First Person

Lawmakers Should Stop Their Rhetoric and Listen

(AP Photo/Rich Pedroncelli, File)

On October 16 of last year, when I was on a Target run to stock up on some soup that was on sale, I discovered—as did millions of low-income Americans who rely on food stamps to prevent hunger—that the computer system that tracks benefits on my Electronic Benefit Transfer (EBT) card wasn’t working.

I didn’t get an email or phone call to tell me that it wasn’t working or why. Nobody did. We all found out when we arrived at the store, and some, like me, not until I had reached the cashier. Embarrassed, I turned to my son and tried to explain why we had to leave the store, and our dinner, behind.

Was it because of the government shutdown? How long would we be without access to the small amount in food help that my son and I receive? I had heard from friends that unless this shutdown was resolved before November 1, there would be no food stamps, veterans’ benefits or social security. I was worried that the food stamp shutdown had started early and so were other parents in our community.

But this isn’t what captured the nation’s attention, the humility of food stamp recipients in 17 states who were turned away at the register. People humbled by the need to ask for government help despite long work histories or who, growing up poor, never got a shot at an income above the poverty line.

Most people I know in my predicament—with incomes below the poverty level—are good people who are trying hard to do the right thing.

Instead, what America heard about on that day was the experience at one store, where the cashiers let food stamp recipients shop instead of turning them away. Without a computer system to document how much money in benefits was on each card, some shoppers may have purchased more items than they were eligible for. The media called it “looting,” taking any opportunity to cast a shadow on the integrity of the down-and-out.

I am a responsible, hard-working, minority single mother who returned to college, as a full-time student at UC Berkeley, after the bottom fell out of the economy. I am thankful for the help I receive and work incredibly hard as I carefully manage my limited time and money. Most people I know in my predicament—with incomes below the poverty level—are good people who are trying hard to do the right thing.

Government shutdowns, accidental or intentional, are scary for people like myself and my son who would be homeless and hungry without the temporary help we receive from the safety net that is there for all of us in case we lose our jobs, or are unable to work, or work doesn’t pay enough to afford the basics. While our national leaders have failed to govern based on the real life experiences of most low-income Americans—and instead focus on the sensational exceptions meant to draw the ire of the television watching public—I’m proud to say that some California legislators have charted a different course.

Having heard my story when I told it on a local radio station, California Assembly Member Mark Stone introduced a bill to strengthen protections for consumers with EBT cards by ensuring that both consumers and retailers are informed when there are outages to the EBT system. Governor Brown’s Administration has also now set up a process to inform SNAP recipients when the EBT system goes down.

This month, the Atlantic ran an article about the lack of real-life experience lawmakers have had with poverty. It concluded that, while inadequate, perhaps more lawmakers participating in the SNAP Challenge and other poverty simulations might help build empathy and understanding among our nation’s leaders. I don’t disagree, but I think that they could accomplish a lot more if they would simply stop their rhetoric and listen to someone who knows poverty first-hand like legislators here in California are doing.

Analysis

Big Food and the Gutting of School Meal Nutrition Standards

Photo provided by USDA/Lance Cheung

This July, new nutrition rules for school meals and snacks will take effect. It will mark the second phase of the bipartisan Healthy Hunger-Free Kids Act that was passed by Congress in 2010. But a debate is now raging on Capitol Hill over the standards for healthy eating that were set by that legislation. It’s not about crafting new or better standards, but whether Congress will do an about-face, lower the bar, and turn its back on science.

Many low-income students rely on school meals as a primary source of nutrition. While Congress hasn’t been able to agree on much these days, it was able to unite around the issue of improving the diets of children in America. Why? Because of the overwhelming scientific evidence that the diets of our children are setting them up for a lifetime struggling with disease. One in 3 children in the U.S. are obese. A 2012 study by the Trust for America’s Health and the Robert Wood Johnson Foundation predicted that obesity rates in the U.S. could exceed 44 percent by 2030, costing our country an additional $66 billion per year in medical expenses. Poor eating patterns are major contributors to childhood obesity and other chronic diseases that begin in childhood, such as Type 2 Diabetes and cardiovascular disease.

