“a survey of more than 1,000 low-income Pennsylvanians found that taxes are often a major barrier to economic security—ranking ahead of more commonly discussed problems such as credit card debt and student loans. Among those surveyed, all of whom have incomes below 200 percent of the federal poverty level (about $53,000 annually for a family of four), the average respondent reported paying $4,575 per year in taxes.”
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“The paper asks officials to consider a counterfactual history: If Pennsylvania had enacted a rule in 2003 that capped future government spending increases at a combination of inflation and population growth (and had returned the surplus to taxpayers), the average low-income resident of the state would have an extra $20,000 in the bank today, simply due to the lower tax burden.”
https://www.vox.com/future-perfect/23574798/climate-adaptation-anticipatory-cash-transfers-givedirectly
“Some people live together by choice. Others share space out of necessity. Lack of affordable housing forces many families to adjust, but the zoning police remain rigid in Cobb County, Georgia.
Even during a nationwide housing crisis, code enforcers northwest of Atlanta continue to enforce a narrow vision of suburbia. One rule limits overnight parking based on property size. Families can have one car for every 390 square feet of living space, which effectively prevents more than two vehicle owners from living together in a 1,000-square-foot unit.
Teen drivers are out of luck. So are adult children, college students, mothers-in-law, and any guest who stays longer than one week. The city does not concern itself with individual circumstances, nor does it care if vehicles remain in good condition with current tags. It counts newer models and clunkers the same.”
“Biden announced that he will—unilaterally, mind you, and for no apparent reason that I can see—extend the pause on student loan payments until the end of the year and forgive up to $10,000 for those persons making less than $125,000 a year. This generosity with other people’s money extends up to $20,000 for Pell Grant recipients.
As David Stockman, a former director of the Congressional Office of Management and Budget, reported recently, “Only 37% of Americans have a 4-year college degree, only 13% have graduate degrees and just 3% have a PhD or similar professional degree. Yet a full 56% of student loan debt is held by people who went to grad school and 20% is owed by the tiny 3% sliver with PhDs.”
Picture two young married lawyers who together earn just under $250,000 and are on their way to making even more mon ey in the future. They will be able to collect from Uncle Joe a nice bonus of $40,000, taken from the pockets of the many people who didn’t go to college—perhaps because they did not want to take on debt—and from those who have responsibly already paid back their debt.”
“On a certain level, it seems intuitive that doing more for people — giving assets and training and cash — will produce better outcomes than just giving one thing, like cash. But the downside is that it takes more time, effort, and money to run a more complex intervention.
So a major question looms over the graduation program: Is it worth spending that money on the program or is it more efficient to just give all the money directly to people in need? In other words, is it really useful to teach the person to fish or should you just give them the damn fish already?”
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“In recent years, development experts have moved toward an important idea called “cash benchmarking,” which basically says that cash is the benchmark against which all other anti-poverty interventions should be judged. Since giving people cash is easy, efficient, and respectful of their autonomy, aid agencies should only run a different type of program if testing shows that it works better than cash would.
Nowadays, when studies come out showing positive results for graduation programs, there’s a tendency to think that this particular combination — cash plus assets plus training — does work better than simply giving cash. But just because the graduation approach works great in some scenarios doesn’t mean it’s always the most efficient approach.
For starters, though, let’s look at the evidence suggesting that cash-plus programs work better than simple cash programs. Three studies have run this sort of comparison.
In South Sudan, a study looked at what happened to 250 households that got a full graduation program, compared to 125 households that got only cash and 274 households that received neither. Both graduation and cash increased consumption, but only the graduation group saw a significant increase in assets, a sign of more durable wealth. Although the cash group shifted a bit from agriculture to other types of work, they didn’t set up their own lasting businesses that may have been higher-paying.
In Uganda, researchers evaluated a graduation-style program run by a group called Village Enterprise. It offered training and a capital grant to extremely poor people so they could start a small business. The researchers found that it worked well, increasing self-employment income and consumption. In fact, it outperformed cash on these measures. The authors speculate that, “left to themselves — without training and mentorship — beneficiaries [of cash transfers alone] struggled to make productive investments, maintain them, and derive sustained value from them.”
