Michigan, 20 years after “welfare reform”

It was 20 years ago, in 1996, that Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act that transformed cash assistance from a federal entitlement program (meaning that all who meet the eligibility requirements receive a direct federal benefit) to a block grant through which states fund their own programs. The Family Independence Program (FIP) is Michigan’s cash assistance program that is funded by the block grant—Temporary Assistance for Needy Families (TANF).

Unlike Aid to Families with Dependent Children (AFDC), TANF gave states wide latitude to set their own eligibility levels and work requirements. It allowed states to use federal funds for other things besides cash assistance as long as the expenditure fit within four general purposes of TANF. (more…)

When are we going to really value education?

Earlier this month, yet another damning report came out showing how badly the state of our educational system in Michigan is. We’ve seen the national 2016 KIDS COUNT Data Book rank Michigan in the bottom ten in the nation on education. An adequacy study commissioned by the State of Michigan—which seems to have received little attention from state leaders—found that the state isn’t spending nearly enough on education, especially for students from families with low incomes. Then there’s the Education Trust—Midwest report predicting that Michigan will fall to 48th in the country in fourth-grade reading achievement by 2030 without changes. Now, our beloved state is one of a handful of states to be highlighted for its rate of growth in corrections spending, which was five times more than spending in education. (more…)

Michigan income inequality 11th worst in nation, wealthiest 1% make 22 times more than rest of workers

For Immediate Release
July 26, 2016

Contact: Alex Rossman
arossman@mlpp.org
517.487.5436

New League analysis to examine income inequality, severe impact on women and workers of color

LANSING—Michigan has the 11th worst income gap in the nation according to a new fact sheet, Time to End Income Inequality, issued today by the Michigan League for Public Policy. The fact sheet shows that the top 1% of Michigan’s earners make 22 times more than the bottom 99%. (more…)

Time to end income inequality

pdficonJuly 2016
Legislative Coordinator, Rachel Richards

Michigan’s top 1% makes 22 times more than rest of workers

Time to end income inequality chart 1Michigan’s income inequality is a persistent and increasing problem that has a negative impact on the state’s residents and economy.1 Between 1947 and 1979, incomes at all levels increased at relatively similar rates for Michigan residents as well as nationally. In the late 1970s, there was a significant divergence as most of the income growth started going to the top earners and leaving the rest of Michigan residents behind.

Time to end income inequality chart 2Over the next 30-plus years, Michigan incomes fared worse than most of the rest of the nation. Between 1979 and 2013, overall incomes actually fell in the state. However, income decline in the bottom 99% solely caused this decline. In 1979, the top 1% of Michigan households held about 9% of the total income in the state. By 2013, the share of state income taken home by this group had nearly doubled to 17.9%, while the rest of Michigan residents saw their incomes decline.

Major income disparities exist between different genders and races. In 2014, Michigan women working full time still made only 74.6 cents for every $1 a full-time working male made. This is below the national average and ranks Michigan as one of the worst states in the Midwest region, trailing all of our immediate neighbors. In addition, women of color, and most men of color, continue to have lower median incomes than white, full-time working men.

Time to end income inequality chart 3Why Does This Matter?

Simply put, poverty in Michigan—especially for children—is still too high, and our state’s economic recovery is leaving too many people behind. Many workers have full-time jobs, but are still barely getting by as they struggle to provide for their families. At the same time, Michigan continues to favor policies that benefit the wealthy, such as its regressive tax structure, while reducing, capping and eliminating programs that help the most vulnerable.

Unfortunately, income inequalities do not simply affect what ends up in your bank account. According to the national Economic Policy Institute, increasing inequality might lead to lower income mobility in future generations. Lower-wage earners are less likely to have access to employer-sponsored health insurance coverage and paid sick and family leave, and are more likely to have underfunded retirement accounts. Income gaps affect the ability to pay for healthcare or save for retirement or a child’s college education, and reducing these gaps will have a positive impact on Michigan’s residents, communities and economy.

Time to end income inequality chart 4What Can Policymakers Do to Reduce Income Inequality?

