Category: Peace and Justice Issues
Safety nets are part of a broader poverty reduction strategy interacting with and working alongside of social insurance; health, education, and financial services; the provision of utilities and roads; and other policies aimed at reducing poverty and managing risk.
Safety net programs can play four roles in development policy:-
- Safety nets redistribute income to the poorest and most vulnerable, with an immediate impact on poverty and inequality
- Safety nets enable households to make productive investments in their future that they may otherwise miss, e.g. education, health, income generating opportunities
- Safety nets help households manage risk, at least offsetting harmful coping strategies and at most providing an insurance function which improves livelihood options
- Safety nets allow governments to make choices that support efficiency and growth
The safety net as a whole should provide coverage to three rather different groups:-
- The chronic poor
- Even in “good times” these households are poor. They have limited access to income and the instruments to manage risk, and even small reductions in income can have dire consequences for them.
- The transient poor
- This group lives near the poverty line, and may fall into poverty when an individual household or the economy as a whole faces hard times.
- Those with special circumstances
- Sub-groups of the population for whom general stability and prosperity alone will not be sufficient. Their vulnerability may stem from disability, discrimination due to ethnicity, displacement due to conflict, “social pathologies” of drug and alcohol abuse, domestic violence, or crime. These groups may need special programs to help them attain a sufficient standard of well-being.
Figure A: Processes and Stakeholders Involved in a Safety Net Program
The effectiveness of a safety net intervention lies in the details of the implementation process and stakeholders’ involvement therein (Figure A). An adequate transfer program incorporates at least a system to target beneficiaries, to register them, to set up program conditionalities, to make payments, and to monitor and evaluate its performance. Moreover, a stakeholders’ strategy that clearly assigns specific tasks and responsibilities for each agent is critical for program success. It is important to acknowledge that every intervention is unique in its complexity, needs to be adapted to local circumstances, and requires a fluent communication mechanism and a solid data process system.
Source: Adapted from Arribas-Baños and Baldeón 2007
Social safety nets, or “socioeconomic safety nets”, are non-contributory transfer programs seeking to prevent the poor or those vulnerable to shocks and poverty from falling below a certain poverty level. Safety net programs can be provided by the public sector (the state and aid donors) or by the private sector (NGOs, private firms, charities, and informal household transfers). Safety net transfers include:
- Cash transfers
- Food-based programs such as supplementary feeding programs and food stamps, vouchers, and coupons
- In-kind transfers such as school supplies and uniforms
- Conditional cash transfers
- Price subsidies for food, electricity, or public transport
- Public works
- Fee waivers and exemptions for health care, schooling and utilities
On average, spending on safety nets accounts for 1 to 2 percent of GDP across developing and transition countries, though sometimes much less or much more. In the last decade[when?], a visible growing expertise in various areas of safety nets has taken place. However, even though an increasing number of safety net programs are extremely well thought out, correctly implemented, and demonstrably effective, many others face — and create — serious challenges.
Deborah Bryan Action for Children NC
Since the Great Depression, the United States has maintained a system of supports to help low-income families, seniors, children, and people with disabilities make ends meet and obtain health care. These supports reduce poverty, supplement wages for low-income working families, and enable millions of Americans to receive health care who otherwise could not afford it.
It is no coincidence that the earliest safety net programs were created during a period of extreme economic hardship. At the height of the depression, one in every four American workers was unemployed and poverty, malnutrition and housing instability were widespread. As he signed landmark safety net legislation into law, President Franklin Roosevelt remarked that the newly created structure would ensure a measure of protection against job loss and economic uncertainty for citizens and “…provide the United States an economic structure of vastly greater soundness.”
In 2011, public programs kept an estimated 40 million Americans-9 million of whom were children-from falling into poverty. The powerful antipoverty effect of public programs is significant: research shows children in impoverished homes are more likely to experience severe, toxic stress that disrupts the architecture of their developing brains, sabotages health outcomes and hinders success in school.
When it comes to improving the well-being of children in poverty, research is clear about what works. Programs that bolster the financial resources of low-income families, like the Earned Income Tax Credit (EITC) and Supplemental Nutrition Assistance (SNAP), have been shown to create gains in educational attainment and test scores – outcomes which, in turn, are associated with higher earnings and employment during adulthood. For children living in poor households, each $3,000 in annual family income during their early childhood years is associated with an added 135 hours of annual work as young adults and additional 17 percent in future annual earnings. And yet, child and family programs continue to sustain deep cuts at the state and federal levels. In North Carolina:
Changes to the state’s unemployment insurance system have reduced the size and duration of benefits and resulted in the loss of federal emergency benefits for more than 70,000 long-term unemployed North Carolinians. In 2012, an estimated one in ten children in North Carolina had an out-of-work parent; 58 percent of those children lived in households with a parent who had been unemployed for six months or longer. Today, North Carolina has the third highest unemployment rate in the country.
