“On the line” - how Chicago is experiencing the recession
September 25th, 2009
Suburbs in Need
September 8th, 2009
To a greater degree than other recent economic recessions, the current downturn has hit suburban communities particularly hard. A recent Brookings Institution report by Elizabeth Kneebone and Emily Garr shows there are nearly twice as many unemployed Americans living in suburbs as in cities. Likewise, food stamp caseloads have increased at a much faster rate in suburban areas than in urban centers. Not surprisingly, many suburban nonprofit service organizations report significant increases in need and in the number of families seeking help for the first time from the safety net.
This past summer my research assistant, Ben Roth, and I have been interviewing a small sample of public and nonprofit organizations that help working poor families in the suburbs of Chicago, Los Angeles, and Washington, D.C. Our work from this summer is briefly summarized in a short research report entitled, “Suburbs in Need”, which is available at my website along with more detail about our study.
Although we are still collecting data and will publish a final report in early 2010, a couple key findings from this short research brief highlight the challenges facing service providers in suburban areas:
- 44% of nonprofits interviewed reported a decrease in a key revenue source in the past year.
- The typical nonprofit in our study reported a 70% increase in demand for assistance or services in the past year.
- Almost 80% of nonprofits in the study that received public funding anticipated cuts to that funding in the coming fiscal year.
- 41% of the nonprofits we interviewed are anticipating having to expand waitlists for services in the coming year.
While the Census Bureau’s poverty report for 2008 has yet to be released, our findings are suggestive about the impact of the recession on working poor families in metropolitan areas - suburban and urban communities alike. Moreover, many states and localities will have to make additional social assistance program expenditure cuts in late 2009 and 2010 to cope with persistent budget deficits, which means that the help working poor families need until they can find a job will be harder and harder to find.
Follow Discussion of Out of Reach on Talking Points Memo
August 3rd, 2009
After taking some time away this summer, I’m back this week. Please check out the discussion of my recent book - Out of Reach: Place, Poverty, and the New American Welfare State - at the Talking Points Memo’s TPMCafe.
Should be a great discussion of the book, as well as current issues in poverty and social policy.
How is the Safety Net Responding to the Recession?
June 1st, 2009
One of the bitterly ironic realities of our contemporary safety net is that it relies heavily upon nonprofit human service organizations to deliver assistance to working poor families, yet funding for these nonprofits contracts and decreases during periods of economic recession. There has not been a severe or sustained recession like the current one, however, since this transformation in the safety net took hold in the late 1980s. Survey data that I collected in the wake of the 2001 recession is suggestive: many nonprofits reported funding losses and service cutbacks, but the impact was primarily felt through cuts in public funding streams. The current recession is hitting all funding sources - public and private - quite hard.
As I have begun to draft a survey exploring the impact of the recession on suburban social service agencies, I ran across an interesting piece by Rick Cohen of the Nonprofit Quarterly, which locates many different surveys and reports tracking the impact of the current recession on nonprofit organizations. In another blog entry, Cohen summarizes key findings about reported effects of the recession on nonprofits.
It is likely that there are worse days ahead for nonprofit service organizations. Not only are state budget deficits going to persist over the next several years, but it is unlikely there will be another $1 trillion in stimulus funding to help states and communities maintain commitments to health, education, and human service programs.
There may be room to be optimistic though. We are unlikely to see the nonprofit service sector experience financial devastation on par with that following the Great Depression. Most nonprofits will have to cut back programs, staffing, and caseloads - some nonprofits may shut their doors or merge, with smaller nonprofits being particularly hard hit - but the sector will remain intact. The resiliency of the nonprofit service sector will be due in large part to the presence of sophisticated organizational structures and fundraising operations that allow today’s nonprofits to adapt to uncertainty in the environment. Also, much of the sector’s resiliency will be due to the public funding for many human service programs that will be sustained, albeit at lower levels more comparable to program funding of the early 1990s than the mid-2000s.
While we should resist giving up fiscal and programmatic ground in the fight to reduce poverty and increase economic opportunities for the poor, the recession won’t return us to a safety net circa 1930. For the next several years states and communities will not be able to help working poor families at levels we have assumed were permanent baselines or with the same approaches that had emerged in a piecemeal fashion over the four decades following the War on Poverty. The retrenchment of the safety net, however, might give us the opportunity to rethink service delivery systems, seek more effective program models, and find more efficient ways to provide help to those in need. In the meantime, we must work as communities and concerned citizens to ensure that those most in need are not left waiting until the economy and our safety net emerge into recovery.
