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Posts By Margaret Simms
Margaret C. Simms is an Institute fellow at the Urban Institute and director of the Institute's Low-Income Working Families project, a research initiative exploring challenges faced by 9 million families and their 19 million children.
A nationally recognized expert on the economic well-being of African Americans, Simms spent 21 years with the Joint Center for Political and Economic Studies in several leadership positions.
Simms, who earned a master's degree and doctorate in economics at Stanford University, was a senior research associate at the Urban Institute from 1979 to 1986 and directed the Institute's Minorities and Social Policy Program from 1981 to 1986.
Simms has also edited many books and monographs, including Job Creation Prospects and Strategies (with Wilhelmina Leigh), Economic Perspectives on Affirmative Action, and Slipping Through the Cracks: The Status of Black Women (with Julianne Malveaux). She was editor of the Review of Black Political Economy from 1983 to 1988 and board chair of the Institute for Women's Policy Research from 1993 to 1998. She served as president of the National Academy of Social Insurance from 2007 to 2009. She is an elected member of the American Academy of Arts and Sciences and recently served on the National Research Council Committee on the Fiscal Future of the United States. The National Economic Association presented her with the Samuel Z. Westerfield Award in 2008 and Carleton College awarded her an honorary doctor of laws degree in 2010.Links:
| Posted: November 10th, 2011
The headline for a front-page article in the Washington Post’s October 30 issue says that Social Security went “cash negative” this year. While Halloween weekend might be an appropriate time to scare people as they sip their morning coffee, it doesn’t set the right tone for a balanced discussion on how to “fix” Social Security. Fortunately, several new data sources on who does and doesn’t benefit from this program can guide our thinking about what could be done to preserve Social Security’s solvency without adverse effects on the most needy.
A new website launched by the Office of Retirement Policy (ORP) at the Social Security Administration contains fact sheets that show graphically who gains from Social Security. While everyone is familiar with Social Security payments as the foundation for retirement income, many don’t think about how much children benefit. ORP’s “Child Beneficiaries and Poverty” fact sheet points out that 3.2 million children received benefits in 2004 because one parent was deceased, disabled, or retired. Almost half of these children (1.3 million) would have been living in poverty without those benefits. Another fact sheet highlights who does not, and under current law will not, receive Social Security. These are more likely to be people who work infrequently, workers in occupations or industries not covered by the program, or legal immigrants who arrive too late to build up the requisite credits.
Poverty Rates with and Without Social Security Benefits, 2004
A Commission to Modernize Social Security report tells us more about those lifted out of poverty by Social Security and those who receive low or no benefits. “Plan for the Future: The Impact of Social Security Reform on People of Color,” documents the dependence of people of color on this program as a main source of income in retirement and when death or disability strikes. Many proponents of privatizing Social Security have argued that Social Security is not a good “investment” for African Americans because of their shorter lifespan. But, as the report points out, African Americans and Hispanics receive a higher rate of return when the full range of benefits, including survivors and disability payments, are considered. The authors point out that a young or low-income family could not afford to purchase, say, a $400,000 insurance policy that would provide the protection against a breadwinner’s death or disability that Social Security does. These are valuable and needed benefits, especially for the families of workers who have contributed to the economy but received low wages in return for their labor.
African Americans and Hispanic families are also less likely to be able to save for retirement, have little or no prospects of a substantial inheritance from parents or other relatives, and are more likely to have to share their meager earnings with family and friends who are even less well off. As a result, “Plan for the Future” says, a majority of African American and Hispanic retirees rely on Social Security for over 90 percent of their income, as do more than 4 in 10 Asian and American Indian workers.
Average Percentage of Family Income from Social Security, 2004
The report goes on to outline a package of program changes to help those at the bottom of the labor market while also closing some of the benefit-revenue gap. While you might not agree with the specific recommendations, the case for preserving and enhancing benefits for those most in need is compelling.
Yes, Social Security does need some adjustments to keep it on track, but the trust fund is not yet empty, so we have a little time to think carefully about how to do that without hurting those who cannot provide adequately for themselves and their families when faced with retirement, disability, or death.
Filed under: Economy, Government, Health Care 2 Comments »
| Posted: October 10th, 2011
A generation ago, a man who finished eleventh grade could get an assembly line job in a Detroit auto plant and earn enough to provide his family with a decent living. When retiring, he could count on a comfortable pension and health benefits. Today, that same young man, if he’s very lucky, can get a similar job in an auto plant, but will make only half the wage of the long-time employees working right beside him.
