Saturday, May 31, 2008

Poor Kids in A Rich Country

This is the title to a book that I have been reading on and off for several months. I cannot read it in long stretches because I grow so angry that I frequently have to set it aside and walk away from it for a while.

Rainwater, Lee, and Timothy M. Smeeding. Poor Kids in a Rich Country, America’s Children in Comparative Perspective. (2003.) Russell Sage Foundation, New York.

During my 38 years as a higher education policy analyst I have struggled to understand why this country treats children born into poor families the way we do. Maybe I could understand why we turn our backs on adults who have made persistently self-destructive choices in their lives and find themselves at the margins of life—maybe. But how we could condemn utterly innocent children to a life poisoned by inherited poverty bespeaks a degree of American extraordinary meanness that I want to deny exists.

For example since about 1980 the United States has been working relentlessly to make college more expensive and less affordable to students. Mainly this is occurring at the state level where states have slashed their state support for the public universities and colleges they created. So public institutions have been aggressively raising tuition charges to students to offset the lost state support. And since no more than 10 states have decent state need-based grant programs college is truly less affordable, but mainly to students from the bottom half of the family income distribution, below about $65,000 per year. At the federal level the focus student financial aid has shifted first from need-based grants, to cheap loans, then to subsidized loans and most recently to private market loans. The federal government now offers various tax incentives to just about everyone except families too poor to pay federal income taxes. Where we are today is about 180 degrees reversed from where we set out in 1965 in the War on Poverty. Today students from the bottom half of the family income distribution--below about $65,000 per year—face about $32 billion in unmet financial need. Since 1980 our public financing of higher education opportunity has been corrupted by political interests, profit motives, and institutional greed that have had disasterous consequences for poor college-age children.

The Rainwater/Smeeding book begins with the finding that there are poor children everywhere. Then with data compiled through the Luxembourg Income Study the authors compare the effects of government resource transfers to alleviate child poverty in the United States and 14 other rich countries: Belgium, Denmark, Finland, France Germany, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom, Australia and Canada. The many comparisons reported in the book consistently show the United States ranking dead last—often by a wide margin—in alleviating child poverty. All of the other 14 countries make greater efforts and are more successful in reducing child poverty than is the U.S. The four Scandinavian countries effectively eliminate child poverty completely. The other countries are not quite so successful, but all try harder and accomplish more than we do.

At several points in the book the authors offer their own interpretations of these data. On page 13, for example, the authors write:

"… we conclude that America has high child poverty because we choose to have it—not because we cannot do anything about it. Other nations make different choices and get different results. In contrast to the Bush administration’s rhetoric, we choose to leave a large fraction of America’s children behind and the comparative analyses we present here inform us by how much.

Anyone who cares about poor children in the United States will find this book a very difficult read. For me it helps understand the mean spirited, selfish, short-sighted choices our federal and state policy makers have made since 1980. The ugly reality about ourselves revealed by the authors through the comparison of poor child treatment sheds light on our shameful record of indifference to child poverty.

Tuesday, May 06, 2008

What is Middle Income?

In the last few months there have been many references to financial aid for students from "middle income" families where the income ranges from $100,000 to $200,000. I find these references to be abuses of the English language and the facts. Students in this family income range are wealthy or affluent or rich--but they certainly are not "middle income".

Here are the facts. For decades I have calculated and reported on the family income distributions of high school graduates in the 18 to 24 age range using data from Table 14 of the Census Bureau's annual report on school enrollments:
The most recent data for 2005 may be divided into four quartiles of family income as follows:
Bottom quartile: $0 to $36,539
Second quartile: $36,540 to $64,108
Third quartile: $64,109 to $98,433
Top quartile: $98,434 and up
These are for 18 to 24 year old high school graduates who are dependent family members. Exactly one-quarter of the total fall into each family income quartile range. If one were to include the family incomes of 18 to 24 year old high school dropouts these family income ranges would be lower.

Using the 2004 National Postsecondary Student Aid Study we have also calculated family income quartile ranges for all 18 to 24 year olds:
Bottom quartile: $0 to $34,288
Second quartile: $34,289 to $62,240
Third quartile: $62,241 to $95,006
Top quartile: $95,007 and over

There are other data sets that confirm these ranges. Most policy analysts refer to middle income broadly as the two middle quartiles, from about $35,000 to $95,000, then might say something about lower middle income and upper middle income. None that I have ever heard or read would consider students from families with incomes of more than $100,000 to be "middle income."

By any conceivable measure students from families with incomes of more than $100,000 are doing extraordinarily well in the education pipeline. They have the highest high school graduation rates (92.5%), college continuation rates for those that graduate from high school (87.0%), and bachelor's degree completion rate by age 24 for those who start college (90.1%). As a result they earn bachelor's degrees by age 24 at far higher rates (72.6%) than do students born into lower income families (27.9% in the third quartile, 16.6% in the second quartile, 12.3% in the bottom quartile).

I realize that many high school and collegiate members of NACAC work almost entirely with students from the top quartile of family income, over $100,000 per year. While these are undoubtedly talented students, they are also students with inherited privileges and educational opportunities not available to students born into families with fewer resources. They have little or no measurable financial need to pay for college. However students from the bottom three quartiles of family income faced $31.9 billion in unmet financial need, or $56.4 billion in work/loan burden in 2004 based on our calculations from the NPSAS study. To fuss over financial aid awards for these rich kids while the staggering gaps in aid for those from lower income families who need it keep growing should be a professional embarrassment to the NACAC organization and its members.