In Niger, a new randomized study has highlighted the benefits of taking a multifaceted approach to extreme poverty. The study evaluated women who were already enrolled in a government cash transfer program. The goal was to understand how psychosocial issues — like feeling depressed or disconnected from your community — might make it harder to seize economic opportunities. The study found that the women who got psychosocial support showed rates of returns that were higher than those who got only cash. Offering psychosocial support was the most cost-effective route 18 months after the intervention.”
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“while graduation programs appear to work great in some places, they’re dependent on the market — and they can run into problems in places where the market is either too dysfunctional or, ironically, too functional.
One randomized trial in India, published in 2012, is an example of the latter. It found that a graduation program yielded no net impact. Although it shifted participants away from agricultural jobs to other sorts of work, they could’ve earned just as much in their original agricultural jobs. While those original jobs were far from big money-makers, wages for agricultural labor had been improving in India, thanks to programs like the ambitious National Rural Employment Guarantee, so adding in a graduation program didn’t really help.
Dysfunctional markets produce their own obstacles. Abed told me about his experience trying to run a graduation program in Balochistan, an extremely dry, desert-like province in southwestern Pakistan, where participants were taught how to run a small business. One problem: There wasn’t a functional market for the businesses to thrive in. “Once they graduated, there wasn’t much to go to,” said Abed. “And there wasn’t microfinance available. So it was very, very difficult.””
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“Another way a graduation program can flop is if it fails to be cost-effective. In the huge 2015 randomized study that looked at graduation programs in six countries, Banerjee and his co-authors note that although the program proved extremely cost-effective in some places, easily paying for itself within 10 years, other countries don’t have such low costs and high benefits in the short run. In Peru, for example, such a program wouldn’t break even.”
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“Abed is convinced that graduation is the best approach for the ultra-poor, but he acknowledges that what makes the most sense for the moderate poor is a somewhat open question. Also, while graduation may be best for ultra-poor people who are young and healthy enough to go start businesses if given half a chance, it may not work for those who are elderly or disabled. For those groups, the answer may well be cash transfers.”
“”Luck,” E.B. White once said, “is not something you can mention in the presence of self-made men.” They worked hard, no doubt, to get where they are. But they also benefited enormously from good fortune, not just in life but in life’s building blocks. A fortunate combination of thousands of slight genetic differences boosted their intelligence, motivation, openness to experience, task perseverance, executive function, and interpersonal skills.
“Like being born to a rich or poor family, being born with a certain set of genetic variants is the outcome of a lottery of birth,” the behavioral geneticist Kathryn Paige Harden argues in The Genetic Lottery. “And, like social class, the outcome of the genetic lottery is a systemic force that matters for who gets more, and who gets less, of nearly everything we care about in society.””
“The percentage of Americans struggling with hunger is now at its lowest level since the pandemic began, suggesting the recent flood in aid from Washington is making a significant difference to families struggling economically.
Data released by the U.S. Census Bureau this week shows the percentage of adults living in households that sometimes or often did not have enough to eat dipped to just over 8 percent late last month, down from nearly 11 percent in March. That is a substantial drop, and it came after hundreds of billions in stimulus checks went out.”
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“While the recent spate of federal aid is clearly a major factor, it’s still too early to know how much of the recent drop in hunger is related to the stimulus payments and stepped up food aid versus how much has been fueled by the improving economy. Economists have found that previous rounds of stimulus checks also led to declines in hunger amid major spikes of unemployment.”
“In the middle of a pandemic that has killed roughly 1 in every 1,020 Black Americans — a disproportionate death toll likely to worsen as coronavirus cases spike in much of the country — it’s not just lives that are being imperiled. Racial wealth gaps are worsening, and progress towards economic equity is being undone.”
