young adult choices and poverty reduction ron haskins senior fellow, the brookings institution...
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Young Adult Choices and Poverty Reduction
Ron HaskinsSenior Fellow, The Brookings Institution
Senior Consultant, The Annie E. Casey FoundationFebruary 19, 2013
2
Overview
• Trends in Poverty and Inequality• Why Are Poverty and Inequality So Stubborn?• Government Spending and Poverty Impacts• Pathways Out of Poverty and Inequality
- Education- Family Composition- Work
3
Trends in Poverty and Inequality
4
Poverty Rates for All Children, Black Children, and the Elderly, 1959-2011
Note: Poverty rates for black children from 1959-1974 are for black children in related families because data for all black children is unavailable over this period.Source: Census Bureau, Poverty Division, CPS ASEC, "Table 3. Poverty Status of People, by Age, Race, and Hispanic Origin: 1959 to 2011.”
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
0
10
20
30
40
50
60
7065.6
38.8
27.321.9
35.2
8.7
Black ChildrenAll ChildrenAge 65 and Over
Beginning of War on Poverty
5
Post-tax, Post-transfer Income in Thousands of 2007 Dollars, by Income Quintile, 1979 and
2007
First Quintile Second Quintile Middle Quintile Fourth Quintile Fifth Quintile Top 1%0
200
400
600
800
1000
1200
1400
15.3 31.0 44.1 57.7101.7
346.6
17.7 38.0 55.3 77.7
198.3
1,319.7
1979 2007
Income Quintile
Th
ou
sa
nd
s o
f 2
00
7 D
olla
rs
(23%) (25%) (35%) (95%) (281%)
Source: Congressional Budget Office, “Average After-Tax Household Income,” available at http://www.cbo.gov/publications/collections/collections.cfm?collect=13. Comprehensive household income equals cash income plus income from other sources, including in-kind benefits. Note: The numbers in parentheses are the percent increase in income between 1979 and 2007.
(16%)
6
Source: Markus Jäntti and others, “American Exceptionalism in a New Light: A Comparison on Intergenerational Earnings Mobility in the Nordic Countries, the United Kingdom, and the United States,” Discussion Paper 1938 (Bonn: IZA, 2006), table 4, p. 18, and table 12, p. 33.Notes: Sons were born around 1958, and earnings of both fathers and sons were observed near age forty. Sons’ earnings are generally measured between 1992 and 2002.
Percentage of Men with Fathers in the Bottom Fifth of the Earning Distribution that Remained in
the Bottom Fifth, by Country
Denmark
Sweden
Norway
Finland
United Kingdom
United States
25%
26%
28%
28%
30%
42%
7
Why Are Poverty and Inequality So Stubborn?
• Work Rates• Wages• Family Composition• Education• Other (Immigration, Technological Change,
International Competition)
8
Government Spending and Poverty Impacts
9
Federal Means-Tested Spending on Biggest Programs, 1962-2011
(Constant $2011)
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0
100
200
300
400
500
600
700
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Spending on Ten Biggest Means-Tested Programs
Spending Per Person in Poverty
Year
To
tal
Sp
end
ing
, B
illi
on
s o
f C
on
stan
t $2
011
Sp
end
ing
Per
Per
son
in
Po
vert
y, C
on
stan
t $2
011
Notes: This series includes 10 spending sources: Medicaid, SNAP, EITC, CTC where credit exceeds tax liability, SSI, AFDC/TANF, Housing Assistance, Medicare Part D Low Income Subsidy, ESEA Title I Grants to Local Educational Agencies, and Federal Pell Grants. Data on the last two are available starting only in 1980 and include approximately $27 billion in ARRA spending in 2009.Sources: Most spending sources from OMB, Fiscal Year 2013 Budget, Tables 8.5, 11.3, 12.3. Title I and ESEA spending from Department of Education Budget History Table. Medicare data from CMS, 2011 Medicare Trustees Report, Table IV.B11, number for 2011 is estimated. All figures adjusted to constant dollars using OMB total deflator from historical table 10.1. Data on number of people in poverty through 2010 from Census Bureau, 2011 number estimated by Richard Bavier.
10
The Impact of Taxes and Transfers on Poverty Rates Among Single-Parent Families
Source: US House of Representatives, Committee on Ways and Means, 2008 Green Book, Appendix E, Table E-31.Note: The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are refundable tax credits designed to help lower income families, particularly single parent families.
Series10
10
20
30
40
50
60
0
10
20
30
40
50
60
39.6
29.9
26.1
34.1
Cash Income Before Transfers
Plus Social Insurance and Means-Tested Benefits
Plus EITC and CTC, Less Federal Payroll and Income Taxes
Total Poverty Reduction
Po
vert
y R
ate
Perc
en
t R
ed
ucti
on
in
Po
vert
y
11
Pathways: Education
12
Median Family Income of Adults Age 30-39 by Education Level, 1963-2011
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Advanced Degree
4-Year College Degree
Some College/2-Year College Degree
High School Diploma/Equivalent
No Degree
Year
Me
dia
n F
am
ily In
co
me
(2
01
1 D
olla
rs)
Source: Income Figures from Brookings tabulations of data from the Annual Social and Economic Supplement to the Current Population Survey, 1964-2012. Adjusted to constant dollars using annual averages of the CPIAUCNS from FRED (https://research.stlouisfed.org/fred2).
