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ANTI-POVERTY STRATEGY

Data on poverty in St. Louis is available from several sources. The U.S. Census Bureau measures poverty levels in the decennial census, and offers periodic county-level updates. The latest Census estimate is for the year 1996. The State of Missouri has made TANF data available to the City of St. Louis, and this allows a more detailed picture of poverty in the City. There are state and local anti-poverty programs available to serve the disadvantaged. The following is a summary of the available statistical information on poverty in St. Louis, and a description of various anti-poverty programs which serve St. Louis' poor.

CENSUS ESTIMATES

The Census Bureau estimates that the City poverty rate has risen from 24.6% in 1990 to 29.5% in 1996. The number of persons in poverty has risen from 95,000 to 102,000, while the number of children in poverty has risen from 39,000 to 44,000. The 1990 Census showed that the greatest concentration of poverty in the City was in the northern section of town, especially in the areas just north of downtown.

TANF DATA

The current caseload on Temporary Assistance for Needy Families (TANF) is 39,462 individuals in approximately 14,000 cases. This represents a 34.3% decrease since January of 1993, when the caseload was 60,030. Statewide there has been a 49.2% reduction in caseload in the same period. The rate of decrease has slowed dramatically in recent months. More than 18,000 St. Louis recipients left the welfare rolls between January 1993 and July 1998, but fewer than 2,000 cases have left the rolls between July 1998 and April 1999.

Over 97% of all TANF households in St. Louis are female headed, 86.5% are black, and 4.5% of TANF heads-of-households are employed. Sixty percent of TANF recipients have received public assistance continuously for more than 24 months. More than a third of all recipients have received assistance for more than five years. Thus, St. Louis, like other central cities, contains a larger proportion of "hard-core" recipients-those who have depended on assistance for long-term periods, and who will be more difficult to move toward self-sufficiency.

Welfare mothers have an average age of 28.3, and have an average of 2.3 children. For female TANF recipients, the average age at the birth of the first child was 22.4 years. 65.7% of all active cases have less than three children. Heads of TANF households have, on average, 11.0 years of schooling.

CONCENTRATION OF POVERTY

The regional poverty rate has been fairly stable in recent decades. The poverty rate for the MSA was 10.9% in 1970, compared to 10.8% in 1990. However, this broad stability masks an increasing concentration of poverty. David Rusk notes that the ratio of the City's poverty rate to the municipal poverty rate rose from 1.86 in 1970 to 2.28 in 1990. The ratio for the City of St. Charles, by contrast, rose only from 0.59 to 0.60.

Rusk also notes that the region has seen a growth in poverty neighborhoods, or census tracts in which more than 20% of the population is poor. Much of this increase has been in the City, where the number of poverty tracts increased from 51 in 1970 to 70 in 1990. Thus, although the number of poor persons is not growing dramatically, the poor that remain are increasingly concentrated in the central city. Table 1 lists poverty rates in the counties that comprise the St. Louis MSA:

[Table D-1: Model Based Income and Poverty Estimates, 1996]

WELFARE REFORM IN MISSOURI

In March, 1998, the Center on Hunger and Poverty at Tufts University released a study which ranked state welfare policy. The study used a scale measuring state policy activities in 34 categories. Missouri was among the ten worst states according to the study, meaning that Missouri's approach to welfare reform was deemed among the most harmful to welfare recipients. Other low-ranking states included Mississippi, Alabama, Louisiana, Georgia, and Idaho.

President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) on August 22, 1996. The welfare reform law replaced Aid to Families with Dependent Children (AFDC) with Temporary Aid for Needy Families (TANF). The law imposes work requirements and time limits on welfare recipients, and required states to reduce caseloads by 35% by fiscal year 1999. Welfare reform has a disproportionate impact on St. Louis and other inner cities, as large urban centers have a higher percentage of welfare recipients-especially long term cases-than does the rest of the country. PRWORA forms the context for the local anti-poverty strategy adopted by the City of St. Louis.

In the State of Missouri, a single parent with two children must earn less than $10,152 per year to be eligible for TANF. Such a family can receive up to $292 per month in TANF benefits, and up to $315 in food stamps. Statewide, the average TANF monthly receipt is $257, and the average food stamp receipt per person is $70. Currently, the minimum wage is $5.15 per hour, or $824 per month.

[Table D-2: TANF Caseload: January 1993 - January 1999]

State legislation creates the context for welfare to work activities in St. Louis. The Division of Social Services describes its Beyond Welfare initiative as a set of programs aimed at preventing, reducing, and ending dependency.