Turnover and Safety in the Social Service Sector
May 12th, 2009
Interesting piece in Governing.com - Jonathan Walters discusses some common administrative and workplace safety challenges that social service organizations face today. If you haven’t read his stuff at Governing.com, it is worth checking out.
One challenge is simply maintaining staffing levels.
“The low pay, the long hours, the constant pressure, the politics involved all add up to a level of wear and tear that drives people out of the profession and into other work–or at least into other branches of the work that aren’t so difficult.”
Turnover is problematic. Good staff transfer off the frontline, are promoted to administrative positions, or are hired away by other governmental or private organizations. The frequent churning of staff is particularly problematic in rural areas or remote communities, where there may not be large pools of professionally trained staff seeking work. Turnover also is a function of funding. Staffing levels can be unpredictable due to cuts in program funding. In my own work, I’ve found that about 1/2 of service organizations experiencing funding cuts have to reduce staffing levels as a result.
Walters details a meeting with county government service administrators and discussing the problem of turnover, particularly among child welfare caseworkers, where he asked if turnover could be reduced by offering frontline staff more money.
“No,” came one response that drew wide and vociferous agreement, “they want guns.”
Guns? Likely a somewhat glib response to his question about turnover, but Walters cites several survey findings highlighting the risks caseworkers face when completing their daily duties.
A 2002 survey of 800 social workers found that a fifth had been the victims of violence and that two-thirds had been threatened.
A 2006 national study of 5,000 licensed social workers found that more than 40 percent regard personal safety as a day-to-day on-the-job concern.
Nearly 600 exit interviews of human services workers and found that 90 percent had experienced verbal abuse, 30 percent had been attacked and 13 percent had been threatened with weapons.
These data points are consistent with the security - sometimes armed security - in place to ensure staff safety in many health and human service organizations. Not only do caseworkers encounter individuals whose behavior may be unpredictable due to mental health and substance abuse problems, but caseworkers often also are the bearers of bad news that can negatively affect families and draw emotional responses. For instance, caseworkers generally are the ones to notify families of removal of children from homes, denial of benefits, lack of eligibility, and cuts to assistance.
In addition to ensuring that federal, state, and local government maintain public commitments to supporting social service programs and cultivating greater private support of social service organizations, Walters notes the importance of legislation moving through Congress designed to strengthen the field of social work and promote safety for caseworkers. A rundown of the agenda prmoted by the National Association of Social Workers (NASW) and its advocacy partners can be found here.
A (Rural) View of the Recession
May 7th, 2009
On Thursday, I spoke at the 11th Annual Social Justice Conference at St. Ambrose University in Davenport, IA. The conference provided a great opportunity for me to share my work about poverty and the safety net in rural areas, but also to learn from more than 150 social workers in the Quad City region.
During the talk, there was time for the audience discuss the challenges facing safety net organizations in rural Iowa. Several keen observations were made:
Even slight increases in earnings can make working poor individuals ineligible for work supports and income supports, or reduce their benefits, making families worse off for their modest labor market gains.
The discussion that followed reminded me of work by Jennifer Romich at the University of Washington, which has explored the effective marginal tax rates on low-income workers. Indeed, working poor households and the agencies that help them face a dizzying array of different eligibility determinations for cash assistance, housing subsidies, and medical care. Modest increases in work earnings can upend one’s access to supports that help families become healthier, stronger, and more self-sufficient, even though those families are negligibly better off.
Nonprofits in Iowa, as in most states and communities, are struggling with how to serve rising numbers of individuals seeking help amidst significant budget cuts.
This will be a tough challenge moving forward for many public and nonprofit agencies, and one that is likely to endure for the next few years as unemployment and poverty rates remain high - even if there is economic recovery soon. Agencies will be forced to make tough trade-offs between cutting staff, triaging clients and providing help only to the neediest, offering more modest services, and expanding waiting lists. A bad set of choices. Interestingly, one audience member said she used an anonymous web survey to collect ideas from staff about how to cut costs with as little impact on clients as possible. Her board was reviewing the many recommendations and deciding how to move forward.
Because most nonprofit service organizations draw on many different revenue sources, they face the administrative challenge of complying with various reporting requirements from these different revenue sources. At a time when there are greater demands on all staff, these tasks can take time away from case management and providing services.
Another tough challenge. On the one hand, program evaluation and reporting are critical to ensuring program quality and to improving program models. On the other hand, time spent on compliance documents takes time away from clients and from addressing the fallout of the current economic environment.
My visit provided sobering insight into the tough tasks facing the social workers that staff the street-level organizations upon which our safety net rests.
