New Mexico Kids at the Crossroads

A Children’s Agenda for Making KIDS COUNT with Candidates

kids playing with bubbles Download this children’s agenda (March 2018; 4 pages; pdf)

There’s a reason we call it the Land of Enchantment—everything from our colorful traditions to our diverse cultures and breath-taking landscapes makes New Mexico so special.

But even the most spectacular traditions, cultures, and landscapes can’t make growing up in New Mexico enchanting for children who don’t have the opportunities they need to thrive. With the highest rate of child poverty in the nation, New Mexico is not providing the opportunities our children need to succeed. And if the future isn’t bright for our children, it’s not bright for our state.

But the good news is that we know what works. We have the power to improve opportunities for New Mexico’s kids in a very big way, and we can do it through public policy.

Elections put New Mexico at a crossroads. Will candidates adopt policies that keep us on the current course or will they opt for a path that will lead us to prosperity?

Prosperity is not possible without investments. The best investments we can make are those that build up our people. Investments in people lead to a skilled, educated, and productive workforce, which is essential to a stable business landscape and a strong New Mexico economy.

What follows are recommendations for investments that will put our people first. Fundamental to all of these recommendations is a fair, responsible, and transparent tax system that generates sufficient revenues to support programs and services that can ensure that all New Mexico kids have the opportunity to thrive and succeed.

Economic Well-Being

Children do best when their families have the economic security that comes from having good jobs that pay family-sustaining wages. When there are simply not enough of those jobs to go around or when families fall on hard times, policy-makers can enhance economic security for hard-working families with work supports that help provide the opportunities that children need to thrive. To best support economic well-being for New Mexico’s children, policy-makers can:

    • Increase the Working Families Tax Credit (WFTC) and the Low Income Comprehensive Tax Credit (LICTR).
    • Enact a new state-level Child Tax Credit (CTC) for families with children.
    • Immediately increase the minimum wage to at least $10 an hour, rising to $12 an hour by 2022.
    • Immediately restore child care assistance to the previous eligibility level so more low-wage working parents can afford safe care for their kids.[1] Within two years, increase eligibility even more to help working parents who still struggle with child care costs.[2]
    • Simplify enrollment and recertification processes for family supports including Medicaid, the supplemental nutrition assistance program (SNAP), and child care assistance, as well as enact express-lane eligibility to reduce duplication of paperwork.
    • Enroll all eligible families in Medicaid, SNAP, and child care assistance and increase participation in other work supports.
    • Reject cost-sharing measures and reductions in benefits or income eligibility for Medicaid.
    • Support a maximum APR of 36% on all small loans, and empower the Regulation and Licensing Department to end predatory lending practices in payday, car title, and tax refund loans, and pawn and rent-to-own schemes.
    • Support low-income housing and enact a comprehensive plan to reduce homelessness.
    • Support increased low-income home energy assistance (LIHEAP) funding.

Education

The most effective path out of poverty is education. But when children from low-resource families start school already behind, they are unlikely to catch up. High-quality early care and learning programs are proven to help prepare children for success in school and in life. Policy-makers should ensure equitable access to an affordable and high-quality cradle-to-career system of care and education for all of New Mexico’s kids. To best support education for New Mexico’s children, they can:

    • Significantly increase funding to achieve universal voluntary parent coaching, child care assistance, and pre-kindergarten as part of a comprehensive pre-school early care and learning continuum.
    • Support a constitutional amendment to use a fraction of the Land Grant Permanent Fund for early education.
    • Significantly increase K-12 per-pupil funding and compensation for teachers and support staff.
    • Ensure that schools whose students have the highest needs receive the most funding by increasing the at-risk factor in New Mexico’s education funding formula.
    • Support evidence-based methods for closing achievement gaps at all stages of education.
    • Increase funding for youth mentoring and after-school programs.
    • Expand community schools and other wrap-around strategies and programs that help families and kids.
    • Increase funding for bilingual education to assure that all children have access.
    • Restore the College Affordability Fund so it can support at least $2 million in distributions per year.
    • Make the lottery scholarship need-based.
    • Expand access to education for adults, including high school equivalency programs, service learning opportunities, career pathways for disconnected youth, adult basic education, and English-as-a-second-language (ESL) programs.

Health

A person’s health should not depend on their racial or ethnic heritage or what zip code they live in, but too often it does. Americans value the ideas of equality that are enshrined in our Constitution but, despite the gains made toward universal health coverage, we are still a long way from true health equity. Policy-makers should ensure that all New Mexico children and families have access to a comprehensive and high-quality system of health care coverage and wellness resources, and that all New Mexicans live and thrive in safe and supportive communities. To best support health for New Mexico’s children, they can:

    • Support full implementation of all provisions of the Affordable Care Act to improve access and achieve health equity.
    • Support full-funding of Medicaid for all eligible New Mexicans and oppose barriers to access such as cost-sharing premiums and co-pays for most Medicaid recipients.[3]
    • Re-open the school-based health care centers that were forced to close due to spending cuts and support the creation of more school-based health centers.
    • Support a rebuilding of New Mexico’s behavioral health system with a special emphasis on access to substance abuse treatment programs.
    • Support treatment instead of incarceration for non-violent drug offenders.
    • Develop and fund a plan to end the Medicaid waiting list for those with developmental disabilities.
    • Support common-sense gun safety legislation, including universal background checks and allowing a judge to prohibit those accused of domestic violence from possessing firearms.
    • Increase funding for child and teen suicide prevention, tobacco-use prevention, teen pregnancy prevention, and alcohol and drug prevention programs.
    • Support strategies to move rapidly toward more wind and solar energy, and strategies to reduce harmful emissions from other energy sources.

[1] Those earning up to 200 percent of the federal poverty level, or $41,560 for a family of three.
[2] Those earning up to 250 percent of the federal poverty level, or $51,950 for a family of three.
[3] Those earning less than 200 percent of the federal poverty level, or $41,560 for a family of three.

Download this children’s agenda (March 2018; 4 pages; pdf)

A Blueprint for a prosperous state

A Blueprint for a prosperous state logo

Download this policy brief (Jan. 2018; 4 pages; pdf)
Download just the policy recommendations (Jan. 2018; 4 pages; pdf)

Building a better New Mexico

We all want a prosperous state, but prosperity requires investments. You can’t grow a garden without good soil, sunlight, water, and some hard work. Same with a state—you can’t have prosperity without resources, infrastructure, and a skilled workforce.

But instead of following an investment strategy to prosperity, New Mexico has tried to cut its way to prosperity. You could call this the “don’t build it and let’s hope they will come anyway” strategy. Or perhaps the “magical-thinking-of-trickle-down-economics” strategy.

This has been the wrong strategy for New Mexico.

Building a prosperous state will take a more sensible approach. If we could recoup the millions of dollars in tax breaks we’re losing to well-connected special interests, we’d have money for the public investments our businesses and economy need. Investments like a well-educated and skilled workforce, state-of-the-art health care, up-to-date communications infrastructure, and affordable child care, to name just a few.

The recession hit New Mexico hard. Revenues plummeted. The state’s investment in health care, education, and other essential services declined.

As the economy started to improve, lawmakers made a fateful choice—massive tax cuts in 2013 for corporations, instead of investment in the common good.

The tax cuts, it was promised, would bring jobs to New Mexico.

But tax cuts don’t create jobs—public investment creates jobs. No business can operate here or anywhere else without a skilled workforce and customers with money to spend. These are only created when we invest in our human capital.

The lost decade

Failed tax cuts and the recession led to a lost decade where the state budget failed to keep pace with inflation and population growth. And when new threats have appeared—such as the opioid epidemic—the state has had no money set aside to solve such problems.

After years of flat budgets and spending cuts that have severely compromised our schools, universities, and other vital systems, a better revenue picture has finally been forecasted for the state.
But we had barely heard the good news when it was followed by bad. This money has yet to materialize and already some lawmakers are talking about spending it on tax rebates that will do little to spur economic activity. The fact is, we need to invest every bit of that new revenue into vital services like health care and education.

In fact, this new revenue doesn’t even begin to make up for all the money we’ve lost by enacting failed tax cuts for the well-connected. We also need to recoup lost revenue so we can make the investments our state needs in order to prosper.