Prevention programs include:

• A pre-kindergarten program, a daycare program for three and four year olds.
• Early Childhood Care and Education, a parenting skills program.
• Educare and Caring Communities, school-based programs which links children with social services.
• Quest, a small pilot program aimed at teens.
• Independent Living, a program for foster children and troubled youths.
• Missouri Mentor Partnership, a public/private partnership.

Programs to reduce dependency include:

• FUTURES, a job training program which helps TANF families obtain child care, transportation, and training.
• Parents' Fair Share, a cooperative effort with the Child Support Enforcement Division which provides training for non-custodial parents of children receiving welfare.
• Self-Sufficiency Pacts, a plan outlining individual obligations which must be accepted by each member of a family on TANF.
• Child Support and Paternity Establishment services aimed at reducing the number of "deadbeat dads."
• Medicaid waiver expansions, which assists families making the transition from welfare to work to preserve their medical coverage.

Programs designed to end dependency include:

• Wage Supplementation, which uses TANF benefits to supplement wages paid by employers for up to nine months.
• Direct Job Placement, which helps employers experiencing labor market shortages to employ welfare recipients.
• Family and Community Maintenance Organizations, which coordinate the financing and delivery of services to children, youth, and families.
• 21st Century Communities, a system developed in Kansas City which includes direct job placement, wage subsidies, and other opportunities for employers and participants.
• One-Stop Service Centers, multiple agencies based within single locations to better serve Missourians.
• Work First, a self-sufficiency assessment model. This program assesses the readiness of welfare recipients to enter the work force. Welfare recipients are classified as ready to work, able to work within 30 days pending provision of services, and unable to work without intensive case management services.

The Division of Social Services claims the following statistics for its various programs:

• 14,544 people participate in FUTURES program activities each month.
• Since May 1995, 30,232 people have signed self-sufficiency pacts.
• Over 4.8 million children were served through Educare between April 1997 and June 1997.
• Unemployed Parent welfare (AFDC-UP), a program for married welfare recipients, has seen a caseload reduction from 5,548 to 256.
• Since January 1993, the monthly number of welfare recipients who have had their TANF grant reduced for insufficient diligence in job seeking has been as high as 7,555.
• In FY 1997, Missouri collected $314 million in child support and established paternity for 13,434 children.
• Over 13,000 employers statewide are involved in hiring welfare recipients.
• 258 individuals were hired under Direct Job Placement in April 1998.
• 9,284 working families are receiving transitional services such as child care and Medicaid coverage.

In addition, families leaving welfare are usually eligible for the federal Earned Income Tax Credit (EITC), and low income families may qualify for food stamps while working full time.

A NATIONAL PERSPECTIVE

Although local conditions have some impact on the lives of the poor, urban poverty is shaped primarily by national, and even international forces which are beyond the control of any municipality. Thus, a look at the national problem of urban poverty can yield some insight into the challenges faced by the City as it prepares a local anti-poverty strategy.

In September, 1998, the Census Bureau reported that the national poverty rate had dropped in 1997, from 13.7% to 13.3%. The number of poor persons remained approximately 35.6 million. The poverty rate for blacks was 26.5%. The central city poverty rate dropped from 19.6% to 18.8%.

A July 1998 Census report by Mary Naifeh analyzed characteristics of the poverty population using data from the Survey of Income and Program Participation (SIPP). SIPP contains longitudinal data, which includes monthly income data for all survey participants for the period 1993-94. Naifeh reports that the average monthly poverty rate in this period was 15.4%, although 21.4% of the population was poor at some point during the two year period. 5.3% of the population was chronically poor throughout the 24 month period. Half of all poverty spells lasted for less than 4.5 months.

Children had an average poverty rate of 24.5%, an episodic poverty rate of 32.4%, and a chronic poverty rate of 9.4%. Retirement age adults had average monthly poverty rates of 10.2%, episodic poverty rates of 13.5%, and a chronic poverty rate of 5.4%.

Marriage status is the single best predictor of poverty status, and of chronic poverty. 40% of persons in female-headed families were in poverty in an average month, and 17.8% of all female headed families were chronically poor throughout the 24 month period. The direction of causality may be argued: It may be that marriage helps prevent poverty status, or it may be that poverty tends to prevent marriage. However, married couple households with two children will avoid poverty if each parent works fulltime in a minimum wage job, whereas a single parent with two children and a minimum wage job will be in poverty. Thus, while causality may flow in both directions, it is likely that marriage itself helps individuals to stay out of poverty, and to reduce the length of poverty spells.

