Chairman Barry and other members of the Committee, thank you for the opportunity to speak today. My name is Ed Lazere, and I am the executive director of the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on policies that affect low? and moderate?income residents.
Nearly one in five DC residents lives in poverty, and the District’s current poverty rate is the highest level in nearly a decade. Despite the overall improvements in the city’s economy, there are 27,000 more poor residents today than in 2000. These and related findings were included in an October 2006 report from the DC Fiscal Policy Institute, which I have attached to my testimony.
These findings are powerful indications that an improving economy is not enough to reduce poverty in the District of Columbia and that concerted policy steps are needed to help more families and individuals benefit from the strong DC economy. Indeed, DCFPI’s research suggests that the rise in poverty may be due in part to massive disinvestment in the city’s safety net in the 1990s. In the wake of the collapse of District’s finances, funding was eliminated for career education in DC high schools. Local funding for affordable housing and job training virtually disappeared, while funding for substance treatment was cut in half. Emergency rental assistance was eliminated and cash assistance benefits for low-income families with children were cut frozen for 15 years. Funding in many areas has increased in recent years, but the increases do not all make up for years of decline.
My comments include some broad suggestions but also more specific recommendations that I believe can be implemented in the near future.
- Get the Poverty Commission Going: Legislation to create this commission was adopted in mid-2006, yet only a handful of nominees have been announced, and just recently. Just as the 2006 Comprehensive Housing Strategy Task Force Report established a blueprint for improving the supply of affordable housing that the city is now working to implement, the Poverty Commission report holds great promise for creating an anti-poverty action agenda. Given the delays in putting the Commission together, it will need more time than its December 31, 2008 deadline to complete its work.
- Adopt a Poverty Reduction Target: Without pre-supposing what the Poverty Commission will do, the District should adopt a goal of reducing poverty by a specified amount over a specific time period, as several states and some other countries have done. The district could commit, for example, to reducing poverty by 25 percent over five years. Setting a vision can provide inspiration and help focus policy efforts, as well as establishing a mechanism to hold elected officials accountable.
- Make poverty reduction an ongoing concern of the DC Council: We should not stop with one hearing. As it has done with education, the DC Council should create a committee to focus on poverty composed of all Council members. Because poverty issues affect many standing committees, the committee would not have direct oversight over any DC agency.
Beyond these actions, there are a number of specific steps the District can take to reduce poverty.
Increasing the Take-home Pay of our Lowest-earning Residents
Since 1979, hourly earnings for low-wage working DC residents have risen just six percent, after adjusting for inflation. These low-wage workers (the bottom 20 percent of earners) have hourly pay of $10.81 or less. Even with a full-time job, this is barely enough to lift a family of four out of poverty. Some options to help low-wage workers make ends meet include the following.
Passing Paid Sick and Safe Leave Legislation: An immediate issue before the DC Council is the Accrued Sick and Safe Leave Act, which would require all businesses in the city to give workers a minimal amount of paid leave to address illness or situations of domestic violence. While a great deal of attention has been paid to the cost to business of providing such a benefit, there has been little discussion of the costs to the 50 percent of private — sector workers who now have no paid sick leave. These mostly low-wage earners face a loss from their already-limited income ‘ and risk losing their jobs ‘ when they take time to care for themselves or a sick child. The high turnover in low-wage work results in part from the lack of paid leave. This contributes to financial instability and poverty among DC families.
Fully Implementing DC’s Living Wage Requirement: In 2006, the District adopted a Living Wage requirement, under which businesses operating under city contracts and businesses getting economic development subsidies are required to pay covered workers at least $11.75 an hour. Yet there are indications that the Living Wage is not being implemented fully, especially among social service providers that have not received grant or contract increases needed to pay workers the living wage. And there appears to be little interest or incentive among the office of the Mayor and the DC Council to provide adequate funding to implement the Living Wage because it is perceived as an added cost that doesn’t expand services.
The purpose of living wage laws, in DC and jurisdictions across the nation, is to ensure that government contracts and economic development efforts do not contribute to poverty-level jobs. While this may increase government expenses in some cases, it has the benefit of helping families become more financially stable and self-sufficient.
