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Latino Daily News

Saturday October 23, 2010

A Challenge to Our Nation - Improving the Economic Well-Being of Latino Kids

Hispanic children are tomorrow’s workers and taxpayers. Investing in their education and well-being is investing in America’s future. The Census’s most recent data, however, reveal that of all racial and ethnic groups, Latinos experienced the largest one-year increase in poverty in 2009. The number of Hispanic families with children in poverty has been exacerbated by the current recession and disproportionately high unemployment among Latino workers who are concentrated in the hard-hit industries, such as construction.Image

Poverty in the Latino community has been a significant issue for many decades. But recently released Census data reveal that in 2009 poverty was at its highest level for Latino children since 1997. Job creation is one of the most important strategies to reverse these statistics but America’s system of work supports also has a role to play in lifting America’s children out of deep poverty.

At the same time, this safety net has shown weakness in reaching Hispanic families and children facing tough economic times. A number of factors contribute to this: high concentrations of Latino adults in low-wage jobs without benefits; barriers to access and eligibility for immigrant workers; and cultural and linguistic differences. As a result, Latino children and families are less likely to have the supports they need to help them through economic difficulties. The safety net’s ability to reach all families and children, therefore, should be strengthened.

This brief will provide background on Latino child poverty, including important demographic information that underscores how Latino poverty is similar to and different from poverty experienced by other groups. It will then discuss stateby- state differences in the data, and policy solutions to reduce poverty and close racial and ethnic disparities.

Background on Latino child poverty
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Anyone concerned with our long-term economic growth and productivity should care about Latino child poverty. We know that child poverty has long-term economic consequences for our nation’s productivity and that costeffective investments to tackle child poverty now can contribute to greater economic growth later on. The following sections will provide background on Latino child poverty, its causes and consequences, and important demographic trends that will affect how we tackle this issue.
Hispanic population growth and rising child poverty

The Hispanic population is growing in all age and income groups and this growth is most visible in the child population. The share of all U.S. children who are Hispanic has grown steadily from 7.5 percent in 1976 to 22.7 percent in 2009. Over the same time period the share of all poor children who are Hispanic grew from 14.1 percent to 36.7 percent. The Population Reference Bureau projects that by 2030 Hispanic children will make up 44 percent of all poor children in the United States.
Hispanic child poverty rises and falls with the economy but remains high

The Census Bureau publishes Hispanic child poverty rates from the early 1970s to the present. Hispanic and black children have had poverty rates three to four times that of white children throughout this time period. Latino child poverty stood at 28 percent in 1979 before the recession of the early 1980s, then jumped to 39.5 percent by 1982.

It would be another 22 years before poverty would fall to 28 percent again. Hispanic child poverty rates peaked again in the early 1990s at 41.5 percent in 1994 and took a steep eight-year dive to 28 percent in 2001 as the economy improved. The lower rates prevailed through most of the 2000s, though they took a sharp turn upward as the recession began in 2007. The Latino child poverty rate in 2009 was 33.1 percent, its highest level since 1997.

Low incomeImage

Many Hispanic families and children are considered low income, meaning their family income falls below 200 percent of the poverty line. This was $44,100 annually for a four-person family in 2009. Sixty-three percent of Hispanic and black children and 28.7 percent of white children are under 200 percent of the poverty line. By comparison, 33.1 percent of Hispanic children are below 100 percent of the poverty line compared to 35.7 percent of black children and 11.9 percent of white children.  Hispanic children are more likely than black and white children to fall between 100 percent and 200 percent of the poverty line, so examining how safety net programs address this income group is important.

Families’ income affects their eligibility for federal safety net programs and tax credits. The Supplemental Nutrition Assistance Program, or SNAP, for example, requires that participants fall under 130 percent of the poverty line, while the Earned Income Tax Credit allows participation up to approximately $44,000 a year depending on family size and makeup, with families earning between $10,000 and $20,000 earning the maximum credit. Programs that allow participation higher up into the income scale can reach more families and children who are low income but not poor. They can thus help more Hispanic children.

Working and poor

Hispanic workers are more likely than whites and blacks to earn poverty-level wages—41.8 percent of Hispanic workers, 21.9 percent of white workers, and 34 percent of black workers earn poverty-level wages (wages below $10.20 per hour for a family of four in 2007). Hispanics in poverty over age 16 also are more likely to be working full time, year round than other groups—13 percent of Hispanics and 7.5 percent of whites work full time, year round, but live in poverty.

Married and poorImage


Certain safety net programs, such as Temporary Assistance for Needy Families, or TANF, serve mainly single female-headed households in part due to design issues. The majority of Hispanic families living in poverty, however, are headed by married-couple families. This family structure makes it less likely that programs like TANF can serve these families.

