Lower-Income Working Families in the Post-Welfare World – Lessons for Higher Ed

Caring for students will not guarantee success. Ongoing critical attention to students’ histories, experiences and values is essential for institutional effectiveness in higher education. For those of us who work at open access institutions, this means special awareness and sensitivity to issues of money, poverty, and agency. It's Not Like I'm Poor

According to the federal government, a working family of four earning $25,000 a year is above the poverty line (recent guidelines require income under $24,250). With or without that formal designation, such a family’s circumstances are straitened. Rent, food, and transportation to work eats up most income, leaving little or no discretionary money. The family has scant savings and an emergency could have catastrophic consequences. Cash flow is a constant problem. Life for low-income families in our post-welfare world can look like poverty.

The lives of these working families are the focus of It’s Not Like I’m Poor: How Working Families Make Ends Meet in a Post-Welfare World. It is an informative book, authored by four academics: Sarah Halpern-Meekin, Kathryn Edin, Laura Tach, and Jennifer Sykes. I recommend it to anyone interested in public policy and I think that it will resonate with professionals who work in community colleges. The people profiled in It’s Not Like I’m Poor are many of our community college students and their families. The book offers valuable insight into their lives, finances, and economic decision-making. It sheds light on how these families think of themselves and their circumstances.

In-depth studies of more than 115 low-income families from East Boston, Massachusetts, are at the heart of the book. The researchers interviewed families and tracked their finances over time. They witnessed problem-solving, juggling, and a consistent commitment to prudent spending. There was little evidence of wasteful or reckless consumption. The authors were consistently impressed with how creative and effective the families were with their finances. In all, the families handled their money just as middle class families do – only they had much less of it.

It’s Not Like I’m Poor makes clear that having less today is different from it was twenty years ago. Welfare reform took hold in 1996 under President Clinton with the Personal Responsibility and Work Opportunity Reconciliation Act. The law replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF). These were cornerstones of the Republican Party’s Contract with America. Harvard economist David Ellwood, an expert on welfare, recommended in his 1988 book Poor Support that policy makers strive to align policies with American values. Ellwood championed the notion that working full-time should be a guarantee against poverty, a proposition that most Americans endorse. Ellwood, appointed Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services (HHS) in 1993 in the Clinton administration, developed and promoted the EITC, or Earned Income Tax Credit. It was very popular. The left and the right supported EITC. It has become one of the most important parts of the broader welfare reform effort.

Individuals qualify for the EITC experience a markedly different income tax season from other Americans. They look forward to filing and the tax credit, received as cash, is anticipated as a critical part of a financial plan. The money, which for most members of the study was between $1,000 – $5,000, is used to pay down debt, to upgrade their car or home, or for education. The money is often tied to an aspiration or goal. The importance of the credit cannot be overestimated, both as income and as a touchstone to middle class values and mindset. Tellingly, the book’s title is a quote from one of the Boston subjects.

A feature of the EITC is that up to particular levels, depending upon the number of dependents and other factors, the rebate increases as income increases. This strengthens the sense that recipients have earned their credit. They see it just as policy makers and elected officials had hoped: a hand up, not a hand out.

Determining the final tax credit is accurately is challenging. In fact, most will not know until they file. As the authors discovered, working families hire professional assistance just as middle class or professionals do. The East Boston H&R Block office caters to the EITC clientele, providing professional services in a white-collar environment. H&R Block employees situate themselves as advocates and consultants. The authors emphasize that even though H&R Block costs more than filing on their own, using the firm makes sense for the working families. It is more evidence of traditional middle class values and actions extending across income levels.

Higher education can take several lessons from It Is Not As Though I’m Poor. Colleges traditionally demands payment at the start of the fall and spring semesters. This is out of sync with the EITC credit disbursement. If we want more lower-income students to stay in college and succeed, bursar and business offices should be creative and display greater sensitivity to the EITC cash flow cycle. We need to think more carefully about how we message and structure programs. Students and their families may respond more favorably to professional support than to offers of aid. In fact, the very name “financial aid” may be problematic.

At a higher level, a  key takeaway from the book is that we must continue to explore the lives of our students. We have to keep listening and learning if we want to create educational environments that will help more students succeed.

David Potash

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