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Poverty Brief Greater Twin Cities United Way

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					                           GREATER TWIN CITIES UNITED WAY
                 F A C E S    O F     P O V E R T Y                                             2 0 1 2

                                                                                                Poverty Brief 1: March 2012
Six Key Learnings about Unemployment and Situational Poverty

For the past decade, since the merger of the St. Paul and Minneapolis United Way offices, Greater Twin Cities United Way has
been realigning its community impact work . This process has enabled United Way to focus its community investment on
those with the greatest need (people living at or below 200 percent of poverty) and invest in highly effective programs where
outcomes can be measured. Our choice to focus on basic needs, education and health was highly intentional. However, we
had never taken a comprehensive look at the causes of poverty, the different ways people get into and out of poverty, and
what keeps so many people in poverty. The data provided in “Faces of Poverty” and the subsequent poverty briefs we will be
releasing in 2012 will be used to strengthen our work going forward and to engage the larger community in reducing poverty
in our region.

1. The Poverty Trigger. A change in employment status or pay is the               Definitions
most common event triggering entry into or out of poverty. Periods of             •	Situational or episodic poverty: Refers to
unemployment and involuntary part-time work resulting from the labor                people who are in poverty for a relatively
market shifts often hinder someone’s ability to stay above the poverty line.        short but often recurring period of time
                                                                                    (i.e., at least two months but less than
	       •	Minnesota	had	17,400	residents	that	had	been	unemployed	for		             three years). There are an estimated
          more than six months in 2007. Four years later, in June 2011, this        400,000 people in situational poverty
          had increased to 75,800, including 47,700 that had been                   in Minnesota.
          unemployed for more than a year.
                                                                                  • 200 percent of poverty. Refers to a family
                                                                                    of four with an annual income of $46,100
	       •	When	the	unemployed	become	reemployed	it	is	usually	at	
                                                                                    or less in 2012. The official poverty rate
          a significant wage loss (i.e., the average worker sees a wage loss        is $23,050.
          of approximately 17%).
                                                                                  •	Extreme or deep poverty: Refers to a family
	       •	Since	the	1970s,	households	have	maintained	consumption	levels	           of four with an annual income that is less
          by working more hours (women entering the workforce) and then             than half the official poverty rate, or
          by taking out second mortgages (rebranded “Home Equity Loans”)            $11,525. Nearly half of people in poverty in
          on their houses during the housing boom, and by also increasing           the U.S. and in Minnesota (44%) are in
                                                                                    deep poverty.
          credit card debt.
                                                    (continued on next page)      Read the full Poverty Report at www.
                                                 2. Declining and Stagnating Wages Among Poor and Structural
                                                 Market Changes. More than half (51.9%) of Minnesota’s poverty population
                                                 in 2010 worked during the prior 12 months, and 8.3 percent worked full-time
                                                 year-round. Since the 1980s recession there has been significant income growth
                                                 among the highest earners but a decline or stagnation in wage growth among
                                                 low- and moderate-income workers. Structural economic changes, including
                                                 an increase in high-skill, high-wage occupations, and low-skill, low-wage
                                                 occupations, but a decline in the middle of the spectrum, have contributed to a
                                                 rise in unemployment.

                                                 3. Poverty Transitions. Contrary to common belief, large portions of the U.S.
                                       population will experience poverty at some point. Poverty spells are often short but
                                       frequently recurring. Among those experiencing short-term poverty, three-quarters may
                                       exit in less than four years, but roughly one-half will become poor again within five years.
One’s chances of becoming poor are higher for younger people, African Americans, Hispanics/Latinos, those in single-parent
households headed by women, and those with lower levels of education. The longer the poverty spell, the less likely one is to
escape and the more likely to return to poverty after exiting.

4. Education. Education level is a strong predictor of whether a household will move up or down the income scale
over time. While employment may be the most common event to pull one above the poverty line, education, particularly
schooling beyond high school, is the primary and most consistent driver of sustained upward income mobility.

5. Race. Unemployment rates vary considerably by race, and the Great Recession of December 2007-June 2009 was
particularly difficult for African American and Hispanic/Latino population groups. The Minnesota unemployment rate
for African Americans in 2010 (22%) was three times higher than that of whites (6%) and the Hispanic/Latino rate (12%)
was two times higher.

