Poverty

Data on recent trends in demand for basic needs services

• Why Poverty Matters
• King County Poverty Statistics
• Measuring Poverty
• Race and Poverty
• Barriers to Escaping Poverty
• What Works to Reduce Poverty?
• Poverty Myths
• Resources

Read About United Way of King County's Response

Why Poverty Matters

Poverty affects early learning

Research has demonstrated that poverty is one of the greatest challenges to children's healthy development. Poverty affects cognitive development and children’s ability to learn. It can contribute to physical and behavioral health problems. It poses the greatest risk for children who experience economic hardship when they are young and those who experience severe and chronic poverty1.

Children born into poverty are subjected to higher levels of trauma and deprivation than children in families with adequate incomes.

• Poverty has an effect on children's development and ability to learn, especially for young children and when it is severe or long term.^[1]
• Children who are born into poverty are 1.6 times as likely to die in childbirth and 1.9 times more likely to be born with a low birth weight.^[1]
• According to a study of the incidence of child abuse and neglect in Washington, children living in families with income below $15,000 were 15 times more likely to be abused, 44 times more likely to be neglected and 22 more times likely to die or be seriously injured as a result of abuse or maltreatment.^[2]

New research is released regularly showing the wide ranging, lifelong effects of negative experiences in early childhood.

• Low birth weight at full term has a direct effect on adult mental health,[9]
• Traumatic experiences in childhood may have a lifelong impact on the neuroendocrine system, and can cause behavioral problems in children, mental health and chronic pain in adulthood. [8]

 Children in poverty have been shown to

• have math and reading scores that are 7 to 8 points lower than average
• be 2 times more likely to repeat a grade
• be 3.4 times more likely to be expelled from school.^[3]

Poverty causes homelessness

Income level is directly related to homelessness. Inability to afford adequate housing is the single greatest reason that people become homeless. Therefore the primary means available to prevent homelessness are to increase income/reduce poverty or reduce the cost of housing.

Income Level of Homeless People in Shelter and Transitional Housing on January 29, 2010

Poverty carries great social and economic costs

Poverty causes human suffering and reduces the quality of life for the whole community. "Research suggests that in addition to the social consequences of economic inequality—such as crime, social exclusion, and despair—the gap between rich and poor has a detrimental effect on health"2.

The income required for a single parent with one child to meet the basic needs of their family is more than twice what a full time worker would earn at minimum wage and nearly three times the poverty level.  While public benefits may help, living in this situation places extreme stress on young parents and their children.  What in this budget would you do without?

Poverty also has economic costs in terms of loss of potential of a portion of our citizens. “Economists estimate that child poverty costs the U.S. $500 billion a year in lost productivity in the labor force and spending on health care and the criminal justice system. Each year, child poverty reduces productivity and economic output by about 1.3 percent of GDP1 ”

Source: Living Wage Calculator, Poverty In America, Penn  State

Living Wage Calculator

Return to Top

Poverty Statistics

In King County 9.5% of all people and 11.6% of all children under 18 live in households with income below the federal poverty level.  Family Poverty in King County^[4]:

Source: American Community Survey, 2006-2008 Average

Download Data | Source: Claritas 2008 Update (Census Tract Level)

Download Data | Source: American Community Survey 2006-2008 average

Return to Top

Measuring Poverty

The common definition of poverty is associated with a single national income threshold established annually by the federal government based on a multiple of the price of a common market basket of goods and services deemed essential for individuals and families to live at a subsistence level. In reality the definition of poverty is much more complex. Read more about measuring poverty

In Fall of 2011, a new supplemental poverty measure will be released by the Census Bureau along with the existing poverty rate. The official poverty measure will continue to be used for determining eligibility for benefits.

Return to Top

Race and Poverty

Poverty and low-income disproportionately affect people of color nationally and locally. At the same time, however, whites comprise the largest group of low-income people.

“Low levels of parental education are a primary risk factor for being low income. Eighty-three percent of children whose parents have less than a high school diploma live in low-income families, and over half of children whose parents have only a high school degree are low income as well. Workers with only a high school degree have seen their wages stagnate or decline in recent decades while the income gap between those who have a college degree and those who do not has doubled. Yet only 27 percent of workers in the U.S. have a college degree.9”

In King County 25% of African Americans, 18% of Latinos and 25% of Native Americans live in income poverty while 7% of white households are considered poor.^[5]

In 2006, the average net worth of a white household in the State of Washington was $154,675 or 8 times the average net worth of a household of color which is $19,445.^[6] 

Nationally, in 2006, African Americans had 10 cents and Latinos had 15 cents in wealth for
every $1 for whites.

