The Wisconsin Poverty Report:AN UPDATE

and a Look at Poverty Need and Policy in Wisconsin and Nationwide

A Report from theInstitute for Research on Poverty

December 2009

Tim Smeeding

Director and Distinguished Professor of Public Affairs

First Wisconsin Poverty Report

Released in April 2009 Looked at poverty data and change in

SNAP/FoodShare enrollments to identify areas of greatest need

Copies available at http://www.irp.wisc.edu IRP Team (including Joanna Marks, Julia

Isaacs) now working on improving the poverty measure and preparing a full report for June 2010 as a national model

Outline of Presentation

Poverty Situation in WI—through a looking glass darkly

Growing Need (jobs, men, fathers, poverty) Alleviation of need – food stamps/FoodShare

and ARRA: 2009 and 2010 as crucial years Summing up for WI: where are we going

next?

I. State poverty rates: How does Wisconsin compare in 2008 ?

US: 13.2% Illinois: 12.2% Iowa: 11.5% Michigan: 14.4% Minnesota: 9.6% Wisconsin: 10.4%

Source: 2008 American Community Survey.

What has Changed from 2007 to 2008?

US Poverty Rate in 2008: 13.2% (US Poverty Rate in 2007: 13.0%)

WI Poverty Rate in 2008: 10.4% (WI Poverty Rate in 2007: 10.8%)

No statistically significant changes. Why?

Sources: 2007 and 2008 American Community Surveys.

Timing of the 2008 ACS

Each ACS family interviewed once during calendar year (Jan-Dec 2008) about income in prior 12 months.

Thus, the ‘annual income’ data covers 23 sets of months, January 2007-Nov 2008 (next slide).

Recession began December 2007, meaning much of family income data in 2008 ACS reflects pre-recession income in 2007 and early 2008 .

Impact in Wisconsin not felt until early 2009.

American Community Survey and the Recession

2007 2008Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

↑December 2007: Official start of thenational recession

Example: A person surveyed in December 2008 will report income for December 2007-November 2008

← Income interview lag →

But when will the recession induced higher poverty figures show up?

2009 statistics to be released Aug/Sept 2010 What can we expect? BIG increases, greater

than 1 and maybe 2 percentage points next year in income poverty

What’s New Since the First Report: A Quick 2008 ACS-WI Update

New data from 2008 American Community Survey (ACS) released this fall : poverty rates by county or multi-county area

State poverty rate in 2008: 10.4% Poverty maps: Red (highest, >12%); Dark Grey

(10-12%); Light Grey (8-10%); White (lowest, <8%)

Using Federal poverty definition today, but updating with better (NAS) approach over the next year

2008 Poverty Rates: 10 Largest Counties

County 2008 Poverty Rate

Milwaukee 17.8%

Dane (Madison) 12.3%

Waukesha 3.7%

Brown (Green Bay) 8.2%

Racine 9.5%

Kenosha 9.0%

Rock (Janesville) 9.5%

Marathon (Wausau) 4.3%

Sheboygan 7.9%

La Crosse 13.1%

Poverty Rates: Multi-County AreasMulti-County Area 2008 Poverty Rate

Ozaukee/Washington 4.1%

Jefferson/Walworth 12.1%

Chippewa/Eau Claire 8.1%

Calumet/Outagamie/Winneb. (Appleton) 7.2%

Columbia/Dodge/Sauk (Baraboo) 7.5%

5-county area (Menomonie) 10.1%

5-county area (Dodgeville) 10.5%

6-county area (Manitowoc) 10.1%

7-county area (Fond du Lac) 8.0%

8-county area (Sparta) 11.1%

9-county area (Stevens Point, Crandon) 10.8%

10-county area (Superior) 12.0%

Poverty Rate for 2008 by Wisconsin PUMAs/PUMA Groups

For All Individuals

Areas within Milwaukee County

Area 2008 Poverty Rate

Outer Northeast and East 17.9%

Inner North 25.1%

Central 40.1%

South 18.6%

Brown Deer, Glendale, Shorewood, Wauwatosa, Whitefish Bay, Other

5.7%

Southern Suburbs* 8.4%

Milwaukee (Overall) 17.8%

*Cudahy, Franklin, Greendale, Greenfield, Oak Creek, South Milwaukee, West Allis, Other

Poverty Rates in Milwaukee Super-PUMAs, 2008

II. Assessing and Meeting Needs

The depths and impact of the recession (unemployment and lower employment)

Effect on younger undereducated men Still growing role of food stamps in the US

and Wisconsin in alleviating hunger The rest of the ARRA nationally – what helps

whom and when?

