Ky.’s Fraud Backlog Imperils Food Stamp Fund

The Safety Net Is Effective at Fighting Poverty in Kentucky, Should Be Protected

More than 800,000 Kentuckians are lifted out of poverty each year by safety net programs including Social Security, SNAP (formerly food stamps) and low-income tax credits for working families according to recent research from the Center on Budget and Policy Priorities (CBPP). Of those 809,000, nearly one in four are children.

It’s a larger impact than was previously thought. New data from the Urban Institute takes underreporting of certain benefits into account to show just how many people the safety net serves (underreporting occurs when, for instance, someone forgets or is embarrassed to admit they’ve received benefits).

CBPP’s report combines that data with a way of gauging poverty called the Supplemental Poverty Measure (SPM) which reflects not just wages and salaries, but also the resources people receive from SNAP, Temporary Assistance for Needy Families (TANF) and other programs, taxes and additional adjustments. Using SPM generates a clearer picture of the resources families have to meet their needs: food stamps to help put groceries on the table, housing assistance and working family tax credits to further supplement income.

The report finds that safety net programs are an extremely effective means of fighting poverty. In Kentucky, data from 2009-2012 shows that:

  • They cut the state poverty rate by almost two-thirds, from 30 percent to 11.2 percent.
  • Safety net programs reduced the share of Kentuckians living below 50 percent of the poverty line — the threshold for deep poverty — from 20.7 percent (one in five) to 3.3 percent (one in 30).
  • The Supplemental Nutrition Assistance Program (SNAP) alone lifted 164,000 Kentuckians out of poverty on average each year.
  • Even without accounting for underreporting, the Earned Income Tax and Child Tax Credits (EITC and CTC) for working families lifted an average of 161,000 Kentuckians, 90,000 of whom were children, out of poverty each year from 2011 and 2013.

Alleviating poverty for families and individuals today is a meaningful outcome in and of itself, but research also shows that making these investments pays off down the road. For instance, children under six in households that see an additional $3,000 in income per year work more and make more money when they become adults.

The bad news is that improvements to the safety net made during the Great Recession — in particular to unemployment benefits, SNAP, the EITC and CTC — have begun to expire. These temporary boosts have helped many Americans across the income spectrum during hard economic times, but they have also alleviated a decade-long trend from 1995 to 2005 in which the safety net actually became less effective at protecting Americans from deep poverty, especially children in single parent families. Nationwide, the share of children living in deep poverty rose from 2.1 percent in 1995 to 3.0 percent in 2005. In 2005, safety net programs lifted about eight out of ten children living below half the poverty line above that threshold, compared to nine out of ten in 2012.

The reason for the pre-recession downward trend is that while welfare reform in 1996 put an important emphasis on supports for working poor families such as the EITC, assistance for deeply poor Americans through TANF was weakened.

Unfortunately, instead of strengthening investments in a brighter future for all vulnerable children, the Congressional budget resolution for 2016 would further cut safety net programs, putting more low- and moderate-income Americans at risk of falling into poverty, and others of falling deeper.

safety net

KCEP Seeks Research and Policy Associate

The Kentucky Center for Economic Policy (KCEP) seeks to hire a research and policy associate. This new position will be responsible for work advancing effective programs, policies and strategies aimed at reducing poverty in the Commonwealth. Successful applicants will bring experience, education and interest in analyzing policy issues and working with a wide range of partners to advocate for positive policy change.

See more about the position here.

Looming Trade Deficit May Cloud Kentucky’s Sunny Economy

Op-Ed: Kentucky Workers Need Better Trade Policies, Not Worse

Originally published in the Herald-Leader on June 1, 2015. Published in the Courier-Journal June 4, 2015.

When the U. S. Senate blocked giving the president fast-track negotiating authority for a new trade deal last week, it took a stand for a fairer approach to trade that’s especially important to workers in manufacturing-heavy states like Kentucky.

The country’s large and growing trade deficit is a big, but often unrecognized, reason we lack the jobs we need. A trade deficit occurs when a country buys more from other countries than it sells abroad. After decades of relatively balanced trade, the U. S. trade deficit began growing in the late 1990s and now has swelled to $500 billion a year.