New Mexico state budget, FY18

The path to a more prosperous economy

The path to a strong New Mexico begins with making smart investments. Investments that would shrink class sizes in our schools, provide child care for more hard-working families, allow us to reopen the school-based health centers that had to close, and lower college tuition to what it was before we made all the deep cuts to higher education funding. There are many common-sense ways to raise new revenue, which could be used to educate our workforce, create jobs, and bolster our economy:

• Repeal the 2013 corporate income tax cuts
The big corporate tax cut of 2013 cost more than expected, and it’s also failed to create jobs. There is no excuse for keeping bad tax policy on the books and New Mexico lawmakers need to repeal this one.

• Could raise more than $100 million a year.

• Repeal the tax break for manufacturers
At the same time the corporate income tax rate was cut, the formula for how manufacturers were taxed was changed so that companies like Intel could get away without paying any taxes. But Intel has since cut jobs in New Mexico.

• Could raise $45 million a year.

• Raise the personal income tax rate for those at the top
In 2003 New Mexico cut the personal income tax rate by nearly half for the wealthiest households. As it is now, the wealthiest pay less of their income in state and local taxes than most of the rest of us. (See the graphic below for just how unfair our tax system is.) Meanwhile the GOP tax plan signed into law at the end of last year gave more tax cuts to the wealthy. Raising income tax rates for very-high income New Mexicans will raise much-needed revenues and help to turn our upside-down tax system right-side up.

• A full repeal of the 2003 cuts would raise $500 million.

New Mexico state and local taxes paid by income quintile

• Curtail tax breaks for capital gains income
New Mexico taxes income from capital gains (profits from the sale of assets such as stocks or real estate) at half the rate that it taxes the wages of working people. This break mainly helps the wealthiest—those making over $200,000—while taking revenue away from much-needed public investments. It also helps make our tax system less fair.

• Could raise $44 million-$48 million in FY19.

• Repeal wasteful and ineffective tax breaks
There are hundreds of tax breaks that have been carved out of the gross receipts tax (GRT) base over the years, many of which simply qualify as a handout to special interests. What’s more, few of them have ever been evaluated for effectiveness. Repealing wasteful and ineffective tax breaks will allow lawmakers to put that money to work in our schools and communities where it will benefit everyone.

• Could raise hundreds of millions.

• Require all out-of-state corporations to pay income tax on their profits in New Mexico
New Mexico is one of the few states that still allows out-of-state corporations to shift their New Mexico profits on paper to another state to avoid paying taxes here. We lose millions in revenue, and local businesses can’t compete. A partial fix (called Mandatory Combined Reporting) was enacted in 2013, but it exempted many profitable corporations such as banks.

• Could raise $25 million.

• Increase the distribution from the Land Grant Permanent School Fund
New Mexico has the nation’s second largest Land Grant Permanent School Fund, now with more than $16 billion. Legislators and voters could choose to increase the distribution of that fund, which would help us better fund K-12 schools and our higher education system, as well as invest a tiny portion in the early childhood education programs that will help our kids do better in school so more of them can attend college.

• Increasing the distribution by 2% provide an additional $300 million for education.

• Enact a health care provider assessment
Instead of facing cuts in Medicaid reimbursement rates, many health care providers are asking to be assessed a provider fee. The money collected could then be added to the state’s Medicaid budget, allowing the state to draw down federal matching money and prevent additional cuts to health care services for children, the disabled, and elderly.

• Amount raised would vary depending on rates.

• Raise alcohol and tobacco taxes and include e-cigarettes
These taxes could both increase revenue and promote greater wellness, particularly when they act as a disincentive for young people to take up smoking.

• A tax increase of $1.50 a pack would raise an additional $90 million.
• An increase in the alcohol tax of 25-cents a drink could raise $154 million.

• Increase the tax on the sale of motor vehicles
New Mexico’s excise tax on motor vehicles is lower than the general sales tax on most other goods purchased in the state. It’s also lower than in surrounding states, and could stay lower even if it was increased.

• Could raise about $100 million.

• Extend the gross receipts tax to more internet sales
“Main street businesses”—those with a brick-and-mortar presence in New Mexico—pay gross receipts taxes on their internet sales here, but businesses without a physical location in the state don’t. This exemption drains a lot of revenue from the state and puts local retailers at a competitive disadvantage.

• Could raise more than $25 million.

• Enact a new tax on diesel fuel
A large portion of this tax would be paid by out-of-state entities like interstate trucking companies.

• Amount raised would vary depending on rates.

Keeping New Mexico on track

By making some of these common-sense fixes to our state’s tax code, New Mexico could be back on the path to making the investments that our businesses and communities need. But we also must make a change to ensure that we stay on track:

• Require a tax expenditure budget in statute
A tax expenditure budget allows legislators to see the hundreds of tax exemptions, deductions and credits they have enacted over the years. This makes it easier to review tax expenditures for their cost-effectiveness and repeal those that do not grow the economy. While the tax department does produce a tax expenditure budget under executive order, requiring one under state law would give legislators more authority over which expenditures are studied.

Download this policy brief (Jan. 2018; 4 pages; pdf)
Download just the policy recommendations (Jan. 2018; 4 pages; pdf)

A Fiscal Policy Project publication.
The Fiscal Policy Project, a program of New Mexico Voices for Children, is made possible by grants from the Annie E. Casey Foundation and the W.K. Kellogg Foundation.

NM’s Working Families Tax Credit

Improving the Credit’s Benefits to the State, Its Businesses, and Its People

tax-returns
by Amber Wallin, MPA
Download this report (Jan. 2017; 16 pages; pdf)
Download just the appendix (6 pages; pdf)
Link to the fact sheet

Our economy is strongest when people have money to spend and, while the rest of the nation is recovering from the recession, New Mexico is still struggling to attract good-paying jobs. When people work full time and still don’t earn enough money to cover the basics, our economy is not at its healthiest. Tax credits for low- and moderate-income working families are one common-sense way to spur economic activity and put money in the hands of consumers who will spend it, particularly when wages are low.

In New Mexico, the Working Families Tax Credit is one of the most sensible parts of our tax code: it encourages work, helps to raise hard-working families out of poverty, and benefits almost 300,000 children, while also pumping millions of dollars back into local communities. Increasing the credit is a smart investment in New Mexico’s businesses, working families, and future.

The History of the Credits

The Working Families Tax Credit (WFTC) is the state’s equivalent of the federal Earned Income Tax Credit (EITC). Its eligibility levels and amounts are based directly on the EITC, and it increases, complements, and leverages the EITC’s ability to directly benefit New Mexico. The purpose of the EITC is to help offset more regressive taxes, reduce poverty, and incentivize employment for low-income workers. The EITC was first passed with bipartisan support under President Gerald Ford in 1975. In 1986, the EITC was indexed to rise with inflation under President Ronald Reagan who called the program “the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress.”1

Since its passage, the EITC has been strongly supported by both Republican and Democratic lawmakers on both the national and state level, and 26 states plus the District of Columbia have modeled state credits after the EITC in order to help offset regressive state taxes for low-income workers while also improving conditions for families in their states and encouraging work among lower-income earners (see Appendix A, for list of states with EITC-based credits). New Mexico enacted the WFTC in 2007 at 8 percent of the EITC and raised it to 10 percent of the EITC in 2008.

How the Credits Work

Eligibility for both credits depend on a filer’s earned income, marital status, and the number of dependent children (see Figure I). For tax year 2015, working parents who had incomes of up to $39,131 (for a single parent with one child) and $53,267 (for a married couple with three or more children) could receive the credits. Workers with no children had to earn no more than $14,820 (or $20,330, if married and filing jointly) to qualify for credits. The value of the refunds ranged between maximums of $503 (with no children) and $6,242 (with three or more children) for the EITC and $50 to $620 for the WFTC. The refund amounts increase as earned income increases until they reach a maximum level, at which point they plateau and then phase out as higher incomes lift families out of poverty.

EITC-WFTC-FigureI

Who Claims the Credits

In the 2013 tax year, the most recent year for which data are available, more than 212,000 New Mexico individuals and families (or 26 percent of the tax returns filed in the state) claimed the EITC and the WFTC.

