Featured Story: Income is Up, Poverty is Down (But Still Not Back to Pre-Recession Levels)
Earlier this week the Census Bureau released their annual report on Income and Poverty in the United States, Health Insurance Coverage in the United States, and The Supplemental Poverty Measure. The reports show a 5.2 percent increase in median household income (the first since 2007) and a large decrease in the number of people living poverty, but it may be too soon to celebrate says the Atlantic’s Gillian White.
“While growth of median income is promising news following several years of decline, median incomes remain 1.6 percent lower than they were in 2007 and lower still than the 1999 median-household-income peak of over $57,000 in time-adjusted dollars,” writes White. The gap is even wider for blacks, and there also weren’t any significant improvements to the gender pay gap.
Looking at changes in income across developed environments, Vox’s Timothy B. Lee argues that rural America is getting left behind in the recovery. While the U.S. median household income rose a little over five percent, rural areas in particular experienced a two percent decrease, from $45,534 in 2014 to $44,657 in 2015.
Despite Obamacare’s Medicaid expansion, “medical expenses are driving more people into poverty than refundable tax credits or food stamps are pulling out of it,” based on the supplemental poverty measure reports Slate’s Jordan Weissmann. It is likely that this is a result of the decision by many states not to expand Medicaid, which has left the rates of uninsured people higher in those states, and, of course, with higher out-of-pocket medical expenses.
Nevertheless, Vox’s Dylan Matthews says that overall, the most recent Census Bureau is something to be celebrated. “It’d take a lot of reports like this to reverse longstanding trends in income inequality and poor median income growth, but it’s pretty stellar news all the same, and a suggestion that the gains of the ongoing economic recovery are finally being broadly shared.”
News Highlights: Weakening Dodd-Frank, Evidence-Based Policies, and Trump's Revised Tax Plan
In an effort to replace Dodd-Frank, Financial Services Committee Chairman Jeb Hensarling’s bill, the Financial Choice Act, is moving to the House floor. Since it is not expected that the bill will actually come to a vote, it is more of a symbolic gesture than anything else. The bill’s timing strikes many as odd given the CFPB’s $185 million fine levied against Wells Fargo this week for illegally opening unauthorized customer accounts. Hensarling’s bill would repeal the Volcker Rule, reduce the power of regulators to break up failing financial firms, and repeal the provision that limited debit-card swipe fees, among other things.
“Research from the Urban Institute, the Pew Charitable Trusts and SAGE Open, an online peer-reviewed academic journal, suggests that eliminating or relaxing asset limits neither increases welfare rolls nor the time people spend on them. In fact, it could help states lower their administrative costs,” writes J.B. Wogan for Governing. Rather than reducing an agency’s caseload, asset limits incentivize people to stay on welfare by discouraging saving. Assets tests also lead to high levels of churn, or the process by which people cycle on and off of welfare, which places an administrative burden on welfare programs when applicants have to be vetted more than once.
Republican Presidential candidate Donald Trump released a new version of his tax reform plan this week, and included in the package was a plan for Dependent Care Savings Accounts. The accounts would be defined by three key features: 1) a $2000 annual tax deduction for contributions to the accounts; 2) a Roth-like structure allowing tax free growth (and annual rollovers); and 3) a matching fund to encourage participation among low-income families.
CFED’sEzra Levin quickly noticed the plan and offered this analysis via Twitter:
2/5: Second, an also-regressive, Roth-like tax subsidized account—rich households’ savings grow tax free!— Ezra Levin (@ezralevin) September 16, 2016
4/5: The first two parts are the costly ones, & taken together they kinda resemble 529/Coverdell education savings accounts in many states.— Ezra Levin (@ezralevin) September 16, 2016
5/5: And what do we know about 529s/Coverdells? Above-median income households own 98.9% of savings in them. pic.twitter.com/j0jefZYyON— Ezra Levin (@ezralevin) September 16, 2016
News in Brief: Geography, Smartphones, Working Women, and More
- Writing for Pacific Standard, Dwyer Gunn discusses the importance of geography when looking at variations in public benefit levels.
- The recent infusion of money into black-owned banks as a result of the #bankblack movement is progress, “but making black-owned banks economically viable in the long term will require more than just a one-time cash infusion—it’ll require larger and more systemic change,” writes the Atlantic’s Gillian White.
- “[F]in tech alone will not magically transform economically challenged places, [but] it is expanding one basic thing: Access,” says Bill Bynum for Shelterforce.
- Writing for the Urban Institute’s blog, Urban Wire, Mary Bogle makes the case for increasing cash assistance by expanding the Earned Income Tax Credit and the Child Tax Credit.
- The Georgetown University Center for Retirement Initiatives held an event to discuss recent Secure Choice wins and the Department of Labor’s final rule to allow states to create their own programs and its new proposed rule that would allow some larger cities to also establish such programs.”
- In an op-ed for American Banker, Neil F. Hall comments on ways in which the Consumer Financial Protection Bureau and banks could work together to provide banking services to those who rely on alternative financial services.
- “Women are working at ages when their mothers were retired. Expect the trend to continue, experts say,” reports Bloomberg’s Ben Steverman.
- In addition to income and assets, we should start more closely at cash flow in order to get a fuller picture of an individual’s financial security says Jonathan Morduch and Rachel Schneider in Shelterforce.
In Our Hands: A Plan to Replace the Welfare State | American Enterprise Institute | September 19, 2016
Inclusion By Design | New America | September 22, 2016
The 20th Anniversary of Welfare Reform: Lessons and Takeaways | Brookings Institution | September 22, 2016
Retirement Security in the New Economy: Access and Guarantees | Brookings Institution | September 23, 2016
Assets Learning Conference | CFED | September 28-30, 2016