October 26, 2016

Anti-Poverty Programs Help Alleviate Costs, But More Must Be Done to Reduce Burdens

It is welcome news that the poverty rate in North Carolina declined from 17.2 percent in 2014 to 16.4 percent in 2015 and declined nationally from 15.5 percent in 2014 to 14.7 percent in 2015. Sustained economic gains, strengthened by federal and state policies that increase income or reduce expenses, have finally begun to reach our low-income neighbors. North Carolina now ranks 12th in terms of highest poverty rate in the nation.

The decline in poverty is good news, and with job growth continuing, we ought to be able to take steps to accelerate the pace of poverty reduction. But the precarious situation for the poor and near poor stands in the way of substantial progress. The fact is, it is expensive to be poor in the United States. New data released in September by the Census Bureau show that 1.6 million adults and children remain in poverty in North Carolina – and they need to pay every dime they have for necessities like rent, child care, and groceries. They pay a premium for rent and food because of bad credit and inability to get to cheaper markets. Getting less value for their limited dollars, poor families are exposed to threats to health, child development, and employment. When expenses exceed income, late fees and fines make matters worse. For too many low-income Americans fall prey to predatory lenders taking advantage of these dynamics placing desperate and unsuspecting borrowers in repeated loans as borrowers  desperately attempt to stave off eviction or loss of a vehicle, leading instead to a trap of debt and poverty. Time and time again borrowers realize too late that these loans only make financial problems worse and leave borrowers with insurmountable debt burdens. While North Carolina has restrictions against predatory payday lending, and car title lending we must ensure these protections are not weakened, putting more North Carolinians at risk. We also must clamp down on the predatory practices in the consumer finance industry that also traps borrowers in repeat lending transactions while attaching fees and high cost insurance products to many loans.

The new Census Bureau data also show that effective anti-poverty programs, like housing assistance, child care subsidies, and the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) lift millions out of poverty and reduce the cost of poverty for millions more. But more needs to be done to reduce the burden of poverty even further, and for more North Carolinians living in and near poverty every day.