That year, New Mexico’s working families received more than $513 million from the EITC and nearly $51 million from the WFTC. The average credit amount for each New Mexico tax return with the credits was about $2,700 when the two refunds are combined.2 Every legislative district and county in New Mexico benefits from the credits (see Appendices B, C, and D, for EITC and WFTC amounts and percent of claimants by county, state House and Senate districts).

The majority of the more than 212,000 working New Mexicans who claim the EITC and WFTC every year are racial or ethnic minorities; 52 percent are Hispanic, nearly 16 percent are Native American, and 29 percent are non-Hispanic White (see Figure II). These filers have a median income of $14,058.3 The credits help most of these workers through tough―but temporary―economic troubles, such as a job loss or the birth of a child. In fact, three out of five workers claim the credits for only one or two years4 (See Figure III).

EITC-WFTC-FigureII-III

The vast majority of those who claim the EITC and WFTC are working, low-income parents who support the nearly 300,000 children living in the households that benefit from the credits. Only a tiny percentage are adults without dependent children, and their incomes must be very low for them to qualify. That most of those who benefit are parents and children is especially important, because according to the national KIDS COUNT program, New Mexico ranks 48th among the states in family economic well-being, and 49th in overall child well-being.5 More than 96 percent of the money returned to taxpayers via the EITC and WFTC goes to working families with children―14,000 of which are families headed by active duty military or by military veterans who are making their way back into the New Mexico workforce.6 The income boost from the credits helps families afford necessities like food, housing, and child care, especially in the month following when they receive their refund. It is estimated that 95 percent of EITC and WFTC recipients also use part the credits to pay off debt or make major car repairs.7

As a group, those who claim the EITC and WFTC pay a large share of their incomes in taxes. In fact, in addition to the federal payroll taxes they pay, New Mexico’s lowest-income households pay a larger share of their income in state and local taxes than the households in every other income group. Those making less than $17,000 a year pay more than 10 percent of their incomes in state and local taxes. Meanwhile, New Mexicans who make more than $340,000 pay less than 5 percent of their incomes in those same taxes8 (see Figure IV). This huge disparity exists even after the current value of the EITC and WFTC are taken into account.

EITC-WFTC-FigureIV

Many types of occupations and industries are represented among EITC/WFTC-eligible tax claimants. The occupations that have the highest shares of EITC/WFTC filers are office and administrative work, sales, and construction and extraction (see Figure V). The health care, retail trade, accommodation and food service, and construction sectors are the industries with the highest shares of workers who claim the credits (see Figure VI). Tax credits for workers in these industries help make up for what are often very low wages and, in doing so, directly help support the businesses in these industries.

EITC-WFTC-FigureVII

Both highly educated New Mexicans and those with limited educations benefit substantially from the EITC and the WFTC. While half of filers have a high school diploma or less, half have at least some college, and 12 percent of claimants have a bachelor’s degree or higher (see Figure VII).

Putting the Credits to Work for New Mexico

The Credits Benefit New Mexico Families

EITC-WFTC-FigureV-VINew Mexico has the second highest overall poverty rate (20 percent) and second highest child poverty rate (29 percent) in the nation,9 but our high poverty rates would be even worse without the EITC and WFTC. Without these credits, nearly 40,000 more New Mexico families—including 20,000 more children—would live in poverty.10

New Mexico’s high poverty rates among children and the overall population extend to workers and their families as well. The state is ranked worst in the nation in terms of poverty among the employed, among people who work full-time year-round, and among people who have a bachelor’s degree or higher.11 We also have one of the highest percentages in the nation of workers in low-wage jobs, so it is not surprising that New Mexico has the highest percentage (17 percent) of families that are working but still living below the poverty line, and the highest percentage (42 percent) of working families that are low-income (below 200 percent of the federal poverty level). Because so many of our working families are poor or living in poverty, we also have the worst rankings in the nation of the percent of children in working families that are poor or living in poverty.12

Of these low-income working families, 41 percent are headed by working mothers. This is important because working mothers who are low-income are often employed in retail and service-sector jobs that pay low wages, limit hours, and fail to provide benefits such as health insurance and paid sick leave that are crucial to the health and success of families and children.13

New Mexico also has one of the highest rates of income inequality in the nation—meaning there is a large gap between what the lowest-income New Mexicans earn and what the highest-income New Mexicans earn.14 Income inequality puts our economy out of balance in part because too much income is concentrated into too few hands where it is less likely to be spent. Growing income inequality is especially destructive in New Mexico because while the rest of the nation has already bounced back from the Great Recession of 2007-2009, New Mexico’s recovery has largely flat-lined for most workers. Economic recoveries happen more quickly when recoveries in income and employment are more broadly shared and spread across all income levels. However, in contrast with historical economic recoveries, income and employment recoveries of the last recession have taken longer to reach low- and middle-income earners, especially in New Mexico. As the gap between the wealthiest and the poorest gets bigger, gains—including recession recovery gains—go very disproportionately to the richest. Tax credits like the EITC and WFTC that target benefits to low-income workers give low-income groups a hand-up while helping to limit the growing gap in wealth inequality.

The EITC and WFTC not only help increase workers’ incomes, but they also help low-income families continue to participate in the workforce because they help pay for necessities like child care, transportation, and education or job training programs. This is good for businesses because workers who can pay for these basic needs are more reliable employees. Families with very low wages see higher refunds as their incomes rise, which encourages them to work more hours. Extensive research shows that the EITC has been successful at encouraging and increasing work, especially among single parents, and particularly among single mothers.15 Increased work and earnings among low-income families has the effect, in turn, of reducing dependence on public assistance and shrinking Temporary Assistance for Needy Families (TANF, the program formerly known as welfare) caseloads. Workers who receive credits like the EITC and WFTC also boost their Social Security earnings and retirement benefits, which can help reduce the incidence or severity of poverty in old age.16 Research shows that the EITC increases employment and reduces the need for public assistance across generations.

The Credits Benefit New Mexico Kids

The WFTC is a relatively small investment on the part of the state that can make a big difference in the lives of New Mexico’s working families and their children. The effects start early and are long-lasting. Increases in EITCs and the creation of state-based EITCs have been linked with earlier prenatal care, an increased likelihood for prenatal care, lowered maternal stress, decreased smoking and drinking during pregnancy, and improved infant birthweight.17 The extra income helps families meet their kids’ basic needs, which in turn, improves children’s chances of success. Children in EITC families have better health outcomes,18 perform better on math and reading tests, and are more likely to graduate high school and go to college than children in low-income families that do not receive the EITC.19

Because higher incomes from refundable tax credits are associated with better health, more education, and higher skills, children in EITC/WFTC families are more likely to work and earn more as adults.20 In fact, children from EITC families, on average, go on to earn 17 percent more when they reach adulthood then do children from low-income families who do not receive the EITC.21 Research finds that progressive state income tax provisions—including state-based EITCs like the WFTC—are linked to increased intergenerational income mobility.22 This relationship strengthens with the size of the state-based EITC, and in states with larger credits, low-income children are even more likely to move up the income ladder over time.23

The Credits Benefit New Mexico Businesses

The EITC and WFTC are also good for business because they are good for the state’s economy. Last year alone, New Mexico’s low-wage workers received more than $560 million from the EITC and WFTC—much of which was pumped right back into the economy through rent payments, purchases of cars, groceries and other household necessities, and to pay for child care. Research shows that EITC households spend their credits quickly and locally, and that local economies benefit as a result. Economists categorize economic impacts of injections of money into an economy (in this case, federal EITC money into New Mexico’s economy) as the sum of direct impacts (EITC recipients spending their refunds), indirect impacts (businesses spending more in response to EITC spending at those businesses), and induced impacts (changes in spending patterns caused by direct and indirect impacts). Together these economic impacts are referred to as the “multiplier” effect of a program.24 The EITC is widely known to have a very strong multiplier effect. In fact, it is estimated that for every $1.00 claimed from the EITC, $1.50 to $2.00 is generated in local economic activity.25 That means the EITC alone is responsible for somewhere between $770 million and more than $1 billion in economic activity in New Mexico each year. This economic activity is important in metro areas, but may be especially crucial in rural areas of New Mexico (see Appendix B for EITC amounts and percent of claimants by county).

