The cost of Christmas is up, especially for the poor

by David Bass | Dec 18, 2023

The cost of gifts, meals, and trips to see family and friends have gone up, inflation, debt, low-income

The cost of Christmas is up, especially for the poor

Key Points

The blog underscores the significant impact of inflation on Christmas expenses, encompassing gifts, meals, and travel, affecting Americans, particularly those from lower economic classes, hindering their enjoyment of the holiday’s relational aspects.
Emphasizing a recent inflation surge due to pandemic-related factors, the post characterizes it as an “inflation tax” disproportionately affecting the poorest Americans, creating challenges in accessing opportunities crucial for a meaningful life.
Supported by statistical evidence, the blog reveals the financial hardships caused by inflation, with the average American household spending $11,434 more annually since January 2021, particularly impacting the poor who face significant debt obstacles.

This year, inflation is threatening to put a dent in Christmas festivities. The cost of gifts, meals, and trips to see family and friends have gone up, to name a few common items. And Americans are noticing.

The pinch is particularly painful for those from the lower classes. Putting aside the greater cost of material items, a more expensive holiday means that those who are struggling will have a more challenging time enjoying the relational aspects of the holiday, including being with family while celebrating treasured traditions and connecting around meals.

What’s clear from these data points is that America’s recent burst of high inflation—which soared to a 40-year high in the aftermath of pandemic-related shutdowns, supply chain disruptions, and government stimulus overspending—has driven up the cost of goods and services and inflicted an “inflation tax” that disproportionately hits the poorest Americans the hardest.

At the Georgia Center for Opportunity, our mission is built around promoting human flourishing—especially for those on the margins. The high cost of Christmas this year matters because it reflects the reality that high inflation reduces people’s ability to access the opportunities that shape a meaningful life.

By the numbers: Inflation’s effect on household budgets

Just how bad is it this year? Nationally, a recent report found that the average American household now spends $11,434 more annually to maintain the same standard of living they enjoyed in January 2021. Worse, they’re using credit cards to finance everyday purchases—running up debt and leaving very little extra for the holidays.

For the poor, debt can become an insurmountable obstacle to moving up the economic ladder. Low-income households spend around 26% of their income each month on debt, compared to around 4% for wealthy households (even though wealthy households carry far more debt on average).

On a personal level, this decreased purchasing power means that more families teetering on the economic edge are struggling to put food on the table during the normal year—let alone for special meals around the holidays. A recent survey found that 50% of Americans say Santa will be less generous this Christmas due to inflation—and that one in three won’t be getting presents this year.

Even for those who plan to spend money this holiday season, 28% say it will be less than last year. And nearly 20% will apply for new credit cards to finance their purchases—despite the fact that nearly 25% still carry holiday debt from last year.

So how expensive are traditional items that Americans associate with the holidays in 2023? PNC Bank’s Christmas Price Index (CPI) shows the overall cost for Christmas festivities has gone up nearly 20% since 2021. For example, Christmas breakfast classics like bacon and eggs are up 24% and 41%, respectively, since 2021, while Christmas dinner pork chops are up 20%.

Gas prices are up 55% over the same time period, making transportation to and from work even more difficult for the poor. Meanwhile, the price to buy a used car has jumped by 22%.

Even home energy costs have risen so much that some families must decide between heating their homes and buying presents. Since September 2021, the cost to heat homes and keep lights on has risen 20% for electricity and 18% for gas.

It is a complex problem caused by a myriad of systems and choices but the implications are substantial. Inflation is having a catastrophic impact on those living in poverty. We discuss what is causing it and what we must do to address it.

Finding joy in the season

A recent Financial Times–Michigan Ross poll found that 82% of Americans say that price increases are their biggest source of financial stress. So even as the jobless rate improves and inflation cools, many consumers simply aren’t feeling it. And this translates into pessimism about the economy as we move into the 2023 holiday shopping season.