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““When the pandemic translates into a disproportionate burden on low-wealth households, that is correlated with race,” says Jones. “The median wealth of white households is between 9 and 10 times as much as the median black household. And during this pandemic, the people with the lowest level of the wealth don’t have the emergency savings to hold themselves over.”
At the same time, Black and Latino workers are more likely to have “frontline” jobs that put them at heightened risk of Covid infection. For many, it’s a bind: You have less of a financial cushion to fall back on and need the work. But the job itself puts you at heightened risk of Covid infection, your health insurance is generally tied to your job, and if you lose it and catch Covid, you face potential financial ruin. Even when the pandemic ends, Jones expects that Black and Latino households will be “worse off, relative to white households, than when it began.””
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“For years, workers have had a continually eroding level of leverage in the workplace. The ways companies have redefined labor as “external contractors” basically causes more and more people to not be covered by workplace protections. During this pandemic, those people couldn’t get unemployment insurance at all. It’s indicative of a larger problem: The labor market is being reoriented in a way where workers have less and less power. One reason that’s important is that if you don’t have a lot of say, you’re going to be stuck between a rock and a hard place: forced to either not work, or to go to work under far less-than-ideal circumstances in terms of protections from Covid infection and other health problems. Do they have the right protective equipment? Do they have sick leave? Probably not.
Related to health care, we have health insurance driven by where you’re employed. During a time like this — a pandemic with acute and chronic health implications and high rates of unemployment — going in and out of access to health care is particularly devastating. In the long run, we need some form of universal health care access to offset this problem of people losing their access to health care if they lose their jobs.”
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” We found that people are sensitive to changes in their paychecks from month to month, and that’s particularly true for Black and Latinx households and households with a low level of liquid assets. What I mean by liquid assets are savings and other assets that are either cash or which can be quickly converted into cash — so your bank account, your savings account, and some investments you can quickly cash out. The households with the lowest level of liquid assets had the most vulnerability. When there were changes in their income, they had to make bigger adjustments, or adjustments that were going to be more painful. Relative to white households, Black and Latino households were more sensitive to those fluctuations, and that seems to be a result of the fact those households generally have less in terms of liquid assets, which is related to broader racial wealth gaps driven by a number of factors”
“In 2019, about one in six children in America — 12 million kids nationwide — lived in poverty. That’s a rate about two or three times higher than in peer countries. And that was before the worst economic and public health crisis in modern history.
The scale of child poverty in America is a disgrace, not only because of the suffering it creates and the potential it drains from our society, but also because it’s easily avoidable. Child poverty is not an inevitability; it’s a policy choice. And we’ve been making the wrong choice for far too long.”
“programs for the poor are only a tiny portion of the U.S. welfare state. In fact, the Congressional Budget Office estimates that more than 60 percent of American households receive more in government benefits than they pay in taxes. To get an idea of just how big the American welfare state has become, consider that those transfer payments from the federal government are equal to 34 percent of all wages and taxes in the U.S.”
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“The largest transfer programs are the middle-class entitlements, Social Security and Medicare. In addition, a large portion of the third biggest entitlement program, Medicaid, actually goes to the middle-class elderly and disabled individuals, not the poor. Those three programs alone now make up more than half of all federal spending.”
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“we need to understand that, in practice, when an individual pays Social Security taxes, none of those taxes are set aside for that individual’s benefits. Rather, they are used to pay benefits to those who are currently retired. Social Security is merely a transfer payment from workers to retirees. In that sense, it operates exactly the same as any other transfer or welfare program.”
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“Many individuals will receive more than taxes paid plus a reasonable amount of interest on those taxes.”
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“according to the Social Security system’s trustees, the program faces a future shortfall of more than $43 trillion7 (measured in discounted present value over an infinite horizon—that is, if the government put away $43 trillion today and earned 3 percent interest on those funds, it would have enough money so that, combined with payroll taxes, it could pay all future benefits). Unfortunately, however, the federal government doesn’t have an extra $43 trillion. As a result, there is simply no way that Social Security can pay future benefits without a massive tax increase.”