Report Finds that Recovery Act Effectively Combated Poverty

Thursday, April 26, 2012 at 10:08 PM by

IRP Research Shows Antipoverty Programs Reduced Unofficial Poverty Rate in Wisconsin in 2010 

A report released Wednesday by the Institute for Research on Poverty (IRP) at UW Madison examines the effects of the antipoverty programs on the poverty rate in Wisconsin.  Not surprisingly, the official measure of poverty shows an increase in Wisconsin between 2009 and 2010.   However, the IRP’s alternative gauge of poverty (the “Wisconsin Poverty Measure” or WPM) showed a decrease in the poverty from 11.1% to 10.3%.

Whereas the official poverty measure is based just on pre-tax cash income, the WPM uses a broader lens that also examines taxes, tax credits, and “near cash” income such as food stamps. Last year the IRP concluded that from 2008 to 2009 the alternative poverty measure was flat in Wisconsin, because the drop in families’ income was offset by tax credits and food assistance benefits, which were enhanced that year by the federal Recovery Act. During the following year, the WPM reveals that those enhanced federal benefits more than offset the loss of wages for low-income families – yielding “an unexpected drop in the number of individuals and families living in poverty in 2010.”

The IRP found that the alternative measure shows an even larger drop in Wisconsin’s child poverty rate in 2010. According to the WPM, the poverty rate among kids dropped to 10.8% in 2010, compared to 12.2 percent a year earlier.

The report says that the long-term solution to poverty continues to be “a secure job that pays well.” However, it adds that “in times of need, a safety net that enhances low earnings for families with children, puts food on the table, and encourages self-reliance – as Wisconsin’s safety net does – makes a big difference in combating market-driven poverty.”

They could have added that an effective safety net also provides counter-cyclical spending that aids the economic recovery and avoids the sort of drop back into recession that is being experienced in a number of European countries that are trying to cut their way back to prosperity.

Read more in the IRP’s fourth annual Wisconsin Poverty Report: How the Safety Net Protected Families from Poverty in 2010.

Jon Peacock

Categories: Blog, food stamps, poverty, Recovery Act, refundable tax credits | Comments Off on Report Finds that Recovery Act Effectively Combated Poverty

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