The 2013-15 state budget drains $500 million from public education and will result in no raises for teachers, larger class sizes, fewer teacher assistants, and little support for instructional supplies or professional development.
The final tax reform package reduces the state EITC rate from 5 percent to 4.5 percent and allows the credit to expire at the end of this year. The EITC is widely recognized as one of the most effective ways to fight poverty, especially among children. This credit helps working families afford basic necessities while pumping dollars into local economies. In 2012, nearly 907,000 low-wage North Carolina taxpayers claimed the credit.
This winter, automatic benefits cuts for all SNAP recipients are scheduled to take effect in November thanks to the expiration of a benefit increase from the 2009 stimulus bill. An average household of three will see their monthly food stamp benefits reduce by $29, more than $300 per year. The Supplemental Nutrition Assistance Program is the nation’s first line of defense against hunger and malnutrition. In 2012, 1.7 million North Carolinians received food stamp benefits.
North Carolina needs a strong safety net to help protect the well-being of its children and youth. Now as the state struggles to recover from the worst economic downturn since the Great Depression, it is imperative that our policymakers work to improve our future by strengthening the safety net for families astride the poverty line, instead of working to dismantle it.
Deborah Bryan is the Executive Director of Action for Children North Carolina.
The state budget for 2013-2015 was passed into law in July 2013 and has implications for every aspect of family and community life in North Carolina. We at Together NC wanted to give you some helpful tools for understanding and discussing the impact of the budget. Below you will find links to articles, briefs and reports regarding the newest North Carolina budget and its potential impact. This page will continue to be updated as new materials are developed.
1. REPORTS AND FACT SHEETS
- Together NC’s fact sheet on K-12 Budget: Every child deserves a quality education: 2013-2015 budget doesn’t meet the mark
- Together NC’s fact sheet on higher education: Higher education critical for state’s economic future; yet lawmakers fail to make needed investments
- Together NC’s fact sheet: Top five ways legislators’ choices fail to support the economy
- Budget & Tax Center Report – The 2013-2015 Fiscal Year Final Budget: Putting North Carolina on a Path to Mediocrity
- Budget & Tax Center Fact Sheet – New State Budget Puts North Carolina on a Path to Mediocrity
- Budget & Tax Center Fact Sheet – State Budget Leaves Rural Areas and Communities of Color Behind
- Budget & Tax Center Fact Sheet – New Budget and Conservative State Policies are Falling Hard on Women
2. BUDGET CUT CASUALTIES IN THE PRESS
- NC Policy Watch – Tracking the Cuts: The Dismantling of Our Public Schools
- The Huffington Post – Why North Carolina Resident Matthew Brown is Happy His Wife is Quitting Teaching
- NC Policy Watch – Is North Carolina a net exporter of teachers?
- Technician Online – Budget-cut related layoffs begin
- WECT 6 New Hanover County – Budget cuts could cost several bus routes
- News & Observer – NC budget cuts reduce assistance for addicts
- Diverse: Issues in Higher Education – NC Governor seeks to retool Community College funding
- Greater Wilmington Business Journal – Budget cuts force layoff at local NC biotechnology division
- News & Observer – Education budget doesn’t reflect NC values
- Asheville Citizen Times – Do you know the budget’s impact?
- Black Mountain News – On the winners and losers in the NC budget
- Wilmington Star News – Dissatisfied NC teachers leave for other states, other jobs
- The Daily Tar Heel – More professors lured away from UNC
- Fayetteville Observer – State budget cuts threaten future of biofuels research in North Carolina
- CBS local Charlotte – NC legislators extend school bus lives for savings
- The Business Journal Greensboro – NC Biotech Center slashing programs due to budget cuts
- Winston-Salem Journal – NC Biotech cuts 7 jobs, expects more, in response to losing $4.6M in funding
- WFMY News Triad – Board of Education finalizes Guilford County Schools’ budget
- News & Observer – Funding cuts to drug treatment centers mean addicts get turned away
- The Daily Tarheel – Another year of budget cuts piles up for UNC system
- Winston-Salem Journal – UNCG, NC A&T facing layoffs due to budget cuts
- Public News Service – NC Budget puts North Carolina on path to mediocrity
- Chart: 3 “Pillars” of State Revenue in NC
- Infographic: New K-12 budget is not enough to keep up: Schools feel the squeeze, students will lose
- Infographic: Spending Cuts Hurt the Classroom
4. TAKE ACTION
- Write a letter to the editor of your local newspaper.
- Email Amber at firstname.lastname@example.org to share a story about why public investment matters to you or about how budget cuts are impacting you, your family and your community.
- Share Together NC’s content on Facebook and Twitter.