Thursday, March 31, 2016

Child Care Assistance That Meets the Needs of All Poor Working Families

Angela Rachidi, American Enterprise Institute Angela Rachidi, American Enterprise Institute, posted on 

In the United States, the safety net for poor families is largely conditioned on work. This makes child care critical. Research shows that more child care assistance would benefit poor families by increasing maternal employment and reducing economic hardship. But even if government spending were increased, the current system of child care subsidies may not serve all poor families well, especially those who work outside of normal business hours (“nonstandard schedules”).
A dialogue about the best way to deliver child care assistance to poor families is important. And while several reforms are possible, refundable child care tax credits may be most effective at targeting poor working families with more child care resources..
In order to work, poor families must find someone to care for their child at no cost (like a relative), find resources to pay for it, or forgo work altogether. Forgoing work is often not possible nor desirable. And finding stable, full-time child care at no cost can be difficult.
U.S. Census data shows that almost half of mothers with a child under five pay for child care. Yet, many poor families don’t get help. According to federal data, only 41 percent of poor children (with family income below poverty level) received child care assistance in FY 2011.
Currently, child care assistance for poor families involves subsidies paid directly to families, which they can use to partially pay for child care. Through the Child Care Development Fund (CCDF), the federal government provides block grants to states. States combine federal dollars with their own money to administer assistance. In FY 2014, state and federal child care funding totaled $8.4 billion and covered 1.4 million children in the average month. A child care tax credit is also available to working families, but because it is not provided unless income taxes are owed, poor families do not benefit from it.
One problem with the current system is how it serves workers with nonstandard schedules, which make up a sizeable portion of poor workers. According to research by Maria Enchautegui and colleagues at the Urban Institute, almost one-third of working mothers in poverty work a nonstandard schedule. This can influence receipt of child care assistance. In a recent study, I found that those working nonstandard hours were less likely than those with standard hours to receive child care assistance; a relationship that was entirely due to less use of day care centers.
This finding was unsurprising since research shows that families who receive child care subsidies primarily use them at day care centers (72 percent of CCDF children received care in a center in FY 2014). And nonstandard hour workers are less likely to use day care centers because centers typically don’t operate outside of normal business hours.
Higher use of day care centers among CCDF families might simply reflect the fact that subsidies make centers more affordable. But state implementation may also play a role. Informal providers that offer flexible care (such as babysitters, friends, and neighbors) may find it difficult to accept subsidies due to regulations, and some states may not allow subsidies for informal care at all.
Several ideas have been proposed to address this issue. One is to ensure that states license and regulate providers that offer care during nonstandard hours. CCDF reauthorization in 2014 encouraged states to do as much; a difficult task that the law does not require or hold states accountable for doing. And new health and safety requirements included in reauthorization may have the unintended consequence of actually making it harder for informal providers to offer subsidized care.
Another potential solution is to legislatively mandate that employers use fair scheduling practices as a way to help workers with child care arrangements, such as offering more predictable hours and flexible schedules. It’s difficult to imagine what this might look like in practice, and it runs the risk of employers discriminating against hiring women. And even if implemented, it’s unclear whether fair scheduling would help nonstandard hour workers gain more access to child care assistance, since they would still need off-hour care.
Instead, we may need to recognize that not all families can be served well by CCDF. CCDF may be better suited to provide quality, subsidized care for children at a day care center. For poor workers (including many nonstandard hour workers) who find that day care centers don’t meet their needs, expanding and making refundable the child and dependent care tax credit, for example, may offer a better alternative.
Given that the social safety net in America is primarily built on work, child care for poor families is critical. Finding ways to provide more child care assistance targeted at poor working families, such as a refundable tax credit, is equally essential.
Angela Rachidi is a research fellow in poverty studies at the American Enterprise Institute.
 The views expressed in this commentary are those of the author or authors alone, and not those of SpotlightSpotlight is a non-partisan initiative, and Spotlight’s commentary section includes diverse perspectives on poverty. If you have a question about a commentary, please don’t hesitate to contact us at commentary@spotlightonpoverty.org.
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Tuesday, March 22, 2016

From CFED: The CFPB Released a Plan to Regulate Predatory Lenders a Year Ago, but Consumers are Still Waiting for Action

