Wealth and Poverty

Options for increasing revenue base?

1. Income tax: general or targeted2. Reduction in tax exemptions3. Increase input from corporations. In particular,

– 3 companies, all in the top 50 of the Fortune 500, have lots of employees receiving medicaid and Basic Health Plan benefits.

Walmart employees: $18,413,400Safeway employees: $7,199,366Fred Meyer employees: $4,500,000

Source: United Food and Commercial Workers

Corporate Welfare

1. Estimates range from $93 to 175 billion a year goes to corporate welfare.

2. Tax breaks• No sales tax on construction costs• Limitations on various taxes, such as property or

utility taxes, to lure companies to a town.

3. Subsidies• Public funds to build roads and other infrastructure.• Public funds contributed to build facilities.

Key questions

1. Does the investment of public funds benefit the community?

2. How does it benefit? • Increased jobs• Increased tax revenues• A needed service that is otherwise unavailable• Community-building

3. Would the business set up shop without the assistance?

4. Does the company have to show its effectiveness over time?

Examples of Corp. WelfareGood Jobs First, 2001

• At least 44 of 60 (73%) private prisons had received a development subsidy from local, state and/or federal government sources.

• 83 of 92 sports’ stadiums were built with subsidies; 32 were paid for entirely with public funds.

• Walmart has received billions in the form of infrastructure subsidies, reduced land prices, etc. 1 million in Grandview, WA to build infrastructure.

Boeing

• 2001, moved headquarters to Chicago.• In 2003, a 3.2 billion dollar subsidy package.• 2009, decided to build a plant in South Carolina.

– 4% vs. 10.5% property tax for 30 years.– Tax credits for site improvements for 15 years.– 170 million in low interest loans– Commited to 3800 new jobs.

The point?

• Public assistance, or welfare, is provided across the income/wealth spectrum.

• Accountability for it is inconsistent.

Definitions of poverty

– Household income is inadequate to meet needs of family.

– Relative poverty: break up the income range into percentiles and define a percentile as the poverty line.

– Absolute poverty involves identifying a poverty line; anyone with income below the line is in poverty. We have the federal poverty guideline which is used to define eligibility criteria for many human services:

http://aspe.hhs.gov/poverty/09fedreg.shtml census measured a rate of 11.3%; 12.5 in 2007.

– In WA, 2001 rate was 9.9%; in 2007, 12.6%.– 20% live below 200% of the FPL. (SPAN)

Why are people poor?

Think

Pair

Share

Conceptualizations of Poverty

• Poverty as deprivation• Poverty as inequality in distribution of

income. – During the 1990s, the bottom 20% of earners

saw a 4% increase in income; the top 20% saw a 27% increase.

• Poverty as culture• Poverty as exploitation• Poverty as structure

Economic conditionsEconomic Opportunity Institute, The State of Working Washington,

2007

• Unemployment rate– Unemployment in WA has increased from 5% in 11/07 to 9% now.

• Wage and Work Patterns– Middle and high earners’ wages increased faster than inflation in recent years.– Low wage earners’ wages have stayed the same or fallen.– The typical couple with kids worked 12.6% more hours in 2004 than in 1979

(U.S.)

• Type of employment, e.g. – decline in high paid manufacturing jobs, from 26% in 1950 to 16% in 1990 to

10% in 2005 (state).– Increase of 22,000 manufacturing jobs between 2004 & 2006 (state).– Increase in service and retail jobs (state)– Increase in information technology jobs, down 5000 from 2001-2003, then up by

9800 by 2007 (King County).

Programs to address poverty

• Residual programs-TANF, GAU/GAX, ADATSA

• Institutional programs-Social Security, Working Connections

• Asset-building programs-– Individual Development

Accounts-http://www.cbsnews.com/video/watch/?id=4597355n

– Microlending– Children’s Saving Accounts– Connected by 25-Financial education and matching

funds former foster youth

Temporary Assistance to Needy Families-a product of PRWORA*

• Rough cost: 21.7 billion/year (includes cash grant, childcare funds, social services)

• Goals of the program include:– Reduce the amount of money spent and number of families

receiving benefits– Increase ability of families to be self-sufficient– To improve quality of life: A job, a better job, a better life

*Personal responsibility and work opportunity reconciliation act

**1996-direct cash grants=63% 2006-direct cash grants=41% 68% drop in case load between 1996 and 2007; 46% in WA

Quiz review

• Residual view• Institutional view• Asset Based programs• Regressive tax system• Reason for budget deficit• ADATSA• First Steps• GAU• TANF/Workfirst• Emergency Programs• Working Connections• Refugee Cash Assistance

WorkFirst: WA’s TANF Program

• Recipients will participate in Workfirst, a program designed to facilitate employment.

• Recipients can receive benefits for a maximum of 5 years.

• Exceptions exist which allow recipients to delay workfirst activities and receive benefits beyond the five year limit.

• Parents of infants up to 1 year can postpone participation in workfirst.

• A variety of services are offered to support recipients.

Services offered

• Evaluation to determine what is needed to achieve self-sufficiency

• Job skills assessment, basic education needs, job training, job search assistance

• Mental health, chemical dependency, child with disability, etc. are examples of when a client might receive other services prior to seeking work

• Childcare (Working Connections Childcare), transportation, work clothing, vehicle repair, tools, etc.

• http://www.workfirst.wa.gov/about/StudyIndex2.htm