You could ask if this is fair. But a more important question is whether this is any way to raise a family? At about $14/hour, our worker –let’s call him Joe-- could support himself and an unpaid spouse at about twice the poverty level, with an income of $29,120. But if he and his wife (Mary) have two children, what Joe brought home would just get them over the poverty line for a family of four. Both Joe and Mary would have to work at that plant to break through the low- income threshold of $44,226. If one of them lucked out and got the top entry- level wage announced in the Ford Motor Company union settlement this month, either would get $19.28 an hour--over $40,000 annually. Better? Absolutely, but probably not enough to allow the other spouse to stay home with the kids.
How Much Do Wage Earners Have to Make to Stay Above the Poverty Line?
While times could get better and the plant could raise wages and give out bonuses, as Ford is doing this year, there’s no guarantee that they will in the future. So what happens when Joe retires? Instead of a surefire pension, Joe and Mary will have to figure out how to make about $2,000 a year in employer contributions and whatever else they can scrape together into a retirement nest egg. In a bonus year, their choice might be to spring for a car as good as the one they make—or add to their retirement account. That would be a hard call, especially since current public policy offers saving incentives for the well-to-do rather than the not so well off.
There are policies that could make the tradeoffs a little easier for low- income families, and there are ways to pay for them. Examples from “Asset Building for Today’s Stability and Tomorrow’s Security” by Signe-Mary McKernan and Caroline Ratcliffe include providing refundable tax credits for home mortgage payments for moderate income families and allowing Individual development accounts (IDAs) to be used for vehicle purchase and upkeep.
It might be good for the economy to bail out companies, but if the workers get thrown overboard, what’s the real point? Just ask Joe.
Filed under: Assets and debts, Economy Add a Comment »
| Posted: September 6th, 2011
On Thursday, September 8, President Obama will address a joint session of Congress. He is expected to deliver a “jobs speech” that the White House press office says will include “bipartisan proposals to rebuild the American economy by strengthening small businesses, helping Americans get back to work, and putting more money in the paychecks of the middle class and working Americans.”
The big question for many –especially those hardest hit by the recession--will be “How many of those in non-working America will have any paycheck as a result of the proposals?” The answer depends on what’s in the jobs package.
Unemployment hasn’t slammed all workers or regions equally. Some groups and some areas have suffered more than others. In many communities, the recession just accelerated a decline that was already taking place. So what would a jobs program do for these groups and places?
A tax break for businesses that hire additional employees may spur employers who were on the brink of hiring to move ahead, but it probably won’t spark large-scale hiring in communities where economic expansion is not already afoot. Likewise, incentives for innovation make sense and may put businesses that take the bait in a more competitive position globally, but the results may not register for several years.
Investment in infrastructure could generate up to 100,000 jobs in a year, based on statistics from the Transportation Department’s ARRA spending in the 10 months of that program. But where these jobs go depends on the details of the deal. Nearly every US community needs some kind of new infrastructure, but program funds would do the most good if distributed preferentially to communities with the highest unemployment rates. And if the proposal is to help African American males— who have the highest unemployment rates and have been out of work longer than most—it must ensure equal access to the new jobs. Requiring minority subcontractors or monitoring affirmative action would help.
A complete jobs program would also feature measures to ensure that workers whose skills have grown rusty during extended joblessness will be attractive to employers and productive once hired. Here the answer is a sizable increase in current or enhanced workforce training programs.
It’s rumored that some of these features might be in Obama’s package, but will the package be big enough to dent the problem? And will a Congress seemingly keener to cut expenditures than to cut the jobless rate pass it if it is? All of us will have to wait and see. Meanwhile, some of us have already been waiting far too long for another shot at employment.
- 2010 Unemployment Rates and Duration of Unemployment, by Race, Ethnicity, and Gender,
ages 16 and over (Annual Averages)
Filed under: Economy 1 Comment »
| Posted: August 5th, 2011
A recent Pew Research Center report-- Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics -- reveals that in 2009 the gap between white households and black and Hispanic households was twice as large as it had been over the two prior decades. Whites had 20 times the wealth of black households and 18 times the wealth of Hispanic households.
While the gap is alarming, as heavy media attention to the study attests, even more distressing is the absolute level to which African American and Hispanic wealth had fallen. Median wealth for Hispanic households was only $6,325 in 2009, down 66 percent from 2005. For African Americans, the percentage drop was somewhat smaller (53 percent), but they had only $5,677 in median wealth in 2009. This tiny cushion compares to $113,149 for white households and $78,066 for Asians.
This decline in wealth comes during a precarious economic time when households need assets to replace lost income and fund personal advancement. Research by Urban Institute senior fellows Signe-Mary McKernan and Caroline Ratcliffe with Katie Vinopal has shown that assets can soften the blow when unemployment or poor health strikes families. A reserve can also fund a college education or a new family business. Increasingly, workers are also expected to supplement Social Security and private pensions or retirement funds with other savings.
