Wednesday, May 23, 2007

The Poor Get Poorer (At Least After 2000)

The Congressional Budget Office has released a study of how low-income households with children have fared from 1991 to 2005. The CBO study can be found here (PDF).

The results are quite interesting. As the chart to the left shows, there was a significant increase in the earnings and income of the lowest quintile income group during the 1990s, but since 2000 there has been an 11 percent drop in income and a 16 percent drop in earnings for this group.

Why the large increase in income and earning for this group in the 1990s? Several factors come into play: a robust economy with a low unemployment, a major enhancement in the earned income tax credit (EITC), and the pro-work features of welfare reform. As a result of these changes, welfare dropped significantly as a percentage of income for this population, while both earnings and EITC increased significantly.

The real story here, however, is what happened after 2000. As a result of the recession in 2001, earnings dropped dramatically for poor families with children, and while the decline has stopped, it appears that income and earnings growth for poor families are now stagnant.

So what does this mean to people of faith? As I have emphasized in a large number of posts, I firmly believe Christ meant what he said about taking care "of the least of these." How we treat the poor among us is a moral and theological issues, and far too often we fail the test.

As I noted in this post, there is a very workable plan proposed by the Center for American Progress to cut poverty in half. The experience of the 1990s shows this is a realistic goal. Given the bad news of this decade, it is time that we took a hard look at implementing this plan.

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