Although income disparities at all levels continue at the national level, Michigan can implement state policies that can help bridge the divide:

  • Improve working conditions: Michigan’s minimum wage is improving, and will rise to $9.25 per hour by 2018. However, more can be done to help Michigan’s lowest-paid workers, such as further raising the minimum wage or eliminating the tipped wage to narrow the gap. Expanding access to high-quality child care would allow more low-wage earners the ability to find more secure and higher-paid employment. Finally, enacting earned paid leave policies would provide workers the necessary flexibility to care for themselves or family members without risking losing money or even their jobs.
  • Improve tax implications: Currently, Michigan’s lowest-income earners pay a higher rate in total state and local taxes than Michigan’s top earners; in fact, they pay nearly double the rate of the top 1%. Restoring Michigan’s Earned Income Tax Credit (EITC) to 20% of the federal credit, expanding the Homestead Property Tax Credit or implementing a fairer income tax, such as a graduated income tax, would let Michigan’s lowest-paid workers keep more of their hard-earned wages.
  • Improve job opportunities: As our economy expands, more jobs will require at least some college education, if not a certification, associate degree or bachelor’s degree. Improving K-12 education—especially for children at risk of educational failure, increasing adult education and expanding access to post-secondary education would help retool Michigan’s workers for its new economy.

For almost four decades, Michigan’s income gap has been widening and it’s time to change that. State lawmakers must do more to adopt policies that will strengthen our economy, alleviate poverty and reduce income inequality for Michigan workers.

Time to end income inequality chart 5

 

 

 

 

 

 

 

 

 

 

 

Endnote

  1. Estelle Sommeiller, Mark Price, and Ellis Wazeter. Economic Policy Institute. Income inequality in the U.S. by state, metropolitan area, and county. Economic Analysis Research Network (EARN) Report. June 16, 2016. American Community Survey 1-year estimates, 2014. PolicyLink/PERE, National Equity Atlas, www.nationalequityatlas.org.

 

 

 

Families left in limbo after Supreme Court ruling on immigration

The United States Supreme Court recently tied 4-4 on a long-awaited decision to allow undocumented parents of U.S. citizens a pathway to citizenship. Due to the tie vote an injunction on Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) will remain in place, continuing to leave tens of thousands of parents in limbo. It is estimated that the DAPA program would have kept 43,000 children with their parents.

Children of MI immigrants graphicsThis would have been an important step forward because immigrant children live in fear of deportation of family members and friends. Under the Obama administration more immigrants have been deported than under any other president, making this fear imminent. Recent declines in deportation are attributed to fewer people illegally migrating. While the administration has stated that the focus of these policies is not intended to affect law-abiding residents, many such families have been separated in the process. (more…)

Using your vote and your voice

It’s an election year. But what that means to people is very different.

When it comes to familiarity with politics, I’m admittedly a little spoiled. My mom was going door-to-door on a campaign when she was eight months pregnant with me and I’ve been around politics ever since.

Publication1I was lucky enough to get a job in the Legislature, working in the Michigan Senate for almost ten years before joining the League last summer to continue the fight to improve public policy. I know for too many people, politics can be intimidating or disenchanting. But it doesn’t have to be.

Having worked both in and out of the Capitol, the greatest insight I can share is that every person can make a difference. Though it may not always feel like it, elected officials do pay attention to the voters they serve and public opinion can influence policy. Many state laws started as a concern or suggestion from a constituent. Many bad ideas (like eliminating the Michigan EITC) have been thwarted by strong, active and vocal opposition from residents as well as organizations. (more…)

Michigan should eliminate its asset limit for food assistance

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July 2016
Senior Policy Analyst, Peter Ruark

What is the food assistance asset limit and why is it a problem?

Families who experience financial difficulty due to unemployment or a medical emergency often seek assistance from the Supplemental Nutrition Assistance Program (SNAP; formerly known as Food Stamps) for purchasing food. This assistance can help keep their household stable, including keeping food on the table for children, until the family can get back on its feet. Many seniors and people with disabilities also depend on SNAP to keep from going hungry.

MI Should Eliminate SNAP Asset TestUnfortunately, in some states including Michigan, there is a limit to how much a family can have in assets in order to be eligible for SNAP. This is commonly referred to as the “asset test.” Assets are resources available to purchase food, such as bank savings. Houses, personal property and retirement savings do not count as assets, although automobiles do. Michigan’s asset limit is $5,000, which means that if a Michigan family has more than $5,000 saved in a bank account or a savings plan, it must spend down its savings to below that level in order to qualify for food assistance. This policy essentially punishes families for saving for emergencies and for their children’s futures.

There is a federal asset limit for SNAP, but in 2002 the federal government gave each state the option to raise its asset limit or eliminate it entirely. Recognizing that the SNAP asset limit is counterproductive, 34 states and the District of Columbia have eliminated it. Michigan was one of the first states to eliminate the asset limit, but reinstated it in 2012, a time when many Michigan families were still struggling to make ends meet.

