The EITC, or Earned Income Tax Credit, has been known for over thirty years to be one of the more successful anti-poverty programs in the nation. The tax relief program is geared toward only workers earning income below a certain income threshold and is responsible for delivering much needed tax refunds to workers, who in turn use this money for medicine, rent, school supplies and food. Every year many people who are eligible for the tax credit in the U.S. and L.A. County fail to claim it, leaving behind billions in uncollected money. According to a 2008 research brief by the United Way of Greater Los Angeles, one in five taxpayers in L.A. County claimed the EITC in the 2006 tax year- that is, 750,000 taxpayers in L.A. County. These residents received a total of 1.5 billion dollars in refunds. Where does all this refund money go? What are the implications when eligible people don’t claim the refund and in essence, ‘leave it on the table’?

A new report by the New America Foundation examines the consequences. Money that is not claimed is never spent on local businesses, which in turn never create new jobs that could have been.  In addition, potential local tax revenue from this forgone economic activity is never generated. The report does an excellent job of highlighting how we are all in the proverbial “same boat.” Even if you are not low income, and not receiving the tax credit, your community still benefits by the infusion of cash coming into your business, your neighborhood and in your infrastructure via tax revenues generated.

Among some of the findings:

• L.A. County left over 370 million dollars in unclaimed refunds in year 2006. This meant a loss of over 440 million dollars to the economy in foregone sales.
• Over 2,700 jobs were not created due to this loss to the economy. This translates into over 123 million dollars in forgone wages.
• The EITC is particularly important in L.A. County because it has a higher level of poverty than the state and the nation- nearly 40% are considered low income. L.A. County has a lower median income compared to other large metro areas, and has a higher proportion of minorities (a constituency which claims the EITC in no small numbers).

If poverty prevention as well as alleviation is to be a public policy goal for our communities, then EITC expansion and funding for capacity and outreach is vital.  To learn about EITC outreach efforts in Los Angeles, visit http://www.greaterlaeitc.org/.

I look at the Business page because…..well, I guess I’m a glutton for punishment. Besides some obligatory stories on the latest techie tools that are going to revolutionize consumer electronics, here are a some sober headlines from the January 6 LA Times Business section:

“Lower number of new deals under contract shows shakiness in the housing recovery.”

“Mixed data on the recover stifle stocks.”

“Only 45% of workers are happy with their jobs, the lowest rate in 22 years, survey finds.”

“Banks take revenge for new consumer-protection rules”

The media has been looking for any good news where it can find it (worker productivity is up!), but unemployment is still high, housing and stocks are shaky, and workers and consumers are still taking it on the chin.

Here’s more bad news: I’m on my way to Chicago and the weather page says to expect a high of 23 degrees. However, when I get back to LA on Friday, it’ll be sunny and 72. I guess my daughter knows something I don’t: if you live in LA and want good news, check the weather.

In this vein, TIME’s recent cover story describes “What’s Still Wrong with Wall Street.” Allan Sloan writes:

Welcome to Round 2 of Main Street vs. Wall Street. The divide is the worst I’ve seen in my 40 years of writing about finance. In a new TIME poll, 75% of the respondents say they believe Wall Street will revert to business as usual, 67% want the government to force pay cuts, and 59% want more government regulation.

Main and Wall are never going to love each other. And they probably shouldn’t, because their interests aren’t identical. But if we’re going to get through this mess as a society and regain our prosperity, Main Street and Wall Street need to understand each other. And they don’t.

(To see some interesting poll data, as well as a telling graph from Thomas Piketty and Emmanuel Saez’s research on income inequality, check out the PDF version of the article.)

Sloan concludes with four ideas for fixing the disconnect, the first two geared toward policy makers, the latter two directed to you and me.

1) Break up institutions that are too big to fail so that we can allow them to fail.
2) Tell the truth, and play it down the middle.
3) Put not your faith in the Fed or Uncle Sam.
4) And for heaven’s sake, don’t put your faith in Wall Street.

To reinforce these points, I might add that Nancy Gibbs’s article in the same issue on “The Case for Modesty, in an Age of Arrogance” should be required reading for all of us.