But instead of allowing the implementation of these new well-founded nutrition standards, the House Appropriations Committee passed a 2015 funding bill in May that weakened standards. That’s when the outcry began; eighty-five organizations spoke out against the gutting of the new standards in a joint letter:

For decades, Congress has wisely ensured that federal child nutrition programs have been guided by science. Science-based decisions have served our children and our nation well.

“ We… strongly oppose efforts… to change or weaken federal child nutrition programs, including potential efforts to require the inclusion of white potatoes in the WIC Program, to alter or delay implementation of meal standards in the National School Lunch Program and the School Breakfast Program, or to weaken or delay rules to limit sugary beverages and unhealthy snack foods in our nation’s schools. For decades, Congress has wisely ensured that federal child nutrition programs have been guided by science. Science-based decisions have served our children and our nation well. Accordingly, we strongly urge you to oppose efforts to intervene in science-based rules regarding the federal child nutrition programs.”

The new standards for school lunches and snacks set forth in the Healthy Hunger-Free Kids Act were written in collaboration with the School Nutrition Association (SNA), which represents 55,000 “school nutrition professionals.” But SNA has now withdrawn their support for the very rules they helped to create. Last week, SNA CEO Patti Montague asked First Lady Michelle Obama to support the House bill and its weaker nutrition standards.

“Our members simply want relief from some of the onerous regulations slated to take effect this summer,” Montague said. “[They] will lead to fewer students receiving healthy school meals, more food being thrown away and many school meal programs in financial straits”.

In a letter to the First Lady and Secretary of Agriculture Tom Vilsack, SNA also requested that the USDA or Congress act to prevent raising the standard for whole grains; maintain the current standard for permissible sodium levels, rather than improving it; and eliminate the requirement that students take a fruit or vegetable with their meals.

SNA justifies its new position in part by claiming that the new standards have led to more plate waste and decreased participation in the school lunch program. But the USDA points to a recent study by the Harvard School of Public health indicating that the new standards have not led to increased plate waste, and that data shows participation has actually been on the decline since 2006.

So what’s really behind this new plea from SNA?

According to writer Bettina Elias Siegel of TheLunchTray.com, we need to look at SNA’s corporate ties. The organization receives significant funding from companies like Kraft, ConAgra and PepsiCo. These corporate sponsors would surely benefit from the loosening of school lunch standards because they would not have to reformulate popular brands in order to sell to school districts. Also, huge food service corporations like Aramark, Sodexo and Chartwell (Compass)—which operate approximately one-fourth of school lunch programs in the US—get a lot of their business from these same major food corporations. As noted in a New York Times editorial, “An increasingly cozy alliance between companies that manufacture processed foods and companies that serve the meals is making students — a captive market – fat and sick while pulling in hundreds of millions of dollars in profits.”

So are there legitimate concerns raised by SNA in regard to budgets, food waste and student acceptance of healthier foods? Sure. But maybe its response to these issues would be quite different if SNA were not financially hitched to Big Food.

The good news is that the First Lady is not backing down. She came to her meeting with SNA accompanied by Dr. James Perrin, President of the American Academy of Pediatrics. Perrin reminded the group that children consume up to half of their daily calories in school, so it’s important that those calories are high-quality. He called the rollback of standards “the wrong choice for children”—one that would “put politics ahead of science.”

Or perhaps, more accurately, it’s a choice that puts money and profits ahead of science and children.

Explainer

Generational Poverty the Exception, Not the Rule

(AP Photo/Charles Dharapak)

Poverty is worse than you think, but it’s different than you think, too.

Even if you count yourself as reasonably well informed about poverty in the U.S., what you think you know may be wrong. For example, you may know that by the official Census Bureau measure, 15 percent of the population was considered poor in 2012, about 46 million people; you may even know that there’s a lot of variation in that rate by age (it’s much higher for children and much lower for older people), by race (it’s radically higher for African Americans and Hispanics), by geography (it’s higher in the South, as it always has been, and it’s now growing fastest in the suburbs), and so on.