It doesn’t have to be that way. During the holiday season, the GCO message of giving hope and opportunity to those who most need it couldn’t be more needed. It’s painful to realize how much many of our neighbors are struggling with the high cost of inflation. But it’s a great invitation for communities to come together and offer support in ways the government can’t.

We can make the biggest difference by starting small and close to home.

Missouri is first state to pass law addressing benefits cliffs

by David Bass | Nov 15, 2023

Missouri lawmakers<br />
Senate Bill 82<br />
public assistance provisions<br />
benefits cliffs<br />
Temporary Assistance for Needy Families (TANF)<br />
Supplemental Nutrition Assistance Program (SNAP)<br />
child care subsidy programs<br />
transitional benefits program<br />
poverty level<br />
state median family income<br />
welfare programs<br />
fiscal note<br />
Medicaid<br />
self-sufficiency<br />
workforce solutions<br />
government assistance<br />
economic opportunity<br />
dependence on the government<br />
benefits cliff phenomenon<br />
social and economic opportunity

Missouri is first state to pass law addressing benefits cliffs

Key Points

Missouri Leads the Way: The enactment of Senate Bill 82 establishes Missouri as the first state in the nation to address public assistance provisions, breaking ground in reforming safety-net benefits and combating the cycle of dependence on government support.
Benefits Cliff Challenge: The legislation acknowledges the pervasive issue of benefits cliffs, where individuals and families face a sudden loss of government assistance as their income increases. The law aims to mitigate this challenge by introducing transitional benefits programs in TANF, SNAP, and childcare subsidy programs.
Incomplete Solution: While the Missouri law is a commendable first step, there are concerns about its comprehensive effectiveness. The legislation, utilizing new funds, creates a supplemental program to ease the loss of benefits but doesn’t address underlying program variables contributing to benefits cliffs. Additionally, potential underfunding and the absence of Medicaid in the scope raise questions about the long-term sustainability and impact of the solution.

Missouri lawmakers recently took an important step toward helping poor and working-class residents escape safety-net benefits cliffs and experience the dignity and opportunity of work. By enacting Senate Bill 82, the Show Me State is now the first in the nation to address public assistance provisions that often entrap program participants by punishing work and perpetuating dependence on the government.

It’s no secret that many Americans rely on government assistance programs to make ends meet. But they often get caught in a Catch-22 situation—a benefits cliff—which disincentivizes them from looking for more meaningful work and gaining independence.

These benefits cliffs occur when an individual, family, or household experiences a sudden, steep loss of government assistance as income increases. Perversely, this net loss undermines the natural desire to earn more income because it takes a huge pay bump to overcome the cliff. The unintended consequences of a benefits cliff can be devastating—trapping individuals and families in a cycle of poverty.

How the new law works

This new Missouri law modifies benefits cliffs to enable residents to more easily earn additional income and experience the fulfillment and belonging that comes with social and economic opportunity. It does so by easing the loss of benefits in the Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP) and child care subsidy programs for families that lose income eligibility for these programs.

Specifically, this law establishes a transitional benefits program for TANF and SNAP—subject to funding from the state legislature—to help the transition off of benefits and reduce the impact of the program cliffs. The benefit is stepped down on a one-to-one basis as income increases.

It also helps to alleviate the loss of benefits from the child care subsidy program by creating a transitional benefits program using a sliding scale that steps down transitional benefits until the household reaches 300 percent of the poverty level or 85 percent of the state median family income.

When funded and implemented, this law will positively impact all individuals and families on the SNAP and childcare subsidy programs whose income exceeds program limits—but remain under income limits for the transitional benefits. It would not, however, impact TANF recipients because the program’s cash assistance tampers to zero, which means there would be no transitional benefits.

And building upon the foundation laid in Missouri, other states should similarly experiment with creative solutions to the cliffs problem.