The EITC has other economic benefits as well. Though it is widely regarded as one of our nation’s most successful anti-poverty programs,26 the EITC was originally intended to primarily act as an economic stimulus.27 Over time, many governments have pushed for expanded EITC participation in their states for this very reason—to increase spending in their economies.28 The EITC and WFTC also benefit employers by enabling workers to better support their families even on meager wages. It has been estimated that as much as 36 cents of every dollar of an EITC credit directly benefits employers by lowering the cost of labor.29 This trend is likely to hold up in New Mexico, where we not only have one of the highest rates of working poor and working low-income families in the nation (as noted above), but also one of the highest rates—34 percent—of employment within occupations whose median annual pay is below the poverty threshold for a family of four.30

The Truth About Overpayments and Errors

In recent years, potential issues about EITC overpayments have been discussed. However, the debate around EITC errors is often misleading and ignores three important points:

1. The overpayment rate is overstated and based on older data.

• More than 40 percent of claims counted as “overpayments” were determined to be valid on further review.31
• The overpayment rate does not fully account for corresponding underpayments. For example, if a father mistakenly claims an EITC for a child that lives with the mother, the full amount is counted as an overpayment but the amount unclaimed by the eligible mother is not taken into account.
• Overpayment estimates are based on 2009 data, and do not reflect the significant additional enforcement measures the IRS has implemented since then.

2. Most EITC overpayments are due to honest mistakes, not intentional fraud.

• IRS studies acknowledge the majority of errors are unintentional32 and stem from the combination of the complexity of the EITC’s rules and the complexity of many family arrangements.33
• Most EITC errors occur on commercially prepared returns,34 and commercial tax preparers, not individual filers, are responsible for 75 percent of the value of EITC overpayments.35

3. EITC errors cost significantly less than business tax noncompliance.

• A 2012 IRS study found that 56 percent of business income went unreported in 2006. This cost $122 billion in uncollected revenue—more than ten times the size of estimated EITC overpayments that year.36
• The EITC rate of noncompliance is substantially lower than the rate in a number of other parts of the tax code, and accounts for a very small share (less than 3 percent) of the estimated $450 billion tax compliance gap.

IRS Actions to Reduce EITC Overpayments37

• More than 80 percent of EITC claims are now filed electronically, better enabling the IRS to identify questionable EITC claims before paying them.
• A powerful IRS database identifies questionable EITC claims, targeting nearly 500,000 claims annually for examination.
• The IRS is implementing rules to require preparers to register and pass a competency exam that promises to be a major step forward.
• In 2013, the IRS identified 7,000 preparers with high error rates in the EITC claims they filed. It carried out a range of interventions with these preparers before and during the 2013 filing season, including educational visits by IRS agents. Overall, this strategy alone averted an estimated $590 million in erroneous claims, according to the IRS.

Policy Recommendations

Evidence that New Mexico’s Working Families Tax Credit helps working families and spurs the economy is abundant. However, the credit could do even more with some improvements.

• Increase the value of the WFTC
At 10 percent, New Mexico’s WFTC is below the national average among states that have a similar EITC-based tax credit (see Appendix A). Lawmakers should increase the credit from 10 percent to at least 15 percent of the federal Earned Income Tax Credit. Raising the credit to 15 percent of the EITC would mean investing $26 million more in our economy and our hard-working, low-income families. This practical investment will make a big difference for New Mexico families struggling to get by on low wages.

• Expand outreach efforts and tax preparation assistance
One in five eligible workers in New Mexico miss out on the EITC and WFTC, either because they don’t claim it when filing, or they don’t file a return. Tax assistance programs—such as the United Way and CNM’s Tax Help New Mexico program—that provide free (and bilingual) tax preparation for low-income New Mexicans are great models for tax preparation outreach. Lawmakers should expand outreach efforts like these and support free or low-cost tax preparation assistance in order to maximize the benefit of the credit. Expanding access to volunteer tax preparation services and free online tax filing would preserve more of the credits’ values for those filers that might otherwise face significant tax preparation fees or be pressured to buy costly refund products that eat up a large part of the credits, blunting their otherwise positive impacts. Additionally, due to the proven economic benefits of the EITC, expanding participation among eligible filers would increase transfer payments and benefit New Mexico’s economy.

• Restrict refund anticipation loans and checks
Another good reason for increasing access to free or low-cost tax preparation for low-income New Mexicans is that it keeps them from being preyed upon by commercial preparers offering refund anticipation loans (RALs) and refund anticipation checks (RACs). Thirty nine percent of New Mexico EITC and WFTC claimants receive RALs or RACs,38 and low-income taxpayers who claim the EITC represent the majority of the consumers for both products.39 RALs are very short-term loans made to the tax filer so they can receive a refund the same day, but they often come with significant fees and high interest rates. RACs are essentially the same thing except that a taxpayer must open a temporary bank account. Fees for preparation of the return and the RAC account are then deducted from the taxpayer’s refund before a check is issued. Tax preparers who push RALs and RACs often fail to tell their customers that they could receive their refund by electronic transfer in as little as two weeks at no cost. While IRS rules have led to a dramatic decrease in RALs among EITC claimants from 2007 to 2010, during the same time period, the percent of EITC recipients requesting RACs more than doubled, from 26 percent to 56 percent.40 Both RALs and RACs disproportionately harm EITC and WFTC tax filers and can syphon off much of the value of the credits that is intended to help low-wage workers. New Mexico should limit the rate that can be charged on these refund options, mandate and standardize disclosure and marketing practices, and strictly enforce compliance among lenders.

• Support federal efforts to increase the EITC for childless workers
Working, childless adults are the only group effectively taxed into poverty or deeper into poverty by federal income taxes.41 These workers pay significant federal income and payroll taxes, yet receive little to no EITC, the credit that otherwise offsets significant portions of these taxes for low-income workers. In tax year 2013, the average combined credit for recipients in New Mexico with qualifying children was $3,334, while the average combined credit for New Mexico recipients without children was only $301. About 22 percent of EITC and WFTC returns in New Mexico are filed by childless workers, but less than 4 percent of the total EITC credit amount goes to these workers.42 Increasing the EITC for childless workers would not only raise their incomes and help offset taxes that send them into poverty, but, according to recent research, it could also help address low labor-force participation and high incarceration rates of childless, low-income workers.43

• Consider periodic payment options of the EITC and WFTC
The single annual disbursement of the EITC and WFTC can present challenges for workers struggling to support their families throughout the year. Research shows that about 95 percent of EITC recipients carry debt of some kind, and that in many families, significant portions of refunds may be spent on debt payments.44 Paying out a portion of filers’ refunds throughout the year would better enable them to cover daily and monthly expenses without taking on additional debt and then using the refund to pay off that debt (with added interest).45 This would also increase the chances that refunds are spent on local goods and services at local businesses, rather than on high-cost financial products (like payday loans), many of which are serviced by large, multi-state financial institutions. A pilot program in Chicago that issued EITC recipients their refunds on a quarterly—rather than an annual—basis found that periodic payments improved overall financial stability for and reduced financial stress of EITC families. Pilot project researchers also reported that 83 percent of families in the program preferred quarterly payments to the standard annual method.46