A fierce ideological debate has raged for the last twenty years on the root causes of poverty. Conservative critics such as Charles Murray and Marvin Olasky have pointed out that the welfare system has created perverse incentives, discouraging individuals from marrying and taking low-wage jobs. Liberals such as William Julius Wilson and David Ellwood have pointed out that national and international economic changes have combined to create the urban underclass: An evaporation of urban manufacturing jobs and deteriorating earnings opportunities for low-skilled individuals have contributed to the problem of urban poverty, these scholars argue.

The anti-poverty philosophy in St. Louis holds that although negative incentives can exist in welfare systems, the existence of structural barriers to upward mobility makes governmental intervention on behalf of the poor necessary. To defend this approach, it is helpful to review some national economic trends:

RISING INEQUALITY

Gottschalk (1997) argues that changes in income distribution between 1973 and 1994 have directly affected poverty rates. Between 1950 and 1973, poverty rates rose during recessions, and dropped to previous levels during economic expansions. After 1973, poverty rates continued to rise during recessions, but did not drop sharply during recoveries. This has resulted in a higher poverty rate today than existed in the early 1970s.

Since 1973, inequality has risen. Males in the lowest 15th percentile have seen a 25% decrease in real wages. By contrast, men in the 90th percentile have seen a real increase of 8%. For women, the picture is not quite so bleak. Low-skilled women have seen a slight increase in wages, though a large gender gap still exists. Gottschalk also finds that there is a segment of the population which finds it difficult to raise earning levels: In a 17-year longitudinal study, 42% of those in the lowest earnings quintile at the beginning were still in the lowest quintile after 17 years. Gottschalk concludes, "the coexistence of rising poverty and increases in mean incomes indicates that the poverty-reducing effects of growing mean income were being offset by the growth in inequality, as well as demographic changes."

LOW-SKILL JOB PROSPECTS

Blank (1997) finds a "good news-bad news" situation for low-skill workers. The good news is that low-skill jobs are plentiful. The bad news is that earnings opportunities in these jobs have deteriorated. Demand for low-skill jobs has increased less quickly than the population of low-skill workers. As a result, wages for low-skill workers have declined in real terms. Blank cites three main causes for this shift:

1. The decline in unions, which had been successful in raising low-skill wages.
2. Globalization, which put U.S. low-skill workers in direct competition with low-skill workers in third world countries.
3. Changing production technology, which increased demand for skilled labor at the expense of low-skill workers.

For low-skilled males, both earnings and labor force participation have decreased. For women, labor force participation has increased, while wages have held steady.

Blank concludes that job availability is strong for low skill workers, but that long-term earnings opportunities are declining. As a result, it is increasingly unlikely that individuals will be able to escape poverty through low-skill jobs.

FAMILY GAP

An interesting and disturbing trend is the growing family gap - the difference between earnings of single women and married women. Waldvogel (1998) finds that the family gap between women is now greater than the gender gap, which has been steadily decreasing in recent decades. This trend shows the difficulty that single mothers have in escaping poverty. Waldvogel argues that a more liberal maternity leave policy would help relieve the biggest obstacle to pay equity. The family gap is of special importance to areas such as St. Louis, where most in poverty are in female-headed households.

SPATIAL MISMATCH

First articulated by Cain (1969), the spatial mismatch hypothesis has influenced scholarship on urban poverty through the work of William Julius Wilson (1989). Wilson notes that poor urbanites are geographically isolated from the outer suburbs, which have enjoyed the fastest rates of job growth over the last 25 years. Lacking transportation, inner-city residents find it impossible to gain access to the fastest-growing areas in the regional economy.

Katherine Newman describes the lives of the working poor in No Shame in My Game. In this book, Newman discusses another aspect of geographic isolation. Newman stresses the importance of informal contacts for persons just entering the labor market. Young persons seeking entry-level jobs are usually helped by friends and family members who know about job openings, and who can help a young applicant. Urban youth are usually not a part of such informal networks. Growing up in neighborhoods with few retail and eating establishments, these youngsters are unlikely to meet individuals who can help them begin their careers. Newman concludes that although the effect of informal contacts is difficult to measure, it is a primary obstacle to the advancement of young unskilled urban workers.

CRIMINAL RECORDS

Stoesz (1999) argues that the lack of legitimate ways to earn income has led many urban youths to become involved in criminal activities. The arrest rate for black youths is more than five times the rate for whites. Stoesz writes, "By the early 1990s, it was not unusual if half of young African-American males living in an urban neighborhood were in prison, jail, on probation/parole, on bail, or being sought for arrest." The presence of a criminal record for up to half of poor urban males will constitute an impediment to earnings opportunities for a large segment of the population.