By Emanuel Nieves on 03/21/2016 @ 11:00 AM

Predatory lending strips wealth from low-income households and can trap borrowers in a crushing cycle of debt. So exactly one year ago this Saturday, the Consumer Financial Protection Bureau (CFPB) released an outline of proposals to regulate payday and other forms of small-dollar lending. But so far, the Bureau has failed to take action to turn this outline into an actual rule — and consumers have been paying the price. In fact, since last March, consumers of predatory payday and auto-title loans have lost over $8 billion of their hard-earned money — enough to pay off the credit card debt of over a half a million American households.
Given the amount of wealth stripped from consumers in just one year, why hasn’t the CFPB promulgated rules that would end the debt trap perpetuated by small-dollar lending? The answer to that question, along with when the CFPB will eventually release their rules, is a bit of a guessing game at this point. But one of the biggest factors responsible for the Bureau’s delay has been the continuous and intense pushback it has received from the payday lending industry. Unfortunately, Congress now wants make the delay even longer by putting forth legislation to block the CFPB from protecting consumers against payday lending.
While attacks on the Bureau by the industry and members of Congress is nothing new, what is new — and even more surprising — is that attacks to delay the CFPB’s work to regulate payday lending are now coming from members you’d least expect, such as Rep. Debbie Wasserman Schultz (D-FL), Chair of the Democratic National Committee.
Consumers of payday and auto-title loans deserve the strongest of federal protections possible — now. At the very least, consumers of these predatory products, like Florida residents M. Figueroa and James, who took out payday loans to cover unexpected financial emergencies only to find themselves stuck in a cycle of debt, deserve to have their voices and experiences heard.
The efforts being led Rep. Wasserman Schultz, who is joined by Rep. Alcee Hastings (D-FL) and ten other members of Florida’s congressional delegation, have focused on H.R. 4018, the Consumer Protection and Choice Act. Although the bill’s title indicates otherwise, H.R. 4018 does not take the consumer voice or the harm caused by predatory lending into consideration. Instead, it considers the voice and concerns of an industry intent on undercutting the CFPB’s ability to protect consumers, so it can continue to thrive while placing vulnerable borrowers in a near endless cycle of financial insecurity.
H.R. 4018 would cause severe harm to consumers of small-dollar loans in Florida and nationwide. The bill would place a two-year hold on the CFPB’s ability to protect consumers against predatory payday lending, while also exempting from federal regulation any state that adopts Florida’s payday debt trap model, which according to the Center for Responsible Lending strips $312 million in fees from financially vulnerable Floridians each year.
Vocal opponents of the CFPB’s work to regulate the payday lending industry have long argued that the Bureau’s efforts threaten to eliminate much-needed credit in a number of underserved communities. Given the current state of financial insecurity in American households, we agree that having access to short-term credit is important, especially in underserved communities. But we don’t believe that that access should come in the form of a toxic financial product (as Rep. Maxine Waters (D-CA) recently said at a payday hearing), that allows lenders to charge consumers as much as 1,955% APR in interest for a loan that will likely lead them to being in debt for almost half a year.

Consumers have waited long enough for the CFPB to act, and they’ve lost billions of dollars in the process. Consumers need federal protections now — not another two years down the road. They need strong regulations that take into account a consumer’s ability repay and greatly limit the ability of lenders (including online lenders) to continue skirting state consumer protection laws. Congress should let the CFPB finish the job it started to end the payday debt trap.

Friday, March 4, 2016

Report: Income Inequality Keeps Some in ND from Getting Ahead

Public News Service - ND | February 2016 | Download audio

A new report shows North Dakota leads the country with some anti-poverty policies, but is among the states where income inequality is the highest. (iStockphoto)

A new report shows North Dakota leads the country with some anti-poverty policies, but is among the states where income inequality is the highest. (iStockphoto)
February 29, 2016
BISMARCK, N.D. – State lawmakers have made progress in recent years, but could do more to help North Dakotans living in poverty, according to a new state by state report from the Center for American Progress.

The center says North Dakota has the lowest unemployment rate in the country, but the report’s lead author Rachel West says the state also has the fourth-highest gender wage gap.

To help women in the workforce, West, who is associate director of the center’s Poverty to Prosperity Program, suggests North Dakota could join states such as Rhode Island by setting up a paid family-leave program.

"Since they are disproportionately caregivers and disproportionately they tend to work part-time, policies like paid sick and family leave could really go a long way to benefit working women in North Dakota, who seem to be having a really hard time," she explains.

The report says positives for North Dakota include the state having the lowest rate of people living with food insecurity in 2014, and a good supply of affordable housing for low-income families.

Still, the state struggles with income inequality at levels higher than the national average. West says North Dakota lawmakers could help close that gap by enacting more protections for low-income residents, who sometimes rely on high-interest payday loans to make ends meet.

"Making sure that there's affordable credit available to families who fall on hard times,” she explains. “Making sure that the rest of the safety net and social insurance systems step in, so that families don't have to turn to these high-cost predatory loans."

The report lists other suggestions for reducing poverty in North Dakota, including raising wages for low-paid workers.
Brandon Campbell, Public News Service - ND
- See more at: http://www.publicnewsservice.org/2016-02-29/budget-policy-and-priorities/report-income-inequality-keeps-some-in-nd-from-getting-ahead/a50593-1#sthash.ZRuTUBDi.dpuf