The next step

While the new Missouri law is a commendable first step by a state to correct design flaws in benefit cliffs, there is still more work to do. For example, this legislation fails to address the variables in each program that drive the benefits cliff phenomenon in the first place. Instead, it uses new money to create a bridge that eases the loss of benefits when coming off designated programs.

Precisely because it uses new money, this solution represents a potentially huge and expensive expansion of welfare programs in Missouri. Indeed, the fiscal note accompanying the legislation estimates a cost of around $200 million per year in state revenue.

So rather than a comprehensive and holistic resolution to the benefits cliff problem, this new law essentially creates a supplemental program at risk of being underfunded in years when the legislature fails to fully fund at levels to meet demand—creating challenges for state agencies charged with program implementation. Moreover, the law doesn’t address Medicaid at all—the biggest driver of benefit cliffs in terms of dollar impact to families.

Despite these limitations, this new law recognizes that benefits cliffs are a real problem in need of a solution. And it attempts to address design flaws in two of the biggest-offending programs—SNAP and childcare. Finally, it recognizes the need to step down benefits in ways that eliminate cliffs as people earn additional income and learn to stand on their own with increasingly less dependence on the government.

In tackling the challenge of benefits cliffs, Missouri lawmakers have set the bar for other states to consider solutions to welfare systems that prevent people from becoming self-sufficient by holding them back from working as much as they could or should.

And building upon the foundation laid in Missouri, other states should similarly experiment with creative solutions to the cliffs problem. This includes waivers and other steps to address systemic program flaws. It also includes pilot projects to demonstrate how to eliminate cliffs with a net positive impact on those who work more, earn additional income and become self-sufficient faster than would otherwise be possible.

The two-parent privilege and how it helps families escape poverty

by David Bass | Oct 28, 2023

Two-parent households<br />
Income inequality<br />
Social mobility<br />
Poverty reduction<br />
Marriage<br />
Economic well-being<br />
Single mothers<br />
Single fathers<br />
Education outcomes<br />
Behavioral tendencies<br />
American Dream<br />
Economic security<br />
Social challenges<br />
Family structure<br />
Economic performance<br />
Government intervention<br />
Grassroots change<br />
Cultural change<br />
Fathers' role<br />
Labor force participation<br />
Marriage penalties<br />
School choice<br />
Social agnosticism

The two-parent privilege and how it helps families escape poverty

Key Points

The decline in two-parent households is a major driver of income inequality and decreased social mobility in the United States.
Two-parent households provide a significant “privilege” for children, leading to better educational and economic outcomes, lower rates of incarceration, and improved chances of achieving the American Dream.
To alleviate poverty and strengthen two-parent households, policy proposals and grassroots cultural changes are needed, along with addressing the importance of fathers in society and promoting stable marriages and families without stigmatizing single parents.

Addressing Income Inequality

Income inequality is on the rise. Social mobility is on the decline. Politicians focus a lot of firepower on these two realities, but they too often ignore a major driver of these trends—one that might surprise you. That’s the drop in the percentage of stable, two-parent households.

At the Georgia Center for Opportunity, our goal is to reduce poverty and encourage human flourishing. Healthy families are a key part of that. What often gets shunted to the side in this discussion, however, is how much family composition matters.

Family Matters

Bravely entering into this political fray is Brookings Institution economist Melissa Kearney with her new book, The Two-Parent Privilege: How Americans Stopped Getting Married and Started Falling Behind. Coming from a centrist (if not center-left) worldview, Kearney provides a refreshing and clear-eyed assessment of the powerful role that marriage plays in reducing poverty and bolstering economic well-being for children, adults and the nation as a whole.

Kearney even frames her book title in terms progressives better understand by using the term “privilege”—precisely what two-parent households afford children across a spectrum of metrics ranging from educational outcomes to behavioral tendencies, rates of incarceration and the likelihood of achieving the American Dream.

Here, Kearney asserts, “The decline in the share of US children living in a two-parent family over the past 40 years has not been good—for children, for families, or for the United States.”

