Roper: Are we paying parents to keep kids in poverty?

By Rob Roper

An article in Seven Days reminded us that back in 2007 the Vermont Legislature set a goal to cut child poverty in half in 10 years. A fourteen-member panel was charged with getting this done. The deadline passed on June 30, 2017. How’d we do?

Rob Roper is the president of the Ethan Allen Institute.

As the article reports: “In 2007, according to the U.S. Census Bureau, 15,907 Vermont children, or 12.4 percent, were living below the federal poverty line. By 2015, the most recent year for which data is available, the number of children in poverty had declined, slightly, to 15,469, but the rate had increased to 13.3 percent.”

What was tried? As part of Vermont’s mini War on Poverty, the state has expanded state subsidized access to health insurance, increased the minimum wage, increased childcare subsidies, and beefed up welfare benefits. Note: These policies achieved exactly nothing for poor kids — at least nothing as far as lifting them statistically up the income ladder.

There are a few ways of looking at this.

First, maybe establishing a distinguished panel of political appointees is no way to get anything done. Perhaps these types of efforts are more of a chance to hold a press conference with much patting of backs today for “doing something,” while counting on voters’ short memories to make sure nobody is actually held accountable tomorrow for doing nothing.

Second, maybe we’re analyzing poverty the wrong way. Instead of looking at someone’s gross household income as a measure of poverty, why don’t we look at access to basic goods and services — food, housing, healthcare, etc. A child (or anybody) who is listed as in poverty, but then receives a government benefit valued perhaps at several thousand dollars, may still be listed as living in poverty. Is a kid who receives free breakfast and lunch at school, attends a subsidized childcare program, gets health care through Medicaid, and lives in subsidized housing really “living in” poverty? Or are they more accurately defined as dependent on taxpayers to maintain a middle class lifestyle?

And, lastly, related to the above point, are we effectively paying parents to stay poor? Common sense and economics dictate that if you subsidize something you get more of it. If parents need to remain income-poor in order to cash in on government subsidies worth tens of thousands of dollars, they are heavily incentivized to stay “poor” — which, of course, means their kids are tagged as “living in poverty.” This is the “benefits cliff” often mentioned in the debate over the $15 minimum wage. In that context our politicians recognize the disincentive to increase income — and to remain “poor” — in order to avoid actually living in poverty.

This is the trap that is creating a permanent underclass. Maybe, if we really want do do something about poverty over the next 10 years, it’s time to remove the bait from this trap.

Rob Roper is president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

One thought on “Roper: Are we paying parents to keep kids in poverty?

  1. “The single largest expenditure is the $1.7 billion [Vermonters] spend on public welfare, which includes many different programs that primarily go to low income Vermonters.”
    http://www.burlingtonfreepress.com/story/money/2017/03/02/vermont-ranks-high-welfare-health-care-transportation-spending-taxes/98587398/

    “The U.S. Census Bureau indicate that 71,329 Vermonters lived below the federal poverty line in 2016”
    https://www.sevendaysvt.com/OffMessage/archives/2017/09/14/census-bureau-vermont-only-state-to-see-poverty-rate-rise-in-2016

    So, if equally distributed, Vermont spends $23,833 per person on public welfare. For a household of four that could be more than $90,000….not counting education costs.

    On the other hand, I suspect, a significant portion of that money goes to the government workers administering the programs, the subsidized housing landlords who own their apartments, the grocery stores receiving EBT card payments, and so forth, which may explain why it’s so difficult to modify welfare programs.

    The democratic dilemma rests in how a productive minority convinces a dysfunctional majority to change its tune when politicians figure out they can bribe the majority with the minority’s money.

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