Why is NJ’s Poverty Rate So High? And What Can Be Done to Lower It?

Meir Rinde | January 28, 2016 | More Issues, Politics, Social
Legislative hearings address ineffective state programs and millions of Garden State residents who can’t, or barely, make ends meet

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Insufficient funding or poor management of state programs in seemingly disparate areas — including welfare, job training, aid for the disabled, food stamps, child care, affordable housing, and mass transit — has allowed high levels of poverty to persist in New Jersey and stymied families’ efforts improve their lives, legislators and advocates said yesterday.

The state’s stubbornly high poverty rate – officially at 11 percent, but considerably higher in practical terms — and the status of programs that could help lower that rate were the topics of four Assembly committee hearings held Wednesday at the request of Assembly Speaker Vincent Prieto, who launched an anti-poverty policy initiative last week.

“It’s incredible to think that the state of New Jersey has higher poverty than it has had in the last 50 years. It’s 40 percent greater than before the recession of 2008,” Prieto (D-Hudson) said at a Human Services Committee hearing. “When you start thinking about a living wage — we have 2.8 million residents who are below that line, 800,000 children. We can’t just have the status quo. We need to do something.”

The official poverty rate is 11 percent, but many more families do not meet the state Department of Human Services’ own “standard of need” guidelines, which estimate actual living costs, according to the Ewing-based Anti-Poverty Network of NJ (APN).

Using a “true poverty” measurement based on 200 percent of the poverty line, the organization said 1 in 5 residents are facing economic struggles relative to the state’s high cost of living.

A family of three is at the federal poverty line with a monthly income of $1,589. The DHS standard is $2,800, and APN’s “true poverty” figure is $3,179.

Poverty has actually gotten worse during the recovery from the economic recession, an occurrence described as “unprecedented” by Ray Castro, senior policy analyst at New Jersey Policy Perspective.

“It’s pretty clear we can’t rely on the economy to get us out of this problem,” he said.

Advocates pointed to several state programs they called inadequate, most of them because of underfunding.

For example, the state’s basic cash assistance program, Temporary Assistance for Needy Families, has not seen the size of its grants increase since 1989, despite inflation, said APN executive director Serena Rice.

“The grant levels are so ridiculously low that life has to be about daily survival, not building toward the future,” she told the Human Services Committee.

Rice said WorkFirst NJ, the state’s welfare-to-work program, is also inadequate, with most participants placed in low-cost programs that provide minimal work experience and do not help people get jobs.

She criticized a policy change that put time limits on the state’s Emergency Assistance program, even for people who are disabled or deemed unemployable, which in some case has driven them into homelessness.

Senate President Stephen Sweeney (D-Gloucester) will hold a press conference this morning with representatives of the Anti-Poverty Network and several other groups to announce a homelessness prevention initiative. Details were not announced, but it is apparently related to the Emergency Assistance program. Advocates are pushing for legislation creating exemptions from the limits.

At the hearing, Rice and Castro also criticized policy decisions that affected residents in the Supplemental Nutrition Assistance Program (SNAP), which provides food stamps. In 2014, the Christie administration declined to provide funding that would have brought additional federal Heat and Eat program funds, reducing benefits for some 150,000 households.

And, last month, the administration declined to apply for waivers on benefit time limits, which were designed to require people to find employment.

“The federal government recognizes that this design only works in labor markets where people can actually find jobs,” Rice said. “In the majority of New Jersey counties the unemployment rate remains above the threshold that allows states to request waivers from the time limit. Unfortunately, the current administration decided not to seek such waivers.”

The Senate’s legislative oversight committee is scheduled to meet this morning to discuss the impact of the SNAP waiver decision and the Heat and Eat funding cut on anti-hunger efforts.

The Christie administration has not commented on Prieto’s anti-poverty agenda, but some Republican legislators offered pushback yesterday, saying more spending is not the solution.

A transportation committee hearing meant to focus on the importance of mass transit turned into a philosophical debate over both NJ Transit’s funding and a proposed increase in the minimum wage, which advocates say would play an important role in reducing poverty.