ECONOMIC GROWTH

A positive development in recent years has been the continuing strength of the U.S. economy. Freeman and Rodgers (1999) find that low unemployment and tight labor markets have brought employment and earning opportunities to low-skilled urban youths. The percentage of employed black youths age 16 to 24 has increased from 52% in 1992 to 64% in 1999 in the 146 metropolitan areas in which the regional unemployment rate is less than 4%. A tight labor market can bring many persons previously thought unemployable into the labor market. It remains to be seen whether these low-skill jobs will give youths the opportunity to escape poverty. An additional concern is that an economic downturn will hurt low-income workers, and welfare reform measures may become much more painful once a recession hits.

RECOMMENDATIONS: TOWARDS A POVERTY STRATEGY

Urban poverty is a national problem, and is largely beyond the control of local governments. Thus, it behooves the City to be aware of the broader environment in which it operates, and to use its influence to press for changes in state and national policy. Following are some of the changes which the City should advocate:

a) Legislate a state earned income tax credit.

The working poor could be greatly assisted by a state earned income tax credit (EITC). Ten other states have adopted EITCs. Bills sponsored by Representative Wilson and Senator Maxwell would create a refundable state earned income tax credit equal to 20% of the federal EITC. The City urges the state legislature to pass this measure.

b) Provide additional hardship waivers for those seeking to move from welfare to work.

Federal welfare reform legislation requires time limits on TANF recipients, but allows for a certain percentage of hardship waivers. The City of St. Louis has a disproportionate number of the chronically poor, and thus will be harder hit by the new time limits. The State of Missouri should ensure that St. Louis receives a number of hardship waivers which is proportionate to the number of the chronic poor in the City.

c) Repeal restrictions on federal training funds to better meet the needs of St. Louis' unemployed.

The welfare reform act targeted $3 billion for welfare-to-work activities. 70% of the funds had to be used for high school dropouts, persons in drug recovery, or persons with poor work histories. 30% of the funds were to serve persons who have high school diplomas, but who face other obstacles to work.

Because of these restrictions, the St. Louis Agency on Training and Employment (SLATE), which administers these funds locally, has been able to spend only $740,000 of the $4.7 million that it received. The program has helped only 779 people, of which only 253 are in permanent fulltime employment. Congress needs to repeal restrictions on welfare-to-work funding, to allow persons with high school diplomas to take advantage of federally funded assistance. Persons with drug problems, criminal records, or young children require employment assistance, even if they already have diplomas.

d) Achieve educational reform by making the school system more accountable.

In the words of Mayor Harmon, "our schools are in crisis, and finding a solution is imperative." In the most recent round of statewide standardized testing, the results from St. Louis were disastrous. On the math test, for example, 25 percent of white St. Louis fourth-graders were "proficient" or "advanced," compared with 9 percent of blacks. The Post Dispatch reports: "In eighth grade, 13 percent of whites scored proficient or above, compared with 1 percent of blacks, while 92 percent of the black students were in the bottom two groups compared with 64 percent of whites. By 10th grade, where 9 percent of the white students were in the top two categories, no blacks scored that high; the bottom two groupings included 95 percent of the black students and 70 percent of the whites." Poor schools perpetuate poverty.

A lack of basic reading and math skills condemns youngsters to a lifetime of poverty. As such, improving education is a vital component of the City's anti-poverty strategy. The state legislature should allow the Mayor to appoint the school board, and empower the mayor to make changes in the educational bureaucracy. Making the school system accountable is the first step in reforming the educational system in the City.

e) Continue to support and expand local initiatives which have shown success in addressing the poverty problem in St. Louis. These programs include:

Slate: The St. Louis Agency on Training and Employment (SLATE) is the City's lead agency in the field of employment training. SLATE administers employment training programs with federal funding through the Job Training Partnership Act (JTPA). SLATE provides a variety of employment training services including:
• Occupational Skills Training for clerical, medical, industry and service jobs
• On-the Job-Training, in which private businesses pay 50% of training costs
• Job Search Training, in which participants learn how to find a job
• Direct Job Placement

SLATE also provides support services for eligible persons enrolled in employment training programs. These services include day care, transportation assistance, and cash payments to eligible individuals. SLATE also funds other vocational training centers in St. Louis. A Private Industry Council represents businesses in the SLATE service area, and provides guidance for SLATE with respect to the current employment needs of area businesses.

St. Louis Community Partnership: This partnership was established by the Family Investment Trust Board to coordinate the services of five state agencies - the state departments of Health, Mental Health, Elementary and Secondary Education, Social Services and Labor and Industrial Relations. The partnership has been charged with pulling together welfare reform initiatives. It is made up of the directors of the five agencies and five residents. The goal is to marshal critical resources, collect data on programs that work and don't work, and monitor how the outcome of programs will be accomplished.

