WHITE HOUSE REPORT - Opportunity For All: Fighting Rural Child Poverty

WHITE HOUSE REPORT - Opportunity For All: Fighting Rural Child Poverty

The full report is available online HERE.

A blog post on the report is available online HERE.

Small towns and rural communities are home to millions of Americans, are a vibrant part of our nation’s economy, and include some of the most beautiful landmarks in the country. Rural America provides the vast majority of food, energy, and environmental benefits for the rest of the country, is the source of nearly 90 percent of renewable water resources, and is home to important service sector and manufacturing hubs. Despite this critical role in our nation’s economy, too many Americans in rural areas are not sharing in our nation’s economic growth. In 2013, 6.2 million Americans in rural areas lived in poverty, including about 1.5 million children. Moreover, in far too many of these communities, high rates of poverty have persisted for generations: over 300 rural counties have had poverty rates of over 20 percent in every Census since 1980.

While the fight to eliminate poverty is far from over, the 2014 Economic Report of the President documented that federal programs designed to reduce poverty and promote opportunity have cut poverty by more than one-third over the past 50 years. This report also shows that poverty in rural areas fell by nearly half between 1967 and 2012, compared to about one-quarter in urban areas.

Federal programs have played a central role in this decline, and this is especially true for rural child poverty. This report shows that:

·         The Federal tax and transfer system, including programs like refundable tax credits, Social Security, the Supplemental Nutrition Assistance Program (SNAP), and housing assistance lifted about 9.0 million rural people out of poverty in 2013, including about 1.6 million children.

·         Refundable tax credits (the Earned Income Tax Credit (EITC) and the refundable portion of the Child Tax Credit) have the largest anti-poverty effect on child poverty lifting about 4.1 million urban and nearly 600,000 rural children from poverty.

·         Programs like Social Security and SNAP have profound impacts on the well-being of the poorest rural children, reducing rural child deep poverty by nearly one-half and about 30 percent respectively.[1] Social Security and Supplemental Security Income benefits are particularly important for rural children since many live with parents with a disability, or receive survivor benefits. The impact of SNAP on deep poverty rates is also larger in rural areas than in the country as a whole.

Federal antipoverty programs continue to effectively reduce poverty. In the Great Recession, actions by the Obama Administration and Congress helped to substantially alleviate poverty.

·         During the Great Recession, poverty increased 4.5 percentage points before accounting for taxes and transfers; however when all taxes and transfers are considered—including those, like the EITC and SNAP, that were strengthened by the Recovery Act—poverty rose only 0.5 percentage point.

·         Improvements to the safety net during the Great Recession lifted 4.0 to 5.5 million people across the nation out of poverty each year between 2009 and 2012.  These programs, including the EITC, SNAP, and Emergency Unemployment Compensation, all substantially reduced poverty. For example, in 2013, refundable tax credits lifted 4.7 million children out of poverty, and SNAP lifted about 2 million children out of poverty.

·         Without Federal tax and transfer programs like the EITC, SNAP, and Social Security, child poverty in rural areas would have been more than 70 percent higher over the 2009 to 2011 period.

In addition to the safety net’s dramatic impact on reducing hardship among urban and rural children alike, a growing body of evidence shows that Federal investments that provide assistance to low-income children provide very large long-run returns. Increasing the resources available to poor children and their families improves children’s education, health, and earnings outcomes later in life. In many cases these benefits are so sizeable that increases in tax revenues due to higher earnings alone may offset most or all of the program costs.

·         In addition to improving health outcomes, access to Medicaid early in life increases earnings once workers are in their mid-20s and also increases educational attainment.[2]

·         A long literature documents that the EITC increases employment among single mothers. Recent research shows the credit can further benefit children by improving health outcomes in infanthood and improving academic performance when children are in elementary and middle school.[3] These medium-term findings suggest that the credit will increase future earnings in adulthood as well.

·         Access to SNAP improves early health outcomes for children. The program also provides long-term benefits in the form of increased high school completion and higher economic self-sufficiency in adulthood.

·         Investments in early education increase children’s educational attainment and earnings later in life, while some studies also show reduced involvement with the criminal justice system.

·         Housing assistance programs that enable families to move to lower-poverty neighborhoods improve health outcomes for adults and teenage girls in the short and medium run. Over a longer horizon, moving to a lower-poverty neighborhood increases children’s college attendance and earnings in adulthood.

Yet despite the progress of the past 50 years, there are still far too many Americans living on the outskirts of hope. President Obama recently remarked, “In order to ensure that all Americans are able to reach the first rung on the ladder of opportunity, we must continue to invest in the types programs that we know have worked to produce our successes to date.”

The President has laid out an agenda that would do just that – make the investments needed to promote opportunity and reduce poverty in the near and long term. These include:

·         Reversing the sequestration cuts that would affect programs like Head Start, Pre-K development grants, Housing Choice Vouchers and Homeless Assistance Grants, job training, and rural infrastructure—programs that have been shown to produce high return investments in the productivity of America’s future workforce.

·         Making permanent the 2009 expansion of refundable credits and preventing a tax increase on 16 million working families with children.

·         Supporting state efforts to expand Medicaid. Expanding Medicaid would substantially improve coverage in rural areas, as nearly two-thirds of uninsured rural individuals live in states that elected not to expand their Medicaid programs under the ACA and about one million rural residents fall into the so-called “coverage gap,” with incomes too high to be eligible for their State’s Medicaid program but too low to be eligible for tax credits to purchase Marketplace coverage.

·         Increasing the minimum wage, providing a needed boost to the working poor and reducing poverty.

·         Improving access to higher education to better prepare our workers for the 21^st century economy. To help students access college and build their skills, the President has proposed improving the American Opportunity Tax Credit and making two years of community college free for hardworking students.

·         Preventing the harmful cuts to the safety net proposed by the Republican budget, such as in the SNAP program. The Administration has worked with states to ensure that low-income households that are eligible for SNAP are able to access this important nutrition assistance. Between 2009 and 2012, the latest year for which data are available, the percentage of individuals eligible for assistance that received SNAP increased from 72 percent to 83 percent. Because SNAP benefits decline gradually as earnings rise and a large share of able-bodied adults receiving SNAP also work, ensuring that the program is accessible helps working households and those returning to work make ends meet.

·         Protecting Social Security retirement and disability insurance programs, which provide critical assistance to millions of American families and lift 1.2 million rural children out of poverty.

·         Leveraging technology to improve access to services. Inadequate access to services is a notable challenge in many rural communities. Programs like HHS’s Rural Child Poverty Telehealth Network Grant Program and USDA’s Distance Learning and Telemedicine Grant Program are testing new ways to use telehealth technologies to link rural children with specialized health and human services that may not be available locally.

·         Ensuring that federal agencies work together and with external partners in the most effective ways possible, such as the actions of the White House Rural Council’s Rural Impact effort to accelerate policy innovations, raise awareness, and increase investments in areas of rural child poverty.

As President Obama has stated, “A child’s course in life should be determined not by the ZIP code she’s born in, but by the strength of her work ethic and the scope of her dreams.” In many rural places, that ZIP code equates to decreased access to critical services, fewer educational opportunities, and limited job choices. This report examines the background and trends of poverty in rural areas, including comparisons of the different measures of poverty between rural and urban areas, as well as a discussion of the impact of safety net programs on rural poverty. This report also discusses actions that the Obama Administration has taken and proposed to ensure that all families have an opportunity to climb into the middle class.