From The Urban Institute

WASHINGTON, D.C., June 30, 2010 — Already off to a tough start in life, 49 percent of American babies born into poor families will be poor for at least half their childhoods, a new Urban Institute study finds. Among children who are not poor at birth, only 4 percent will be “persistently” poor as children.

Fallout from persistent childhood poverty is evident during young adulthood, say Caroline Ratcliffe and Signe-Mary McKernan, the authors of “Childhood Poverty Persistence: Facts and Consequences,” the first study connecting poverty status at birth, poverty persistence, and adult outcomes. Those poor at birth are more likely to be poor between ages 25 and 30, drop out of high school, have a teen nonmarital birth, and have patchy employment records than those not poor at birth.

For instance, while 4 percent of individuals in nonpoor families at birth go on to spend at least half their early adult years in poverty, the share jumps to 21 percent for individuals born poor. The difference for blacks is 24 percentage points; for whites, it is almost zero.

In general, the longer a child is poor, the worse his or her adult outcomes. Only 1 percent of never-poor children spend half their early adult years living in poverty, compared with 32 percent of persistently poor children. The likelihood that an individual drops out of high school, has a teen nonmarital birth, or has a spotty work record generally increases with the number of years poor as a child.

An estimated 14.1 million Americans under age 18 are poor. Approximately 4.2 million children are born annually.
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“Because poverty status at birth is linked to worse adult outcomes, targeting resources to children born into poverty and their families would help particularly vulnerable people,” Ratcliffe and McKernan observe. They say education, training, and work supports (such as child care subsidies) for parents could brighten children’s prospects by providing needy families with economic security and stability. Other supports for parents, such as home-visiting programs, could help children by improving family functioning and the home environment.

Other Findings
*13 percent of all children (40 percent of black children and 8 percent of white children) are born poor.
*37 percent of children live in poverty for at least a year before reaching age 18.
*10 percent of children spend at least half their childhood years (9 years or longer) in poverty.
*Black children are 9 times more likely than white children to be poor for at least three-quarters of their childhoods — 18 percent versus 2 percent.
*69 percent of black children and 31 percent of white children who are poor at birth stay poor for least half their childhoods.

Childhood poverty rates, according to the U.S. Census Bureau, have ranged between 15 and 23 percent over the past four decades. In 2009, a family with two adults and two children was considered poor if its income was below $21,756.

About the Study
Ratcliffe and McKernan’s research on the circumstances of children from birth through age 30 uses 1968-2005 data from the University of Michigan’s Panel Study of Income Dynamics. The PSID sample includes people born between 1967 and 1974.

“Childhood Poverty Persistence: Facts and Consequences” is the latest publication from the Urban Institute’s Low-Income Working Families project, which is supported by The Annie E. Casey Foundation and The John D. and Catherine T. MacArthur Foundation.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation. It provides information, analyses, and perspectives to public and private decisionmakers to help them address these problems and strives to deepen citizens’ understanding of the issues and trade-offs that policymakers face.

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WASHINGTON – The number of first-time claims for unemployment benefits rose unexpectedly for the second straight week, a sign that jobs remain scarce even as other data show the economy is stabilizing.

The Labor Department said Thursday the number of new jobless claims rose to a seasonally adjusted 576,000 last week, from a revised figure of 561,000. Wall Street economists expected a drop to 550,000, according to a survey by Thomson Reuters.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies’ willingness to hire new workers.

The figures are volatile, and had been trending down, after remaining above 600,000 for most of this year. The new report indicates that the labor market is still weak. In a healthy economy, initial claims are usually around 325,000 or below.

The four-week average of initial claims, which smooths out fluctuations, rose for the second straight week to 570,000.

The number of people remaining on the benefit rolls dropped by 2,000 to 6.24 million. Analysts had expected a slight decline. The continuing claims figures lag initial claims by a week.

When federal emergency programs are included, the total number of jobless benefit recipients was 9.18 million in the week that ended Aug. 1, the most recent data available. That was down from 9.25 million in the previous week. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.

The large number of people remaining on the rolls is an indication that unemployed workers are having a hard time finding new jobs.

Still, layoffs have slowed recently. The department said earlier this month that companies cut 247,000 jobs in July, a large amount but still the smallest number in almost a year.