You may even know that the official measure of poverty is outdated and inaccurate, and that, using the Bureau’s new Supplemental Poverty Measure (SPM), the problem is, in truth, a bit worse: the SPM shows that more likely 16 percent of Americans were poor in 2012, or about 50 million people, and that poverty was much higher among the elderly than the official measure would lead us to believe, and a bit lower among children.

Both of these approaches share a common problem, however: they are static, point-in-time measures, telling you how many people were poor at the time of the surveys used to gather these data. But poverty in America is fluid, and people move in and out of poverty over the course of a year and over the course of their lives.

Thanks to other data from the Census Bureau, we can step back a bit to see that more common kind of movement in and out of poverty. If we look at how many Americans were poor for at least two months during 2009, 2010, and 2011, for example, we find a poverty rate not equal to the Census Bureau’s 15 or 16 percent—but twice that, at 31.6 percent. That is, over a recent three-year period, almost one-third of all Americans were poor at least once for two months or more.

U.S. household economies are fragile, so it often just takes one crisis to push a family over the edge—from just getting by to not getting by at all...

There’s another important lesson to learn from this data: while lots of Americans experienced a “spell” of poverty during those years, only 3.5 percent of the population was poor for all 36 months. So how we think about poverty is all wrong: it’s a much more common occurrence than people realize, and the chronic, persistent, generational poverty that features so prominently in political rhetoric and media coverage is very much the exception, rather than the rule.

We can step back even further, and look at the likelihood that any American will encounter poverty at any point over the course of their entire adult lives, thanks especially to research done by Mark Rank at Washington University in St. Louis. What his work tells us is that more than 40 percent of Americans between the ages of 25 and 60 will be poor for at least a year. Over the same period, more than half will be poor or nearly poor, with income at 150 percent of the poverty line, or about $27,000 annually for a family of three.

So poverty in the U.S. is, in fact, a much larger problem than we think it is, and it’s one that most Americans will face.

While that’s a grim realization, perhaps it’s also a cause for hope. Maybe if more Americans understood what their own personal stake is in committing to poverty reduction, they might be more inclined to press for higher wages, better access to affordable child care, more generous social welfare programs, a reinvigorated right to form a union, and so on. These are not policies that benefit some group of Others, but policies that serve the majority of us. If we can’t count on empathy to improve well-being, maybe selfishness will do the trick?

We live in a world of widespread economic fragility, of insecurity, of what some have come to call precarity: According to one recent survey, about one-in-four Americans have no savings at all.

U.S. household economies are fragile, so it often just takes one crisis to push a family over the edge—from just getting by to not getting by at all: An injury that makes it impossible to work, a sudden physical or mental illness, a death in the family, a car breaking down, or even the birth of a new baby. All of these can be traumatic economic events for a family with little or no savings and no margin for error—events that most families recover from, with time. But then the next crisis hits. And in the U.S., you can’t necessarily count on the social safety net to be there for you when you need it. And you’ll need it.

We can’t hope to address a problem if we misdiagnose it, and one of the virtues of thinking more clearly about what poverty actually looks like is that a better diagnosis might alter the political landscape.

Don’t fight poverty because you feel sorry for other people; fight poverty because the odds are increasingly high that you and your family will be poor someday, too.

Analysis

Can We Talk Poverty Without Talking Money?

Photo provided by AP Photo/Ryan J. Foley

When we talk about poverty, we often talk about material hardship and the cost of things like housing, food, clothing, and transportation.

But when we look at the budgets of struggling families, we often ignore the cost of money itself. Yet the old adage that it takes money to make money is also true in reverse. Without money, it costs money just to deal with money.

