The Census Bureau released the 2009 poverty and income data today. The data reveal that last year 3.7 million additional people fell into poverty, for a total of 43.6 million, the largest number since the census began publishing the data in 1959.
We’ve already seen headlines clamoring, “Poverty Goes Up on Obama’s Watch.” In reality, though, these trends would have been significantly worse without the administration’s leadership. The American Recovery and Reinvestment Act of 2009 was a bold step, saving or creating 1.4 million to 3.3 million jobs, according to analysis by the nonpartisan Congressional Budget Office. The Recovery Act also focused on combating poverty: An analysis examining just seven targeted provisions of the American Recovery and Reinvestment Act found that they kept more than 6 million additional people from falling into poverty last year. And initiatives President Barack Obama championed such as health care reform and the recently passed consumer financial protection agency will ultimately help millions more families achieve economic security and expand the middle class.
But we can’t exactly pat ourselves on the back when more than one in five (20.7 percent) of America’s children lived in poverty last year, and racial and ethnic disparities widened at an alarming rate. There is still significant work to do, and we need our elected leaders to enact measures that will put us on track to reverse these troubling statistics.
President Obama agrees. The president, in anticipation of today’s poverty numbers, emphasized, “The most important antipoverty effort is growing the economy and making sure there are enough jobs out there.” He added, “That doesn’t mean that there aren’t some targeted things we can do to help communities that are especially in need.”
The president is right on both counts. One of the most important things that Congress can do for low-income families is to create jobs and ensure that working families do not have to raise their children in poverty. But we must also take steps to connect low-income families with those jobs, offer the supports they need to get a foothold in the labor market, and make sure that families that fall on hard times have a safety net to support them as they strive to get back on their feet.
Fortunately, Congress has two opportunities to enact policies that would make strides toward these objectives. But time is running short. In just two weeks a job-creation engine known as the TANF Emergency Fund will expire, forcing states to begin shutting down successful partnerships with the private sector that have already created nearly a quarter-million jobs for low-income families. Congress must act before September 30 to extend the TANF Emergency Fund for another year and allow this innovative jobs program to continue.
Congress can also help low-income working families in the upcoming tax debate. Last year Congress made important reforms to two tax credits that help working families struggling to make ends meet: the earned income tax credit, or EITC, and the child tax credit, or CTC. Congress reformed an EITC provision that penalized low-wage workers who got married and allowed families with three or more children to earn a larger credit to reflect the higher cost of raising an additional child. Congress made the CTC more widely available to low-income working parents by allowing them to count most of their earnings toward calculating their credit instead of arbitrarily counting only earnings above $8,500.
These reforms reward work, enable low-wage families to move up the economic ladder, and improve child outcomes.
Congress is likely to extend reforms to the child tax credit and the marriage penalty in the approaching debate. But it will need to find ways to pay for an extension of the reform that offers a larger credit to families with three or more kids and to allow families to count all earnings toward determining their child tax credit. These reforms will do more to boost the economy and help working families than extending the Bush tax cuts for the top 2 percent of Americans, a policy that ranks dead last among different ways to spur economic growth.
Half in Ten is urging our government to set a national goal to reduce poverty by half over the next decade in addition to taking these immediate steps. Having a target is important because it can break down silos across various agencies working to reduce poverty and engage the private sector. Moreover, a target provides focus and accountability in our efforts to rebuild the middle class, encouraging lawmakers to judge proposals before them in relation to progress toward a larger goal.
Much of last year’s increase in poverty was caused by the lingering effects of the Great Recession. It’s not surprising that more people fell into poverty as unemployment remained near record highs. These trends affected everyone, but had a particularly devastating impact on communities of color, who consequently suffered disproportionate rates of poverty in 2009. The poverty rate among non-Hispanic whites rose from 8.6 percent to 9.4 percent, but for African Americans and Hispanics the percentage living in poverty jumped at a higher rate from 24.7 percent to 25.8 percent for African Americans and 23.2 to 25.3 percent for Latinos.
It’s important to remember, however, that poverty was a problem even before the Great Recession. Between 2003 and 2007 we experienced the first-ever economic “recovery” on record where productivity and profits grew but poverty went up and median incomes fell. The middle class and low-income families did not benefit from the gains accrued over the last decade, which was due to the failed economic policies of the Bush administration and the focus on tax cuts for the wealthy that did not lead to growth in investment or jobs.
We can and must do better this time around. A shared goal of cutting poverty in half provides that focus. As we rebuild our economy we must tackle poverty’s root causes. This means creating more decent-wage jobs, strengthening work supports, and investing in children early on so that everyone can participate in the economy.
Melissa Boteach is the Half in Ten Manager at American Progress.
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Senior Vice President, Poverty to Prosperity Program