State Budget Crisis = Human Service Funding Crisis
April 29th, 2009
One of the key themes in my book Out of Reach and this blog’s discussion of the recession, is the pro-cyclical nature of public expenditures for programs that help low-income populations. Funding for many human or social service programs that assist low-income workers increases during periods of growth, but contracts during economic downturns right at the moment when need is greatest. The current recession has hurt almost every source of government revenue and almost every source of funding for social service organizations that help low-income populations.
As governors and state legislatures begin to grasp the program cuts necessary to balance budgets in the next few years, the fragility of the safety net for low-income populations becomes more and more apparent. The safety net has come to rely more heavily upon state and local government for human service funding in the past twenty years. Yet, government programs are under budgetary pressures unprecedented in recent years.
Many regional and local newspapers track proposed social program cuts within their states, but National Public Radio and the New York Times both have recent pieces that use the budget crisis in Arizona to frame some of the broader issues at hand. According to the NPR story:
Arizona, which faced a $1.6 billion budget gap this year, has been among the hardest hit. Funding was trimmed for food banks, community health centers and home health care for the elderly. Monthly payments for foster care parents were reduced, and more than 1,100 children with chronic or disabling conditions were dropped from the state Children’s Rehabilitative Services program.
The New York Times continues:
Arizona’s crunch came on fast and hard. In January, the newly seated Republican governor, Jan Brewer, had to address a $1.6 billion budget gap by cutting $580 million in general-fund spending, taking more than $500 million from agencies financed with fees or other sources, and using $500 million in federal stimulus money — squeezing all the reductions into the final five months of the fiscal year ending June 30. Arizona expects a $3 billion shortfall in the next fiscal year. In a speech to legislators in March, Ms. Brewer proposed to fill the chasm with $1 billion in spending cuts, $1 billion in federal stimulus money and — in a risky idea she floated after emphasizing her conservative credentials — $1 billion raised through “a temporary tax increase.”
States are in a tricky spot right now - they are faced with falling revenues amidst rising program costs, even if social programs are not expanded or made more generous. For instance, inflation makes it more expensive to operate programs. Population growth and trends in demographics matter as well. Growth in population and the aging of the population both translate into greater numbers of individuals that may benefit from programs.
Few social programs or clients groups are buffered from program cuts. Looking at surveys with almost 2,000 government and nonprofit social service organizations that I completed in years following the 2001 recession, I find that about half of all organizations reported recently losing funding. The results are likely to be more dramatic if one was collecting data today. It is surprising when I look at the data that there is no particular pattern to it. Government agencies and nonprofits were equally likely to lose funds. Reliance on different revenue streams made little difference - those receiving public funds were as vulnerable as those reliant on private giving or charitable organizations. No service mission or client focus was immune - employment services, emergency assistance, housing, mental health and addiction services all seemed equally likely to face cuts.
What we should be worried about, is what happens to agencies after funding cuts. We hope organizations can make up the lost revenue or get by until the economy improves. But my survey data collected a few years ago suggest this is not the case. First, about 70 percent of service providers that lose funds report cutting staff, clients, and services as a result. Second, and perhaps more alarming, I found that about 30-40 percent of programs listed in community directories in the years following the 2001 recession were no longer offering programs or were nonoperational. Both are a sobering indication of what tough budget times mean for organizations that serve the poor.
Outlook Brightening for Markets, What About For Workers?
April 11th, 2009
Even though the stock market has been on the rise recently and optimism is emerging that the economy may start rebounding in coming months, millions of Americans are still having trouble finding work and providing for their families. News and research highlight the many challenges working poor families and communities face today. Food Pantries are facing unprecedented need for help. More than 30 million Americans today receive help from the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). Homelessness is on the rise. Nonprofits that help low-income families are in trouble. The foundations that typically serve as the safety net for nonprofits are struggling. As a result of mounting needs and inadequate assistance to meet those needs, people are turning to family for help.
Even though the outlook for markets may be brightening, the outlook for workers - particularly those at the lower end of the income ladder - may not be so bright. How could a recession end without improvement in the labor market? The end of recessionary periods do not correlate with immediate increases in employment opportunities because the starting and stopping points of recessions are defined by trends in GDP, not by changes in unemployment rates. Recessions are deemed to have ended when sustained GDP growth is observed. This growth can occur due to a range of factors - like increases in productivity - without increasing overall employment rates. Thus, unemployment can increase or remain high early on during an economic recovery.