The unemployment rate dipped to 9.4 percent in July from 9.5 percent, its first drop in 15 months. But many private economists and the Federal Reserve think the rates could top 10 percent by next year.

The recession, which began in December 2007 and is the longest since World War II, has eliminated a net total of 6.7 million jobs.

More job cuts were announced this week. Bethesda, Md.-based defense contractor Lockheed Martin Corp. said it will eliminate about 800 jobs in its space systems division, and San Francisco-based video and audio conferencing company Polycom Inc. said it will cut 3 percent of its 2,600 person work force.

Among the states, Tennessee had the largest increase in claims with 2,525 for the week ended Aug. 8, which it attributed to more layoffs in the transportation equipment, industrial machinery, and rubber and plastics industries. The next largest increases were in North Carolina, Wisconsin, Georgia and Washington.

California reported the largest drop in claims of 5,635, which it attributed to fewer layoffs in the construction, trade and service industries. Michigan, Ohio, Kentucky and Delaware had the next largest decreases.

From NYTimes.com:

Unemployment among blacks in New York City has increased much faster than for whites, and the gap appears to be widening at an accelerating pace, new studies of jobless data have found.

While unemployment rose steadily for white New Yorkers from the first quarter of 2008 through the first three months of this year, the number of unemployed blacks in the city rose four times as fast, according to a report to be released on Monday by the city comptroller’s office. By the end of March, there were about 80,000 more unemployed blacks than whites, according to the report, even though there are roughly 1.5 million more whites than blacks here.

Click here for full story.

Fifteen months into a deep recession, college-educated white workers still had a relatively low unemployment rate of 3.8% in March of this year. The same could not be said for African Americans with four-year degrees. The March 2009 unemployment rate for college-educated blacks was 7.2%—almost twice as high as the white rate—and up 4.5 percentage points from March 2007, before the start of the current recession (see chart). Hispanics and Asian Americans with college degrees were in between, both with March 2009 unemployment rates of 5%.

Click here for the full report.

The economic downturn has forced private industry and state and local government to shed jobs, but one major employer in the country is hiring: The federal government.

While the nation’s 11 million unemployed and the millions more who fear losing their jobs may feel Washington should streamline too, economists say a strong federal work force is key to economic recovery. Were President Barack Obama to put any of the nearly 2 million federal civil servants out in the street in the middle of the worst economic downturn since the Great Depression, the consequences could be dire.

“Federal belt-tightening would worsen the problem right now,” said Kevin Hassett, director of economic policy studies at the American Enterprise Institute, a conservative think tank. “Most economists agree that the federal government is a built-in stabilizer,” said Hassett, a former adviser to GOP presidential campaigns.

Obama’s proposed $800-plus billion economic aid plan, which includes heavy spending on public works, is expected to increase the ranks of government workers, although mostly at the state and local level.

That measure is working its way through Congress just as Microsoft Corp., Pfizer, Caterpillar, Home Depot and scores of other companies are shedding workers, and governors are asking or ordering state workers to accept furloughs, salary reductions, truncated workweeks or reduced benefits.

Simply letting federal workers go is “penny-wise and pound foolish,” said Max Stier, president of the Partnership for Public Service, a nonprofit group that works to revitalize the government and its work force. “We had a situation where we had a single person monitoring toys coming in from abroad. The result: You get lead-tainted toys coming in to the country,” Stier said. “We need people looking out for the public good.”

Paul Light, professor of public service at New York University, also thinks more, not fewer, federal workers are needed on the front lines. He said other steps could be taken to trim costs. The Obama administration has suggested reducing the number of managers at the middle levels, he said.

“That would be a good thing,” Light said. “What he hasn’t suggested is that we reduce political appointees at the senior level. I just think you could do some things to say to the public, ‘Look, the federal government is going to make its share of sacrifice and it’s more than just having energy-efficient buildings.’”

The government’s civilian, nonmilitary work force peaked in the late 1960s at about 2.3 million. It was 2 million or more through the mid-1990s, when the government cut more than 400,000 jobs — many through military base closings. Since 2001, civilian employment in the executive branch, excluding postal employees, has edged upward from 1.7 million to about 2 million, largely because of new homeland security jobs.

