Working Poor Families Battered By Great Recession, Expiration of Recovery Act Programs | |
By: David Dayen |
In a beat sweetener this morning, Jacob Lew defended the tax cut bill by saying, “This is not a package we could have supported if it didn’t take care of the workers who are most vulnerable.” He’s talking about the extensions of the refundable tax credits like the expanded EITC and the child tax credit. He does not mention that low income Americans will see an effective tax increase from the law. Because expanded EITC and the child tax credit just carry forward current law, the only change in the real lives of the working poor from the tax cut bill comes from the swapping of Making Work Pay with the payroll tax cut. And as we’ve demonstrated, the tax cut will be less generous to those at the low end of the income scale.
How many people are we talking about? Consumer Reports puts the figure at 51 million, including individuals making less than $20,000 a year and households making less than $40,000. And the numbers of the working poor are growing. The Working Poor Families Project has released a new paper showing the most recent data on the working poor, and the numbers are staggering. Low-income working families, defined fairly rigorously by the WPFP as families making 200% of the poverty level, jumped in 2009. 45 million people, including 22 million children, lived in working poor families in 2009, up 1.7 million from the previous year. “There’s been a big jump in the last two years, which one can attribute to the Great Recession,” said Brandon Roberts, one of the co-authors of the report. Thirty percent of all households now fall into the working poor families category, a major jump from previous years.
Basically, these families are living on shoestring budgets, struggling to meet their basic needs on an almost daily basis, according to Roberts. “There’s no money set aside for vacations, for college education for the children, or even for emergencies.” The Great Recession has pushed these families back even further, as well as swelling their ranks. Even with so many people falling out of this category by becoming unemployed, working poor families have increased, with hours cut back and other losses of income. What jobs are available to this class are increasingly of the temporary help variety. The middle class has fallen back into the working poor territory. “These people are one paycheck away from a serious economic crisis,” said Roberts.
Several policy actions put in by the Recovery Act sought to cushion the blow of the recession for these families. Increases to Head Start, food stamps and child care programs, a TANF emergency contingency fund for jobs, COBRA subsidies and an extra $25 a week in unemployment checks all helped working poor families get by despite the hardships of the recession. “The Recovery Act policy actions are all important and useful… it begs the question, how much worse can it get?”
We are about to find out. Practically all of these Recovery Act programs designed to help the working poor have been cut back or eliminated for 2011. The failure of the omnibus bill hurt a lot; Head Start was promised $841 million extra, and child care $681 million. Those will now get funded at current on-budget levels, without the boost from the Recovery Act, and as a result, working poor families will have major troubles.
“These increases would have helped many, although not all, of the nearly 300,000 children who benefited from child care assistance and Head Start and Early Head Start starting in 2009 as a result of economic recovery funding,” Blank said.
“This is devastating news for these children, their families, and the economy,” Sen. Al Franken (D-Minn.) said in a statement to HuffPost. “Without child care, it will be difficult for parents to hold down steady jobs. And by shrinking access to programs like Head start, we’re putting our most vulnerable children at risk of school failure, which will harm their job prospects and our economy in the long run.”
You can add to that the reduction of the $25 for unemployment checks, the end of the COBRA subsidy, the expiration of the TANF Emergency Fund, and two cuts to the food stamp program, including a month-over-month benefit reduction for the first time ever. AND, the effective increase in the taxes of the working poor.
“The 2011 budget has not been signed and delivered,” said Roberts, adding that the next Congress has already vowed to look for major cuts when they get their hands on the budget, as soon as next March. “This data (from the report) says you have to bring the needs of these families into those decisions. You must make policy decisions with these conditions in mind.”
But with the existing policies not sufficient protection for working poor families, and the meager help offered to them running out, there’s no telling what cutbacks will do to tens of millions of families.
Roberts hoped that the data collected by his organization would raise the attention of the severity of the issue. But it’s unclear what will cause policymakers to take notice. “We’re going from 1 in 4 working poor families to 1 in 3. When will this stop? 1 in 2?”
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