Government programs, tax policies reduce child poverty

Contact: Judy Putnam or Jane Zehnder-Merrell at 517.487.5436

Michigan rate drops in half when safety net counted

LANSING, Mich. — Michigan’s poverty rate for children drops by half when the positive effect of government programs and tax policies are taken into account, a report released today by the Annie E. Casey Foundation concludes.

In fact, 341,000 Michigan children are lifted from poverty when such programs as food assistance, federal and state Earned Income Tax Credits, cash assistance, child care assistance and housing subsidies are counted. About the same number are left in poverty.

“At a time when so many programs designed to help children and families have been cut, this is good information that shows safety net programs do work as intended,’’ said Jane Zehnder-Merrell, Kids Count in Michigan project director at the Michigan League for Public Policy, which helped release the report.

The report looks at the Supplemental Poverty Measure (SPM), created by the U.S. Census Bureau in 2011, which uses costs affecting a modern family’s budget and measures the impact of government programs. The official poverty measure, created in the 1960s, is based on outdated information and leaves out major safety net programs.

While the official poverty measure is still in use, the SPM provides a more accurate assessment of poverty levels on a state and regional basis, according to the Casey report, Measuring Access to Opportunity in the United States. Unlike the current poverty measure, the SPM also takes into account the variations in cost of living.

The SPM finds that 30 percent of Michigan children are in poverty without government transfers, higher than the official child poverty rate of 24 percent. But the SPM rate drops to 15 percent when benefits from all programs are counted.

“Policymakers need to have a clear picture of the success of anti-poverty programs at the national and state levels,’’ said Gilda Z. Jacobs, president and CEO of the Michigan League for Public Policy. “Child poverty takes its toll not only on individuals but on society as a whole with lost productivity and higher health- and crime-related costs. It’s important to know that public policy can and does make a positive difference.’’

Michigan voters have a chance to weigh in on the May 5 ballot proposal on road funding. It is linked to the full restoration of the state Earned Income Tax Credit. A ‘yes’ vote will increase the state EITC to 20 percent of the federal credit, protecting more than 1 million kids in working, while raising needed revenue to fix the roads.

It’s also important that Congress continue funding the Supplemental Poverty Measure so that resources are directed in ways that offer the best chance for children to succeed.

State lawmakers and the administration should also:

• Ease a harsh state asset test on food assistance that limits federally funded food aid.
• Revisit the strict 48-month time limit on cash assistance for families playing by the rules. Months in which families receive as little as $10 a month are unfairly counted in the lifetime limits.
• Employ two-generation strategies such as connecting job training opportunities to Head Start and Great Start Readiness preschool so more parents can access better-paying job.
• Update state child care subsidies for parents searching for work or working for low wages. The subsidies have not kept pace with inflation.

Measuring Access to Opportunity in the United States is available at www.aecf.org.

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The Annie E. Casey Foundation creates a brighter future for the nation’s children by developing solutions to strengthen families, build paths to economic opportunity and transform struggling communities into safer and healthier places to live, work and grow. For more information, visit www.aecf.org. KIDS COUNT® is a registered trademark of the Annie E. Casey Foundation.

The Michigan League for Public Policy, www.mlpp.org, is a nonpartisan policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way. Kids Count in Michigan is a project of the League.