Is it unfair for Michigan to impose a SNAP asset limit when so many other states have eliminated theirs?

Yes. Michigan suffered more than most other states during the 2000s, including four years when it had the highest unemployment rate in the nation, and although its economy has improved to some degree, many families continue to struggle.

Families who have saved up money to weather future economic storms or to invest in their children’s future should not have to spend down all but $5,000 of their savings if they need to receive temporary help from SNAP. By requiring this, Michigan is punishing prudence and long-term thinking. Because SNAP functions for most households as a temporary stopgap (58% of new recipients leave the program within one year), it makes sense to allow families to retain their savings as they get back on their feet.

Why and how did Michigan reinstate the asset limit?

In 2012, media publicity around a lottery winner continuing to receive food assistance while collecting winnings prompted the Michigan Legislature to pass Public Act 79, which states simply, “For the purposes of determining financial eligibility for the Family Independence Program or the Food Assistance Program administered under this act, the department shall apply an asset test.” That year, Michigan also passed Public Act 78, which requires that the Michigan Lottery inform the Department of Health and Human Services (DHHS) of lottery winnings of over $1,000, and that lottery and other gambling winnings be counted as unearned income (if received in installments) or as assets (if received in a lump sum) for determining continuing eligibility for SNAP benefits. The Department of Human Services (now the Department of Health and Human Services) responded by establishing an asset limit of $5,000.

What can Michigan do to make it easier for struggling families with some savings to receive food assistance?

Current law requires Michigan to have a SNAP asset limit but does not stipulate a specific amount; that is left up to DHHS to determine. The department can raise or lower the limit but cannot eliminate it under current law. Likewise, if the current law requiring an asset limit is eliminated, the department can still choose to impose an asset limit.

Because it would require only a departmental and not a legislative change, the easiest way to allow families to save more money while they are receiving SNAP benefits is to raise the limit rather than eliminate it entirely. Nebraska has an asset limit of $25,000, five times the amount of Michigan’s limit, allowing families to build savings while receiving assistance.

Michigan can also join the 34 states and District of Columbia in eliminating the asset limit entirely. This would require a legislative change to eliminate the requirement to impose an asset test, followed by a departmental action to remove the asset limit itself. If the Legislature wants to keep the restriction on lottery winnings, it would need to modify that wording accordingly.

MI Should Eliminate SNAP Asset Test (Read-Only)

 

Ask your candidates

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Taxes and revenues

1Since the 1970s, the federal Earned Income Tax Credit (EITC) has been considered a significant poverty reduction tool that encourages individuals to work. In 2006, Michigan created its own state-level EITC based on 20% of the federal tax credit. The governor and state lawmakers scaled back the Michigan EITC to 6% in 2011.

Would you support fully or partially restoring the state-level EITC to 10% or 20% of the federal tax credit?

2Michigan is one of only seven states that continues to rely on a flat income tax rather than a graduated income tax, like the federal income tax. States with graduated income tax structures tax at higher rates as income rises making it a more modern and equitable system.

Would you support reforming Michigan’s income tax structure from a flat income tax rate to a graduated one?

3Sales taxes are typically considered to be the most regressive type of tax, costing individuals earning low wages a larger proportion of their income compared to wealthier individuals. Expanding the sales tax to apply to services can serve to both increase revenue and make the sales tax less regressive. Even still, the sales tax will remain regressive, which is the reason some states offer sales tax credits to provide relief for individuals who earn the least.

Would you support extending the state’s sales tax to services with a sales tax credit for filers with low wages?

4While Michigan’s actual tax revenues have grown year after year, when adjusted for inflation, revenues are below 2000 levels by about 18%, and state lawmakers have continually pulled funds away from general state coffers to fund specific programs, such as road funding and the Personal Property Tax repeal reimbursements. At the same time, the costs of providing Michigan residents the most basic services have grown, increasing pressure on our budget. This has meant that programs have had to be funded at the expense of others, furthering Michigan’s disinvestment in its communities, education, infrastructure and other services on which its residents and businesses rely.

Would you support exploring new revenue sources or expanding existing ones, for example by eliminating outdated and unnecessary tax exemptions or credits, to fund vital state services?