6. The Great Recession’s Impact on Household Wealth. The most recent recession had devastating impacts
on household wealth, eroding the bedrock that families use to survive during difficult times. While all racial and ethnic
groups experienced drops in wealth there were sharp differences among them. From 2005 to 2009, the inflation-
adjusted median wealth of Hispanic households fell 66 percent; it declined 53 percent among African Americans and 16
 during 2010 (slightly a result of these declines, in 2009, the typical African American household Employment,
percent among whites. Ashigher than the U.S., which was 18.9) (American Institute for Fullhad just $5,677
in wealth (assets minus debts), and the typical Hispanic household had $6,325. This is compared to a typical white
household which had on average $113,149 in wealth.

                          Percent Unemployed for 6 Months or Longer, U.S.: 1966-2010
                                     Recession                   Percent unemployed 27 weeks or longer

                1966    1970       1974         1978    1982     1986     1990     1994     1998      2002     2006     2010

           Source: Bureau of Labor Statistics
What United Way is Doing to Reduce Poverty

Investments. United Way invests in several strategies to increase the earnings of those living at or near
poverty. The largest investment—in job training—prepares and trains workers for better jobs, or a first job with
earnings growth potential. United Way is the largest non-governmental funder of job training in the nine-county
metro area, funding 25 job-training programs throughout the region at a total annual investment of $5 million.
We invest in programs with the best chance of placing people into jobs that are available in the marketplace,
such as the growing health care sector.

                            “The health care sector is experiencing an increase in job opportunities in clinic,
                            hospital and health plan settings. Jobs such as receptionists, appointment
                            schedulers, health unit coordinators and personal care assistants require some
                            post-secondary education or the completion of an industry recognized certification
                            program. Many of these positions directly partner with patients or members and
                            also require that individuals have a passion for teams and service as well as the
                            ability to effectively use technology and apply critical thinking skills.”
                                –Calvin Allen, senior vice president of strategic planning
                                 and human resources, HealthPartners, Inc.; and United Way board member
Calvin Allen

The Earned Income Tax Credit (EITC), a refundable federal income tax credit for low- to moderate-income
working individuals and families is a significant anti-poverty tool which lifts 6.6 million people nationally
above the poverty line each year. Claim It!, a community-wide partnership including United Way,
AccountAbility Minnesota, the IRS and other organizations, provides free tax preparation and resources
to families in need. Over the past five years, claiming EITC has brought more than $1 billion into the Twin
Cities region.

Leadership. United Way is a key leader in Minnesota FastTRAC, an innovative pilot program that helps low-
wage workers develop skills, attain post-secondary credentials and access employment that pays a family-
sustaining wage. United Way has played a lead role in convening partners from different sectors—including
representatives from the Minnesota State Colleges & Universities (MnSCU), the Department of Employment
and Economic Development (DEED), the Department of Human Services (DHS), and Adult Basic Education at the
Department of Education—to pursue a common and more effective solution.

Results. In 2010, United Way increased earnings for over 25,000 people. United Way-funded job training
programs placed nearly 10,000 individuals in jobs. Nearly three-quarters (72%) of participants placed retained
their jobs for at least six months.

       Increasing Earnings in the Nine-County Region. United Way recently announced
       a new goal to increase the earnings of 30,000 individuals by an average of
       $5,000 annually per individual by 2013. Our work will focus on investments that
       demonstrate job placements with meaningful earnings increase, demonstrate
       12-month job retention and incorporate financial education for people living at or
       below 200 percent of poverty.
What You Can Do to Help Reduce Poverty

Here’s how you can help reduce poverty in our community:

  	 1. Join the Conversation. Register today for our quarterly online conversations about poverty in our community at The more people engaged in the community dialogue the better,
    so tell your business colleagues, friends and families and ask them to register for an upcoming conversation.

    2. Partner with a Nonprofit. If you are a business owner, enter into a partnership with a United Way partner agency
    and employ one person per year. Contact the partner agency directly or contact Ben Knoll, chief operating officer at
    United Way at

    3. Volunteer: Find volunteer opportunities at local nonprofits by visiting

Greater Twin Cities United Way’s “Faces of Poverty” report was released in March 2012. Our poverty briefs address key issues
within the poverty report, including situational poverty and unemployment; child poverty and education; and chronic and
intergenerational mobility. To download the full “Faces of Poverty” report and find subsequent briefs,

For more information about this report, contact Devon Meade at Greater Twin Cities United Way:

Devon Meade
Phone: (612) 340-7420