In 2009 40.4 percent of poor Hispanic families were headed by a single female, which was the same percentage (40.4 percent) of poor white families. This proportion of female-headed households among Hispanics living in poverty has not changed since 1973.

Nativity and mixed-status families

An overwhelming proportion of Latino children are citizens. More than 9 in 10 (91 percent) Hispanic children are native-born U.S. citizens. Nine percent of Hispanic children are first-generation immigrants themselves.

Thirty-eight percent of all Hispanic children in 2008 were native-born children of native-born parents (third generation or above). About half—52 percent—of Hispanic children are second-generation, native-born children of immigrants. Of the second-generation children, 60 percent (or 4.9 million) have parents who are both legally present immigrants, while 40 percent (or 3.3 million) have at least one parent who is undocumented to work in the United States.

Most Latino children are U.S. citizens but a majority live in immigrant families. This often results in their families running up against barriers to services due to eligibility as well as cultural and linguistic differences. Even children with parents who are legally present immigrants have a hard time accessing government programs.

How Latino child well-being varies by state

The table on page 5 shows that Latino child poverty rates are related to unemployment rates in the state. But the intensity of this relationship varies in different states across the nation.

The analysis below of Latino child poverty at the state level focuses on three states: Maryland, California, and North Carolina. These states were chosen because they represent a low, middle, and high in terms of Latino child well-being as measured by the child poverty rate.

The average Latino unemployment rate in the United States was 12.1 percent in 2009 and the Latino child poverty rate was 33.1 percent. States like Maryland had one of the lowest Latino unemployment rates of 7.6 percent as well as the lowest Latino child poverty rate of all the states at 14.6 percent.

States like California and North Carolina paint another picture. California had one of the highest Latino unemployment rates at 14.7 percent. But the Latino child poverty rate was 27.5 percent there, which is lower than the national average. On the other hand, the Latino unemployment rate of 13.6 percent in North Carolina was also relatively high, but the Latino child poverty rate was 42.3 percent, which is far higher than in California.

The lost decade for Latinos

The national Latino child poverty rate was 28 percent in 2000 and it’s grown to 33.1 percent in 2009. But digging deeper into the state-level data reveals that Latino child poverty increased dramatically in some but not all states since the recession began in 2007. And again, the growth is not solely related to changes in unemployment rates.

In Maryland and California, for example, the Latino child poverty rate increased slightly between 2000 and 2009 even though unemployment doubled in both of those states. Latino child poverty in California increased from 26.6 percent in 2000 to 27.5 percent in 2009 as unemployment rose from 6.5 percent to 14.7 percent over the same timeframe. In Maryland, Latino unemployment rose from 3 percent in 2000 to 7.6 percent in 2009 but Latino child poverty increased from 13 percent to 14.6 percent over the same period.

On the other hand, the economic well-being of Latino children in North Carolina was much more deeply affected by the recession. There Latino child poverty grew dramatically from 28.4 percent in 2000 to 42.3 percent in 2009 while Latino unemployment more than doubled from 5.4 percent in 2000 to 13.6 percent in 2009. Latino child poverty is much higher in North Carolina compared to California even though North Carolina has a lower Latino unemployment rate.

Overall, any economic gains Latinos made earlier in the decade were lost to the recession as Latino child poverty rates in 2009 were much higher than 2000.

A way forward

America’s safety net and tax credits for the working poor in particular play an enormously important role in lifting America’s poor children out of poverty and deep poverty. But these programs don’t work as well as they could for Latino and other children. Protecting and strengthening them is critical.

Families in deep poverty are those with income below 50 percent of the poverty line (or income less than approximately $11,000 in 2009 for a family of four). Unpublished data by the Center on Budget and Policy Priorities show that the safety net lifted a total of 7.3 million American children out of deep poverty in 2005, including 1.9 million Hispanic children. Without the safety net a total of 9.7 million children overall, including 2.8 million Hispanic children, would have fallen below half the poverty line.

The safety net did not, however, reach 900,000 Latino children, who remained below half the poverty line. The safety net lifted 67 percent of deeply poor Latino children and 76 percent of all deeply poor children above half the poverty line. This reflects that the safety net was less effective with Latino children than it was for others. It also represents a weakening of the safety net over time since in 1995 the safety net lifted 90 percent of deeply poor Hispanic children above half the poverty line. It’s critical to strengthen these protections so fewer children grow up in deepest poverty.

