Association for Public Policy Analysis & Management

Panel: Alternative Approaches to Anti-Poverty Policy

(Poverty and Income Policy)

Economic growth in the United States has done little to improve the lives of low-income working Americans in recent decades. Given increased earnings volatility and a lack of mobility out of poverty, a more robust safety net may require alternative approaches to social policy targeted toward families at risk of poverty. Specifically, working families need more support maintaining disposable income and steady employment. For example, housing assistance is currently poorly-targeted and often wait-listed, and about a quarter of all renters spend over half of their income on housing. Meanwhile, the labor market for low-wage jobs has become more precarious even as unemployment has been steadily falling; many workers are either leaving the labor force or are underemployed. Further, a recent Federal Reserve report indicated that forty-six percent of adults report that they could not access $400, whether by selling items or borrowing, if they needed it for some emergency. When so many are living at the margins, any negative shock to family income could imply a fall into poverty.

The proposed panel will address anti-poverty policy alternatives related to major components of a family’s financial security: housing, employment, and income. In “A Renter’s Tax Credit to Curtail the Affordable Housing Crisis”, the authors use the Current Population Survey (CPS) to simulate a refundable tax credit for renters that could reduce the poverty rate among beneficiaries by 12.4 percentage points, and the program costs would be about a third of the magnitude of homeownership tax benefits directed to households with over $100,000 in yearly income. To address employment, the authors of “Working to Reduce Poverty: A National Subsidized Employment Proposal” suggest a policy that is funded federally and implemented by state, local, and private employers, and they estimate that about 1 million people would be lifted out of poverty while improving labor force attachment and stimulating local economies. In the last paper, “Poverty Impact and Distributional Effects of Alternative Income Guarantee Designs”, the authors simulate an income guarantee that complements the existing safety net, benefits about 70 percent of the population, and reduces the national poverty rate by about 3 percentage points.

Each of these studies provides a new approach to supporting low-income Americans and reducing poverty. For the many working families that are at risk of poverty and having difficulty making ends meet, these proposals could provide additional stability that prevent falling on the safety net while possibly allowing some upward mobility through small-scale improvements in human capital investments or wealth accumulation. These papers all relate to disposable income and financial security, yet they represent different policies and methodologies. Further, the presenters represent a mix of law, economics, social work, and policy, whereas the chair and discussant will be able to add perspective from experience at the Department of Health and Human Services as well as the Council of Economic Advisors. These policy proposals offer evidence on relevant and practical reforms along with the poverty effects, costs, and possible funding plans.