Recession and Poverty

Yesterday, I received an email in my in-box from the Center on Budget and Policy Priorities (www.cbpp.org),  an organization that addresses local, state and federal fiscal policy, budgets and public programs that affect low- and middle-income families and individuals.

It was interesting to me that the email, which is about recession and poverty, came on the heels of my recent posts on poverty and homelessness.

The article, with an accompanying 15 page document entitled, “Recession Could Cause Large Increases In Poverty And Push Millions Into Deep Poverty”, by Sharon Parrott, begins:

Like previous recessions, the current downturn is likely to cause significant increases both in the number of Americans who are poor and the number living in “deep poverty,” with incomes below half of the poverty line. Because this recession is likely to be deep and the government safety net for very poor families who lack jobs has weakened significantly in recent years, increases in deep poverty in this recession are likely to be severe. There are a series of steps that federal and state policymakers could take to soften the recession’s harshest impacts and limit the extent of the increases in deep poverty, destitution, and homelessness.

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 ot eligibility rules in place in many states that deny benefits to individuals who worked part time or did not earn enough during a ‘base period’ that often excludes workers’ most recent employment.”

As the article continues, Ms. Parrott presents and discusses several options that are available to policymakers, that if implemented, could help “stave off large increases in severe poverty and hardship” that may be ours as the result of the recession. These options include:

  • A temporary increase in food stamp benefits
  • Additional rental assistance through the housing voucher program
  • Expand and increase the TANF (Temporary Assistance for Needy Families) contingency funds
  • Expand and extend unemployment benefits (see post below)
  • Provide significant fiscal relief to states

The document has great tables and graphs that help us better understand the impact of recessions on the already poor and “deep poor,” including children, as well as on those who may become poor during this current recession that is projected to be severe and long in duration.

As we address the nation’s financial crisis in its early stages, we also need to be making plans to address the fall-out of the recession and the toll it is and is going to take on the poor among us.

To read CBPP’s report on recession and poverty, click here.

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Explore posts in the same categories: Economics, Homelessness, Labor, Politics, Poverty

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