Endnotes

1. Quoted by Lea Donosky in “Sweeping Tax Overhaul Now The Law,” Chicago Tribune, October 23, 1986
2. NM Voices for Children analysis of 2013 Internal Revenue Service (IRS) income tax data provided by the Brookings Institute
3. Ibid
4. Income Mobility and the Earned Income Tax Credit: Short-Term Safety Net or Long-Term Income Support, Tim Dowd and John B. Horowitz, 2011
5. KIDS COUNT Data Book, Annie E. Casey Foundation, 2016
6. Center on Budget and Policy Priorities analysis of 2009-2012 American Community Survey data
7. Two Generation Approaches to Poverty Reduction and the EITC, Grantmakers Income Security Taskforce, 2015
8. Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy, 2015
9. U.S. Census Bureau, American Community Survey data, 2015
10. Brookings Institute analysis of 2011 tax year data
11. US Census Bureau, American Community Survey data, 2015
12. Conditions of Low-Income Working Families in the States, The Working Poor Families Project, Population Reference Bureau analysis of U.S. Census American Community Survey data, 2014
13. Low-Income Working Mothers and State Policy: Investing for a Better Economic Future, Deborah Povich, Brandon Roberts and Mark Mather, The Working Poor Families Project, 2014
14. On the Gini Coefficient measure, NM is 40th; on shares of income by quintile, NM is 44th. US Census, American Community Survey, 2014 data (1st being the best ranking a state can have, 50th being the worst ranking)
15. Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply, Nada Eissa and Hilary Hoynes, National Bureau of Economic Research, 2006
16. Two Generation Approaches to Poverty Reduction and the EITC, Grantmakers Income Security Taskforce, 2015
17. Income, The Earned Income Tax Credit, and Infant Health, Hilary W. Hoynes, Douglas L. Miller, and David Simon, National Bureau of Economic Research, 2012; Do Cash Transfer Programs Improve Infant Health: Evidence from the 1993 Expansion of the Earned Income Tax Credit, Kevin Baker, University of Notre Dame mimeo, 2008; and “Effects of Prenatal Poverty on Infant Health: State Earned Income Tax Credits and Birth Weight,” Kate W. Strully, David H. Rehkopf, and Ziming Xuan, American Sociological Review (August 2010), 1-29
18. The EITC: Linking Income to Real Health Outcomes, Hilary W. Hoynes, Douglas L. Miller, and David Simon, University of California Davis Center for Poverty Research, 2013
19. EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds, Center on Budget and Policy Priorities, revised in 2015
20. “Early-Childhood Poverty and Adult Attainment, Behavior, and Health,” Greg J. Duncan, Kathleen M. Ziol-Guest, and Ariel Kalil, Child Development, January/February 2010, pp. 306-325
21. Two Generation Approaches to Poverty Reduction and the EITC, Grantmakers Income Security Taskforce, 2015
22. The Economic Impacts of Tax Expenditures: Evidence from Spatial Variation Across the U.S., Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, special report for the US Internal Revenue Service, 2015
23. The Earned Income Tax Credit and Community Economic Stability, Natalie Holmes and Alan Berube, The Brookings Institute, 2015
24. “The economic impact of the Earned Income Tax Credit (EITC) in California.” Antonio Avalos and Sean Alley, California Journal of Politics and Policy, 2010
25. Dollar Wise: The Best Practices on the Earned Income Tax Credit, U.S. Conference of Mayors, 2008
26. An Assessment of the Effectiveness of Anti-Poverty Programs in the United States, Yonatan Ben-Shalom, Robert A. Moffitt, and John Karl Scholz, National Bureau of Economic Research, 2011; The Earned Income Tax Credit at Age 30: What We Know, Steve Holt, The Brookings Institution, 2006
27. The Earned Income Tax Credit, Austin Nichols and Jesse Rothstein, National Bureau of Economic Research, 2015
28. Using the Earned Income Tax Credit to Stimulate Local Economies, Alan Berube, The Brookings Institution, 2006
28. The Earned Income Tax Credit, Austin Nichols and Jesse Rothstein, National Bureau of Economic Research, 2015
30. This rate ranks New Mexico as 42nd in the nation on this measure. Working Poor Families Project analysis of Bureau of Labor Statistics May 2015 Occupational Employment Statistics
31. Testimony of Nina Olson, IRS National Taxpayer Advocate, before U.S. House Appropriations Subcommittee on Financial Services and General Government, February 26, 2014, p. 32
32. “Issues Affecting Low-Income Filers,” Janet Holtzblatt and Janet McCubbin, in The Crisis in Tax Administration, Henry Aaron and Joel Slemrod, Brookings Institution Press, November 2002; and “Noncompliance and the EITC: Taxpayer Error or Taxpayer Fraud,” Jeffrey Liebman, Harvard University, November 1995
33. Department of the Treasury, Agency Financial Report (AFR), fiscal year 2013, p. 207. It is estimated 70 percent of issues relate to complex residency and relationship requirements and confusion on claiming eligible children. The remaining 30 percent of EITC improper payments stem from verification of wage and self-employment income. (EITC recipients are as likely to be self-employed as other taxpayers.) Income verification issues regarding self-employment are a concern in the tax code as a whole, not unique to the EITC.
34. Testimony of John A. Koskinen, IRS Commissioner, before US House Ways and Means Subcommittee on Oversight, February 5, 2014
35. Based on IRS audits of EITC claims in the IRS study, “Compliance Estimates for the Earned Income Tax Credit Claimed on 2006-2008 Returns,” as reported in Estimated Earned Income Tax Credit Annual Overclaims, by the Center on Budget and Policy Priorities
36. “Tax Gap for Tax Year 2006: Overview,” Internal Revenue Service, January 6, 2012. These figures, which are for 2006 tax returns, represent the estimated impact of business under-reporting in the personal income tax; they do not include under-reporting or other sources of error in the corporate income tax.
37. “Reducing Overpayments in the Earned Income Tax Credit,” by Robert Greenstein, John Wancheck, and Chuck Marr, Center on Budget and Policy Priorities, April 7, 2014.
38. NM Voices for Children analysis of 2013 Internal Revenue Service income tax data provided by The Brookings Institute
39. EITC Interactive: User Guide and Data Dictionary, The Brookings Institute, 2015
40. Ibid
41. Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty, Chuck Marr, Chye-Ching Huang, Cecile Murray, and Arloc Sherman, Center on Budget and Policy Priorities, 2016
42. NM Voices for Children analysis of 2013 IRS tax data provided by The Brookings Institute
43. Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty, Chuck Marr, Chye-Ching Huang, Cecile Murray, and Arloc Sherman, Center on Budget and Policy Priorities, 2016
44. The Earned Income Tax Credit and Community Economic Stability, Natalie Holmes and Alan Berube, The Brookings Institute, 2015
45. Periodic Payment of the Earned Income Tax Credit Revisited, Steve Holt, The Brookings Institution, 2015.
46. Restructuring the EITC: A Credit for the Modern Worker, Dylan Bellisle and David Marzahl, Center for Economic Progress, 2015

Download this report (Jan. 2017; 16 pages; pdf)
Download just the appendix (6 pages; pdf)
Link to the fact sheet

A Working Poor Families Project report.
The Working Poor Families Project is funded by the Annie E. Casey Foundation, Ford Foundation, Joyce Foundation, and The Kresge Foundation.

Raising the State Minimum Wage

Who it would help, how much they would benefit, and why indexing it to inflation is necessary

by Gerard Bradley, MA
Download this report (Jan 2017; 12 pages; pdf)
Link to the fact sheet

Raising the minimum wage is an effective strategy for reducing poverty in New Mexico, particularly given the erosion of its purchasing power since it was last raised in 2009. In the legislative session that begins in January 2017, New Mexico lawmakers should enact legislation to raise the minimum wage to $12.50 per hour by 2021, if not sooner. This would establish a minimum wage that is roughly 60 percent of the state’s median wage. While this level for the minimum wage could not be considered a living wage, thousands of families would benefit—as would the state’s economy as that money was spent at local businesses.

In recent years the cities of Albuquerque, Santa Fe and Las Cruces have acted to raise the minimum wage in their communities above that of the state. If the state raised the state’s minimum wage to $12.50 an hour by 2021 in the upcoming state legislative session, it would be the first minimum wage increase for the whole state since the present minimum wage of $7.50 took effect in January of 2009. This report assumes an increase in five $1.00 increments, from $7.50 to $8.50 an hour in 2017 and to $9.50 an hour in 2018 and so forth, up to $12.50 an hour by 2021. In 2017, according to the Economic Policy Institute (EPI), there will be about 795,000 workers statewide making an hourly wage in New Mexico, rising to 825,000 in 2021. The EPI estimates that in 2021, 225,500 (or 27 percent) of those 825,000 workers would be directly helped by raising the minimum to $12.50 an hour. An additional 22,900 workers would be indirectly affected—their wages would rise due to ‘spillover effects’ from raising the wage to $12.50. The total number of workers affected would be 248,400 or about 30 percent of the 825,000 hourly workers. This report describes the characteristics of these low-wage workers and looks at the EPI’s estimates of the wage impacts of raising the state’s minimum wage.

