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According to the U.S. Department of Health and Human Services, a quarter of American households are "asset poor," meaning the individuals and families have insufficient financial resources to support them at the poverty level for three months (during a suspension of income).
Asset poverty affects children at a disproportionately greater rate. Forty-seven percent of all American children live in households with no net financial assets. Rates for racial and ethnic minorities and minority children in the United States are even more severe.
Research shows that families with assets:
- demonstrate an orientation toward the future
- demonstrate a decrease in marriage dissolution
- demonstrate an improved housing stability
- experience improved health and well-being
- experience increased civic and community involvement
- experience decreased rates of transfer of poverty to the next generation [1]
[1] U.S. Department of Health and Human Services, Office of Community Services, Asset Building, http://www.acf.hhs.gov/programs/ocs/afi/about.html
The cost of state earned income tax credits (EITCs) may be relatively modest because they are more specifically targeted to low- and moderate-income working families than many other major tax cuts. State EITCs are financed in whole or in part from funds available in a state’s general fund — the same funding source typically used for other types of tax cuts. When an EITC is used to offset the effects of a regressive tax increase, such as a sales tax increase, a part of the proceeds of the revenue increase may be set aside for the EITC. A state EITC can complement a state’s welfare program by assisting low-income, working families with children. [2]
According to the Center on Budget and Policy Priorities, in 2006, the annual cost of refundable state EITCs in recent years has ranged from about $17.3 million in Vermont to $591 million in New York, less than 1 percent of state tax revenue in each state.
The cost of a state EITC depends principally on four factors:
- the number of families in a given state that claim the federal credit
- the percentage of the federal credit at which the state credit is set
- whether the credit is refundable or non-refundable
- how many state residents who receive the federal credit also learn about and claim the state credit [2]
[2] Center on Budget and Policy Priorities, http://www.cbpp.org/cms/?fa=view&id=164
It is the refundable nature of the earned income tax credit (EITC) that makes it such a powerful, poverty-fighting tool. The EITC provides a very considerable boost to low-income workers' take home pay, making each hour worked far more valuable to a struggling family. A non-refundable credit allows taxpayers to benefit only to the extent that they owe taxes. Such a credit can reduce a family’s taxes to zero, but if a family does not owe any taxes then they cannot benefit from the credit. [3]
A refundable credit allows families to benefit from the full value of the credit they have earned even if they owe less in income tax than the amount of the credit. If the amount of the EITC exceeds the amount of income tax owed, the difference is paid back to the filer in the form of a rebate. At least part of the refundable credit offsets payroll and sales taxes, which, for low-income working families, are often larger than income taxes. [3]
[3] State EITC, http://www.stateeitc.com
According to a study by the Urban Institute, when foreclosures occur, the families living in the foreclosed properties are almost always obligated to move. Other major types of impacts that affect the well-being of families include:
- Displacement and housing instability
- Financial insecurity and economic hardship
- Personal and family stress, disrupted relationships, and ill health [4]
Research indicates that children who face home loss are more likely to move from school to school. This school mobility is associated with poor educational outcomes and behavioral problems, and family economic stress is associated with poor health outcomes for children. [5]
The demographic hardest hit by predatory lending in the sub-prime market includes racial and ethnic minorities, the elderly, women, and low- and moderate-income borrowers. [6] Minorities in particular are receiving a disproportionately higher number of high-cost loans and in turn stand to lose substantial equity as a result of high debt payments. The Center for Responsible Lending reported that 53 percent of African-Americans and 42 percent of Latino families who bought homes in 2006 have already lost or will lose their homes to foreclosure in the next few years, as compared to 22 percent of white borrowers facing foreclosure. [6]
[4] Urban Institute, G. Thomas Kingsley, Robin E. Smith, and David Price, The Impacts of Foreclosures on Families and Communities, May 01, 2009
[5] First Focus, Phillip Lovell and Julia Isaacs, The Impact of the Mortgage Crisis on Children, May 2008
[6] Center for Responsible Lending, http://www.responsiblelending.org/mortgage-lending/
The fight again discriminatory compensation has been shaped by several landmark acts dating back to the late 1930s. Three of the most notable acts include: the Fair Labor Standards Act of 1938; the Equal Pay Act of 1963; and the Lilly Ledbetter Fair Pay Act of 2009. Other federal laws—enforced by the U.S. Equal Employment Opportunity Commission (EEOC)—protecting the right of employees to be free from discrimination in their compensation include: Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, and Title I of the Americans with Disabilities Act of 1990.
Fair Labor Standards Act of 1938
The Fair Labor Standards Act (FLSA), which prescribes standards for the basic minimum wage and overtime pay, affects most private and public employment. It requires employers to pay covered employees who are not otherwise exempt at least the federal minimum wage and overtime pay of one-and-one-half-times the regular rate of pay. For nonagricultural operations, it restricts the hours that children under age 16 can work and forbids the employment of children under age 18 in certain jobs deemed too dangerous. The Act is administered by the Employment Standards Administration's Wage and Hour Division within the U.S. Department of Labor. [7]
Equal Pay Act of 1963
In 1963, when the Equal Pay Act was passed, full-time working women were paid 59 cents on average for every dollar paid to men. [8]
The Equal Pay Act requires that men and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Specifically, the EPA provides:
- Employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment.