TOTAL JOBS LOST DURING THE RECESSION: 6.9 MILLION
• New jobs needed per month to keep up with population growth: 127,000
• Jobs needed to regain pre-recession unemployment levels: 9.4 million

UNEMPLOYMENT RATE: 9.7%
• Number unemployed: 14.9 million (up from 7.5 million in December 2007)
• Underemployment rate: 16.8%; Share of workers un- or underemployed: roughly 1 in 6
• Under- and unemployed, marginally attached and involuntary part-time workers: 26.4 million
• Unemployment rate, ages 16 to 24: 18.2%

INCREASE IN AVERAGE U.S. WORKER’S PRODUCTIVITY, 2000-07: 19.2%
• Decrease in all prime-aged worker’s real median weekly wages, 2000-2007: $1; Decrease for African Americans: $3
• Ratio of average CEO’s pay to typical worker’s pay in 1979: 27 to 1; Ratio in 2007: 275 to 1

AMERICANS UNINSURED IN 2007: 45 MILLION
• Drop in children covered through parents’ employers, 2000 to 2007: 3.4 million
• Share of people under 65, with incomes in the top 20%, covered by employers in 2007: 86.4%; Share with incomes in the bottom 20%, covered by employers: 21.9%

SHARE OF PEOPLE NEAR RETIREMENT AGE WITH A 401(K) BALANCE UNDER $40,000 IN 2007: 50%
• Percentage of amount needed to maintain living standards that is held by average 401(k) participant approaching retirement: 20-40%
• Share of 401(k) assets estimated to be lost since 2007: 29%

For data sources and even more fun (and not so fun) facts, visit EPI’s Labor Day by the Numbers fact sheet.

Probably like most everyone, I personally know people who have lost their homes or are at serious risk of doing so. Besides the obvious financial drain, there are social and emotional costs of losing a home and having to move. The consequences are not just personal, of course, as declining property values mean reduced property tax revenue for local governments and the credit meltdown contributes to rising unemployment and overall insecurity in financial markets: a truly vicious cycle.

What surprised me most during the early stages of the meltdown was the, well, surprise with which policymakers, economic and financial “experts,” and the media reacted. It wasn’t as if plenty of researchers, analysts, activists and even some policymakers hadn’t been sounding alarm bells about the dangers of the housing boom. Even my 2004 dissertation highlighted the dangers of subprime lending for minority and low-income communities (further evidence that no one besides those who have to read those things…).

Now that things have (hopefully) stabilized somewhat, some are questioning whether the American-Dreamy promotion and prioritization of home ownership is in the best interest of society. U Penn Historian and Sociologist Thomas Sugrue had an interesting piece in the Wall Street Journal titled, “The New American Dream: Renting.” Sugrue traces how home ownership became so intertwined with American mythology:

The story of how the dream became a reality is not one of independence, self-sufficiency, and entrepreneurial pluck. It’s not the story of the inexorable march of the free market. It’s a different kind of American story, of government, financial regulation, and taxation.

We are a nation of homeowners and home-speculators because of Uncle Sam.

The mortgage interest tax deduction has helped subsidize increasing home ownership rates and suburbanization in the U.S., but also costs the federal government tens of billions of dollars in revenue. In a 2005 article in Shelterforce, Peter Dreier highlights the disparities in how homeowners and renters fare in help from the government:

Of the hundreds of tax breaks (what economists call “tax expenditures”) for corporations and individuals in the nation’s tax code, the largest are the subsidies for homeowners. The two major homeowner tax breaks cost the federal government almost $90 billion last year – $70.1 billion for the mortgage interest deduction and $19.3 billion for the property tax deduction – according to a report by the Congressional Joint Committee on Taxation. That would be ok if most of it helped middle- and working-class people. But it doesn’t. Those with the highest incomes and the most expensive homes (including second homes) get the largest subsidy.

Most Americans think that federal housing assistance is a poor people’s program. In fact, less than one-fourth of all low-income Americans (those who have Section 8 rental vouchers or who live in government-assisted developments) receive federal housing subsidies. In contrast, almost two-thirds of wealthy Americans – many living in mansions – get housing aid from Washington.