Min-Wage-2017-FigureIThe Necessity of Indexing the Minimum Wage to Inflation

The New Mexico minimum wage was last increased in January 2009, to $7.50 an hour. That $7.50 an hour wage was not indexed to inflation as measured by the Consumer Price Index and therefore its purchasing power has declined with rising prices. The wage will have lost almost one quarter (23.3 percent) of its value by 2021. That is because the Consumer Price Index is expected to increase by about 2 percent for each year between 2016 and 2021. Figure I shows that the $7.50 an hour wage (show by the light orange line) had declined in value to $6.52 an hour in 2016 (the dark orange line), and will decline further, to $5.80 in 2021, even with inflation rising by a fairly low 2 percent per year. A proposal to raise the minimum wage in stages to $12.50 by 2021 is shown in the blue line.

 

Summary of the Impact of Increasing the Minimum Wage to $12.50

Figure II-A summarizes the impact that raising the minimum wage to $12.50 in 2021 would have on the New Mexico workforce. About 225,500 workers will be directly affected, meaning that these workers will see their wages rise as the new minimum wage exceeds their current pay. Indirectly affected workers, estimated at 22,900, have a wage rate just above the new minimum wage. Indirectly affected workers will receive a raise as employer pay scales are adjusted upward to reflect the new minimum wage.

Figure II-B shows that increasing the minimum wage to $12.50 would add a total of almost $309.6 million a year to the paychecks of workers at or near the minimum wage. On average, the workers affected by the increase will receive an annual wage increase of $1,246. Directly affected workers will receive an increase of $1,349 while indirectly affected workers will receive an annual increase of $244. There will also be slight positive impacts on the state’s gross domestic product and a slight increase in total employment.
 
Min-Wage-2017-FigureII

Children in Families with Minimum Wage Workers

Figure III shows that in 2021 there will be 151,113 children living in households with directly and indirectly affected workers, or 28 percent of all children. Clearly, low-wage work affects a significant share of New Mexico’s children. Also, the prevalence of low-wage work in New Mexico inhibits household formation, marriage, and having children because minimum wage workers don’t have the financial resources to do so.
 
Min-Wage-2017-FigureIII

Impact of the Increase on Women and Men

More women workers than men will benefit by raising the state minimum wage. Figure IV-A shows that about 140,700 women and 107,600 men would benefit from the higher minimum wage. About 35 percent of all women hourly workers and 25 percent of all male hourly workers would be helped by the increase. This is despite the fact that there are more male (423,100) than female (401,800) hourly workers.

Despite these odds, men will receive a slightly larger annual wage increase than women, as Figure IV-B shows. While men will earn $1,300 more, on average, women will earn $1,200 more. This reflects the different mix of industries and occupations in which men and women work, as well as the fact that the average wage increase for male workers who are affected is slightly higher than for female workers.
 
Min-Wage-2017-FigureIV

Impact by Age

Most of the workers who will be helped by raising the minimum wage are adult workers, not teenagers. A common, but erroneous, perception about minimum wage workers is that they are by and large teenagers. Of the total 248,400 workers impacted by the minimum wage increase, only about 8.8 percent (21,800) are teenagers (younger than 20 years old). Figure V-A shows that about 66 percent of the affected workers (165,000) are age 25 and older, with 34 percent (84,800) over age 40. Even more telling, a significant proportion, 14.6 percent (36,500), are seniors―workers older than 55. One might visualize a greeter in a big box superstore, a senior working to make ends meet.

Figure V-B also shows that, of the 28,300 teenager in the workforce, 77 percent would be affected by the increase in the minimum wage. This is to be expected, since teenage workers will be at the lower end of the wage spectrum. Of workers aged 20 and older, an estimated 226,600 (28.4 percent) out of a total of 796,600 workers will be affected.
 
Min-Wage-2017-FigureV

Impact by Ethnicity

Figure VI-A shows the distribution of workers helped by the minimum wage increase by ethnicity. Hispanic workers are by far the largest group of those helped by the minimum wage increase because they are disproportionately represented in low-wage jobs. Although Hispanics comprise about 45 percent of hourly workers, they make up 56 percent of those who would be helped by raising the minimum wage. Conversely, while 40 percent of hourly workers are Non-Hispanic White, they make up just 30 percent of those helped by the minimum wage increase.

About 38 percent of the Hispanic workforce would be affected by a minimum wage increase, while only 29 percent of the non-Hispanic White workforce would be affected. Hispanics would also see the largest wage increase (Figure VI-B).
 
Min-Wage-2017-FigureVI

Impact by Marital and Family Status

Figure VII-A shows the distribution of those helped by a minimum wage increase by marital status. Almost 52 percent of affected workers are unmarried, with no children. This may be because low-wage workers are not able to afford the cost of marriage and children. A significant share of low-wage workers are married, but have no children (18.4 percent). Again, this may be because these workers feel they cannot afford to have children. They would also see the largest average wage increase (Figure VII-B).
 
Min-Wage-2017-FigureVII

Impact by Family Income Level

Another popular misconception about minimum wage workers is that they live in upper-income families and are merely teenagers working for entertainment income. This is clearly not the case. By and large, workers impacted by raising the minimum wage are living in low-income families. Figure VIII-A shows that 28 percent (70,000) of workers benefitting (directly and indirectly) from the minimum wage increase live in families with a family income less than $20,000 per year. Another 30 percent (74,000) of low-wage workers live in families with income between $20,000 and $40,000, so 58 percent of workers impacted by the minimum wage increase are in families with income less than $40,000.
 
Min-Wage-2017-FigureVIII

Impact by Industry Sector

Figure IX-A provides an overview of workers by type of industry. As expected, the retail (17.5 percent) and leisure and hospitality (21 percent) sectors together account for a significant share (38.5 percent) of workers affected by raising the minimum wage. It is somewhat surprising to note that the education and health care sector accounts for 26.4 percent (65,700) of affected workers. Clearly, a significant share of workers in the health care field, the fastest growing sector in New Mexico’s slowly growing economy, are low-wage workers.
 
Min-Wage-2017-FigureIX

Impact by Occupation of Worker

Figure X shows the distribution of affected workers by occupation. Workers in the service (90,400 or 36.4 percent) and sales (36,600 or 15 percent) occupations account for 41.4 percent of the total. This is consistent with the large share of service occupation workers in the health care industry. There were 16.2 percent (40,200) of affected workers in the office and administrative services occupations. It is surprising that there are 28,600 affected workers in the professional, business and science occupations, reflecting the seepage of part-time and contingent work into all parts of the occupational structure.
 
Min-Wage-2017-FigureX

Impact by Hours Worked

Another hardy myth about minimum wage workers is that they are mostly part-time workers. Figure XI-A shows that only 10 percent (24,900) of affected workers work less than 19 hours per week. Almost 32 percent of low-wage workers (78,200) work between 20 and 34 hours per week, while almost 59 percent (145,200) are full-time, working more than 35 hours per week. Many low-wage workers would welcome working more hours on a consistent schedule so that they don’t need to cobble together a subsistence living from more than one job. The fact that almost 90 percent of minimum wage workers work more than 20 hours per week is significant.
 
Min-Wage-2017-FigureXI

Impact by Educational Level

Figure XII-A shows that, as could be expected, low-wage workers are concentrated on the lower rungs of the educational ladder. Workers with less than a high school education (56,400 workers or 23 percent) and those with only a high school diploma (77,400 workers or 31 percent) accounted for about 54 percent of total directly and indirectly affected workers. It is disturbing to note that there were 94,100 workers with some college who will be affected by raising the minimum wage for almost 38 percent of the total. It is important to note that, due to the occupational structure of the state, workers with more education may end up working in low-wage jobs. In other words, more education is not a panacea for low-wage work.
 
Min-Wage-2017-FigureXII

Impact by Ownership of Employer

Although it is not surprising, Figure XIII-A shows that more than 80 percent of low-wage workers are in the for-profit sector. It may be an eye-opener, though, that 14 percent of low-wage workers are in the public sector. Certainly, the perception is that government workers are highly paid. By and large, that is not so when education and job tenure are taken into account.
 