Help for struggling people and families

5Out of 16 states offering families additional heating assistance to qualify for additional food benefits, Michigan was one of four that declined to add dollars to keep the Heat and Eat program going when federal rules changed. That means an average loss of $76 a month in food benefits for 150,000 families, seniors and people with disabilities. It would take only $3.2 million in state dollars to bring in $138 million in extra federal food assistance for these Michigan residents.

Do you favor spending $3.2 million to bring in this additional food assistance?

6Michigan has one of the most stringent income eligibility levels in the country for child care subsidies for families with low wages. Given the high cost of child care, without assistance many parents find themselves in the difficult position of relying on unstable or even unsafe arrangements for their children or placing their jobs in jeopardy.

Would you support the use of state and available federal funds to expand child care subsidies to more families with low incomes?

7Children in families that must rely temporarily on state income assistance live in increasingly deep poverty as a result of the very low payments provided by the state (a maximum of $492/month for a family of three). Michigan provides a one-time payment of $140 for all school-age children in families receiving Family Independence Program assistance so children can start school with at least a decent set of clothes, but with current prices, this doesn’t carry children very far into the school year.

Would you support an increase in the annual school clothing allowance to ensure that children can purchase the clothes, shoes and overcoats needed for school?

8Food assistance (Supplemental Nutrition Assistance Program) helps families experiencing financial difficulties purchase food, helping parents feed and provide for their children without disrupting their lives. In 2012, Michigan passed a law that required the state to limit the amount of assets a person could have in order to qualify for food assistance. This was implemented just as the state was exiting a decade-long recession and at a time when most states (about two-thirds plus D.C.) were eliminating their own asset tests. This penalizes families that have saved for emergencies, for their retirements or for their children’s futures by requiring them to spend their assets in order to receive food assistance.

Would you support legislation or policy changes that either increase the asset limit on food assistance or completely eliminate the requirement, joining most other states in the nation in doing so?

Addressing child poverty and education

9Nearly half (49.9%) of Michigan third-graders did not demonstrate proficiency in English Language Arts (reading and writing) in 2015. Legislation under consideration would require that third-graders who are not proficient in English Language Arts as measured by the state test would be required to repeat the grade; although, if the student is proficient in other subjects, then instruction for those may be given in a fourth-grade classroom. Alternate tests and portfolios may be used to document reading skills and some good cause exemptions are provided, however, the school superintendent would make the final decision. Critics contend research on retention shows a higher likelihood of dropout for retained students while supporters of retention decry the negative impact of social promotion.

Would you support mandatory retention of Michigan third-graders who are not proficient in English Language Arts ?

10Child poverty in Michigan has escalated by almost 60% over the last 15 years. Almost 1 of every 4 children in the state lives in a family with income below the poverty level: $19,000 for a family of three and $24,000 for a family of four. Several policy initiatives to alleviate child poverty have been suggested, such as reinstating the state Earned Income Tax Credit to 20% of the federal EITC, expanding adult education and other workforce development opportunities, and raising the child care subsidy and eligibility so parents earning low wages can have access to child care.

Would you support any of these initiatives?

11Michigan has been a leader in investments in preschool programs for 4-year-olds, but funding for families with infants and toddlers living in poverty or near poverty has declined—despite scientific evidence that the first three years of life are when children’s brains are growing most rapidly, affecting their lifelong development, learning and achievement.

Would you support additional state funds for proven programs for parents of very young children, including home visiting, parenting programs and Early On?

12One in 10 children, or 228,000, in Michigan have had a parent in their household incarcerated at some point in their lives—one of the highest rates and largest populations of children impacted in the country. Having a parent incarcerated can lead to increased poverty, stress and unstable environments, affecting kids’ health and academic performance. Additionally, approximately 95% of Michigan’s prison population will return to the community after serving their sentences making reentry and family reunification services critical for the formerly incarcerated, their children and communities.

Would you support a comprehensive, multigeneration approach, including the expansion of support programs, family reunification and reentry services, to ensure that the needs of children and their parents, families and communities are met while a parent is incarcerated and upon their return home?

13With the recent housing bubble burst dropping property taxes, declining enrollment and the inability of the state to fully invest in K-12 education, many Michigan schools have fallen into financial crisis. Recently the state legislatively dissolved two school districts and Detroit Public Schools, our largest public school district, nearly fell into bankruptcy despite years of state control. Two other schools have emergency managers, and two are under a consent agreement, with many more under deficit elimination plans or state review.

Do you believe the state should be doing more and providing more financial help to Detroit Public Schools and other school districts that have fallen into, or are on the verge of falling into, financial crisis?