Caring Communities: This is a school based program which enables parents to access information and social services through neighborhood public schools. More than a dozen schools in the City of St. Louis participate in the program. The DeSoto School District in Jefferson County, and the Barbara Jordan elementary school in St. Louis County also participate. The $24 million program was founded with support from five Missouri agencies: the Division of Family Services, the Department of Health, the Department of Mental Health, the Department of Labor and the Department of Elementary and Secondary Education. Two other agencies, corrections and economic development, have also joined the program as sponsors.

The Employment Partnership: The Employment Partnership is a collaborative effort of employment service providers to address the employment needs of residents in the Enterprise Community. The Partnership provides a forum for increased innovation, communication, and resource sharing between employment agencies, government agencies, job training programs, businesses, community organizations, and residents. Established in 1995 as part of the Enterprise Community grant, the Partnership first convened with seven member agencies it has since expanded both in membership and scope.

East-West Gateway Casey Jobs Initiative: The Jobs Initiative is a comprehensive plan to improve the way the metropolitan labor market in St. Louis performs for young adult job seekers who live in the region's urban core. The program has an annual budget of approximately $2.5 million. In 1997, East-West Gateway expected to place 600 people in new jobs under the program. The Jobs Initiative includes many partners, including the St. Louis Carpenters Joint Apprenticeship Committee. The program provides assistance in job placement, training in vocational skills and in "soft skills" such as work habits. Other components of the program include assisting welfare recipients in obtaining housing, health care, transportation, and other social services.

Cornerstone Partnership: This program provides opportunities for urban youth and unemployed workers to obtain training for jobs in manufacturing. Training is available in remedial math and reading, machine tools operation, and drafting. Industry certification programs are also available. The training takes place in the newly refurbished Wagner Electrical plant in Wellston, Missouri.

Mid.Tec: The Midwest Manufacturing Technology Corporation, known as Mid.Tec, is a nonprofit consortium established by area businesses to provide technical training for their employees. With government, YouthBuild, and private help, Mid.Tec now offers welfare to work training. President Clinton visited Mid.Tec in 1997, praising its welfare to work efforts.

Grace Hill: Grace Hill Neighborhood Services is a nonprofit organization which serves disadvantaged communities in North St. Louis. It offers welfare to work services for individuals living in its service area. Based on a "neighbors helping neighbors" philosophy, the program includes day care assistance, health care, and literacy training.

Sustainable Neighborhoods: In December, Area Resources for Community and Human Services (ARCHS), the Regional Housing and Community Development Alliance (RHCDA), 18 banks, the states of Missouri and Illinois and others launched Sustainable Neighborhoods, an unprecedented partnership to revitalize nine neighborhoods through an ambitious initiative directed by the residents themselves.

Sustainable Neighborhoods features the largest concentration of private capital ever directed at neighborhood revitalization. Eighteen financial institutions committed $751 million in investments and loans in the neighborhoods for new and rehabilitated housing, new business development and job creation. The Deaconess Foundation pledged $1 million annually through 2004 to fund health-related projects for children living in these neighborhoods. Neighborhood planning, led by residents, will be completed by summer 1999. The planning process builds on exciting work already going on in each of the nine neighborhoods.

Each neighborhood is setting short-term and long-range consensus goals. Implementation of short-term goals will begin immediately upon completion of the plans. Implementation will include projects ranging from organized cleanups to child care and safety programs to street and sidewalk improvement projects. More neighborhoods will be added to the program in the years ahead.

Area Resources for Community and Human Services (ARCHS): This partnership was established by the Family Investment Trust Board to coordinate the services of five state agencies - the state departments of Health, Mental Health, Elementary and Secondary Education, Social Services and Labor and Industrial Relations. The partnership has been charged with pulling together welfare reform initiatives. It is made up of the directors of the five agencies and five residents. The goal is to marshal critical resources, collect data on programs that work and don't work, and monitor how the outcome of programs will be accomplished. ARCHS has case management contracts with the State of Missouri which fund initiatives to move TANF recipients from welfare to work. ARCHS also has a faith-based support program which works to ensure that churches play a role in addressing the welfare to work challenge

Daycare: Finding adequate care for young children is one of the principal obstacles poor women seeking work. This is also one of the few aspects of urban poverty that local government can affect. The City should adopt the goal of making quality child care available to all poor mothers seeking to enter the workforce. To this end, this Community Development agency budgeted over $173,000 to support child care in 1998, and this level of support is expected to continue.