Poverty gap widens between Louisiana and U.S.

Poverty gap widens between Louisiana and U.S.

By Nick Albares

The poverty rate in Louisiana for adults and children remained unacceptably high in 2015 even as other states saw significant improvements. New U.S. Census data released Thursday also show that Louisiana continues to have one of the highest rates of income inequality in the United States. They point to the need for greater investments in programs that support low-income working families, such as child care assistance, need-based financial aid for college, and an expansion of the state’s Earned Income Tax Credit.

Here are five key trends that you should know about:

1. Wages are low and poverty is high

Nearly one in five Louisianans — 889,946 people, or 19.6 percent of the population — lived in poverty last year, the third-highest rate in the nation. That includes more than 300,000 children (28.4 percent; also third highest).

Wages in Louisiana continue to lag behind the rest of the nation. Louisiana’s median household income was $45,727 in 2015, compared to a national median of $55,775. And income inequality is fourth-highest among the states, trailing only Connecticut, New York and the District of Columbia – one more reason the state should reform its upside down tax structure.


 2. The poverty gap is growing between Louisiana and the nation

While the poverty rate in Louisiana was statistically unchanged in 2015 from the previous year, the rest of the country saw a decrease in the number of families that cannot afford life’s basic necessities. This is especially true for children – who experience poverty at significantly higher rates than adults in Louisiana and elsewhere.


One in 4 Louisiana kids – 312,710 children or 28.4 percent –  are growing up in families that can’t afford the basics necessary for a good start to life because they make so little. That’s a slight uptick from the previous year’s rate of 27.9 percent. Nationally, it was a different story, as the poverty rate for kids dipped slightly to 20.7 percent from 21.7 percent the previous year.


Perhaps most disturbing, the state’s poverty rate jumps to 31.5 percent for children under 5, highlighting the urgent need for the state to invest in early care and education.

3. Racial disparities are deep and persistent

The economic gap between African Americans and whites in Louisiana remains stark and significant. One in three black Louisianans lived below the federal poverty line in 2015 and were almost two and a half times as likely as whites to live in poverty (32.2 percent compared to 13.2 percent). The average white worker earned more than twice as much as an African-American worker — $56,093 compared to $27,537. The poverty rate for Latinos was 24.1 percent and 22.7 percent for Native Americans.

The outlook for African American children is even more dire, with close to half (46.4 percent) living in poverty across the state.census_4_rates_by_race

The gender gap also is apparent in the poverty data. The poverty rate for women in Louisiana is 21.8 percent, compared to 17.2 percent for men.

4. Deep poverty is persistent

Deep poverty – defined as living on an income of less than half the federal poverty line – remains stubbornly high in Louisiana. One in 10 Louisiana households made less than $10,000 a year in 2015. Along with the state’s high rate of income inequality, this highlights the wide gulf between Louisianans struggling to gain basic necessities and those at the top. Tax reform and targeted public investments are needed to reverse this troubling trend.census_5_deep_poverty

5. Things would be worse without the safety net

Major public investments at the federal level played a powerful role in building opportunity and helping people build a more secure future last year. Federal safety net programs cut the U.S. poverty rate nearly in half in 2015, lifting 38 million people — including 8 million children — above the poverty line, according to an analysis by the Center on Budget and Policy Priorities (CBPP). Analysts at CBPP arrived at this number by comparing two Census data sets, one that counts government assistance when calculating the poverty level. The difference between the poverty rates shows the positive impact of programs like Social Security, SNAP (formerly food stamps), Supplemental Security Income, rent subsidies, and tax credits for working families like the Earned Income Tax Credit (EITC) and Child Tax Credit.

Louisiana can build on the success of the federal safety net by bolstering investments in child care assistance, need-based financial aid for college, and through an expansion of the state EITC. census_6_safety_net

Reforms needed to address poverty and inequality

There are several things Louisiana can do to build a more inclusive economy that betters the lives of families struggling to make ends meet:

  1. Fully fund K-12 schools: Despite evidence that education is the key to a strong economy and that funding levels matter, the dollars going to support public education have failed to keep up with inflation since the start of the recession.
  2. Ensure college financial aid for those who need it the most: Louisiana has cut funding to colleges by 39 percent since 2008 while tuition rose 80 percent over the same time frame. In addition, the Go Grant program, the state’s only need-based award, is chronically underfunded at the same time cuts to TOPS are disproportionately impacting low-income recipients. Investments in those least likely to attend college provide the greatest returns. The state must ensure that TOPS returns to its original purpose of providing support for those most in need, while also investing more in the Go Grant program.
  3. Increase the value of the state Earned Income Tax Credit (EITC): The federal and state EITC rewards and encourages work by increasing income. The credit is especially beneficial for children, as studies have shown that higher family incomes lead to stronger school performance and improved lifetime earnings. Unlike many other tax credits that have never been rigorously evaluated, the benefits of the EITC for Louisiana’s families and children are proven. Doubling the value of the EITC would be an important investment in a stronger economic future for Louisiana.
  4. Fund early care and education for the youngest Louisianans. The state does not provide any general fund dollars to the Child Care Assistance Program for low-income children and their parents. The number of subsidized child-care slots has decreased from 40,000 in 2009 to 12,500 today. Investing state dollars in high quality early learning is proven to have a high rate of return.