At
the end of 2001 nearly 19 million American’s were participating in the Food
Stamp Assistance program (SNAP)
·
The fraction of families receiving SNAP was
higher in 2009 than in 2005. Most of the increase occurred among unemployed
families with more work (39 % in 2005 compared with 47 % in 2009).[6]
·
Families with less than 26 weeks of work
frequently received SNAP in 2005 and 2009. The increase in enrollment among
higher work families could reflect the decline in their income (from $26,270 in
2005 to $24,525 in 2009), but also broader acceptance of this support among
working families.[7]
 |
| Chart 2: Monthly Participation in the SNAP food stamp program 1990-2012 actual and 2012-2020 projected |
·
USDA
trends analysis shows that 1980 Supplemental Nutrition Assistance served
9.9 million children, 1994 before welfare to work went into effect 14.4 million
children benefited; in 2000 this was now 8.7 million by 2008 this had rebound
to 13.3 million on track for 15 million. And further
o During
2006-7 school years, 17 million students received subsidized meals under the
school lunch program, during school year 2010-11 this number rose to 21
million, nearly 25%.
o During
2010-11 for the first time, more than half of fourth-graders nationwide (52
percent) qualify for the lunch program.
8.
Child
Care and Development funds (CCDF) and
AARP child tax credit allowance
·
According to the Urban Institute study on the
Social Safety Net released in 2011 it found that there was a decline in child
care assistance to both low and moderate income families. In 2005 10.5% of all
families received this assistance but in 2009 it declined to 7.9% (see chart 5).[8]
9.
Demands for services from non-profit human service providers are way up while at the same
time resources are in short supply according to the Urban
Institute’s 2010 report on Non-Profit Government Contracting (see Chart 3
below).
·
Human service providers surveyed in the report were
large (i.e. Red Cross) and small local organizations.
·
Besides cuts in their government contracts or
loss of contracts or to provide services, most organizations reported loss of
revenues from individual, corporate, and foundation donors, but also from
investment income and fees due to the huge impact of the global recession.
10.
Consequences
of the torn safety net on the US middle class according to the Urban Institute[9]
·
Since the start of the global financial
meltdown, entitlements such as social security and Medicare are now under
serious consideration by the US Congress for decrease benefits to be altogether
eliminated.
·
A dramatically larger share received a
refundable child tax credit in 2009 than in 2005, as a result of the ARRA
extension of refundability to lower-income taxpayers. However, since then this
program has expired leaving families either forgoing employment to provide
their own child care or paying this and not some other necessity (i.e. health
and medical premiums).
·
The federal extensions of unemployment benefits
continued through 2011, but the extension beyond this period was eliminated in
the debt ceiling legislation.
·
The expanded child tax credit is scheduled to
expire at the end of 2012, returning to a $500 credit and much lower levels of
refundability.
 |
| Chart 3: Percentage of Elderly relying on Social Security in 2012 |
.png) |
|
Chart 4: Impact of Federal Budget Cuts on Non-Profit Human
Service Providers in 2009 (Urban Institute)
|
 |
|
Chart 6: One and Two
Parent Low-Work Families, percentage of benefits 2005 and 2009
|
+-+WSJ.jpg) |
|
Chart 7: Trends in
Entitlements (2008-2012) -WSJ
|
[2]
Low work families
eligibility is 200% of Federal Poverty Level (FPL), Low work is at least one
parent working less than 26 weeks during the year.
[3]
US Department of Labor Unemployment Insurance Weekly Claims Report for
2007-2012
[4]
See also http://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/key-statistics-graphics.aspx
[5]
Congressional Budget Office, April 19, 2012 (http://www.cbo.gov/publication/43173)
[6]
Is the Safety Net Catching Unemployed Families? Austin Nichols, Sheila R. Zedlewski, Urban
Institute Sept 2011, pg 3
[7]
ibid
[8]
Is the Safety Net Catching Unemployed Families? Austin Nichols, Sheila R. Zedlewski, Urban
Institute, Sept 2011, Table 2
[9]
Ibid
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