Poorest poor left out of government aid

May 19, 2014 Facebook Twitter LinkedIn Google+ Economic News

Poorest poor left out of government aid

May 18, 2014

Many Americans think the poorest of the poor are simply sitting on their couch and collecting an ever-growing government check. Actually, their benefits have been shrinking.

Government aid has been shifting to working families just above the poverty line leaving those at the bottom with a very thin safety net.

These very poor households have incomes below 50% of the poverty threshold: a single-parent family with two children earning less than than $8,700 a year.

This group saw their assistance fall 19% between 1983 and 2010, according to research by Robert Moffitt, an economics professor at Johns Hopkins University. Moffitt looked at the 15 largest social safety net programs, including food stamps and the Earned Income Tax Credit.

By comparison, government benefits have more than doubled — up 121% — for single parent families just above the poverty line, or those with incomes between $17,400 and $26,100.

The gains are even bigger for families with married parents and two children who are just above the poverty line. Those with incomes between $24,000 and $36,000 saw their benefits explode by 246.3%. They now get more assistance than single parent families with two kids in a comparable place on the poverty scale, which was not the case in 1983.

The shift in part reflects a policy focus on helping those who work. “If you aren’t able to achieve steady employment, you aren’t going to get very much,” Moffitt said. “You are left out.”

The main changes came in the 1990s with welfare reform. The resulting Temporary Assistance for Needy Families program imposed work requirements and time limits, and also converted funds into block grants, which meant that states had a set amount of funds to distribute rather than being able to serve all who qualified.

Within a decade, the number of adults receiving this aid dropped 71%.

Now, the primary help that the poorest Americans receive are food stamps. Women who are pregnant or have small children are eligible for additional food and support services. And, in a few states, poor adults are eligible for Medicaid. Some may get TANF or unemployment insurance, if they used to work.

“There are people who are really scrapping by on extraordinary little,” said Elizabeth Lower-Basch, senior policy analyst at CLASP, an advocacy group for low-income Americans.

On the flip side, those who work — or the so-called “Deserving Poor” — are receiving more government benefits.

The main policy, the Earned Income Tax Credit, provided up to $5,660 a year for households with incomes up to $48,360 in 2010. The program was expanded greatly in the 1980s and 1990s, and again through the 2009 Recovery Act.

Read more here…