Going further, she says, “Based on the overwhelming evidence at hand, I can say with the utmost confidence that the decline in marriage and the corresponding rise in the share of children being raised in one-parent homes has contributed to the economic insecurity of American families, has widened the gap in opportunities and outcomes for children from different backgrounds, and today poses economic and social challenges that we cannot afford to ignore—but may not be able to reverse.”

Of course, nobody seeks to stigmatize or deny the heroic efforts that loving and dedicated single parents sacrificially pour out to raise their children in difficult circumstances. Indeed, Kearney argues for strengthening the safety net for all families—regardless of structure.

But as she shows, the data can’t be so easily dismissed by those who resist policy discussions involving family formation distinctions.

The data backs it all up

Consider: 2019 US Census statistics reveal that families headed by a single mother were five times more likely to live in poverty than families headed by a married couple, while families headed by a single father were nearly twice as likely to live in poverty.

Further, research shows that 40% of Millennials who grew up in two-parent homes graduated from college by their mid-20s, compared to 17% for Millennials from non-intact homes. Moreover, 77% of Millennials who grew up with the two-parent privilege attained a middle-class or higher lifestyle by their mid-30s, compared to 57% from non-intact families.

And then there are many studies from Utah, where—more than any other state—marriage and two-parent households are encouraged. Indeed, Utah ranks at the top of economic performance—including GDP growth, favorable business climate, work environment and high rates of economic mobility. And Utahns experience lower child poverty and criminality rates, while enjoying enviable levels of emotional and physical wellbeing, healthy behaviors, life evaluation, student educational performance, and median family income.

Taken together, these data suggest that stable, intact, two-parent marriages lay the foundation for strong families, which in turn create thriving communities of men, women and children.

To alleviate poverty by strengthening two-parent households, Kearney suggests several policy proposals:

Work to restore and foster a norm of two-parent homes for children
Work to improve the economic position of men without a college level of education so they are more reliable marriage partners and fathers
Scale up government and community programs that show promise in strengthening families and improving outcomes for parents and children from disadvantaged backgrounds
Have a stronger safety net for families, regardless of family structure

Stronger Families Create Thriving Communities

Our vision is one where everyone has the support that comes from healthy thriving relationships and family.

Stronger Families Create Thriving Communities

Our vision is one where everyone has the support that comes from healthy thriving relationships and family.

The Policy Prescription

In offering these policy prescriptions, however, she adds that economics and government intervention can only do so much. There must also be grassroots, cultural change at the neighborhood and community levels. That’s why marriage enrichment and parenting classes like Raising Highly Capable Kids are crucial to reducing poverty.

Commendably, Kearney addresses a related—and also politically sensitive—topic: The important role that fathers play in society. She writes, “The absence of a father from a child’s home appears to have direct effects on children’s outcomes—and not only because of the loss of parental income. Nonfinancial engagement by a father has been found to have beneficial effects on children’s outcomes.”

Indeed, a father’s presence in the home is particularly important for boys. As Kearney notes, “Boys and young men are faring worse than girls and young women on a host of behavioral, educational, and economic dimensions. This gender gap in outcomes has been linked to the heightened disadvantage boys face when growing up without a father figure in their home.”

Of course, this creates a vicious cycle: Boys growing up without their fathers have a higher likelihood of themselves falling into traps of poverty: “The more boys struggle and fall behind, the less prepared they will be as adults to be reliable economic providers as husbands and dads,” Kearney writes.

Here, she points to our country’s crisis of masculinity and how declining labor force participation rates by prime-age men contribute to the marriage problem. Recent cultural shifts have “stripped many men of their traditional role as breadwinner for the family and, in simple terms, made them less desirable marriage partners,” she writes.

Clearly, the challenge is how to promote stable marriages and families when males increasingly remain in perpetual adolescence and fail to assume adult responsibilities that lead to success in work, marriage, and family.

Where do we go from here?