Sources

Gary Burtless: “Recession and Redistribution: The Economy, Public Policy, and the Poor “

IRP Seminar November, 19, 2009, at

http://irp.wisc.edu/newsevents/seminars/Presentations/2009-2010/Burtless-IRP-11-19-2009.pdf- Tim Smeeding: “Young Disadvantaged Men:

Fathers, Families, Poverty and Policy” September 2009, IRP “Fathers” Conference Overview, PowerPoint available from author

Unemployment Rate among Americans Aged 25-54, 1948-2009:III

Source: U.S. Bureau of Labor Statistics.

Percent of labor force aged 25-54

0

2

4

6

8

10

1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

0

2

4

6

8

10

Unemployment Rate in Wisconsin by Month, 2004-2009

Source: Bureau of Labor Statistics.Note: October 2009 data are preliminary.

December 2007

Percent of the Unemployed Who Have Been Jobless for 27 or More Weeks, 1960 - August 2009

Source: Author's tabulations of U.S. BLS data (downloaded Sept, 12, 2009).

0

5

10

15

20

25

30

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Percent of all unemployed

27.5 %

, United States

Who are these young workers who are getting clobbered?

Mostly young undereducated men and most of them out of wedlock fathers

Plagued by three reinforcing forces:bad economy and joblessnessmultiple out of wedlock childbearing high incarceration risk Result lots of poor kids with absent fathers who

are earning enough to support them (or to pay child support)

Fatherhood (2002)

Percent of Young Men Who are Fathers By Age 22 By Age 30

All Men 21% 56% Less than HS 38% 73% High degree only 32% 64% BA+ 3% 38%

Fathers earning less than $20,000 62%

Birth Patterns of Women And Men by Level of Education, Women in 1960–1964, Cohort Observed in 2004

Level of Education

Percent with First Birth by Age 25a

Percent with First Birth by Age 40a

Average Number of

Children Born by Age 40

Median Age at First Birthb

Women Men Dropouts 78 86 2.6 19 22 HS Gradsc 64 83 1.9 21 23 Some College 49 81 1.8 23 24 College Graduate 20 74 1.6 28 29

Sources: Ellwood, Wilde and Batchelder, 2009; Berger and Langton.

Total Kids with Poor Life Chances?

Over a ‘lifetime’ (women and men up to age 40 in 2004), total number of kids (total fertility) in each mother’s education grouping (similar education or less for fathers):

Dropouts 16 percentHS only 32 percent (includes GED)Some college 28 percentBA+ 24 percent

48 percent of all kids in the USA today come from parents with low educational backgrounds; parents who are more likely to be unemployed, lowly paid and poor

Bottom lines in needs assessment for US and WI

Long term unemployment at all-time high in US; recovering a bit in WI but still high

‘Biggest losers’, younger undereducated fathers (and also to a lesser extent mothers) and children of same .

Personal income fell 8 percent in aggregate , (12-2007 to 9-2009) but in terms of distribution , fell most for the younger workers at the bottom of the income ladder

What has been done about poverty nationwide and in WI?

SNAP/FoodShare to the rescue again Nationwide now serving 1 in 8 people in USA; nearly 1 in 4 children in USA

And only slightly fewer in Wisconsin (1 in 9 people here —650,000 of 5.509 million; 40 percent of kids in Milwaukee alone)

With both sets of participants still rising ARRA – what is being spent where, how and on whom?

Changes in US SNAP receipt from 2007 to June 2009

(map from New York Times, 11/29/09)

Source: Wisconsin Department of Health Services.Data are through October 2009.

