The Center for Budget and Policy Priorities has a new report on the likely effects of the recession on poverty. As you might expect, they aren’t pretty:
“Goldman Sachs projects that the unemployment rate will rise to 9 percent by the fourth quarter of 2009 (the firm has increased its forecast for the unemployment rate a couple of times in the last month). If this holds true and the increase in poverty relative to the increase in unemployment is within the range of the last three recessions, the number of poor Americans will rise by 7.5-10.3 million, the number of poor children will rise by 2.6-3.3 million, and the number of children in deep poverty will climb by 1.5-2.0 million.
Already there are signs that the recession is hitting low-income Americans hard. Between September 2006 and October 2008, the unemployment rate for workers age 25 and over who lack a high school diploma — a heavily low-income group — increased from 6.3 percent to 10.3 percent. Yet low-income workers who lose their jobs are less likely to qualify for unemployment benefits than higher-income workers, due to eligibility rules in place in many states that deny benefits to individuals who worked part time or did not earn enough over a “base period” that often excludes workers’ most recent employment.
As another sign that poverty is now climbing rapidly, food stamp caseloads have increased dramatically in recent months, rising by 2.6 million people or 9.6 percent between August 2007 and August 2008, the latest month for which data are available. In 25 states, at least one in every five children is receiving food stamps. Because monthly food stamp caseload data are available long before the official Census poverty data for the prior calendar year, rising food stamp caseloads are the best early warning sign of growing poverty.
Furthermore, the nation’s basic cash assistance safety net for very poor people who are jobless is much weaker and less well equipped to meet the challenges that a serious economic downturn poses than it was in previous major recessions.”
To put this in perspective, the current unemployment rate (seasonally adjusted) is 6.5%; it was under 5% at the beginning of this year. It reached 9% one month in 1975, and was over 9% for about a year and a half in 1982-3; otherwise, it has not come near that level since the BLS’ unemployment statistics start, in 1948. In 2007, the poverty level for an individual was $10,590; for a parent and two kids, it was $16,705. People are described as being in “deep poverty” when they make less than half of that amount. The idea that there will be 1.5-2 million kids in families making half the poverty level is horrifying.
The CBPP suggests a number of ways to help: extending unemployment benefits, rental assistance and food stamps, help to state and local governments, changes in the TANF contingency fund. These are all very good steps that have the additional virtue of being very effective economic stimuli.
I’d like to suggest one further measure aimed at the kids: universal school breakfasts. (Why universal? It saves paperwork, removes stigma, and makes the program much easier to administer.) Besides protecting kids from hunger, school breakfasts also make them more likely to learn and less likely to have behavioral problems. They seem to increase school attendance. We spend lots of time and energy trying to figure out ways to improve our schools; if what we’re interested in is kids actually learning, making sure that they have eaten recently is a pretty good way to start.
Even if we take all these steps, though, it’s going to be a very tough time.