13
Bottom Second Middle Fourth Top Bottom Second Middle Fourth Top0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
45
28
1712 13 10 12
7 5 4
26
24
2226
16
37
1415
105
16
20
2522
22
26
10 21
23
16
8
18
23
22
24
17
27
2627
23
39 12
1825
10
3731
35
51
Top
Fourth
Middle
Second
Bottom
Parents' Income Quintile
Per
cen
t o
f A
du
lt C
hild
ren
Rea
chin
g
Eac
h In
com
e Q
uin
tile
Adult Chil-dren's Income
Quintile:
Without a College Degree With a College Degree
Chances of Getting Ahead for Adult Children With and Without College Degree from Families of Varying Incomes
Note: Income adjusted for family size.Source: Pew Economic Mobility Project, Pursuing the American Dream: Economic Mobility Across Generations, July 2012, Figure 15.
14
Trends in Performance on the National Assessment of Educational Progress (NAEP) for 13 Year Olds, 1971 or 1978
to 2008
Note: NAEP Scores are on a 0-500 scale. Scale scores for 2004 and 2008 use the revised assessment.Source: U.S. Department of Education, Institute of Education Sciences, National Center for Education Statistics, National Assessment of Educational Progress (NAEP), 1978, 1982, 1986, 1990, 1992, 1994, 1996, 1999, 2004, and 2008 Long-Term Trend Mathematics Assessments.
1971 1975 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1999 2004 20080
50
100
150
200
250
300
350
400
450
500
Reading Math
Year
Sca
le S
core
15
Students in the U.S. in International Comparisons, 2009
Out of 64 countries, the US:• Tied for 24th (with 12 others) in Mathematics• Tied for 19th (with 13 others) in Science• Tied for 10th (with 16 others) in Reading
Various countries that scored higher than the US:
Slovak Republic, Estonia, China, Japan, Slovenia, New Zealand, Finland, and Iceland
Source: Department of Education, Institute of Education Sciences, National Center for Education Statistics, “Program for International Student Assessment (PISA) 2009 Results,” (http://nces.ed.gov/surveys/pisa/pisa2009highlights.asp).
16
Education Investments
• Preschool- Average quality- Head Start
• K - 12- Teacher quality (Race to the Top)- i3 (Foundation Registry)- Literacy
• Post-Secondary- Employment and training- Community college- Four-year college
17
Pathways: Family Composition
18
Percent of Births to Unmarried Women, 1940-2011
1940
1943
1946
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
0
5
10
15
20
25
30
35
40
45
3.8
40.7
Year
Pe
rce
nt
of
All
Bir
ths
Note: Data for 2011 is preliminary.Source: CDC, National Vital Health Statistics.
19
Percent of Children Living with Mothers Only, 1970-2011
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
20100
5
10
15
20
25
30
10.8
23.8
Year
Pe
rce
nt
of
Ch
ild
ren
Source: U.S. Census Bureau, Living Arrangements of Children, Table CH-1, available at http://www.census.gov/hhes/families/data/children.html.
20
Differences in Non-marital Births by Mother’s Education and Ethnicity
Non-marital Births, by Ethnicity, 1970-2010
Never-married Mothers, by Education,1968-2008
Source: (Education) Authors' tabulations from the March Current Population Survey; (Ethnicity) Source: National Center for Health Statistics, Table 1-17 Number and Percent of Births to Unmarried Women, by Race and Hispanic Origin: United States, 1940-2000; Rest of Data from National Vital Statistics Reports, Births for each Year, see http://www.cdc.gov/nchs/nvss/new_births.htm.
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
10
20
30
40
50
60
70
80
White
Black
Hispanic
Per
cen
t o
f B
irth
s
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
0
5
10
15
20
25
30
Less than 12 yrs
12 yrs
13 - 15 yrs
16+ yrs
Per
cen
t o
f M
oth
ers
in E
du
cati
on
Cat
ego
ry
21
Family Dissolution During the First Five Years After the Birth of First
Child
Married at Birth of First Child Cohabiting at Birth of First Child0
5
10
15
20
25
30
35
40
45
Per
cen
t w
ith
Fam
ily
Dis
solu
tio
n
39%
13%
Source: Original analysis by the National Marriage Project (UVA) using National Survey of Family Growth data from 2000-2005.
22
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
20100
10
20
30
40
50
60
40.9
8.8
Female-Headed
Married-Couple
Year
Pe
rce
nt
in P
ov
ert
y
Poverty Rates for Children in Female-Headed and Married-Couple Families,
1975-2011
Source: U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2011, Historical Tables, Table 4.
23
Investments in Family Composition
• Reducing teen pregnancy• Reducing unplanned births for young adults• Encouraging marriage• Male employment• Churches and civil society
24
What Accounts for Success?
1-2 Norm
s 23%
30%
The Three Norms
•Complete high school
•Work full time
•Wait until age 21 and marry before children
Income Class, by Adherence to Social Norms, 2007
0 Norm
s
77%
4%
Poor (< 100% poverty level)
Middle class and above (> 300% poverty level)
3 Norm
s 72%
2%
Source: Authors' calculations based on the U.S. Census Bureau, Annual Social and Economic Supplement to the Current Population Survey.