Here’s how we can improve critical safety net programs so that they help more families weather hard times.
Supplemental Nutrition Assistance Program

SNAP, formerly known as food stamps, was one of the most responsive safety net programs in the Great Recession. The official poverty measure does not include the value of SNAP. But when this program is added to the calculation of income we can clearly see that it moved 3.6 million people above the poverty line in 2009—1.4 million more than in 2008.

Many states and counties have successfully reached out to high percentages of eligible families. Maryland particularly has a high estimated percentage of eligible individuals enrolled in the program across the state, while counties across North Carolina and California have lower rates of participation.

As pointed out earlier, one barrier facing Latino children who are eligible but not enrolled in SNAP benefits is their parents’ immigration status. Citizen children with a noncitizen parent are less likely to receive needed nutrition assistance due to the parents’ fear and misinformation about eligibility. Even adult legal immigrants, many of whom are low-wage workers, cannot access food stamp benefits until they have been in the United States for five years.

Unfortunately, some states like California and Arizona opted to enact barriers such as a requirement for fingerprints, which makes applying for food assistance akin to entering the criminal justice system. Also, Arizona enacted a law in September 2009 that requires that state workers report undocumented immigrants applying for public benefits to the federal immigration authorities. This has made parents of citizen children afraid to apply for public benefits for their eligible citizen children.

States and counties can make smart choices to increase the SNAP take-up rate of all eligible families such as removing onerous fingerprint requirements, removing anti-immigrant laws that affect the use of public benefits by citizen children, using a categorical eligibility option to eliminate the asset test, using a higher gross income test, and reducing and simplifying reporting requirements.
Unemployment insurance

Unemployment benefits were one of the most effective policies keeping families out of poverty last year. According to a study by the Center on Budget and Policy Priorities, 3.3 million more people would have fallen into poverty in 2009 if not for this critical lifeline.

Still, the unemployment insurance system traditionally leaves behind certain categories of workers, including part-time and low-wage workers. Because Latino workers are disproportionately concentrated in low-wage jobs, they are vulnerable to being without this safety net should they lose their employment.

Fortunately, the Recovery Act provided $7 billion in incentives for states to modernize their unemployment insurance systems. These reforms include enacting an “alternative base period” that would allow workers to credit their most recent employment in determining benefits—a change that would particularly help workers in low-wage positions.

The table on page five details which states have undertaken these reforms and which have not. States have until August 2011 to enact these reforms in order to qualify for Recovery Act dollars. Doing so is the right thing to do for low-wage workers, many of whom are Latino. It’s also good economic policy as these extra dollars stimulate local economies and create local jobs.
Earned income tax credit

The EITC is a federal tax credit for low- and moderate-income working people that supplements income earned in lower-wage jobs. The EITC is “refundable,” which means workers receive a refund check from the government if their tax credit is greater than their income tax liability. Because this tax credit is refundable and supplements income earned by working, it encourages and rewards work. Additionally, it is meant to offset the payroll and income taxes paid by low- and moderate-income workers. The Child Tax Credit, or CTC, is similarly designed in that it is refundable for lower-income families with children.

Because Latino parents often work in lower-wage jobs the EITC is a critically important supplement to family income and lifts many families above the poverty line. Approximately one-third of Hispanic families utilize the EITC. In addition, the Recovery Act increased the EITC amount for families with three or more children by $629. This particular feature also benefited Latino families because these families are slightly more likely to have three children.

Also, the Recovery Act lowered the earnings threshold to qualify for the CTC, meaning that more low-income working families qualified. These improvements will expire in December 2010 if Congress does not take action. These expansions to the refundable tax credits have rewarded work and have been proven to improve child outcomes. They should be made permanent.

Economic growth and targeted investments

Lastly, Latino workers are ready and willing to work and pull themselves out of poverty. The economy just needs to grow again to create jobs.

Targeted investments to stimulate job creation in low-income communities are still needed. And job training and education must be effectively tailored and delivered through groups that know how to serve particular communities such as foreign-born Latinos, many of whom need basic education and English instruction integrated with job training to improve their earning potential.

Despite their high unemployment and poverty, in a July 2009 poll conducted by the Allstate/National Journal Heartland Monitor, Hispanics were more likely than any other group of Americans to believe that increased opportunity comes from personal effort. Fifty-five percent of Latinos agreed with this statement compared to 40 percent of all poll respondents. It’s time to give them and their children the chance to realize that opportunity.

See the full report at the HS News Library

Leticia Miranda is the associate director of the Economic and Employment Policy Project at the National Council of La Raza. Melissa Boteach is the Half in Ten Campaign Manager and Katie Wright is the Half in Ten Special Assistant at the Center for American Progress Action Fund.
“This article was created by the Center for American Progress Action Fund