Eliminating Taxes on Working Poor Families: The District’s Chief Financial Officer has found that taxes on a DC family earning $25,000 are the highest in the Washington region. The goal of the District’s tax policy should be that families that earn too little to make ends meet should not pay any income taxes. There at least two steps the District can take to reduce taxes for low-income families. The first is to raise the point at which families start owing income tax by raising the standard deduction and personal exemption. The second is to update and improve DC’s low-income property tax relief credit, known as Schedule H. The credit is available to both renters and homeowners because renters pay property taxes indirectly through their rent. The $20,000 income eligibility threshold for Schedule H has not been changed for 30 years, and the program suffers from cumbersome rules that result in only a small number of families actually receiving it.
Literacy and Job Skills Training
Limited job skills result in low wages for many working DC residents. As many as one-third of DC adults have limited literacy skills, yet District spends only a small amount on literacy services, serving only a small fraction of the need, and these services are not well connected to further job skills training. Moreover, a 2006 report from the Brookings Institution identified as many as 61,000 DC residents that could benefit from education, training, and work readiness services. Brookings Institution has developed a number of recommendations on workforce development, including funding recommendations developed with DCFPI for the FY 2009 budget that would expand successful programs for residents with limited job skills.
Stabilizing DC’s Most Vulnerable Families:
Some 110,000 District residents live below the poverty line, which is about $17,000 for a family of three. While it is hard to imagine how any family in DC could survive on an income this low, there are in fact many families with incomes well below this level. These families are the least stable and most likely to experience homelessness, poor physical and mental health, low educational achievement, and child neglect. A focus on DC families in extreme poverty is warranted, including the following:
Raising TANF Cash Assistance Levels. The maximum TANF grant for a family of three is $427 a month, less than one-third the poverty line. This low level, reflecting frozen benefit levels from 1991 to 2006, almost guarantees family instability. Recent increases in TANF benefits are laudable but inadequate. The District should aim to bring TANF levels closer in line with other states where costs of living are high, including Maryland, California, Massachusetts, and New York. At a minimum, we recommend raising grants to match Maryland’s ($565 a month for a family of three) over the next two years
Emergency Rental Assistance: This kind of assistance can prevent evictions and homelessness. The District eliminated its emergency assistance program in the 1990s and then re-established it in 2007. The current funding of $8 million remains well below historical level and the level recommended by the Comprehensive Housing Strategy Task Force ($20 million).
Other Supports: Substance abuse treatment, mental health services, and home visiting programs play a critical role in helping vulnerable families. Yet these services are either underfunded, face significant management challenges, or both
Affordable Housing
The District has suffered from a tremendous loss of affordable housing in recent years. More than 41,000 low-income households pay at least half of their income just to stay housed, leaving them vulnerable to any short-term disruption in income. Given the very high costs of housing, even lifting every family out of poverty would not guarantee that they could find affordable housing. Greatly expanding the stock of affordable housing thus is critical to helping low-income families in District make ends meet. The DC Fiscal Policy Institute applauds the commitment of Mayor Fenty to fund the recommendations of the Comprehensive Housing Strategy Task Force. This will result in a substantial expansion of affordable housing in the city. Given continuing market forces and the large number of low-income families facing housing burdens, however, even this aggressive action will fail to fully address the District’s low-income housing needs.
Suggestion for Pilot Anti-Poverty Program
It is clear to all that the causes and impacts of poverty are numerous and that simply expanding isolates services may not help meet all that a family might need to leave poverty. An increase in funding for job training, for example, may not help a family where a parent has a substance abuse problem or a child has disabilities that are not addressed.
I would like to suggest that the District create a pilot program in the FY 2009 budget that would target one or more low-income communities and develop a comprehensive set of services to help residents address all of their barriers to economic advancement. It is likely such a pilot would have to built on a case management foundation, under which case managers would assess the full range of needs of individuals in each family and would be empowered to help the families receive the needed services. Such a pilot also would require substantial community input on the systemic needs of the community ‘ on the kinds of services needed community-wide to help residents become stable and economically self sufficient
Thanks again for the opportunity to testify. I am happy to answer any questions you have.