Unemployment compensation: Oregon pays well, but too many states lag far behind

Congress patted itself on the back Sunday when it reached agreement on a pandemic aid plan including supplemental federal unemployment benefits of $300 per week, half the $600 a week delivered by the stimulus law enacted in March.

One of the conservative criticisms of the $600 payment was that it disincentivized people from seeking to return to work because itresulted in many people being eligible for more income while unemployed than they had made when unemployed. Some economists disagreed, asserting that the additional benefits did not deter job seekers. 

An analysis by three economists at the University of Chicago used government data from 2019 to estimate that 68 percent of unemployed workers who could receive unemployment benefits were eligible for payments that were greater than their lost earnings and that a substantial minority of those workers, particularly in low-wage professions like food service and janitorial work, ended receiving more than 150 percent of their previous weekly salary.

Surprisingly, the new $300 weekly supplement will also result in many recipients taking in more in unemployment benefits than they earned working. Estimates of the percentage, however, differ.

The Labor Department has said a $300 supplemental unemployment payment would give about 50% of workers at least the same amount of money through benefits that they earned while working.  The American Action Forum, a center-right policy institute, has estimated that 45% of recipients would receive at least full wage replacement with a $300 enhancement. University of Chicago economist Peter Ganong figured a $300 supplement would put 47% of workers above their prior earnings.

I find this appalling, but not for the reason you may think. I’m not all that concerned in these particularly difficult times about some workers collecting more in unemployment benefits than they earned when working. What raises my hackles is that the pandemic has shown how pitifully low so many American’s wages are and that many states pay abysmally low unemployment benefits in normal times.

That puts a significant number of unemployed Americans in peril.

A team of researchers at the Poverty Lab and the Rustandy Center for Social Sector Innovation at the University of Chicago in partnership with the University of Chicago, implemented a seven-wave longitudinal survey between April and October 2020 that illustrates the issue. Their research showed that Americans are experiencing financial hardship due to the crisis. Among low-income households, 17 percent have missed a rent or mortgage payment and over a quarter have missed a credit card or a loan payment since the start of the pandemic. Across income groups, about 15 percent of the families in our sample have withdrawn from their retirement savings, potentially undermining their future financial stability. 

A current analysis shows that states with alarmingly low maximum weekly unemployment benefits include Alabama ($275), Arizona ($240), Florida ($275), Louisiana ($247) and the lowest, Mississippi, at ($235). Coincidentally, some of these same states have not taken steps to protect tenants with a COVID-19-related financial hardship from being evicted. In comparison, Oregon’s maximum is $648, Massachusetts’ is $823 for an individual and $1234 for an individual with dependents, and Minnesota’s is $740.

Adding insult to injury, though most states pay unemployment compensation for a maximum of 26 weeks, subject to prevailing state unemployment rates, some are more miserly. The maximum number of weeks is 20 in Arkansas, South Carolina, Michigan and Idaho, 14 in Georgia, 13 in Missouri and 12 in Florida and North Carolina. In all, 29 states pay a maximum weekly benefit of $500 a week or less.

The 2020 Federal Poverty Level (FPL), a measure of income issued every year by the Department of Health and Human Services (HHS), is $26,200 for a family of 4, or $503.85 a week. In other words, maximum unemployment compensation in 29 states is less than the federal poverty level of income for a family of 4. In Alabama, Arizona, Florida, Louisiana and Mississippi, maximum unemployment compensation is about half of the 2020 federal poverty level for a family of four.

David Lloyd George, a former Prime Minister of the United Kingdom, called unemployment torture “…with its injustice for the man who seeks and thirsts for employment, who begs for labour and cannot get it, and who is punished for failure he is not responsible for by the starvation of his children.”  

With that in mind, surely this nation, this shining city on a hill, can do better.

Disillusionment and despair: the Trump turmoil

Donald Trump isn’t a candidate.