- Pay differentials are permitted when they are based on seniority, merit, quantity or quality of production, or a factor other than sex. These are known as "affirmative defenses" and it is the employer's burden to prove that they apply.
- In correcting a pay differential, no employee's pay may be reduced. Instead, the pay of the lower paid employee(s) must be increased. [9]
Lilly Ledbetter Fair Pay Act of 2009
On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009, which supersedes the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007). Ledbetter had required a compensation discrimination charge to be filed within 180 days of a discriminatory pay-setting decision (or 300 days in jurisdictions that have a local or state law prohibiting the same form of compensation discrimination).
The Act restores the pre-Ledbetter position of the EEOC that each paycheck that delivers discriminatory compensation is a wrong actionable under the federal EEO statutes, regardless of when the discrimination began. As noted in the Act, it recognizes the "reality of wage discrimination" and restores "bedrock principles of American law."
Under the Act, an individual subjected to compensation discrimination under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, or the Americans with Disabilities Act of 1990 may file a charge within 180 (or 300) days of any of the following:
- when a discriminatory compensation decision or other discriminatory practice affecting compensation is adopted;
- when the individual becomes subject to a discriminatory compensation decision or other discriminatory practice affecting compensation; or
- when the individual's compensation is affected by the application of a discriminatory compensation decision or other discriminatory practice, including each time the individual receives compensation that is based in whole or part on such compensation decision or other practice.
The Act has a retroactive effective date of May 28, 2007, and applies to all claims of discriminatory compensation pending on or after that date. [9]
[7] U.S. Department of Labor, http://www.dol.gov/compliance/laws/comp-flsa.htm
[8] National Committee on Pay Equity, The Wage Gap Over Time, http://www.pay-equity.org/info-time.html
[9] The U.S. Equal Employment Opportunity Commission, http://www.eeoc.gov/
According to the Center for Responsible Lending, predatory lending involves a wide array of abusive and unethical business practices. Predatory lending is not limited to one area of borrowing. Some signs of predatory lending—originally identified by the CRL for consumers looking to avoid predatory mortgage lending—include:
- Excessive fees
- Prepayment penalties
- Inflated interest rates from brokers (yield-spread premiums)
- Steering and targeting
- Adjustable interest rates that “explode”
- Promises to fix problems with future refinances
- Not counting taxes and insurance
- Repeated refinances that drain your resources [10]
Predatory lending is disproportionately common in populations with low incomes or those with poor or no credit histories. The Center for the Study of Social Policy identified two forms of predatory lending that are significantly common in these populations: predatory mortgage lending and “payday” lending.
“Payday” lending is defined as the practice of offering short-term, high-interest loans on the condition that the lender obtains authorization to obtain payment from the borrower. The majority of “payday” borrowers end up incurring greater debt and are unable relieve themselves from the high-interest payments. In turn, this has a serious impact on their ability to apply for conventional loans in the future. [11]
[10] Center for Responsible Lending, http://www.responsiblelending.org/mortgage-lending/tools-resources/8-signs-of-predatory-lending.html
[11] Center for the Study of Social Policy, Policy Matters: Twenty State Policies to Enhance States’ Prosperity and Create Bright Futures for America’s Children, Families and Communities, 2006
Through workforce development, low-income families are offered the opportunity to improve their education and occupation skills in order to maintain their current jobs and increase opportunities for career advancement. According to The Working Poor Families Project [12], America’s educational systems continue to poorly prepare workers for jobs requiring higher skills. At the same time, the economy is comprised of a larger share of low-paying jobs, with an increase of 4.7 million jobs paying a poverty-level wage from 2002 to 2006. [13]
A major challenge moving ahead will be to raise the education and skills of America’s workers to meet the needs of the changing economy. Almost one-half of all job openings require more than a high school education,[14] yet as noted in the Report of the National Commission on Adult Literacy, 88 million adult workers are not prepared for these positions;[15] 25 million of these adult workers lack a high school degree or its equivalent. At the same time, combined federal and state government resources for such programs as adult education or skills development serve approximately one-tenth of the need.
Additional research indicates that strong economies are characterized by an abundance of well-paying jobs; and overwhelmingly, well-paying jobs are held by individuals who have knowledge and skills obtained through education beyond high school. Simply put, human capital drives economies in the information age. [16]
From a global perspective, leadership in educational attainment has been achieved largely because those Americans now approaching retirement age are more highly educated than their counterparts in other countries. But when it comes to the younger generation, the U.S. global position has slipped considerably. The U.S. now ranks eighth among the industrialized countries of the world in the proportion of the population age 25 to 34 with at least an associate’s degree. Among the fastest-growing groups within the country’s young adult population—African-Americans and Hispanics—college attainment levels have fallen far below those required for the U.S. to remain competitive. [16]
[12] Working Poor Families Project, Still Working Hard, Still Falling Short
[13] In 2006, $9.91 is the hourly wage a full-time worker needs to meet the poverty threshold for a family of four.
[14] The Workforce Alliance, Harry Holzer and Robert Lerman, America’s Forgotten Middle-Skill Jobs: Education and Training Requirements in the Next Decade and Beyond, 2007
[15] National Commission on Adult Literacy, Reach Higher America: Overcoming the Crises in the U.S. Workforce, June 2008
[16] National Center for Higher Education Management Systems, Dennis Jones and Patrick Kelly, The Emerging Policy Triangle: Economic Development, Workforce Development, and Education, May 2007
