X

NOTE!

The Council on Virginia's Future, which created Virginia Performs, was sunset on July 1, 2017. This site is no longer updated and is maintained for archival purposes only. For questions, please contact Ashley Colvin at the Virginia Department of Planning and Budget, ashley.colvin@dpb.virginia.gov.

State Agency Planning and Performance Measures are not affected, and continue to be available on DPB's website at http://dpb.virginia.gov/sp/sp.cfm

Economy

Poverty

Poverty

Poverty imposes far-reaching hardships, not only on the poor but on all who share their communities. Virginia has a relatively low poverty rate -- it ranked 11th in the nation in 2015 – but it, too, has been affected by recent trends, with more than 1 in 10 residents now living below the federal poverty threshold.

Why is This Important?

Poverty has a significant impact on individuals and society at large. Children who live in poverty are likely to suffer from poor nutrition during infancy, experience emotional distress, and have an increased risk for academic failure and teenage pregnancy. Adult men and women who live in poverty are at high risk of poor health, debilitating stress, and violence. Poverty can also affect seniors' ability to care for themselves or to obtain prescription medication.

How is Virginia Doing?

Due to the recent recession and slow job growth, poverty rates in Virginia have seen small but steady increases for seven of the last nine years (the rate remained steady at 11.7% from 2012 to 2013 before ticking up to 11.8 percent in 2014). In 2015 Virginia's poverty rate dropped slightly to 11.2 percent, the 11th lowest rate in the nation.

Poverty rates also declined across the nation in 2015; for all but a handful of states, these declines were small, while just four states saw a small increase. Among Virginia's peers, Maryland had the lowest poverty rate in 2015 at 9.7 percent, while North Carolina and Tennessee both had considerably higher rates -- 16.4 and 16.7 percent, respectively. New Hampshire again ranked best in the nation with a poverty rate of 8.2 percent. The national average dropped slightly, to 15.1 percent in 2015, compared with 15.5 percent the year before.

Regionally speaking, poverty rates rose a bit in 2014 (latest data available) for five regions (Northern, Southside, Southwest, Valley, and West Central), but dropped a bit for the Central, Eastern, and Hampton Roads regions. The Southside region continued to have the highest percentage (20.3%) of individuals living below the poverty level, followed by the Southwest (19.1%) region. With poverty levels around 15 to 16 percent, the Eastern and West Central regions didn't fare much better. At the other end of the scale, the Northern region (7.0%) had the lowest percentage of individuals living below the poverty level, followed by the Central (12.7%), Hampton Roads (13.0%), and Valley (13.5%) regions.

The poverty rate for Virginians below the age of 18 rose again in 2014, to 15.9 percent (from 14.9% the year before). Although higher, Virginia's rate is still considerably lower than the national average.

What Influences Poverty?

Except for periods of economic recession -- which tend to create increased, if temporary, levels of poverty -- overall poverty rates in the US have held steady for nearly 50 years and have rarely gone above 15 percent.

Poverty was once far more prevalent among the elderly than among other age groups, but today's elderly have a poverty rate similar to that of working-age adults and much lower than that of children. For example, from 1960-1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent. In 2015, just 8.8 percent of seniors were living below the poverty level, compared to 19.7 percent of American children.

There is a greater likelihood of facing poverty or near poverty if one is Black or Hispanic or in a family (of any race) that is headed by a single woman.

Important factors affecting poverty are educational attainment, economic opportunity, and family status. There is a strong and direct relationship between education level and earnings and employability. The Bureau of Labor Statistics reports that in 2015 an adult (aged 25+) with a bachelor’s degree earned about 40 percent more than an adult with just a high school diploma and was only about half as likely to be unemployed. However, a good education is not enough. To reach their full earning potential, workers also need the job opportunities and potential for upward mobility that a truly healthy economy creates.

What is the State's Role?

Traditionally, the primary role of government in addressing poverty has been to provide a social safety net -- Social Security and Medicare, SNAP (food stamps), CHIP (children's health insurance), Medicaid, the Earned Income Tax Credit, etc. -- that mitigates its impact. This has been especially true in the years during and after the Great Recession. According to the Center on Budget and Policy Priorities, from 2009 through 2012, "the safety net reduced overall poverty by more than half in 41 states, and reduced child poverty by more than half in 43 states."

One program that has not performed as well is welfare. Since the mid-1990s, reform efforts at the state and federal levels have changed the focus of these programs to "welfare to work," where those in need are provided temporary assistance (with lifetime caps of no more than 60 months) and access to resources to help them become self-supporting. This is accomplished through programs like Temporary Assistance for Needy Families (TANF) and various workforce initiatives. Welfare rolls have dropped by nearly 75 percent since 1996 -- yet the number of families living in poverty has stayed about the same, and the number of families in deep poverty has actually increased.

In fact, overall poverty levels have proven to be quite stubborn, despite periods of significant economic growth over the last 50 years. This lack of progress is largely attributable to decades of stagnant growth in median wages, soaring income inequality, and steadily declining upward mobility rates across the US. These conditions have made it much harder for those in poverty to rise above it and harder for those struggling to remain in the middle-classes to keep from falling into poverty.

For example, one 2005 study shows that increasing the median wage by 10 percent decreases the poverty rate by about 2 percentage points. Currently, an individual working a full-time job at minimum wage ($7.25 an hour) earns just $13,920 a year before taxes and other deductions -- barely above the 2015 federal poverty level of $12,082.