Even the sacred cow of mortgage deduction has come under attack and been subjected to possible revision by the federal government. Even though, having bought a town home several years ago, I benefit greatly from this federal subsidy, I have to agree with Thomas Sugrue that “if there’s one lesson from the real-estate bust of the last few years, it might be time to downsize the dream, to make it a little more realistic.” Or, I might add, at least make access to it a little more equal.

While any job loss is tragic, layoffs at this scale can also be traumatic for entire communities: “the closing of a plant or several mass layoffs in the same area also erode the community’s tax base, resulting in a ripple effect, such as decreased funding for schools or falling property values.”

A new report from the LA-based Economic Roundtable attempts to meet those needs by providing a wealth of the most recent data on how the current recession is affecting everything from employment, income, housing, poverty and health in Los Angeles and the state. Using historical data on recessions and employment projections from respected forecasters, the report produces estimates for how residents will fare over the coming years. If you are interested in where we’ve been and could be going, check out Ebbing Tides in the Golden State: Impacts of the 2008 Recession on California and Los Angeles County.

In general, the report sees conditions continuing to worsen over the next year but then starting to improve steadily by 2011 or 2012. It even provides estimates of how much poverty and homelessness will increase or decrease. Are these accurate? Of course there is no way to know. As the Nobel Prize laureate physicist Niels Bohr said, “Prediction is very difficult, especially about the future.” At the very least, Ebbing Tides in the Golden State provides an important overall understanding of how deep the recession is affecting us.

The deprivations of the formerly affluent Nouveau Poor are real enough, but the situation of the already poor suggests that they do not necessarily presage a greener, more harmonious future with a flatter distribution of wealth. There are no data yet on the effects of the recession on measures of inequality, but historically the effect of downturns is to increase, not decrease, class polarization.

The recession of the ’80s transformed the working class into the working poor, as manufacturing jobs fled to the third world, forcing American workers into the low-paying service and retail sector. The current recession is knocking the working poor down another notch — from low-wage employment and inadequate housing toward erratic employment and no housing at all. Comfortable people have long imagined that American poverty is far more luxurious than the third world variety, but the difference is rapidly narrowing.

We shouldn’t discount the negative effects the current crisis is having on a wide range of families who make up the newly poor; but neither should we forget the long-term poor, who will be less likely to bounce back once the crisis turns.

Whether we’re at the bottom, nearing it, or still far away, many, many people are having a very difficult time during this period. Last week, I attended a session with about 40 community organizations that serve the poor and homeless in Los Angeles, and they reported that they are seeing a whole new swath of people coming to them for help. They’re seeing formerly middle-class people unfamiliar with how social safety net systems work, people who lost jobs and were evicted, increasing numbers of families and an overall increase in demand for basic services.  Here’s a sampling of what they reported:

• An organization that runs a day shower program has seen a 180% increase in people coming in.
• A large shelter has seen a 35% increase in families that they are serving and 60% increase in women, and they are having to turn away 150 people a night.
• A winter shelter program had increase of 630% families looking for emergency shelter; two-thirds of them became homeless due to foreclosure, eviction or job loss.
• An employment services organization has seen a 60% increase in people coming in at the same time there has been a 10% drop in jobs people can apply for.

Clearly, for a growing number of people in this country, whether we’ve hit the bottom of the recession or not is academic; they’re already there.

Women appear to be weathering the economic storm slightly better than men. Does this mean that social trends and policies such as affirmative action have reversed gender discrimination in labor markets? As analysts point out, the mostly likely reasons for these trends are that hard-hit sectors such as construction, manufacturing, and financial services tend to be male-dominated; while female-dominated sectors such as healthcare and education have not seen such high levels of job loss. Also, college graduates are half as likely to be unemployed as those who have not gone to college; and more women today are a third more likely than men to have graduated from college.

So, women are doing better than men by some measures, but this doesn’t mean that gender discrimination has disappeared. Despite the gains women have made in education, for example, they still earn less than men on average, even when controlling for hours, occupation, parenthood, and other factors known to affect earnings. In many ways, the proverbial “glass ceiling” still exists. According to Amy Osler from the Chicago Network, which tracks the advancement of women in the workplace, “it’s like climbing straight up an ice mountain.”

So, women, take heart that you’re keeping your jobs at a better rate than men; but watch out for likely budget cuts in education, healthcare, social work…