Working Families director Analilia Mejia said poor commuters have been the only group to see tax increases in recent years, in the form of a 22 percent transit fare hike in 2010 and another 9 percent increase last year.

The state has sharply reduced its main subsidy to NJ Transit even as it has been spending billions in the form of corporate tax incentives, she said.

“What we’re doing, in effect, is taxing New Jersey’s working poor to pay for additional tax incentives for the wealthy and well-connected in our state,” she said.

Assemblyman Scott Rumana (R-Passaic) responded that total state funding for mass transit is at nearly its highest level ever, when diversions from the NJ Turnpike Authority and Clean Energy Fund are included. Public transportation systems elsewhere depend even more on fare revenues, he said.

Rather than boost subsidies, or assist the poor through measures like a higher minimum wage, the state needs to make NJ Transit more efficient and focus on reducing the cost of living generally, he said.

“The alternative view is to try to find a way to bring the cost of living down so that it is an affordable state to live in. It’s the most overtaxed state on just about every single level,” he said. “It doesn’t stop there. The cost of everything is high in New Jersey. Food is high, transportation is high, fees, everything you pay for is high. (Bringing down those costs) helps everybody across the entire economic spectrum, most importantly those people on the lower end and in the middle.”

The high cost of housing was another focus of the day’s discussions. New Jersey is the fifth-most-expensive state in which to rent a two-bedroom apartment, at $1,309 a month, Housing and Community Network president Staci Berger told the Assembly housing committee. If housing is supposed to consume no more than 30 percent of income, that means a family must earn $52,347 a year to afford such an apartment — an impossible task for someone working at the minimum or even average wage, she said.

Yet efforts to create more affordable, safe housing have flagged, Berger said. Funds have been diverted from the Affordable Housing Trust Fund to the State Rental Assistance Program, which she likened to “stealing from Peter to pay Paul.” Many families end up buying houses they can barely afford, leading to foreclosures.

The Vineland area has the nation’s highest foreclosure rate, following by Atlantic City, which has been devastated by casino closures, she said.

“The housing affordability and foreclosure crisis is the albatross around the neck of our economic recovery,” Berger said. “Our housing market is like a food market that only regularly offers filet mignon and caviar; we need Hamburger Helper and tuna fish, too.”

Insufficient state funding has made it difficult to finance new affordable-housing projects, especially for the very poorest residents, said Christiana Foglio, an affordable housing developer who was previously chair of the Council on Affordable Housing and director of the NJ Housing and Mortgage Finance Agency. Funding programs have become less focused on helping the urban poor, she said.

Berger urged lawmakers to push for passage of legislation that could improve the housing situation for low-income individuals. She cited bills to create a fund to support neighborhood stabilization and foreclosure prevention, to promote foreclosure mediation and counselor certification, and to standardize Code Blue procedures for sheltering homeless people during extreme cold.

Also holding a hearing yesterday was the Assembly’s Women and Children Committee, which heard testimony about child poverty and the need for greater investments in childcare and preschool, along with other social services.

[related]Three doctors from the American Academy of Pediatrics of New Jersey outlined the dire prospects for children who grow up very poor, including higher rates of participation in special education, lower college attendance rates, and much higher rates of arrests for violent crimes, teenage pregnancy, unemployment and lifelong poverty.

They said universal pre-K, like an expansion of New Jersey’s Abbott preschools, could provide poor kids with an important boost, but assistance must begin much earlier — from conception — if children are to have a fighting chance at overcoming their difficult environments and doing well in school and life.

“It is too late by the time the child gets to school to intervene,” said Alan Weller, vice president-elect of AAPNJ. “We know that (learning) gaps at 12 years are present upon school entry. We have to start at the very beginning.”

He argued for a higher minimum wage, saying it would allow parents to spend less time working and more time with their children, as well as high-quality childcare, school nutrition programs, and efforts to make sure that children not only have medical coverage but actually receive medical, mental health, dental and vision care.

The chart of Housing Cost Burden by Income Group is courtesy of the National Low Income Housing Coalition (NLIHC.org).