More federal job openings are on the horizon.

A report released in January by Christina Romer, head of the White House Council of Economic Advisers, and Jared Bernstein, an economic policy adviser to Vice President Joe Biden, predicted that more than 90 percent of the 3 million to 4 million jobs that Obama proposes to save or create would be in the private sector.

But the report also estimated that 244,000 government jobs — some at the federal level, but more at the state and local level — would be created or saved.

That was based on a $600 billion stimulus package; the one being debated in Congress is more than $800 billion.

Moreover, many baby boomers who are getting government paychecks are at retirement age. The Office of Personnel Management estimates that 58 percent of supervisory and 42 percent of nonsupervisory workers who were on the federal payroll as of October 2004 will be eligible to retire by the end of next year. The financial meltdown, however, has prompted some to delay retirement.

Cynthia Bascetta, 56, director of health care at the Government Accountability Office, has 31 years of federal service under her belt. She said she thought retiring in these troubled economic times was too risky. So she will wait at least a year to retire, even though she recently moved to Fredericksburg, Va., and now has to commute by train to her job in Washington.

“I know of a few people who feel as though they need to stay because they have children they need to put through college, and they’ve lost a lot in college funds,” she said. “Others are just anxious about their financial situation.”

Other older workers are seeking federal jobs, which come with job security, health and life insurance, a federal retirement program, paid vacations and leave and other benefits.

When the national job market began tightening in the first quarter of last year, FedJobs.com, a business that has been helping federal job hunters since 1974, started hearing from 50- to 65-year-olds instead of 25- to 40-year-olds.

“All of a sudden, it’s a much older clientele calling up saying they’re interested in government work because they lost their jobs, their companies merged, their companies went bankrupt and they’re looking for stability,” said Ross Harris, sales and marketing director for the site. “The perception is that federal work is more stable — that there aren’t as many layoffs.”

Rising unemployment and excitement about working for Obama combined to motivate about 350,000 people to apply for 3,000 to 4,000 political appointee positions in his new administration. Jumping to the federal payroll, however, doesn’t necessarily mean moving to the nation’s capital; more than 80 percent of federal civil workers are employed outside the Washington metro area.

Federal employment has not completely escaped the impact of the economic downturn, While no government-wide hiring freeze has gone into effect, some departments and agencies are taking belt-tightening moves.

Obama, for example, froze the pay of some White House employees.

“During this period of economic emergency, families are tightening their belts, and so should Washington,” Obama said.

But it was a symbolic move. The pay freeze only affects roughly 100 White House employees earning more than $100,000 a year.

Bush signed an extension of jobless benefits into law just before 8 a.m., as he was preparing to leave the White House for a morning flight to Lima, Peru, to attend the 21-nation Asia-Pacific Economic Cooperation forum.

Congressional leadership rushed the bill to the White House after it was approved Thursday to make the unusually quick bill signing possible before Bush left the country.

Earlier in the year, Bush expressed doubts about further benefit extensions, but he came to support the legislation as new figures showed new claims for jobless aid had reached a 16-year high.

In what could be its last vote of the year, the Senate approved a measure Thursday that would provide up to three months of extra benefits for those whose unemployment benefits have run out or are about to expire. The House passed the bill in October.

“With more Americans filing jobless claims than at any time since the 1992, the Senate’s passage of the House’s unemployment insurance extension legislation will help speed relief to more than 2 million workers who continue to search for new jobs in these difficult economic times,” said House Speaker Nancy Pelosi, D-Calif.

Those times became a little more difficult Thursday as the Dow Jones industrials dropped more than 400 points for the second straight day, reaching the lowest level in more than five years. In part, investors were discouraged by the inability of the White House and Congress to agree on a plan to provide relief to the battered auto industry.

Democrats had sought to carve out $25 billion from the $700 billion financial rescue plan to keep the auto industry in business through next spring, but the White House and Senate Republicans objected.

Democratic leaders said they were ready to come back into session on Dec. 8, but only if the Big Three automakers first come up with a roadmap showing how federal aid will put them on the path to future economic viability.

At stake are millions of jobs in the auto and related industries that could go under if one or more of the major automakers goes bankrupt.

