Assuring opportunity for all Iowans

New Census data highlight the need for Iowa policymakers to ensure that all can fully contribute to Iowa’s economy

New Census data highlights a slight decline in Iowa’s overall poverty rate, though not all racial groups benefited from this advance. Stagnating household incomes and poverty rates among working Iowa families of color over the past 10 years mean that economic gains aren’t broadly shared among racial groups in Iowa.[i]

180915-MedianIncome_Race_IA

Ways that the Iowa Legislature could strengthen economic security for families of color include:

  • expanding the Earned Income Tax Credit (EITC);
  • ensuring that high-income Iowans and corporations pay their fair share of taxes;
  • raising the minimum wage; and
  • investing in preschool and K-12 education.[ii]

In recent days, the U.S. Census Bureau released new 2017 data covering poverty, income, and health insurance coverage.

Iowa showed a slight decrease in family and child poverty rates and an increase in household incomes. The outdated poverty guidelines fail to capture what it really takes to get by in Iowa.[iii] Our Cost of Living in Iowa research builds basic needs budgets for multiple family types across Iowa. Our 2018 analysis found that 30 percent of black working households and 28 percent of Latino households were unable to meet basic needs. This compares to 16 percent of white households.[iv]

The median household income for black Iowa families was about half of white family household incomes in 2017. White households are the only group who saw a statistically significant increase in household income over the past 10 years. Poverty rates declined for white and Latino Iowans between 2016 and 2017. However, poverty rates for black, Asian, Pacific Islander, and Native American Iowans have remained the same.[v]

Communities of color in Iowa continue to face barriers to economic prosperity. These include structural factors such as hiring discrimination and a lack access to quality jobs, great schools, and convenient transportation. Latino and Black families are disproportionately low-income. Further, they pay a larger portion of their income in sales and property taxes relative to more affluent Iowans.[vi]

Moving to a less regressive statewide tax system for families while closing corporate tax loopholes to assure stronger investments for all Iowans would work to dismantle some of the barriers to economic success for all Iowans and particularly families of color, who the latest data show are disproportionately impacted.

Expanding the EITC and raising the minimum wage would contribute to more broadly shared prosperity, as would restoring Iowa’s traditional commitment to education. Education funding in Iowa has lagged in K-12 and opportunities to advance in college are threatened by state cuts in support. Iowans and their leaders should be looking to solutions that improve equity and opportunity for a new generation of Iowans.[vii]

[i] U.S. Census Bureau, “Poverty Status in the Past 12 Months.” September 2018. American Community Survey 1-year estimates. factfinder.census.gov/

[ii] Erica Williams, “States Should Adopt Policies to Help Dismantle Racial Barriers to Broader Prosperity.” September 2018. The Center on Budget and Policy Priorities. https://www.cbpp.org/blog/states-should-adopt-policies-to-help-dismantle-racial-barriers-to-broader-prosperity

[iii] Ibid.

[iv] Peter Fisher and Natalie Veldhouse, “The Cost of Living in Iowa 2018 Edition Part 2: Many Iowa Households Struggle to Meet Basic Needs.” July 2018. Iowa Policy Project. http://iowapolicyproject.org/2018docs/180702-COL2018-Part2.pdf

[v] Ibid.

[vi] Ibid.

[vii] Ibid.

2018-NV-6w_3497(1)Natalie Veldhouse is a research associate at the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

New Census measure shows good policy reduces poverty

The new measure helps policymakers view the impact of public initiatives to alleviate poverty.

Andrew Cannon photo
Andrew Cannon

Working-family tax credits and food assistance are among ways public policy lifts millions of Americans out of poverty. At the same time, continued high unemployment rates and low wages have put more and more Americans into poverty.

Those are some of the inescapable conclusions from the Census Bureau’s latest information.

In order to better capture what poverty means and how public programs help (or fail) to alleviate it, the Census Bureau devised a new poverty measure.

The Supplemental Poverty Measure (SPM) does not replace the official poverty measure, which is used to determine eligibility for many public programs, but provides policymakers with another way of viewing the impact of public programs.

The SPM measures what it costs to maintain a minimal standard of living using average costs of necessities: food, rent, clothing, utilities, etc. In addition, SPM also accounts for the increase in overall well-being individuals experience as a result of public programs. Those include the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps), the Earned Income Tax Credit (EITC) and the Low Income Heating and Energy Assistance Program (LIHEAP), among others. It also accounts for the decrease in overall well-being an individual experiences through out-of-pocket medical costs, child care, child support, and other expenses.

Using the SPM, 49 million Americans, or 16 percent experienced poverty in 2010. The official poverty measure shows about 46.6 million or 15.2 percent in poverty. Among seniors, the difference is even more drastic: The official measure found 3.5 million seniors, or 9 percent in poverty in 2010; the SPM found 6.2 million or 15.9 percent in poverty.

Not all the results of the SPM are so grim, however. The SPM finds a lower rate of poverty among children than the official measure, 18.2 percent vs. 22.5 percent. As noted above, this is because the SPM accounts for the increase in income and living standard individuals experience when they benefit from public support programs.

Additionally, the SPM illustrates the effect public programs have on reducing poverty. For instance, SNAP keeps 5.2 million people, including 973,000 children, out of poverty. The EITC prevents about 6 million people, more than 1.1 million of whom are kids, from living in poverty.

On the other hand, medical out-of-pocket expenses, meaning everything from co-pays and deductibles to paying for medical services with cash or through debt, added about 10.1 million, or 3.3 percentage points, to the number of Americans in poverty.

Successful problem-solving requires that first the problem be understood. The Supplemental Poverty Measure is an important new tool for policymakers in alleviating poverty.

Posted by Andrew Cannon, Research Associate