A major cause of the trade deficit is the elevated value of the U. S. dollar compared to other currencies. But the high value of the dollar isn’t the result of market forces; it’s inflated in part because of what’s called currency manipulation. That’s when the central banks of more than 20 countries, including China and Japan, buy up dollar-denominated financial assets in order to artificially suppress the value of their countries’ currencies, making their exports relatively cheaper and U. S. goods more expensive.

Among the beneficiaries of this arrangement are large corporations like Walmart that produce their goods offshore and sell them in the U. S. But in this country, it’s responsible for the loss of up to 3 million jobs per year. And workers in those countries engaging in currency manipulation lose out when capital that could be invested domestically is instead being sent abroad to push down currency values.

Congressional leaders — led by Kentucky Sen. Mitch McConnell — and President Barack Obama have been unwilling to take on the powerful interests that benefit from this situation. They didn’t insist on provisions addressing currency manipulation in the proposed new Trans-Pacific Partnership trade deal. But the absence of those provisions is the reason many members of the Senate blocked the deal last week. And there are other legitimate concerns about what might end up in a trade deal, including the weakening of protections for workers and the environment and the potential undoing of rules intended to protect us from the bank shenanigans that led to the Great Recession.

As residents of a manufacturing state, Kentuckians should be especially concerned about bad trade policies. Among states, Kentucky has the eighth-largest share of factory jobs compared to total employment. Since 2001, the state has lost 41,000 jobs from the growing trade deficit with China alone, the 17th-largest share of any state, according to a study by the Economic Policy Institute (EPI). Job loss has been especially steep in computer and electronic parts manufacturing, where 10,700 jobs have been lost or displaced; apparel manufacturing, industrial supplies, including plastics and rubber products, and electrical equipment, appliances and components.

The loss of good jobs in the past is reason enough to be wary of a new trade deal. And signing a deal without addressing currency manipulation is a missed opportunity to create jobs just when we need them. Kentucky could grow up to 82,000 jobs if Congress ended currency manipulation, another EPI study shows. Especially benefiting would be the first and second congressional districts in western Kentucky, which are among the 20 percent of districts in the country with the most jobs to gain from taking action.

Jobs and the economy always top the list in any poll of Kentuckians about the issues that concern them most. But almost always missing from the debate about jobs are the harmful impacts of our overvalued dollar and unfair trade policies. You might argue that’s because it’s a complicated issue, but a more likely reason is that addressing it means taking on the billionaires who benefit from the way things are.

While it’s unclear what will happen next on the Trans-Pacific Partnership deal, let’s hope last week’s vote is a step toward a better discussion on the kind of trade policies that can create a more broadly-shared prosperity.

Jason Bailey is Executive Director of the Kentucky Center for Economic Policy,

As State Cuts Funds, Growth in Graduation Rates at Kentucky’s Colleges Declines Sharply

Report: Kentucky Has Highest Per-Student Cut to Higher Education Spending in the Country

Kentucky Cuts to Higher Education Place it Among Worst in Country

A new report on state trends in funding for higher education places Kentucky at or near the bottom in several categories for its continued cuts to public college and university funding. That disinvestment threatens to limit access to higher education and opportunities for economic growth.

Even as most states have begun to restore funding for higher education after cuts during the recession, Kentucky has continued to reduce funding as outlined in the report from the Center on Budget and Policy Priorities. Continued cuts will make it harder for the state to grow and attract businesses that rely on a well-educated workforce.

“Smart investments in public colleges and universities will help strengthen our economy,” said Kenny Colston, communications director for the Kentucky Center for Economic Policy. “Sadly, our elected leaders are still failing to make those smart investments, threatening the state’s well-being, overburdening students and holding everyone back. It’s time Kentucky paid for education again, like a state slogan used to say.”