The previous recession that lasted from March 2001 to November 2001 exemplifies this seeming contradiction. According to Bureau of Labor Statistics data, the seasonally adjusted unemployment rate among adults 25 and older without a high school degree rose from 6.8% in March 2001 to 8.0% in November 2001. Yet, the unemployment rate among this group peaked in 2003 and did not fall below 8.0% until 2005. Similarly, the unemployment rate for adults 25 and older with a high school degree increased during the recession of 2001 to 5.0% and remained at or above that level until late 2004.
In March 2009, the unemployment rate was 13.3% for adults without a high school degree and 9.0% for those with a high school degree. Even if GDP and the Dow rise in the latter half of 2009, we should expect jobseekers at the bottom of the income distribution to continue to struggle to find work. Safety net programs, food pantries, and social service providers should be expected to see historically high levels of demand well into 2010 and 2011, maybe even beyond. In short, rosy stock market news and initial signs of turn-around may distract the news media, but they should not divert our attention from the very real investments we need to continue to make in education, training, work supports, and aid to low-skill jobseekers unable to find employment.
Rising Job Sprawl and Poverty in Urban America
April 8th, 2009
A recent report for the Brookings Institution’s Metropolitan Policy Program by Elizabeth Kneebone examines recent trends in job sprawl across metropolitan areas. Despite the resurgence of urban living during the 1990s, there were relatively few job gains in downtown or central city areas between 1998 and 2006. Instead, most of the job growth appears to have occurred in suburbs far away from downtown areas.
Over the course of the 1990s, downtowns in major metro areas throughout the country experienced a sort of renaissance. The population living in downtowns grew by 10 percent over that decade, after 20 years of decline. While that upswing has continued to a certain extent in this decade, the “rebirth” of downtowns appears to have remained a residential rather than a jobs-based phenomenon. From 1998 to 2006, the top 98 metro areas experienced a 10 percent increase in the number of jobs within 35 miles of downtown. However, the urban core [within 3 miles of downtown central business district (CBD)] saw an increase of less than one percent, compared to job growth of 9 percent in the middle ring [3 to 10 miles from CBD] and more than 17 percent growth in the outer ring [10 to 35 miles from CBD]. As a result, the geographic distribution of employment steadily decentralized in the top 98 metro areas over this time period.
While these data do not reflect changes in the distribution of employment since the recent recession began, these data are consistent with evidence that poverty rates in central cities have not diminished in the years following the recession of late 2001. Moreover, they suggest that we should expect poverty and jobless rates to increase during and remain higher after we recover as a nation from the current recession.
Tough Times Now for Nonprofits, Tougher Times Ahead?
March 26th, 2009
A survey of 986 nonprofit organizations by the Nonprofit Finance Fund (NNF) provides yet further evidence that the nonprofit sector is being crushed by the simultaneous decline of government spending, private philanthropy, and endowments. One-third of nonprofits expect to finish the current fiscal year in a deficit position. Nearly half of respondents indicated they would reduce staff or salaries to cope with budget problems; about 40% indicated they would eliminate programs in an effort to weather current fiscal challenges.
Although we should be concerned with mounting evidence that the recession is creating volatility in nonprofit funding, this is not a new phenomenon - particularly among nonprofit human service organizations. To this point, a related article in the New York Times by Stephanie Strom examines the impact of current fiscal pressures on human service nonprofits. Strom quotes Carrie Karasaw, an executive director of a human service organization in Bensalem, PA, who underscores the persistent fragility of nonprofit human service financing:
‘It’s not a new story that nonprofits like us are struggling,’ Ms. Karasaw said. ‘It’s that we’re just hitting a critical mass of financial problems now.’
My own interviews with about 900 nonprofit human service organizations between 2004 and 2005 in Chicago, Los Angeles, and Washington, D.C., underscore this point. Even in the relatively stable economy of the mid-2000s, 46% of nonprofit human service providers report recent losses in funding. Of those, about half reduced staffing and/or programs available to cope with funding loss. As surprising as it might seem, nonprofit human service providers in my study were still experiencing shocks to funding and programs for several years after the recession that started in 2001.
There are many reasons why the nonprofit sector - particularly the nonprofit human services sector - might not recover quickly from a recession. Perhaps most importantly, program funding streams are normally volatile. Priorities and agendas shift. Focusing events or crises draw attention to particular causes or needs. Government budgets ebb and flow. Moreover, it takes time for foundations and charitable organizations to rebuild endowments and grantmaking capacity. In addition, nonprofits are forced to trim professional staff during tough times, which make it difficult to ramp up fundraising efforts quickly when public and private revenue streams expand.
Thus, we should expect the current fiscal crisis to have lingering effects on the stability of the nonprofit service sector for many years. Although nonprofits are facing tough times now, we should expect tougher times ahead.