Donald-Trump-Caricature

He’s a stand-in for the alienation and disillusionment so many Americans feel as both the Republican and Democratic parties have failed us.

How could it be otherwise when so much seems so wrong and fakery, misdirection, and outright lies by both parties have been so pervasive?

Consider:

  • The past several decades have seen the most sustained rise in inequality in the United States since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years.
  • The 2009 $830 billion stimulus package, with a claimed focus on shovel-ready projects, was supposed to fix things after the Great Recession. The legacy instead – a slow growth economy. The first 23 quarters of the recovery, which officially began in June of 2009, had an annual rate of growth of just 2.1 percent.
  • The distribution of wealth in the United States is even more unequal than that of income. The wealthiest 5 percent of American households held 54 percent of all wealth reported in 1989, rose to 61 percent in 2010 and reached 63 percent in 2013.
  • 71 percent of Americans say life has gotten worse for middle-class Americans over the past 10 years.
  • Today’s fifty-somethings may be part of the first generation in American history to experience a lifetime of downward mobility, in which at every stage of adult life, they have had less income and less net wealth than did people who were their age ten years before.
  • There is now less economic mobility in the United States than in Canada or much of Europe. A child born in the bottom one-fifth of incomes in the United States has only a 4 percent chance of rising to the top one-fifth.
  • Young Americans (ages 18-34) are earning less (adjusted for inflation) than their peers in 1980 ; the college graduating class this year left with an average student debt of $35,051.
  • In 1986, President Reagan signed legislation that was supposed to fix the illegal immigration issue once and for all. Three million applied for legal status and about 2.7 million received it. Today, about 11.7 million immigrants are living in the United States illegally. So much for the fix.
  • Despite all the “mission accomplished” and “victory is at hand” assurances, America has been at war in the Middle East for the past 15 years, with little to show for it, billions of dollars down a rathole, thousands of American soldiers dead and wounded, and continuing chaos in Afghanistan, Iraq, Libya and Yemen.
  • Despite the billions the government has spent on poverty-related programs, half of children age three and younger live in poverty.
  • The White House wants to “press the reset button” on one of Washington’s biggest challenges: its increasingly troublesome relationship with Russia,” Vice President Biden, 2/7/2009; “We’re going to hit the reset button and start fresh (with Russia),” Secretary of State Hillary Clinton, 3/6/2009
  • “If you like the plan you have, you can keep it.  If you like the doctor you have, you can keep your doctor, too.” President Obama, 6/6/2009.
  • “I ended the war in Iraq, as I promised. We are transitioning out of Afghanistan. We have gone after the terrorists who actually attacked us 9/11 and decimated al Qaeda.” President Obama, 9/14/2012
  • Despite assurances from some politicians that all’s well, the Medicare program has $28.1 trillion in unfunded liabilities over the next 75 years. Together with Social Security’s $13.3 trillion shortfall, the government has accumulated entitlement spending commitments that far exceed our capacity to pay for them.
  • In the 2012 election cycle, a tiny elite of the U.S. population, just 0.40 %, made a political contribution of more than $200, providing 63.5% of all individual contributions to federal candidates, PACs and Parties, according to the Center for Responsive Politics.
  • Fewer than four hundred families are responsible for almost half the money raised in the 2016 presidential campaign to date, a concentration of political donors that is unprecedented in the modern era.

As H.L. Mencken said, “Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule — and both commonly succeed, and are right.”

 

Availability of affordable, quality child care can clear a path out of poverty

This week the U.S. Census Bureau released comprehensive reports on nationwide and state poverty in 2013. There are a lot of almost mind-numbing numbers in the reports, but behind those numbers are millions of Americans struggling with poverty that infects their lives 24 hours a day and shapes their future.

The Census Bureau reports reveal that the poverty rate for Oregon improved somewhat from 17.2 percent in 2012 to 16.7 percent in 2013, but remains stubbornly high. One way to reduce it further is to ensure that quality, affordable child care is available to low-income families.