Number of Wisconsin Food Share Recipients by Month, 2000-2009

December 2007

National Economic crisis: Impact and remedies

Most anti-recession government actions are familiar:– Temporary tax reductions– Extensions of unemployment benefits– Increased government investment in buildings, roads,

technology

But this time there are unusual federal actions:– Generous health insurance subsidies to individuals– Massive grants to state governments for education and

Medicaid/SCHIP– Emphasis on protecting education & training

US ARRA Special programs for the unemployed

Unemployment benefit extensions of up to 73 weeks -- giving a total of 99 weeks protection– Length of extension tied to state unemployment rate , not

local unemployment rate Federal gov’t. pays all extra cost $25 / week hike in benefits (8%) $2,400 of yearly benefits are tax free 65% federal subsidy for continued health insurance

– An all-time first

Special ARRA programs for the poor

14 percent increase in monthly food stamp allotments in April 2009

Aid to the states for social assistance-TANF for children (but need to buy down)

Doubling of budget for training the unemployed and hard-to-employ

Large increases in EITC and refundable Child Tax Credit

ARRA Aid comes in three types

1. Fiscal relief for states

2. Direct income assistance and services

3. Infrastructure (those ‘shovel ready’ projects everyone has been talking about)

Timing and patterns of each are very interesting and non-intuitive

Expected Stimulus Spending under the American Recovery and Reinvestment Act of 2009, 2009-2015

Sources: Congressional Budget Office and Joint Committee on Taxation.

Billions of current dollars

$65$141

$129

$46$22

$390

0

100

200

300

400

500

600

700

2009-2010 2011-2019Fiscal years

Fiscal relief for state governments

Direct income assistance & services

Infrastructure / technology investment

$22

Sources: Congressional Budget Office and Joint Committee on Taxation.

Expected Stimulus Spending under the American Recovery and Reinvestment Act of 2009, Fiscal Years 2009-2015

Stimulus Spending as % of Potential GDP

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2009 2010 2011 2012 2013 2014 2015

Fiscal year

Fiscal relief for state governments

Direct income assistance & services

Infrastructure / technology investment

Economic Crisis & Social Protection Impact and remedies in perspective

What is old:– Automatic stabilization of lower taxes and higher

benefits and standard gov’t. reactions – such as tax cuts; UI increases and infrastructure spending projects

What is new:– Health insurance for the unemployed– Massive federal aid for state governments– Unusual focus on protecting education & training

What Congress avoided:– Huge investment in public works (They’re too slow)

III. Pulling the Picture Together

Even with small poverty changes from 2007-2008, we can see if any patterns are beginning to emerge and they will intensify in 2009

New estimates including better income and poverty measures may show different patterns, but –

Major need appears steady or growing in La Crosse and Milwaukee; also growing in Dane and Jefferson/Walworth Counties

High Poverty in 08 (12% or more)

Average Poverty in 2008(8-12%)

Low Poverty in 2008 (Less than 8%)

High Povertyin 2007 (12% or more)

La Crosse County

Milwaukee County

Kenosha CountyRock County9 central WI counties (Stevens

Point, Crandon) 10-county area (Superior)

AveragePoverty in2007 (8% to 12%)

Dane County Brown CountyRacine County5-county area (Dodgeville)5-county area (Menomonie)

Chippewa/Eau Claire Counties

6-county area (Manitowoc)7-county area (Fond du Lac)8-county area (Sparta)

Columbia/Dodge/Sauk (Baraboo)

Low Poverty in2007 (less than 8%)

Jefferson/Walworth Region

Calumet/ Outagamie/ Winnebago

Marathon CountyOzaukee/Washington (West

Bend)Sheboygan CountyWaukesha County

Pulling It Together: Wisconsin Poverty in 2007 & 2008 by County/Region

Next Steps:This Morning and Beyond

Listening to people around Wisconsin to develop a unique measure of poverty for our state

Next report in June 2010 as national model built on new NAS guidelines

Build a better tool for assessing economic, program and policy impacts

Thanks

Send your reactions to me, please: Tim Smeeding

Director, Institute for Research on Poverty

smeeding@lafollette.wisc.edu