Percentage of Families Who Experience Material Hardship, Given an Adverse Event, By Asset Poverty Status
The burst housing bubble was a major factor in the decline for all households. But because African American and Hispanic households have proportionally more of their assets tied up in housing than white households, these minorities suffer more from this decline. Hispanics found themselves concentrated in the states hurt most by the housing collapse. For African Americans, personal foreclosure problems combined with high foreclosure rates’ impact on housing values in their neighborhoods most likely account for their situation.
So is the best way to avoid wealth declines in the future to discourage more people from homeownership? Not when housing is still the easiest way for most people to build significant assets over the long term. That means that the real question is what policy options work best when few government resources seem to be available. One option would be to make the homeowners mortgage interest deduction more progressive. As McKernan and Ratcliffe point out in Enabling Families to Weather Emergencies and Develop: The Role of Assets, tilting the deduction more toward moderate income families could do more to reduce the cost of homeownership for moderate income households than the current structure.
Now that Congress is seeking ways to reduce federal budget deficits, a bold look at the huge tax expenditure of mortgage interest deductions should include options that would favor the less privileged. Caps or limits on the deduction could be combined with a tax credit to benefit those who don’t itemize. Alternatively, a sliding scale deduction could give more moderate- income families a leg up .
Filed under: Assets and debts, Built Environment, Economy 1 Comment »
| Posted: June 29th, 2011
A front-page Washington Post article on June 26 raised questions about President Obama’s emphasis on green technology as he talks about U.S. competitiveness and job creation. Much of the criticism centered on favoritism. Only one person raised a fundamental question about the number of jobs Obama’s strategy might yield. And no one raised what should be the second and third questions—What do these jobs pay? And who will get them?
Policy makers and advocates for low-income workers who want to help people move their families out of poverty must ask—and answer—these questions. Not all jobs are created equal, and not all provide equal access. Even if the jobs are plentiful, many may—like the jobs low-skill workers typically get—not pay enough to live on.
When the call for green jobs first came in 2009, the Urban Institute’s Low Income Working Families project analyzed the types of jobs likely to develop under a major green jobs policy initiative. Karin Martinson, Alexandra Stanczyk and Lauren Eyster outlined some of the characteristics of green jobs and the factors that policy makers need to focus on to make sure that low-skill, low-wage workers can advance through this industry to provide a better life for their children.
Number of Green Occupations by Green Sector and Skill Level
There will be many low-paying jobs in green industries—an estimated one-third of the jobs in green construction and manufacturing industries according to some. But if today’s low-wage workers are to get the better paying green jobs they will need training since many are so-called middle skill jobs that require some post-secondary education—often, a combination of on-the-job and classroom training. While low-wage workers may know they need to get additional training, they will need assistance to make it happen. Martinson and her colleagues identify five complementary strategies for opening up the better paying jobs to women as well as men: curricular reforms in training institutions, partnerships between employers and training providers, clearly articulated career paths, financial assistance, and recruitment campaigns to bring non-traditional workers into the industry.
If we are going to worry about whether ” growing” green industries is right for the country, let’s also ask all the right questions, including whether this economic strategy will help workers earn decent wages so they can provide for their families.
Filed under: Economy Add a Comment »
| Posted: May 27th, 2011
Unemployment insurance (UI) plays a major role in keeping families with unemployed workers out of poverty. This role expanded with a small increase in weekly benefits and the extended benefits provisions of the federal emergency bills passed over the past few years. Recent Congressional Research Service analysis shows that UI benefits cut the poverty rate for unemployed workers and for persons in families with unemployed members by about half. Without UI benefits, the poverty rate for unemployed people would have neared 25% in 2009. With them, it was just over 10%. In all, an estimated 3.3 million people were lifted out of poverty through UI benefits, including almost 1 million children. These findings are close to those in a study by Urban Institute economist Wayne Vroman using 2008 data.
The American Recovery and Reinvestment Act, which included the first UI benefit enhancements, also contained Unemployment Insurance Modernization Act provisions designed to make UI easier for low-income and part-time workers to get. States received cash incentives for changing eligibility provisions in state programs to allow more types of workers to could get UI. Forty-two states have enacted one provision, and over 60% have enacted at least two other provisions.
Despite UI’s proven effectiveness as an anti-poverty tool, some states are moving to weaken this rainy day benefit. At least four states have either shortened the eligibility period for UI payments or are considering the move. Michigan and Missouri cut the number of weeks workers can get state benefits from 26 to 20 weeks. Arkansas set a 25- week limit and the Florida legislature just passed a law that would vary the number of weeks of eligibility based on the state unemployment rate—in practice, unemployed workers would get 12 weeks of state UI benefits if the state unemployment rate was 5% and a maximum of 26 weeks only if the rate exceeded 12%. As of April, two of these states--Michigan and Florida-- still had troubling unemployment rates well above the national average of 9%.