Holding tight, a child grins as she enjoys being pushed on a swing by Jan McIntosh at Good Apple Child Care Preschool in Hillsboro. What a treat.

childcarefot

But for this child’s low-income parents, and many other low-income Washington County residents who want to work and want the best for their children, it can be tough to access affordable, quality child care.

But child care is essential to help low-income people climb out of poverty and children who don’t get a good start often enter kindergarten behind and stay behind throughout their schooling.

It’s in the community’s best interest to provide a strong foundation for all children to develop into well-educated adults ready to participate in the work force and keep our economy strong. It’s also in the community’s interest to facilitate work by adults because work builds self-esteem and creates self-sufficiency.

One Oregon program that helps make work possible is the Employment Related Day Care program run by the state’s Department of Human Services (DHS). It provides financial assistance to help eligible low-income working families pay for child care, enabling parents to stay employed and children to be well cared for in stable child care arrangements.

The program helps approximately 20,000 Oregon families every year pay for child care for about 35,000 children.

About half the children who attended Good Apple Child Care Preschool in Hillsboro this summer were being helped by the program.

The preschool’s owners, Jan and James McIntosh, operate out of their 1,200 square foot home with its half-acre backyard playground.

If a child wants to enjoy arts and crafts, hike through Jackson Bottom Wetlands, take a field trip to the Enchanted Forest, get introduced to reading and music, or dunk her feet in poster paint and make footprints on poster paper, Good Apple’s the place to be.

The 16 boisterous children there this summer ranged from 6 months to 9 years of age; that switches to children 6 months to 5 years of age when school starts. The children are overseen by between three to six staff members, depending on the activities under way.

The nonprofit Community Action organization, which works to eliminate conditions of poverty and create opportunities for people and communities to thrive, helped Good Apple succeed.

“We were hooked up early on with Jan Alvarez, a child care specialist at Community Action of Washington County, and she has been awesome,” said Jan McIntosh. “She’s encouraged us to take the steps to get our certification, get nationally accredited and then participate in Oregon’s Quality Rating Improvement System (QRIS), which aims to raise the bar on quality child care and prepare children for kindergarten.”

Community Action also educates low-income working families about child care options, such as home-based programs and child care centers, and offers a broad range of face to face and online training classes in English and Spanish to child care operators and staff, such as first aid and CPR and child abuse and neglect training.

Karen Henkemeyer, who manages the child care program at Community Action, said some low-income families also find that providing child care can help lift them out of poverty while allowing them to stay close to their own children.

Child care providers throughout Washington County are striving to make a difference for low-income children and their parents. It’s critical that we support efforts to provide a full range of affordable, high quality child care if the county and all of its residents are to prosper.

For more information about child care-related programs in Washington County, call Community Action at 971-223-6100 or visit its website, caowash.org/ccrr.

Moving to the suburbs: addiction and poverty

Linda knows poverty in the midst of plenty.

Her family was desperately poor during her childhood, but they lived in a tony Portland suburb, attending school there with kids who were much more affluent.

Her home environment growing up, however, was far from idyllic. Linda and her siblings were exposed throughout her childhood to drug and alcohol abuse as well as domestic violence.

That led Linda (not her real name) to reckless behavior, including her own drug and alcohol addiction, followed by brief trips to jail. She tried to straighten out on several occasions, but slipped back, returning poverty to the forefront.

In his heart-wrenching novel, “There are No Children Here”, Alex Kotlowitz followed the lives of two young boys growing up in the projects of the near West Side of Chicago. There they were in the midst of ruinous poverty, rampant drug use, run-ins with the police and dysfunctional families.

The book resonated partly because poverty and associated ills are often seen as synonymous with big cities.

But times are changing. Linda now lives in suburban Tigard, not a rundown area of Chicago or inner city Portland.