Jobs and the economy

14Workers who are laid off, or who work in low-paying jobs, can often improve their financial situation by building skills at a community college or university. However, Michigan’s financial aid grants are not available to workers who have been out of high school more than 10 years. There was a legislative proposal last year to reinstate the Part-Time Independent Student Grant, which helps older workers (including many with families and full-time jobs) go back to school and get a degree. This grant was discontinued in 2009.

Would you support the reinstatement of the Part-Time Independent Student Grant to help older workers get the skills they need for family-supporting jobs?

15Although Michigan’s economy and unemployment rate have improved, there are many workers still seeking work, and there continue to be businesses that for some reason or another face difficulty and need to lay off workers. Yet, Michigan is one of a few states that allows unemployed workers to receive up to only 20 weeks of Unemployment Insurance (UI) while they look for jobs—nearly all other states have a maximum of 26 allowable weeks of UI which Michigan also provided until cutting back in 2011. While some unemployed workers find another job within 20 weeks of becoming unemployed, it is important that they have additional weeks if they do not to prevent further family disruption.

Would you support reinstating the 26-week maximum for unemployed workers to receive Unemployment Insurance while they look for work?

16More than 1.7 million (44%) Michigan workers cannot take time off with pay when they or one of their children are ill. Becoming sick puts these workers in the difficult position of having to either stay home and lose wages, or go to work and risk becoming sicker and exposing coworkers (and often the public) to illness. Parents feel pressure to forgo needed medical care for themselves and their children, and to send their child to school sick because they cannot miss work to take care of them. An earned sick leave law similar to what several other states and cities have would help Michigan workers by requiring most employers to bank sick time for their workers based on the number of hours they have worked.

Would you support a Michigan earned sick leave law?

Criminal justice reform

17Michigan is one of nine states that automatically charges 17-year-olds as adults in the criminal justice system. In nearly every other aspect of the law, whether it is voting, buying a lottery ticket, serving in the military or signing a contract, 18 years of age is legally required, yet 17-year-old youths must be prosecuted, convicted and sentenced as adults in criminal courts in Michigan. Research on development shows that 17-year-olds are not adults and are better served in juvenile justice systems.

Would you support raising the age of juvenile jurisdiction to age 18?

18Persons of color are arrested, detained and incarcerated at higher rates in Michigan as well as around the country, though national statistics demonstrate that higher crime rates do not account for this disparity. While only comprising 14% of Michigan’s population, African-Americans comprise over half, or 53%, of the state’s prison population, and they are detained at a rate more than six times higher than white people.

Do you support training for police, judges and others in the criminal justice system, along with the use of a race equity policy tool, to expand understanding of the disparate impact of the system and its policies on communities of color?

19An estimated 20-25% of prisoners have been diagnosed with severe mental illness and many more with mental health problems. Nine of every 10 prisoners with severe mental illness also suffer from substance use disorders, and upwards of 65% of those with mental health symptoms do not receive treatment. Michigan has recognized the need for alternatives to incarceration for those suffering from behavioral health issues by implementing mental health courts and substance abuse programs for those serving time and on probation and parole.

Do you support diversion programs and improved mental health and substance abuse treatment programs within prison facilities to improve access for incarcerated people?

Flint water crisis

20In April 2014, Flint switched its drinking water source to the highly corrosive Flint River, and a decision to not properly treat the water caused lead to be leached from the pipes into the water. This resulted in thousands of Flint residents, including children, being poisoned by the water they drink daily. Unfortunately, lead poisoning has no cure, and all Flint residents, especially children, will require lifelong services to help detect and treat developmental and educational delays and health problems caused by lead. Furthermore, lead continues to be a problem in almost all of our communities, either through lead pipes or lead in paint in older homes, and it needs to be remedied statewide.

Would you support continuing to provide long-term funding to help residents affected by the Flint water crisis? Would you also support looking at a statewide solution to abate existing lead, prevent future poisoning and provide services to those already affected?

 

 

 

 

 

 

 

 

 

We want to hear from you

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As we head into July, summer is in full swing. With it, we are afforded a brief respite from the legislative grind and a prime opportunity to refine our work. And that starts with you.

We want to improve how we communicate, interact and engage with you. We have put together a very short survey on our efforts to see what’s working, what isn’t, and what we can do differently. We truly appreciate your support of our work, and we hope that you will take a few minutes to fill out this brief survey to help us better serve you. Your input means the world to us, so please give us five minutes of your time to fill this out. (more…)