June 25, 2009
PEOPLE OFTEN talk about “a culture of poverty” as if being mired in dependency and despair is a personal choice. But what if government contributes to that culture with counterproductive rules that keep struggling families down? Today, a special state commission will release a report that identifies bureaucratic barriers to climbing out of poverty – some familiar, some new – and recommends ways to correct them.
The Massachusetts Asset Development Commission spent the past 18 months looking for ways that low-income people can build up financial cushions, becoming less dependent on state assistance and providing a better foundation for their children. “Assets” can be something as simple as a used car for getting to work, a savings account, or a less tangible benefit such as an education or vocational skills. They are the keys to financial stability.
Senator Jamie Eldridge, an Acton Democrat and co-chairman of the commission, says that up to 43 percent of the state’s population is considered “asset-poor” – they are less than three months away from being unable to maintain their households if they were to lose their job or income. These aren’t just people on welfare; many work in service jobs or as office clerks, but they still need support from programs such as food stamps, subsidized day care, or one of the new state-sponsored health insurance plans to help them keep their heads above water.
Unfortunately, these programs can include perverse disincentives to getting better-paid employment or building assets. For example, a parent cannot keep more than $2,500, own even a clunker car, open a college savings plan for the kids, or keep more than $50 in child support per month and still be eligible for most state assistance. Eldridge has filed legislation to adjust some of those limits upwards.
The commission report identifies a “cliff effect” whereby working people reach a wage threshold and are precipitously cut off from benefits. These people are working hard at difficult jobs; they shouldn’t have to choose between reaching for a better life and losing support programs that make working possible.
The current fiscal crisis has removed other pillars of support for low-income residents. A pilot program that matched a working family’s savings in individual development accounts was zeroed out of the new state budget. Many programs that accept applicants if they earn 130 percent of the federal poverty line – just $18,310 for a single mother with two children, unreasonably low for a state like Massachusetts – now cap eligibility at 115 percent.
The state ought to help people climb out of poverty, not keep them cycling through.