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As in her youth, she’s experiencing hardship, but this time she’s getting help through collaborative social service programs that promote self-sufficiency for homeless individuals and families. And she’s making real progress toward getting back on her feet. A big break came recently when she got a job.

The suburbs are struggling with an increasing number of residents living in poverty, including Tigard’s home, Washington County, which has a well-deserved reputation as the economic engine of Oregon with thousands of well-paying jobs.

The shift of poverty to the suburbs occurred around 2001, when data showed that more poor people lived in suburbs than in cities. The trend sped up with the Great Recession, which devastated many families.

One-fourth of poor people living in extremely poor neighborhoods in the nation’s 100 largest metro areas are in the suburbs, according to research at the Brookings Institution in Washington, D.C. And suburbs account for four in ten poor individuals in those regions who live in areas of high poverty—a neighborhood poverty rate exceeding 20 percent.

Alan Berube, a Senior Fellow at Brookings, argues that contemporary anti-poverty strategies must recognize the different needs of poor families in both cities and suburbs. The suburbs, for example, often lack the density to deliver services in a distinct area, he says.

Poor families often spread over greater distances in the suburbs, and they face different barriers (transportation, for example) than city dwellers do. Moreover, as poverty spreads to the suburbs, it becomes less a neighborhood problem and more of a regional or sub-regional problem.

Berube and Elizabeth Kneebone, a fellow at the Metropolitan Policy Program at Brookings, say we need to recognize that growing jobs and fighting poverty are not separate initiatives. As U.S. Senator Barbara Mikulski put it, the best social program is a job. In addition, we need to engage more partners, particularly the private sector, in efforts to improve outcomes for low-income people and places.

A few years into the painfully slow recovery from the Great Recession, the need remains high.

 

 

Single mothers = singular troubles

It’s no secret that single motherhood is a prescription for economic insecurity for many women.

Single-mother families are nearly five times as likely to be poor than married-couple families and a majority of America’s poor children live in single mother-led households, according to the left-leaning Center for American Progress.

Lone mothers

At the other end of the political spectrum, the conservative Heritage Foundation says marriage is the greatest weapon against child poverty.

“Family disintegration, lack of education, and counterproductive welfare incentives all contribute to child poverty,” Heritage wrote recently. “Rebuilding a strong marriage culture should be at the forefront of our efforts to fight poverty.”

A New York Times story cited a number of studies that attributed the growing income gaps in American society to the changing structure of the typical family with the growing number of single parent families. The article suggested that changing marriage patterns could account for anywhere from 15-40% of growing income inequality across the country, with a surge in births outside of marriage among less educated women pushing single-parent families into the lower end of the socio-economic range.

“College-educated Americans … are increasingly likely to marry one another, compounding their growing advantages in pay,” The Times said. “Less-educated women…are growing less likely to marry at all, raising children on pinched paychecks that come in ones, not twos.”

“It is the privileged Americans who are marrying, and marrying helps them stay privileged,” said Andrew Cherlin from Johns Hopkins University.

Now there’s even more evidence connecting single-motherhood to poverty.

The Earned Income Tax Credit (EITC) is a refundable tax credit for low to moderate income working persons, particularly those with children.

The Brookings Institution, a Washington, D.C.-based centrist think tank, put together an illuminating interactive map of the share of taxpayers that claim the EITC at the county level nationwide:

Map: The Earned Income Tax Credit in Your County

Brookings then compared the EITC map with a map of single motherhood in the United States in the most recent year for which complete data is available.

Map: Percent of all households that are single female headed with children in 2010.

The principal conclusion? The map of EITC benefits by county looks a lot like a map of single motherhood.

As Brookings points out, looking at the number of parents in a household as an indicator of financial stability and opportunity, changing marriage patterns could account for anywhere from 15-40% of growing income inequality across the country.

While correlation doesn’t necessarily equal causation, the link between poverty and mothers with children growing up without a father is clearly something that ought to be part of the discussion of income inequality in the United States.