The cost of a bank account has gone up in recent years. Only about half as many banks offer free checking accounts as they did in 2009, and the average minimum balance to avoid bank fees reached $723 in 2012, up 23 percent from the previous year. At the same time, not having a bank account—roughly 17 million American adults don’t, according to the Federal Deposit Insurance Corporation (FDIC)—can be even more expensive. And policymakers need to factor in these costs when making decisions not just about banking regulations, but a wide range of policies that affect low-income families. Otherwise, struggling families and consumers will continue to lose dollars needlessly.

Take the case of Natalie Gunshannon, a McDonald’s employee in Pennsylvania. She sued her local franchise last year when it forced her to receive her wages on a prepaid debit card. This card charged $1.50 for every ATM withdrawal, or $5 to withdraw cash at a bank. It even charged $1 to check the account balance at an ATM, and 75 cents to pay bills online. Depending on how the card was used, it could easily drive someone’s earnings below minimum wage.

In Natalie’s case, using the card made no sense because she already had a free account at a local credit union. But not all low-wage workers have good alternatives like Natalie, and if they decide not to participate in the mainstream banking system, they may ultimately pay even more for simple transactions. Check cashers may charge from 1 to 5 percent of the amount on a paycheck or government benefit check in order to cash it. And many unbanked consumers end up paying again when they need to buy money orders or pay bills in person.

A low-wage worker paid $700 every two weeks, facing a 2 percent check cashing fee, and buying two money orders each month, spends more than $30 per month on financial services. That means he or she is working nearly an hour each week just to pay the check casher. For many workers, these costs are often even higher. It’s a slow drip for workers that takes dollars out of every single paycheck, and it adds up to billions of dollars that consumers and families could otherwise spend or save. By simply expanding access to affordable banking services millions of Americans would receive a raise.

Sometimes that slow drip for financial services turns into a catastrophic flood. About two out of every five Americans say that they probably or definitely wouldn’t be able to come up with $2,000 in 30 days to deal with an emergency. That number rises to about two-thirds of lower-income Americans. When faced with financial shortfalls, struggling families may turn to payday lenders for quick cash pledged against the next paycheck, or to auto title lenders who offer cash in exchange for the car title and a spare set of car keys.

These lenders typically charge triple-digit annual interest rates and, not surprisingly, borrowers can’t keep up. Four out of five payday loans is rolled over to a new loan. In Virginia alone, auto title lenders repossessed 13,000 cars in 2012 among borrowers who couldn’t make their payments. In 2007, the Pentagon was so concerned about these loans that they successfully pushed Congress to cap at 36 percent the annual interest rate that can be charged to our troops and their families. However, bills to extend this cap to everyone have gone nowhere.

Fortunately, many of the solutions to these problems already exist. In its three-year history, the Consumer Financial Protection Bureau has effectively been a new cop on the beat examining the tricks and traps in the financial marketplace. State and local governments have expanded access to affordable, basic bank accounts and pushed for more affordable prepaid cards for payroll and benefits. Policymakers are now considering whether to build out public banking options, such as offering more banking services through the post office, as many other countries do. In cities like New York, financial empowerment centers that offer free financial counseling now help struggling families make the most of their money and avoid the rip-offs that make it even harder to get ahead.

Not all of these efforts have succeeded, however. Last year, the Chicago Transit Authority (CTA) announced an innovative new product called Ventra: a transit farecard that doubled as a prepaid debit card. In theory, this card could have turned every subway and El station into a banking center. But as designed, it was a high-fee card that guaranteed revenue for the CTA and was a bad deal for consumers. It took public pressure to redesign the card’s features and fees and launch a better product. In the meantime, trust was lost.

Yet the occasional step backward shouldn’t stop policymakers from seeking safer, more affordable, and more convenient ways for low-income Americans to manage and save their money. When every dollar counts, we should make sure families are able to keep the dollars that belong to them.

Analysis

Black and Brown and Redlined All Over

(Wikimedia Commons/Mikeishere701)

Home prices have been on the rise for several quarters now but the housing crisis is not nearly over.