To add insult to injury for the long- term unemployed, Congress is considering a bill (HR 1745) that would allow states to use the federal payments intended for extended benefits to replenish their state UI trust funds or repay the federal loans taken out to pay UI benefits during the recession. Although this won’t happen without companion state legislation, states will be sorely tempted since about thirty of them are in the hole to the feds for $45 to $50 billion in loans. The so-called Job Opportunity, Benefits, and Services (JOBS) Act would enable some states to avoid raising taxes on businesses to repay loans and rebuild trust fund balances, but it could backfire by sapping consumer buying power when what businesses really need now is more customers. And it would certainly deepen hardship for many unemployed people and their families who live in places –like Detroit --with far more jobless than jobs.
Filed under: Economy, Government Add a Comment »
| Posted: April 25th, 2011
Most responsible policymakers are desperately seeking ways to reduce the federal budget deficit, but the strategies proposed vary wildly. Some would cut federal spending to the bone, while a few would take the opposite approach—hiking taxes without cutting services. Opponents of tax increases argue that taxing the wealthy more won’t generate enough revenue to dent the deficit much but will, along with higher taxes on small business owners, discourage job generation.
But let’s dig deeper on this score. Many deficit-busters who oppose tax increases would cut spending on education and training services or subsidies to disadvantaged individuals, support for child care and early childhood development, and incentives for infrastructure and community development. At best, concentrating cuts on these programs could be expected to reduce the deficit as much as proposed tax reforms would. For example, spending on these programs in 2011 amounts to about $500 billion, while President Obama’s tax proposals would raise about $700 billion in revenue. But the impact of the budget cuts would be more far-reaching, basically making it far harder for firms to find the skilled workers they will need if they expand.
Population trends make it clear that a substantial and growing portion of the future workforce will come from communities of color—African Americans and Hispanics, many of whom have found it hard to prepare for jobs in the new economy because they lacked access to good K-12 schools and higher education. Here’s where those far-sighted federal programs on the deficit chopping block come in: many aim to increase the quality and quantity of education these groups receive while others make it possible for low-income parents to work while their children benefit from good child care and early childhood developmental programs. Similarly, community development initiatives make neighborhoods safer and more liveable for children and adults.
Even if some of federal programs are not as effective as they could be, improving them makes far more sense over time than eliminating them. Indeed, if we end the drive for more effective ways to support the young people who will be the backbone of tomorrow’s workforce, there won’t be enough workers to fill the jobs that the best tax incentives for business would generate.
Filed under: Assets and debts, Economy Add a Comment »
| Posted: March 25th, 2011
The front page of today's Washington Post highlights the changing racial composition of the District of Columbia, once dubbed "Chocolate City." But Washington, D.C. isn't the only city that is confronting change. Over the last two decades of the twentieth century, a number of U.S. cities became majority black. The Census data released during this past decade indicate that several of these “chocolate cities” are now moving in the opposite direction—going from chocolate to vanilla. This fact has alarmed some, but should it have? Why should we care about the changing racial composition of our cities?
When people of color became a major force in some cities, it was viewed as a means of gaining political power and, in turn, access to economic resources to improve the population’s well-being. Early on, that led to ambitious plans to improve the public schools, eliminate poverty, and move residents into more stable, higher paying jobs. In response to the popular question, “how did that work out for you?” the response has generally been “not so much,” at least not in the short run. But over the long haul, some cities have generated more economic activity and attracted more residents. Some of these successful cities are the same ones that are now seeing a drop in the proportion of African American residents. Does this mean that African Americans are being displaced just when the economic and social benefits of living in the city are going up? Or will those left behind lose their political clout as their numbers dwindle?
It’s not that simple, as the numbers show. For example, if you take nine cities that were at least half African American in 2000 and look at what has happened in the past decade, you’ll see several different stories. Five of them—New Orleans, Atlanta, Richmond, Baltimore, and Newark—saw declines in the proportion of the population that was African American, while four—Detroit, Memphis, Augusta, and Baton Rouge—had increases. But the details differ.
21st Century Population Change in Cities That Were at Least Half Black in 2000
In Atlanta, the overall population grew slightly but the African American population fell significantly. Metropolitan Atlanta enjoyed strong economic growth, which likely attracted people. While displacement can’t be ruled out, African Americans who remain in the city are likely—with the proper supports—to benefit from that growth. And the city government might be positioned to tap that growth to expand access to opportunity.
Detroit represents the other extreme. The percent of the population that is African American increased, but only because a larger proportion of the nonblack population crossed the city limits. Economic opportunity plummeted in the Motor City, so the municipal government has fewer resources to strengthen either the safety net to support the most vulnerable left behind or the “trampolines” that would boost them to a higher level of economic security.
Filed under: Built Environment, Economy, Urban Culture Add a Comment »