A look at how Kentucky fares in the report in terms of recent funding decisions paints a bleak picture for higher education in the Commonwealth:

  • Kentucky joins Oklahoma and West Virginia as the only three states still cutting funding to higher education over the last two years.
  • The state has the highest funding cut per-student in the nation this year – $179 per student. It’s also worst from a percentage standpoint, tying West Virginia for a 2.3 percent cut.
  • The state is among the five states with the highest increase in the average cost of tuition since last year – a 3.9 percent increase or an average of $344 more per student than last year.

Kentucky also ranks poorly when it comes to state funding for higher education since the recession began in 2008. Lawmakers are funding Kentucky’s public universities and colleges nearly 28 percent less now than pre-recession, 11th-worst among the states. That equates to roughly $3,000 less per-student in state funding or 9th-worst in the country in the dollar amount cut. At the same time, tuition has increased 28.1 percent.

Meanwhile, finances play a big role in whether or not students — particularly those from low-income families — enroll in and graduate from college. And even the state’s most affordable option, the Kentucky Community and Technical College System, is not affordable for many; it had the highest median annual tuition and fees for community colleges in Southern Regional Board states in 2011-2012 and the 11th most expensive community college tuition and fees in the nation in the 2012-2013 school year.

To reverse these disturbing trends, Kentucky needs to make higher education a greater priority. In order to make sure the Commonwealth has enough money to fund higher education adequately, lawmakers need to commit to revenue-raising tax policies rather than tax breaks like the state’s recent expansion of its film tax credits, which will cost the state millions of dollars each year.

“A thriving economy of the future requires college-educated workers,” said Michael Mitchell, policy analyst at the Center on Budget and Policy Priorities and author of the report. “For the sake of its future prosperity, Kentucky should start reinvesting in its colleges and universities now.”


Minimum Wage Hike – Will Lexington Be Next?

Op-Ed: Right-to-Work Laws Worsen Jobs For All

Originally published in the Lexington Herald-Leader on May 11, 2015

Kentuckians deserve credible information as they consider right-to-work laws — information that is free from unchecked ideology, misleading messaging and bad math. Here is what the experience of other states shows when appropriate, responsible methods of analysis are used:

■ These laws do not grow jobs — not in manufacturing, not in other sectors.

■ Workers make less, according to one thorough study, $1,500 less per year. And that’s for all workers, not just those in unions.

■ Workers are less likely to have employer-provided benefits.

The methods you use to study right-to-work laws really matter. Solid analysis of the impact of any policy change on economic growth must account for many other factors that contribute to a strong economy, such as workforce education and health, access to natural resources, markets and suppliers, and the condition of the transportation system.

A study from our own Center for Business and Economic Research at the University of Kentucky is among those that looked at a variety of factors and found no statistically significant relationship between right-to-work laws and economic growth.

In a recent commentary, Americans for Prosperity Kentucky and used casual statistics to claim a positive relationship between right-to-work laws and job and wage growth. But one can find all sorts of things using similar methods.

For instance, in the 2000s, average job growth was nine times higher in states beginning with the letters N-Z, compared to those beginning with A-M. Also, at the end of 2014, five of the 10 states with the lowest unemployment were right-to-work states, and seven of the states with the highest unemployment were right-to-work states.

As that commentary pointed out, a lot of Kentuckians don’t even know what right-to-work laws are, including more than a third of their polling respondents.

Kentuckians have a right to accurate information to fill that knowledge gap, too. It is already illegal to force workers to join a union as a condition of employment.

What these laws actually do is remove the requirement that workers who benefit from union representation, but who choose not to be members, pay reduced “core dues.” Those dues go toward the administrative costs of representation, not toward political causes.

But the freedom from core dues does not go both ways. In right-to-work states, unions are still required to represent people who don’t pay, stretching thin the resources they have to advocate for better wages and benefits. That’s why research shows that such laws lead to worse job conditions, even as they fail to produce the promised job growth.

The late congressman, Daniel Patrick Moynihan, famously said everyone has a right to their own opinions, but not to their own facts. So-called studies claiming that right-to- work laws will lead to a job growth bonanza are based on junk science, not real analysis, and should be treated as such.