Posts Tagged "poor"
September 2, 2021
Federal Aid May Help Kids Later in Life
President Biden has said he wants to increase the benefits in a federal program for low-income children and adults with disabilities. But a long-running debate about the program is whether the direct cash assistance helps children when they grow up.
The Supplemental Security Income program, or SSI, clearly has immediate benefits. SSI provides nearly $800 in monthly cash payments and Medicaid health insurance to help parents care for their children and teenagers and manage their physical, cognitive, or behavioral disabilities. However, policy experts disagree on the program’s long-term effects.
Critics say it creates a negative dynamic if it causes poor parents, consciously or unconsciously, to lower their expectations for a child in order to preserve the payments. If the child has a relatively mild disability, the stigma might discourage educational achievements that would ultimately boost his earnings potential as an adult.
However, one analysis in a new study found no evidence that the future earning power of children receiving SSI was affected. This analysis compared kids whose benefits started before and after a 2001 administrative change that led to more benefit terminations.
A second analysis supported the argument made by SSI’s proponents that the program has broader long-term benefits for children. The additional financial resources enable parents to provide more of the educational experiences, nutritious meals, or stable home life that can improve their children’s future prospects.
To assess the merits of this long-term benefits story, the researcher used a different, more indirect approach. This approach was based on a medical exam for 18-year-old SSI recipients that was introduced in 1996 to determine whether their benefits would continue. The researcher compared the future earnings of the younger siblings in poor families in which the 18-year-olds did and did not lose their benefits.
When the 18-year-olds retained their SSI benefits, their younger siblings earned more as adults than the younger siblings in families that had lost benefits. This pattern held true both for the younger siblings who received SSI themselves and for the siblings who did not receive SSI. …Learn More
February 11, 2021
Billionaires Got Much Richer in Pandemic
That’s one perspective on the pandemic. The growing billionaire class is another one.
Since last March, the nation’s 660 billionaires have added more than $1 trillion to their wealth – a 39 percent increase. Their combined net worth is now $4 trillion, which is nearly double the $2 trillion held by the 165 million Americans in the bottom half, according to the Institute for Policy Studies’ new report.
“It’s a troubling sign that too much of society’s wealth and income is flowing upwards to that small group of people,” Chuck Collins of the Institute for Policy Studies said during an interview on NPR’s Fresh Air.
The institute’s report is based on Forbes magazine’s annual estimates of the net worth of the world’s richest people.
Inequality has always been with us, but economists say it has grown as billionaires’ wealth has hit stratospheric levels.
To be sure, inequality would’ve been worse without the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $500 billion in direct assistance to families last spring prevented a surge in poverty, and the relief bill passed in late December is sending more aid to unemployed and under-employed people who need it.
The billionaires are getting richer for a couple reasons, starting with a surprisingly strong stock market in 2020. Despite the worst public health crisis in a century and a struggling economy, the Standard & Poor’s 500 stock index shot up 18 percent.
But some billionaires were also in the right place at the right time – a pandemic. …Learn More
October 1, 2020
Cash from Kids Slows After Parents Retire
But a new study uncovers a twist in this familiar story: once the parents are old enough to collect Social Security, the money flowing from adult child to parent slows down. And when this occurs, the offspring are able to start saving money.
Social Security, by reducing disadvantaged parents’ reliance on their children, “may be able to interrupt the cycle of poverty between generations,” Howard University researcher Andria Smythe concluded from her analysis.
To chart changes over time in cash transfers within families, Smythe followed U.S. households’ finances between 1999 and 2017 using survey data from the Panel Study of Income Dynamics.
She found that the financial support going to parents in the bottom half of the U.S. income distribution was substantial. These parents received about $8,000 from their offspring over time. In contrast, among the higher-income families, money consistently flowed in the opposite direction – from parent to child.
After the lower-income parents turned 62 and started their Social Security, the likelihood the adult children would continue to support them declined, according to the study, which was conducted for the Retirement and Disability Research Consortium.
This, in turn, had a positive effect on the adult children’s wealth. People who grew up in lower-income families saw the biggest bump in wealth, adding about $13,000 in the years after their parents turned 62.
Social Security benefits, Smythe concludes, “may contribute to wealth-building among the adult children’s generation.”
February 18, 2020
Electric Bills and Financial Survival
Timing is everything for low-income people who rely on federal benefits to survive.