Min-Wage-2017-FigureXIII

Download this report (Jan 2017; 12 pages; pdf)
Link to the fact sheet

A Fiscal Policy Project report.
The Fiscal Policy Project, a program of New Mexico Voices for Children, is made possible by grants from the Annie E. Casey Foundation, the McCune Charitable Foundation, and the W.K. Kellogg Foundation.

 

Turning Assistance into Opportunity

Improving TANF and Implementing Two-Generational Solutions to Help New Mexico Families Access Educational Pathways Out of Poverty

A KIDS COUNT Special Report
Executive Summary

December 2016

Download this executive summary (Dec. 2016; 4 pages; pdf)
Download the full report by Armelle Casau, Ph.D., and Virva Walkington, MPH (Dec. 2016; 16 pages; pdf)

Our communities are stronger when we ensure that all parents and children have access to the resources and opportunities they need to succeed and thrive. The Temporary Assistance for Needy Families (TANF) program, formerly known as welfare, provides some cash assistance to eligible families with children so they can better afford basic necessities. When welfare was reformed twenty years ago, the cash assistance—with some exceptions—became tied to work or work-related activity requirements. Unfortunately, TANF does not sufficiently address one of the reasons families fall into or remain in poverty: the lack of education credentials and job skills, which present barriers to employment and to getting jobs that pay family-sustaining wages.

Additionally, while families receiving TANF cash assistance are generally eligible for child care assistance, too little focus is spent on making sure children in TANF families have the opportunity to participate in quality early childhood care and education programs (ECCE), including child care, that increase their school readiness and provide safe learning environments while their parents are at work or furthering their education or training.

tanf-figure-iA two-generational approach is needed

Since TANF only serves families with children, the program should use a two-generational approach to help families gain long-term economic self-sufficiency (see Figure I). Because of the strong correlation between poverty and low levels of educational attainment, education is key. When parents increase their education and work skills, subsequent higher incomes improve their family’s living standards as well as their children’s future economic security as adults. When young children participate in quality ECCE programs, their educational outcomes also improve, which helps break the generational cycle of poverty.

TANF in New Mexico helps too few families with too little assistance

Considering that the state has the second worst child poverty rate in the nation (28.6 percent) and ranks 49th in overall child well-being according to the Annie E. Casey Foundation’s 2016 KIDS COUNT rankings, the TANF program in New Mexico should better serve our many vulnerable children and their families. Across the state, only 23,432 children—or 17 out of every 100 children living in poverty—were served by TANF in 2015 (see Figure II). The cash assistance is also time limited to 60 months over a lifetime and is too little for a family to live on while parents look for work or attend school. A family of three receives an average of $409 per month. This represents a 30 percent drop from 20 years ago when adjusted for inflation.

tanf-figure-ii-iii
 

Children on TANF need increased access to quality ECCE programs

Since cognitive delays start early in children living in poverty, and children who start behind in school often fall further behind, quality ECCE programs are needed to provide nurturing, stable, and safe environments while promoting school readiness and early reading skills that can set children on a path to success in both school and in life. While the state has increased funding for some ECCE programs, including the NM Pre-K program and home visiting, funding for other programs, like child care assistance, has stagnated. Future ECCE funding is at risk due to current budget pressures, even though the need for all of these programs is not close to being met.

ECCE programs are also not targeted explicitly enough to TANF families. Almost $31 million of federal TANF funds in FY17 are being used for child care assistance but just 4 percent of New Mexico’s TANF families received child care assistance even though 40 percent of children on TANF are 5 years old or younger (see Figure III). Data are also not collected for how many of the 23,432 children on TANF are benefiting from other ECCE programs like home visiting and NM Pre-K even though nearly $23 million of federal TANF funds are being spent on those two programs.

tanf-figure-iv

TANF adults need access to effective education and training programs

In today’s economy, most family-sustaining jobs require some level of post-secondary education. In New Mexico, 77 percent of projected job openings will require some college education and yet, only 6 percent of the 7,688 TANF adults in the state have more than a high school education (see Figure IV). Parents living in poverty need access to education and training programs as many struggle with academic deficiencies in basic math, reading, and writing or lack college or workforce credentials, all of which makes them non-competitive for most family-sustaining jobs.

Considering that the TANF program was built around participation in work or work-related activities, New Mexico ought to spend significant amounts of their TANF funding on effective education and training programs. Unfortunately, the state in FY15 spent only 5 percent of its combined federal TANF funds and state maintenance of effort (MOE) funds (referred to as TANF/MOE) on work-related activities for TANF adults (including skills assessment, employment search, and subsidized job training) and zero TANF/MOE funds on education and training programs even though this is an allowable and recommended category under work-related activities.

Across the nation, workforce development experts are advocating for states to prioritize career pathways programs that move non-traditional, low-skilled adults along an education and training continuum into post-secondary education that leads to credentialing in high-growth industries. New Mexico should follow the lead of other states that are leveraging TANF funds and the Workforce Innovation and Opportunity Act (WIOA) to develop and sustain a statewide career pathways frameworks.

New Mexico’s TANF program should implement two-generational strategies

We need to ensure that services for both children and parents are linked, aligned, and coordinated in a two-generational approach so these services can do a better job of improving outcomes for the whole family than can services provided in isolation. Strategies the state should adopt include co-designing and co-locating services (e.g. a center-based program where infants are cared for in the same location as parents are developing parenting and work-related skills); targeting programs to TANF families (e.g. setting aside funding for a home visiting program just for TANF families); coordinating between agencies (e.g. hiring a two-generation manager to identify and recommend poverty reductions strategies across agencies); and providing education and training programs with comprehensive supports for parents (e.g. using TANF and WIOA funds to support a career pathways framework that provides tuition, case managers, career coaches, transportation assistance, and child care assistance).

tanf-figure-v

We should also do away with New Mexico TANF policies that hurt parents and their children. This includes full-family sanctions, full-family time limits, and the lack of an automatic work exemption for single-parent heads of families with infants. In addition, New Mexico needs to better prioritize its TANF funding to serve the population it’s intended to serve—our many families with children struggling with poverty. New Mexico spends only 40 percent of its TANF/MOE funds on the core TANF activities—basic cash assistance, work and work-related activities, and child care assistance (see Figure V).

Policy Recommendations

Implement two-generational TANF strategies so parents and children benefit at the same time
• Co-design programs and co-locate services for TANF parents and children.
• Target programs specifically to TANF families and coordinate between agencies to increase prioritization of TANF families.
• Support career pathways programs that provide comprehensive supports for TANF parents.
• Increase the minimum wage and provide more opportunities for subsidized job training for TANF parents.

Change New Mexico TANF rules that hurt children in addition to adults
• Automatically exempt single-parent heads of families, pregnant women, and mothers of infants from TANF work requirements.
• Remove full-family TANF sanctions and full-family TANF time limits.

Better target TANF funding so struggling families can escape the generational cycle of poverty
• Spend more TANF/MOE funds on education and training activities.
• Increase TANF cash assistance levels and include cost-of-living adjustments.
• Use a small percentage of the $15 billion Land Grant Permanent Fund for ECCE programs.
• Generate additional state revenues while addressing regressive tax code provisions to support two-generational TANF strategies.

Download this executive summary (Dec. 2016; 4 pages; pdf)
Download the full report by Armelle Casau, Ph.D., and Virva Walkington, MPH (Dec. 2016; 16 pages; pdf)

Find more data for New Mexico and the nation on the KIDS COUNT Data Center
NM KIDS COUNT is a program of the Annie E. Casey Foundation.

Valuing Families at Work: The Case for Paid Sick Leave

by Gerry Bradley, MA
Download this report (Feb. 2016; 10 pages; pdf)

Paid sick leave is critical for families for health care and economic reasons. Parents should not be forced to choose between caring for themselves or family members and their jobs. The lack of paid sick leave adds stress to families, exposes co-workers unnecessarily, and risks the spread of infectious diseases to children in schools and child care centers. As with other employee-provided benefits, such as health insurance and paid vacation, paid sick leave tends to be less available in lower-wage jobs.

