North Carolina’s incredible shrinking safety net

Deborah Bryan Action for Children NC

August 24, 2013

Since the Great Depression, the United States has maintained a system of supports to help low-income families, seniors, children, and people with disabilities make ends meet and obtain health care. These supports reduce poverty, supplement wages for low-income working families, and enable millions of Americans to receive health care who otherwise could not afford it.

It is no coincidence that the earliest safety net programs were created during a period of extreme economic hardship. At the height of the depression, one in every four American workers was unemployed and poverty, malnutrition and housing instability were widespread. As he signed landmark safety net legislation into law, President Franklin Roosevelt remarked that the newly created structure would ensure a measure of protection against job loss and economic uncertainty for citizens and “…provide the United States an economic structure of vastly greater soundness.”

In 2011, public programs kept an estimated 40 million Americans-9 million of whom were children-from falling into poverty. The powerful antipoverty effect of public programs is significant: research shows children in impoverished homes are more likely to experience severe, toxic stress that disrupts the architecture of their developing brains, sabotages health outcomes and hinders success in school.

When it comes to improving the well-being of children in poverty, research is clear about what works. Programs that bolster the financial resources of low-income families, like the Earned Income Tax Credit (EITC) and Supplemental Nutrition Assistance (SNAP), have been shown to create gains in educational attainment and test scores - outcomes which, in turn, are associated with higher earnings and employment during adulthood. For children living in poor households, each $3,000 in annual family income during their early childhood years is associated with an added 135 hours of annual work as young adults and additional 17 percent in future annual earnings. And yet, child and family programs continue to sustain deep cuts at the state and federal levels. In North Carolina:

Changes to the state’s unemployment insurance system have reduced the size and duration of benefits and resulted in the loss of federal emergency benefits for more than 70,000 long-term unemployed North Carolinians. In 2012, an estimated one in ten children in North Carolina had an out-of-work parent; 58 percent of those children lived in households with a parent who had been unemployed for six months or longer. Today, North Carolina has the third highest unemployment rate in the country.

The 2013-15 state budget drains $500 million from public education and will result in no raises for teachers, larger class sizes, fewer teacher assistants, and little support for instructional supplies or professional development.

The final tax reform package reduces the state EITC rate from 5 percent to 4.5 percent and allows the credit to expire at the end of this year. The EITC is widely recognized as one of the most effective ways to fight poverty, especially among children. This credit helps working families afford basic necessities while pumping dollars into local economies. In 2012, nearly 907,000 low-wage North Carolina taxpayers claimed the credit.

This winter, automatic benefits cuts for all SNAP recipients are scheduled to take effect in November thanks to the expiration of a benefit increase from the 2009 stimulus bill. An average household of three will see their monthly food stamp benefits reduce by $29, more than $300 per year. The Supplemental Nutrition Assistance Program is the nation’s first line of defense against hunger and malnutrition. In 2012, 1.7 million North Carolinians received food stamp benefits.

North Carolina needs a strong safety net to help protect the well-being of its children and youth. Now as the state struggles to recover from the worst economic downturn since the Great Depression, it is imperative that our policymakers work to improve our future by strengthening the safety net for families astride the poverty line, instead of working to dismantle it.

Deborah Bryan is the Executive Director of Action for Children North Carolina.