“We are prepared to come back into session the week of Dec. 8 to help the auto industry,” said Senate Majority Leader Harry Reid, D-Nev. “But only if they present a responsible plan that gives us a realistic chance to get the needed votes.”

Other federal actions to resuscitate an economy crippled by home foreclosures, a credit freeze and confusion in financial markets will probably have to wait until January.

President-elect Barack Obama has pledged to make economic recovery the immediate focus of his new administration and both the House and Senate will have increased Democratic majorities eager to support him.

The voice vote in the Senate Thursday came just hours after the Labor Department reported that claims for unemployment benefits jumped last week to 542,000. That marked the highest level since July 1992 and provided fresh evidence of a rapidly weakening job market that is expected to get even worse next year. The number of people searching for work has now topped 10 million and the civilian unemployment rate now stands at 6.5 percent, a 14-year high.

About 1.2 million people would exhaust their unemployment insurance by the end of the year without the extension, sponsors said. The measure is estimated to cost about $5.7 billion, although economists put the positive impact at $1.64 for every dollar spent on jobless benefits because the money helps sustain other jobs and restores consumer confidence.

“Extending this basic assistance to help unemployed workers pay their mortgages, feed their families, and heat their homes is a down payment on broader economic recovery legislation that our economy desperately needs,” said House Ways and Means Committee Chairman Charles Rangel, D-N.Y.

The legislation as approved would provide seven additional weeks of payments to people who have exhausted their benefits or will exhaust them soon. Those in states where the unemployment rate is above 6 percent would be entitled to an additional 13 weeks above the 26 weeks of regular benefits. Benefit checks average about $300 a week nationwide.

The benefits provided would be in addition to 13 weeks of federally funded extended benefits Congress approved last June.

Congress has enacted federally funded extensions seven times in the past 50 years during economic slumps — in 1958, 1961, 1972, 1975, 1982, 1991 and 2002.

The White House had earlier opposed a broader $61 billion bill that would have helped states meet Medicaid costs and fund public works projects as well as extend jobless benefits.

But on Thursday White House press secretary Dana Perino urged Congress to move quickly on the benefits bill. “The recent financial and credit crisis has slowed the economy, and it’s having an impact on job creation,” she said.

Unemployment insurance is a joint program between states and the federal government that is almost completely funded by employer taxes, either state or federal.

In yet another bad sign for the economy’s near future, the private, New York-based Conference Board said Thursday that its monthly forecast of economic activity declined 0.8 percent in October. Over the past seven months, the index has declined at a 4.7 percent annual rate, faster than at any other time since 2001.

Most of the decline was due to the drop in stock prices, a decline in building permits and sagging consumer expectations.

The government said new applications for jobless benefits rose to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. That’s much higher than Wall Street economists’ expectations of 505,000, according to a survey by Thomson Reuters.

That is also the highest level of claims since July 1992, the department said, when the U.S. economy was coming out of a recession.

The four-week average of claims, which smooths out fluctuations, was even worse: it rose to 506,500, the highest in more than 25 years.

In addition, the number of people continuing to claim unemployment insurance rose sharply for the third straight week to more than 4 million, the highest since December 1982, when the economy was in a painful recession.

Those figures partly reflect growth in the labor force, which has increased by about half since the early 1980s. The percentage of workers who receive unemployment benefits — which is different from the unemployment rate — increased to 3 percent, the highest since June 2003. Less than half of unemployed workers receive unemployment insurance.

The figures likely will cause some economists to increase their projections for the unemployment rate this year. Many already expect unemployment to reach 7 percent by early next year and 8 percent by the end of 2009.

The rate in October was 6.5 percent, and last year the rate averaged 4.6 percent.

The Federal Reserve on Wednesday released projections that the jobless rate will climb to between 7.1 percent and 7.6 percent next year, according to documents from the Fed’s Oct. 29 closed-door deliberations on interest rate policy.

Initial claims have been driven higher in the past several months by a slowing economy hit by the financial crisis, and cutbacks in consumer and business spending.

Economists consider jobless claims a timely, if volatile, indication of how rapidly companies are laying off workers. Employees who quit or are fired for cause are not eligible for benefits.

Several companies announced mass layoffs in the past week, including Citigroup Inc., Union Pacific Corp. and Sun Microsystems Inc.