Read more about racial equity

Download Data | Source: Claritas 2008 Update (Census Tract Level)

Return to Top

Barriers to escaping Poverty

People who live in poverty, or who regularly have insufficient income to meet their basic needs, face a number of systemic and practical barriers to achieving financial stability. 

Poor health and poor nutrition are closely associated with lower educational and job performance outcomes which makes it more difficult for people to advance in school or in a job to a wage that is self sustaining. 

Low income people, especially those living in concentrated low income neighborhoods, are likely to pay more for basic goods and services than people in middle and high income neighborhoods. 

For example, in King County low-income drivers tend to pay higher auto insurance prices because of where they live, their credit scores, educational attainment, and occupations.  According to a Brookings Institution Report on the High Cost of Being Poor, households with incomes less than $30,000 pay $614 or $50 more for the same insurance policy than do households with incomes between $60,000 and $90,000.^[9] 

This “poverty effect” on prices means that low income people are likely to pay more for financial services, groceries, housing, transportation and other basic goods and services that they need to get by. 

The cumulative effect of being forced to pay high costs for necessities further reduces the spending power of those most in need. 

Upward mobility – trends

“Economic mobility — the likelihood of moving from one income group to another — is on the decline in the U.S. Although Americans like to believe that opportunity is equally available to all, some groups find it harder to get ahead than others. Striving African American families have found upward mobility especially difficult to achieve and are far more vulnerable than whites to downward mobility. The wealth gap between blacks and whites — black families have been found to have one-tenth the net worth of white families — is largely responsible1”

Food insecurity is closely associated with poverty.  Food insecurity rose sharply in 2008.

Download Data |Source: USDA

“Long-term economic trends are also troubling as they reflect the gradual but steady growth of economic insecurity among middle-income and working families over the last 30 years. Incomes have increased very modestly for all but the highest earners. Stagnant incomes combined with the high cost of basic necessities have made it difficult for families to save, and many middle- and low-income families alike have taken on crippling amounts of debt just to get by.

Research also indicates that economic inequality in America has been on the rise since the 1970s. Income inequality has reached historic levels — the income share of the top 1 percent of earners is at its highest level since 1929. Between 1979 and 2006, real after-tax incomes rose by 256 percent for the top 1 percent of households, compared to 21 percent and 11 percent for households in the middle and bottom fifth (respectively).”[1]

“In King County, between 1979 and 2007, income has shifted from the four lower income groups to the highest income group. In 2007, the richest 20% of households received 48.9% of all income earned by King County households in that year. The poorest 20% earned only 3.5% of total income."[2]

Source: Communities Count 2008

While local data are not available on household wealth, nationally wealth inequality has always been substantially greater than income inequality. As of 2004, the richest 5% of U.S. households held 59% of the nation’s private wealth and the top 1% of households held more than one-third of the wealth. Between 1983 and 2004, average household wealth increased by 78% for the top 1%. By comparison the bottom 40% experienced a 59% loss.”[2] 

In 2006, the median net worth of the richest fifth of households in the State of Washington was $364,294 or 52 times the median net worth of households in the poorest fifth, which is $7,000.^[6] 

Return to Top

What works to reduce poverty?                                   Read About United Way of King County's Response

Refundable Tax Credits

The Earned Income Tax Credit is refundable in that a wage earner can get a credit in excess of what he or she pays in taxes. This program mitigates the effects of poverty for working people.

Public Benefits  

The State of Washington Department of Social and Health Services administers a range of sate and federal public benefits for low-income people.  Benefits include access to food, medical insurance and financial assistance.  State and local programs also provide child care subsidies and utility assistance.

In a survey of Washington State Emergency Food program recipients, 77.3 % had ever used SNAP (food stamps), and only 53.9% were currently enrolled. Those not using supplemental food programs were asked the reasons and 51.8% did not believe they were eligible, 22.5% said the process was too inconvenient or difficult, 26% felt they had no need for the programs and 5.5% felt the sigma attached to benefits was too great .

