Reducing poverty integral to restoring Michigan’s economy
Holidays ring hollow for many struggling with lingering recession

 As Michigan tries to shake off the lingering effects of the recession, poverty reduction must be part of the solution to restore a healthy state economy.

Unfortunately, poverty has grown dramatically over the decade, with more children and families in poverty, fewer families able to afford rent, more homes in foreclosure, and more breadwinners out of work, according to Ties that Bind: Poverty and Michigan’s Economic Recovery, released today by the  Michigan League for Human Services.

“It’s a time of year where we pause to count our blessings. Sadly for many families in Michigan, the lack of economic security casts a shadow on the joy of the season,’’ said League President & CEO Gilda Z. Jacobs. “We know that for Michigan to have a healthy economy, our families must have disposable income to spend on their needs and to grow the economy.”

Among the trends:

• Child homelessness grew 40 percent between the 2009-10 school year and the 2010-11 school year, with 31,000 children homeless and more than 700,000 on food assistance.

• Nearly one in every four kids lived in poverty in 2010 but in 14 counties, more than a third of children were in poverty, while one in every 10 kids lived in “extreme poverty.’’

• Michigan had the fourth-highest increase in family poverty among the states between 2006 and 2010 and the second-highest drop in the U.S. in median income.

• African Americans had the highest poverty rate at 34 percent (compared with 13 percent of whites) while nearly half of female-headed households with children in Michigan were in poverty in 2010 compared with 20 percent for all families with children.

• The cost of rent has increased 25 percent over the decade, making “fair market rent” out of reach for half of the state’s renters, meaning a full-time minimum wage worker must work 77 hours a week to afford a two-bedroom apartment at the fair market rate.

• Those with more education are less likely to live in poverty, with only 9 percent of those in poverty having a bachelor’s degree or higher and more than half in poverty holding a high school degree or less.

Michigan’s recession has forced many to rely on the public structures that help children and families until the economy stabilizes. A quarter of the state’s population received some sort of help in 2011. Nationally, studies have shown that two-thirds of American adults will rely on a safety net program during their lifetime.

Those programs do make a difference. Under the Supplemental Poverty Measure – an alternative way to show a more realistic view of poverty – the percent of children in poverty nationally rises from 18.2 percent to 21.2 percent when food assistance is not counted. Other programs that are effective in reducing poverty are the Earned Income Tax Credit, housing subsidies and the school lunch program.
Among the recommendations in the report is to restore the Michigan Earned Income Tax Credit, which stands out among the programs for its effectiveness in reducing poverty. The credit was cut from 20 percent of the federal credit to 6 percent to pay for business tax cuts.

Other recommendations:

• Review recent policy decisions to cut food and cash assistance, especially in light of a budget surplus. Such public programs help stabilize consumer spending and speed up recovery.

• Reinvest in education, the No. 1 predictor of future success for Michigan’s children.

• Reverse the Legislature’s decision to cut the basic period of unemployment benefits from 26 weeks to 20 weeks. Unemployment insurance is an insurance program for the economy.

“These programs do not just help families, they help the economy recover,’’ said the League’s Policy Director Karen Holcomb-Merrill. “Gov. Snyder recognized the impact of poverty in his MiDashboard, citing child poverty as an indicator of economic strength. We agree that the fewer kids and families in poverty, the more families who have the means to purchase goods and services that support jobs.”

The Michigan League for Human Services is a statewide, nonpartisan policy and advocacy group dedicated to achieving economic security for all in Michigan. It will celebrate 100 years of operation in 2012.