For example, retirees who receive their Social Security checks early in the month and spend the money before the bills come in are more prone to fill the gap with high-cost payday loans than people who get their checks a few weeks later, a 2018 study found. New research in a similar vein shows that timing also matters for individuals who receive food aid under the federal Supplemental Nutrition Assistance Program, or SNAP.
When the electricity bill arrives on or within a day of the monthly SNAP benefit, the lowest-income customers in this study were much less likely to have a past due bill or to have their power cut off than customers whose bills arrive well after their benefits.
The timing is crucial, because SNAP supplies between 10 percent and 25 percent of household incomes up to 35 percent above the federal poverty level. When the government loads each month’s food benefit onto the card, it frees up money for high-priority bills coming due at the same time, including utilities.
This study took place in an unidentified New England state where recipients’ SNAP debit cards are refilled on the first day of every month.
After following the SNAP recipients for a full year, the researchers also found that the unpaid balances they had accumulated after 12 months were smaller if the bills coincided with the SNAP-card deposits. The advantages of a well-timed electricity bill were greatest in the poorest neighborhoods, the researchers said. …
October 1, 2019
Financial Survival of Low-Income Disabled
A monthly disability check from the federal government is a lifeline for poor and low-income persons with disabilities, but they still face a daily struggle to meet their basic needs and cover their expenses.
In in-depth interviews, 35 low-income people in Worcester, Massachusetts, described how they make ends meet on the disability benefit they get from Social Security, which averages $912 a month and is their largest source of income. Another $300 comes from other forms of public assistance, family support, or minimum-wage jobs, according to a new issue brief by Mathematica’s Center for Studying Disability Policy.
The daily struggles that each individual faces are as unique as they are. Here are a few excerpts from the study:
“My rent is subsidized. Plus I work 20 hours a week which is pretty good. I bring home more than one hundred something dollars a week and I get a few dollars in food stamps. So it’s okay.”
“I’m stringing it, managing it, and just barely staying above water. I’ve been treading that water for a long time.”
“My situation is challenging. I sometimes just don’t have enough coming in to make what’s going out.”
Three out of four people in the study told interviewers that they find it very difficult to pay for their housing, food and other basic expenses. A bright spot is that people on federal disability insurance (DI) are also covered by Medicare and/or Medicaid and spend very little on medical care. “I’m getting everything I need,” one individual said about her healthcare. …Learn More
July 25, 2019
1 of 3 in Bankruptcy Have College Debt
One thing bankruptcy won’t fix is college debt, which – in contrast to credit cards – can’t usually be discharged by the courts.
One in three low-income people who have filed for bankruptcy protection from their creditors have student loans and face this predicament, according to LendEdu, a financial website.
The debt relief they can get from the courts is very limited, because the aggregate value of their non-dischargeable college loans is almost equal in value to all of their other debts combined, including credit cards, medical bills, and car loans.
Under these circumstances, a bankruptcy filing “does not sound like a financial restart,” said Mike Brown, a LendEdu blogger.
Although LendEdu analyzed data for low-income bankruptcy filers, the court’s inflexibility around student loans affects a wider swath of college-educated bankruptcy filers.
In the past, individuals were permitted to use bankruptcy to reduce their college loans. But in 1998, Congress eliminated that option unless borrowers could show they were under “undue hardship,” a legal standard that is notoriously difficult to satisfy.
While the legal requirement hasn’t changed since 1998, paying for college has become far more onerous. Americans today owe nearly $1.6 trillion in student debt, which ranks second only to outstanding mortgages. …Learn More
December 13, 2018
Reducing Poverty for Our Oldest Retirees
With more Americans today living into their 80s and beyond, the elderly are becoming more vulnerable to slipping into poverty.
To reduce the poverty risk facing the oldest retirees, some policy experts have proposed increasing Social Security benefits for everyone at age 85. Under one common proposal analyzed by the Center for Retirement Research in a new report, the current benefit at this age would increase by
The poverty rate for people over 85 is 12 percent, compared with 8 percent for new retirees. But more elderly people may actually be living on the edge, because the income levels that define poverty for them are so low: less than $11,757 for a single person and less than $14,817 for couples.
One reason the oldest retirees are especially vulnerable is that their medical expenses are rising as their health is deteriorating, yet they’re too old to defray the expense by working. This is occurring at the same time that the value of their employer pensions – if they have one – has been severely eroded by inflation after many years of retirement.
Further, elderly women are more likely to be poor than men, because wives usually outlive their husbands, which triggers a big drop in income that is generally not fully offset by a drop in their expenses.
Limiting the 5 percent benefit increase to the oldest retirees would ease poverty while containing the cost. …Learn More