Despite the speculator-fueled rise in home prices in some parts of the country, hard-hit neighborhoods are still reeling, as America continues to grapple with the consequences of reckless predatory lending that caused the housing bubble to burst.

The subprime implosion cost more than 10 million Americans their homes through foreclosure. That’s more families than the population of Michigan.

And nearly 10 million households are still underwater—owing more on their mortgages than their homes are worth. Entire cities and neighborhoods have become blighted by plummeting home values, vacant properties, and decrease in tax revenue. The report, “Underwater America: How the So-Called Housing ‘Recovery’ is Bypassing Many Communities” published by UC Berkeley’s Haas Institute for a Fair and Inclusive Society, where I serve as Director, shows that one in ten Americans lives in the 100 hardest hit cities where the number of underwater homeowners range from 22 to 56 percent.

A Baltimore lawsuit estimates the total costs for that city are about $34,199 per foreclosure. A federal court ruling recently pointed to the wave of municipal bankruptcies as a direct result of the foreclosure crisis.

What’s worse is that unintentionally or not, the history of the housing crisis is deeply linked to past practices of racial discrimination that have been structured into the current credit market. The mortgage crisis has fallen disproportionately on communities of color, wiping away generations of hard-won wealth.

Banks had long excluded low-income, minority areas from loan availability, a practice known as redlining. During the subprime boom we saw a new practice – reverse redlining. High-cost loans were five times more likely to be made in African American neighborhoods than in white neighborhoods.

The response by the government and the banking community has been grossly inadequate. The Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP) programs have been notable, high-profile failures. These programs did not sufficiently incent banks to do what was really necessary to fix this crisis: to modify mortgage principal.

In response, a growing number of cities on both coasts are exploring an unusual response to an unusually difficult problem, with a program they are calling “reverse eminent domain” or local principal reduction.

The city of Richmond, California, voted to enact this program to acquire some of the hardest-to-modify, deeply underwater mortgages, and to then restructure the loans with reduced principal and terms that make the new mortgages affordable and sustainable for the homeowners.

Cities exploring this approach have made clear that they prefer to negotiate a purchase of these loans based on fair market value but they are prepared to use their power of eminent domain to acquire the loans, if necessary, in order to prevent further deterioration of their communities.

The financial industry has responded with threats of a new kind of redlining. The Securities Industry and Financial Markets Association has passed a policy that raises the price of credit for any community that uses eminent domain in order to restructure mortgages for homeowners.

Banks such as Wells Fargo, and institutional investors such as BlackRock and Pimco, sued the City of Richmond—unsuccessfully so far—rather than accept the city of Richmond’s offer to negotiate a solution that works for both homeowners and investors.

What is more surprising is that the Federal Housing Finance Agency—the governmental overseers of Fannie Mae and Freddie Mac—has thus far sided with industry lobbyists and speculators instead of working with cities like Richmond and homeowners looking for relief.

Community groups and the ACLU filed a Freedom of Information Act request and sued the FHFA to uncover the efforts of big bank lobbyists to crush local anti-foreclosure initiatives. One email turned over by the agency shows a bank lobbyist noting with alarm that the only banker on a city task force on eminent domain in Brockton, MA “is also a Past President of the Brockton NAACP.”

Housing advocates applauded the confirmation of former Congressman Mel Watt, long an advocate of fair lending, to lead the FHFA at the beginning of this year. One simple step he could take quickly would be to withdraw the threats to punish communities that pursue a local foreclosure solution that may include the use of eminent domain.

Civil rights laws have been enacted in efforts to overcome disparities among whites and people of color in the credit and housing markets. But the subprime crisis and the response by the banks and federal government thus far will continue to hurt entire communities even as they exacerbate unequal opportunity and outcomes based on race.

To read more about concentrated poverty and discriminatory redlining practices, read Why Brown v Board Was Unsuccessful in Ensuring Equal Educational Outcomes by Richard Rothstein and Concentrated Poverty and The Case for Promise Zones by Tracey Ross

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