So how can we build more two-parent homes? Certainly investing more in vocational education and apprenticeships for men will help—as will implementing criminal justice reform and addressing the pandemic of untreated mental illness and opioid addiction among men.

Beyond these, we should expand school choice so that impoverished children stuck in failing public school districts have an opportunity to achieve a good education. And we need to eliminate marriage penalties in programs like Medicaid and public housing that punish marriage and encourage single-parenthood.

But perhaps most of all we need to have a frank national discussion about the importance of two-parent families “without coming across as shaming or blaming single mothers,” as Kearney writes. “By being honest about the benefits that a two-parent family home confers to children, we can break the pattern in which social agnosticism treats all households as the same in terms of the benefits they deliver children.”

Solving the food stamp benefits cliffs

by David Bass | Oct 26, 2023

Solving the food stamp benefits cliffs

Many Americans rely on SNAP benefits to afford food, but these same individuals and families face a trap that keeps them mired in dependency. It’s called the SNAP benefits cliff. A new report from the Georgia Center for Opportunity analyzes some possible solutions for addressing the benefits cliffs still present in safety-net programs like SNAP.

What are benefits cliffs?

A benefits cliff is when an individual, family, or household loses more in net income and benefits from governmental assistance programs than it gains from additional earnings. This net loss is a perverse incentive that undermines the natural desire to earn more income.

At an individual level—or in the case of SNAP, at a household level—the impact has to do with the ability of the individual or household to overcome the cliff. If the household can increase its earnings (and other income) sufficiently relative to the loss in benefits and taxes, the cliff will have no impact on that specific individual or household.

Who is hurt the most by benefits cliffs?

Our computational analysis shows that it is mathematically possible for some one-member households, where the individual is disabled or elderly, to overcome a benefits cliff with a pay raise of less than 5%. However, almost all other households will require percentage income increases in the double digits or worse.

Larger families, especially those without elderly or disabled members of the household, fare much worse. For example, a family of four (where a single mom is raising three kids, for example) would require a pay raise of between 37% and 121%, assuming the family doesn’t have housing costs. For larger households with disabled or elderly members, that pay raise ranged from 30% to 109%.

Access the Report:

SOLVING THE FOOD ASSISTANCE (SNAP) BENEFITS CLIFFS

Our comprehensive report on the SNAP Benefits Cliffs outlines the pitfalls in the current structure of the program and steps that can be made at a federal, state, and agency level.

Learn More About This Report

Running the numbers: the impact of benefits cliffs

A family of four would begin experiencing SNAP benefits cliffs when their household income exceeds $36,084. This family would lose around $462.42 in SNAP benefits each month. To overcome those lost benefits, that same family would need to earn $58,280 a year, a 61.5 percent increase in income.

What is the marriage penalty?

Another example of benefits cliffs’ detrimental impacts lies in the marriage penalty. For instance, a couple choosing to marry would leave them worse off financially by getting married than by staying single. Instead, many couples decide to remain unmarried to avoid the financial burden of the marriage penalty.

SNAP benefits cliffs are at a 20-year high

During the COVID-19 pandemic, the SNAP maximum allotments were raised significantly—between 45% and 51%. The Thrifty Food Plan was recalculated by the USDA, which impacted these increases. However, SNAP’s current benefits cliffs are at a 20-year high and may be the highest they’ve ever been.

The situation is getting worse

Setting aside COVID-19 and the emergency allotment program, SNAP benefits cliffs are getting worse and, based on twenty years of data, have never been higher. This was not always the trend. The benefits cliffs cycled up to a high in 2009, slowly came down, and then leveled off for a few years. However, since the pandemic, they have all shot up to record highs.

Policy goals for improvement

We recommend approaching change from a policy perspective, and engaging Congress and the states to solve the problems with SNAP’s benefits cliffs.

As a public policy goal, it would make sense to design a safety-net assistance program in such a manner that it minimizes potential cliffs for most cases. We believe that it should be relatively easy for individuals and households to overcome benefits cliffs by earning additional income.

