How Much Could Policy Changes Reduce Poverty in New York City?

RESEARCH REPORT How Much Could Policy Changes Reduce Poverty in New York City? Linda Giannarelli Laura Wheaton Joyce Morton 0DUFK 2015 POVERTY, VULNERABILITY, AND THE SAFETY NET ABOUT THE URBAN INSTITUTE The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. ABOUT THE FUNDERS This work was supported by the Federation of Protestant Welfare Agencies, Catholic Charities Archdiocese of New York, and UJA-Federation of New York. &RS\ULJKWk0DUFK8UEDQ,QVWLWXWH3HUPLVVLRQLVJUDQWHGIRUUHSURGXFWLRQRIWKLVILOHZLWKDWWULEXWLRQWRWKH8UEDQ,QVWLWXWH Contents Acknowledgments v Statement from the Funders vi Executive Summary ix Introduction 1 Measuring Poverty before and after the Policies 3 The Survey Data and the Microsimulation Model 3 Measuring Poverty 4 Simulating the Policies 10 Limitations of the Analysis 10 Antipoverty Impacts of Proposed Policies Applied Individually 12 Transitional Jobs 12 Earnings Supplements 16 Minimum Wage Increase 20 Increased Supplemental Nutrition Assistance Program Benefits 24 Increased Housing Vouchers 26 Guaranteed Child Care Subsidies 29 Senior and Disability Tax Credit 32 Reductions in the Poverty Gap from Individual Policies 34 Costs of Individual Policies 36 Policies in Combination 39 Poverty Impacts of Policies in Combination 40 Costs of Policies in Combination 46 Conclusions and Caveats 49 Appendix A: TRIM3 Simulation Methods and Baseline Data 50 The ACS Data 50 TRIM3 Data Preparation 51 TRIM3 Baseline Simulations 54 Appendix B: Poverty Thresholds 63 Appendix C: Detailed Methods and Assumptions for the Policy Simulations 65 Transitional Jobs Simulations: Participation Assumptions 65 Earnings Supplement Simulations: Credit Amounts and Employment Effects 66 Minimum Wage Simulations: Identification of Affected Workers and Job-Loss Assumptions 68 Guaranteed Child Care Subsidies: Employment Effects 70 Appendix D: Detailed Simulation Results 72 Notes 94 References 96 About the Authors 98 Statement of Independence 99 Acknowledgments This work was supported by the Federation of Protestant Welfare Agencies, Catholic Charities Archdiocese of New York, and UJA-Federation of New York. The views expressed in this publication are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. The work could not have been completed without the contributions of numerous Urban Institute colleagues. Maria Enchautegui consulted on the immigrant status imputations, Dean Resnick provided one component used in the immigrant-status imputations, Silke Taylor expertly completed new programming related to taxes, and Kara Harkins’ programming facilitated the data analysis. Also, Elaine Maag, Kye Lippold, Christin Durham, Erika Huber, Sarah Minton, Elissa Cohen, Martha Johnson, and Paul Johnson either contributed to individual simulations or previously developed aspects of the TRIM3 (Transfer Income Model version 3) model used in this analysis. We gratefully acknowledge the assistance of Thesia Garner and Marisa Gudrais of the US Bureau of Labor Statistics, who provided us with the alternative poverty thresholds that we used. We also appreciate the involvement of the advisory group that was convened by the three sponsoring organizations to consider the alternative policies and review the simulation results. The advisory group members are: James Parrot (Fiscal Policy Institute); John Mollenkopf and Lesley Hirsch (CUNY Graduate Center, Center for Urban Research); Christine D’Onofrio, Daniel Scheer, John Krampner, and Vicki Virgin (NYC Center for Economic Opportunity); David Riemer, Conor Williams, and Julie Kerksick (Community Advocates Public Policy Institute, Wisconsin); Maryanne Schretzman (NYC Center for Innovation through Data Intelligence); and Jack Krauskopf (Baruch College). The analysis rests on the foundation of prior investments in the development of the TRIM3 modeling system. The Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (DHHS/ASPE) funds and holds the copyright to the version of TRIM3 that operates on Current Population Survey (CPS) data. TRIM3’s adaptation to the American Community Survey was funded by the Casey Foundation and the MacArthur Foundation. Urban strives for the highest standards of integrity and quality in its research, analyses, and policy recommendations. Urban scholars believe that independence, rigor, and transparency are essential to upholding those standards. Funders do not determine research findings or influence scholars’ conclusions. As an organization, the Urban I