Food Stamp Utilization in King County 2006-2008 Average

Source: 2006-2008 American Community Survey 3-Year Estimates
 

Minimum Wage

Washington is one of only a few states with a minimum wage that is indexed to inflation. Although the minimum wage does not assure a living wage, minimum wage workers in Washington state can at least avoid erosion of their income by inflation.

The 2010 minimum wage in Washington State is $8.55 per hour.

Employment – job placement and job training

Programs that help people find jobs and get training to advance their skills can be effective strategies to reduce poverty and promote economic development.  Read more about employment and job training.

Employer benefits

Employer benefits make it possible for people to maintain work-life balance which promotes a healthy work force, effective parenting for the next generation and supplements income to bring low-wage workers out of poverty. The percentage of employers offering paid vacation and sick leave and medical insurance is declining.

• The number of Washington State employers offering paid leave to full time employees remained fairly steady through 2007 then dropped in 2008. Little gain was made in 2009.

• Those that offered paid sick leave dropped from 46% in 2004 to 41% in 2009,

• companies that offered paid vacation leave dropped from 73% in 2004 to 65% in 2009.

• Paid holiday leave dropped from 65% in 2004 to 63% in 2009.

• The percentage of employers that offered medical insurance to full-time employees has declined steadily over the past 5 years to 55% in 2009.

• Fewer firms offered medical coverage to part-time employees as well, slipping from 15% in 2004 to 9% in 2009.
  Tax benefits[8]
   

Percent of Firms in Washington Offering Health Insurance to Employees by Year

Poverty Myths:

Government income transfers benefit the poor

Government benefits to low-income families:

• Earned Income Tax Credit : For working poor only, provides income supplement to bring workers above the poverty level

• Public financial, food and medical assistance: Means tested, requiring much documentation, highly stigmatized. Often difficult to acquire, manage, and use.  Not used by all who are eligible.

Government benefits to middle and upper-income families

•  tax-subsidized benefits provided by employers (such as health insurance and retirement accounts),

• tax breaks for home owners (such as deductions for mortgage interest and tax exclusions for profits from home sales)

• other tax preferences that privilege assets over income.

• child tax credit and the child care and dependent tax credit - because neither is fully refundable, low wage workers do not benefit.

Although most people don’t think of these tax breaks as government “benefits,” they cost the federal treasury nearly three times as much as benefits that go to low- to moderate-income families.

Most poor people are single women of color with large families; Most poor people have been poor for generations.

While people of color are disproportionately affected by poverty, the majority of people in poverty are white.

"A study of children born between 1970 and 1990 showed that  35% experienced poverty at some point during their childhood; only  small minority experienced persistent and chronic poverty.  And more than 90% of low-income single mothers have only one, two or three children."1

Return to Top

Resources

National Center for Children in Poverty

West Coast Poverty Center

Poverty In America Living Wage Calculator

Communities Count

Return to Top________________________________________

 Footnotes and References

^[1]Ten Important Questions About Child Poverty and Family Economic Hardship Authors: Nancy K. Cauthen and Sarah Fass Publication Date: December 2009 http://www.nccp.org/publications/pub_829.html
^[2] Communities Count 2008
^[4] American Community Survey 2006-2008 average
^[5] American Community Survey 2006 - 2008 average
^[6] Asset and Opportunity Scorecard, 2009-2010.” Corporation for Enterprise Development.   http://www.cfed.org/parentid=31&siteid=2471&id=2475&measureid=3889
^[7] Asset and Opportunity Special Report on home ownership in the bubble years. 2008. Corporation for Enterprise Development http://www.cfed.org/specialreport/a_o_special_report.pdf
[8] Communities Count May 2010 Update

[9]“The Poor Pay More in Seattle: Expanding the Envelope of Working Family Initiatives.”  Brookings Institution, 2006. 


West Coast Poverty Center at UW, Poverty Research Flash No. 2007-1 describing study by Stephen D. Holt and Jennifer L. Romich “Marginal Tax Rates Facing Low-and Moderate-Income Workers who Participate in Means-Tested Transfer Programs,” Published in the National Tax Journal, Vol. 60, No. 2 (June 2007) downloaded 3-25-10 from http://depts.washington.edu/wcpc/sites/default/files/Flash/PFLASH.Romich.2007-1.FN_.pdf