Our recommendations include:

Limiting how long future emergency allotment programs last
Requiring the USDA to recalculate the Thrifty Food Plan
Permanently eliminating benefits cliffs that a typical pay raise can’t mitigate
Implementing strategies to prevent marriage penalties
Amending U.S. code to test potential solutions via demonstration projects
Opening the floor for the Secretary of Agriculture to work with states to solve benefits cliffs
Allowing states to conduct §2026 demonstration projects

Why crime in smaller cities like Columbus matters

by David Bass | Oct 24, 2023

Why crime in smaller cities like Columbus matters

Key Points

Reducing crime and restoring community safety is vital to addressing poverty and increasing opportunity.
While major metro areas are typically the focus of crime reduction efforts, there is a need to address crime in smaller communities seeing an uptick in crime.
Columbus, GA has seen an increase in violent crime over the last 5 years.
The Columbus community and municipalities must come together to address crime and work on preventative solutions.

We know that crime in major metro areas across the United States is up. Here in Georgia, Atlanta is front and center on that issue, highlighted by a recent report by the Georgia Center for Opportunity showing a concerning rise in violent and property crime over the last few years.

While the crime problem in larger cities is crucial to address, smaller cities tend to get overlooked. Yet these cities represent a large portion of the country’s population. There are 335 cities with population levels between 100,000 and one million, but only 14 cities with populations over one million.

Take Columbus, Georgia as an example. The city’s population now stands at approximately 203,000—a slight reduction from 2020 when the population was 207,000. Since 2017, Columbus has seen a spike in crime.

The crime problem—and what to do about it—is the focus of a new GCO report. Titled “Reducing Crime in Columbus: Safer Communities Through Policy,” the report is authored by Josh Crawford, Director of Criminal Justice Initiatives at GCO.

Quick Facts on Crime in Columbus

Columbus saw one of its most violent years with 59 murders in 2021.
The city’s population is on the decline, correlated to the rise in violent crime.
A decrease in Columbus police has gone hand-in-hand with the crime spike.
Attempted murder convicts in Columbus who were released in 2022 only served 35% of their time.

“The human cost of this violence is dramatic, cutting lives short and leaving behind grieving families and fractured communities,” Crawford said. “The toll of violent crime goes beyond the physical cost to those directly impacted and includes financial costs to victims and taxpayers, the loss of productive years, and decreased economic mobility and growth in communities afflicted with high rates of crime.”

Access the Report:

Reducing Crime in Columbus

Our Columbus Crime Report details six practical solutions that city leaders can use to reduce crime in Columbus and restore safety, hope, and opportunity to the broader community.

Learn About the Report

Why Smaller Cities Matter

Our focus at GCO is on empowering underserved, disadvantaged, and low-income communities. By starting with Columbus, we want to equip more of these overlooked cities across Georgia and the U.S. with policy reforms that will reduce crime and restore community safety.

Six Policy Recommendations to Reduce Crime

Because Columbus is smaller, it’s easier to implement changes that would make a big difference. Success in Columbus could provide a model to inspire change in similar-sized cities.

Fixing the Columbus crime problem is about focusing on the most violent offenders. By addressing gang-related violence and solving more homicide investigations, Columbus can restore community safety, improve trust with city officials and law enforcement, and expand upward mobility and opportunity for residents.

Crawford suggests:

Addressing disrepair in Columbus’ communities by expanding cleanup efforts, tearing down or renovating abandoned buildings, and installing adequate street lighting.
Building trust between community residents and law enforcement and social services, particularly through protecting the rights of victims.
Removing egregious offenders from communities by implementing gang-enhancement provisions such as SB44 (2023) that keep these individuals incarcerated.
Improving and requiring pre-entry cognitive behavioral therapy services for all juvenile offenders, no matter how non-violent their offenses.
Reevaluating reentry programs through an external third party, examining the impact on revocation, rearrest, and reconviction.