Therefore, those who can least afford to lose any of their income are the most likely to have to choose between working and taking time to care for themselves or a child when they are sick. This intersection of low-wage work and the lack of benefits like paid sick leave helps keep the working poor from climbing out of their situation.

Guaranteeing all workers at least one week of paid sick leave would do much to help low-income working families and their children. In New Mexico, however, only half of private-sector workers have access to paid sick leave. This is the worst rate in the nation.1 New Mexico, with its high percentage of low-wage jobs and a correspondingly high rate of working families who are low-income, would have much to gain from enacting paid leave legislation.

The lack of paid leave is a national problem. On January 20, 2015, in the State of the Union address, President Obama highlighted the need for paid sick leave in the United States:

    “…today, we are the only advanced country on Earth that doesn’t guarantee paid sick leave or paid maternity leave to our workers. Forty-three million workers have no paid sick leave―43 million. Think about that. And that forces too many parents to make the gut-wrenching choice between a paycheck and a sick child at home. So I’ll be taking new action to help states adopt paid leave laws on their own.”

The President then called on Congress to send him legislation that would ensure that all workers could earn at least seven days of paid sick leave, saying “it’s the right thing to do.” While there has been no similar call to action at the state level in New Mexico, the Legislature did pass a memorial in 2015 requesting that the Bureau of Business and Economic Research at the University of New Mexico convene a working group to develop recommendations for the establishment of a publicly managed parenting workers’ leave fund. That same year, a broad coalition of grassroots organizing groups, advocates, and labor began pushing the Albuquerque City Council to enact a Fair Work Week ordinance that would ensure all employees would earn one hour of sick leave for every 30 hours worked, among other things. The Albuquerque City Council did not pass it, but it is expected to be introduced again.

There is a substantial body of evidence that supports President Obama’s belief that granting paid sick leave is “the right thing to do.” Paid sick days bring multiple benefits to employers, workers, families, and communities at large.2 The economic and public-health benefits of paid sick leave coverage are substantial, including safer work environments,3 reduced spread of contagion,4 and reduced health care costs.5

Health care costs are reduced because paid sick leave encourages a more rational use of health resources. In a 2011 report, the Institute for Women’s Policy Research found that:

  • Paid sick days are associated with better self-reported general health among workers;
  • Workers with paid sick days are less likely to delay medical care for themselves or for family members;
  • Access to paid sick days is associated with lower usage of hospital emergency departments, a finding that holds true for those workers and families with private health insurance, those with public health insurance (e.g. Medicaid or CHIP), and those with no insurance.6

The Institute for Women’s Policy Research, which puts the estimate of American workers without paid sick leave between 43 million and 48 million, writes that such workers, “…often have to risk their jobs or pay when inevitable short-term health and care-giving needs arise.”7

International Comparison

As the President indicated, the U.S. does not compare well with other advanced nations regarding guaranteed paid sick leave. In 2009, the Center for Economic and Policy Research (CEPR) issued a report called Contagion Nation: A Comparison of Paid Sick Day Policies in 22 Countries. The report notes that the U.S. is the only nation ranked highly in terms of economic and human development that does not guarantee paid sick leave for all workers. The U.S. also has no federal laws protecting workers from being fired if they do miss work due to illness.

The CEPR report compares national policies for two illness scenarios: a case of flu that requires five days off work for recovery and a cancer treatment that requires missing 50 days of work. The report defines the time necessary for recovery from the flu as paid sick days and the time off for cancer treatment as paid sick leave. The U.S. is not the only country with no national policy for paid sick days—Canada and Japan join us in that distinction. While Canada has no national policy for paid sick days, most of its provinces require employers to provide some paid days off during short-term illnesses. Figure I summarizes the findings on the 22 countries.

PaidLeave-Figure I

The U.S., however, stands alone as the only country not providing paid sick leave for a long-term illness such as a 50-day cancer treatment. Several nations provide full pay for the 50 working days missed, while others provide less.

There are two ways that governments can approach guaranteeing sick leave to workers. The first method is to mandate that employers provide sick leave to workers. The second method is to include sick days or sick pay in a social insurance system. An employer mandate for sick days is more common in the case of the time needed to recover from a case of flu, while a 50-day cancer treatment is more commonly covered by a countries’ social insurance system. Figure I shows which countries use employer mandates and which countries use the social insurance system model. It also shows what, if any, requirements must be met before employees are eligible.

Paid Sick Leave: The National Picture

PaidLeave-Figure IIThe fact that the United States does not have national legislation requiring sick leave through an employer mandate or a social insurance system does not mean that no sick leave is offered by employers in the U.S. The outcome of availability of paid sick leave in the U.S. is the result of agreements between employers and workers at the individual employer level. Not surprisingly, then, paid sick leave is more common in high-wage and union jobs, as are other employment benefits such as health insurance and paid vacation time. The National Compensation Survey (NCS) of the U.S. Bureau of Labor Statistics provides a broad description of the availability of sick days in the U.S. (Figure II).

PaidLeave-Figure IIIAs one would expect, a far lower share of employees receive paid sick leave in industries where most of the jobs do not require a college education—such as goods-producing industries (factories and food processing plants) and in service-producing industries (retail, food service and hospitality). It should be a national concern that so many of the workers who handle our nation’s food supply do not have access to paid sick leave. By far the highest share of employees with paid sick leave work in government. This is, in part, because many of those are union jobs and jobs that require post-secondary education.

The availability of paid sick leave also varies widely by the size of employer, as shown in Figure III. The pattern is clear: larger employers are much more likely to offer paid sick leave to their workers. In addition, a far higher percentage of public-sector workers than private sector have access to paid sick leave, irrespective of size.

Paid Sick Leave: Race and Ethnicity and Hours Worked

PaidLeave-Figure IV-VPaid sick days bring multiple benefits to employers, workers, families, and communities at large. The economic and public health benefits of paid sick leave coverage are substantial, including safer work environments, reduced spread of contagion, and reduced health care costs. Access to this important benefit, however, is still too rare, and is unequally distributed across the U.S. population, with substantial differences by race and ethnicity, occupation, earnings levels and work schedules. Differences are also apparent when looking at worker demographics, such as race/ethnicity and gender (see Figure IV). Whites have more access to paid sick leave than Hispanics or Blacks, but less than Asians. The availability of paid sick leave also varies with hours worked, with full-time workers much more likely to have paid sick leave than part-time (see Figure V). This is due to the fact that many employers offering paid sick leave require that employees work a minimum number of hours in order to qualify for it. Also, those working part time are often in low-wage jobs.

Paid Sick Leave in the States and Cities

PaidLeave-Figure VIThere is also variation in the availability of access to sick leave among the four regions of the United States, as shown in Figure VI. The differences by geographic are not as compelling as differences by industry or hours worked, although it is clear that state and local government employees are far more likely to have paid sick leave benefits, irrespective of geographic location. Overall, workers in the New England and Middle Atlantic areas fare the best.

PaidLeave-Figure VIIWith almost 50 percent of workers without paid sick leave, New Mexico has the highest percentage of workers lacking paid sick days in the United States. Analysis of 2012-2013 data conducted by the Institute for Women’s Policy Research finds that across the country the percentage of workers without paid sick days varies widely from a high of 49.7 percent in New Mexico to a low of 38.9 percent in New Hampshire (see Figure VII). The main reason for New Mexico’s lack of paid sick leave is the high concentration of workers in low-wage employment sectors such as retail trade and hospitality services.

PaidLeave-Figure VIIIA growing number of cities and states have adopted laws that give workers the right to earn paid sick days (see Figure VIII). Paid sick days laws are in place in California, Connecticut, and Massachusetts, the District of Columbia, and in 17 cities across the country.

Paid sick legislation passed in other states provides that workers may not be disciplined, fired or retaliated against for using sick leave. Commonly, workers earn one hour of sick leave for every 30 hours worked with a cap on the number of hours or days that may be earned. Some legislation permits the carryover of unused sick leave each year, also with a cap on the number of hours that may be accrued. It is also common for workers in smaller industries to earn paid sick days at lower rates such as one hour per 40 hours worked or to have lower caps on the number of days or hours that may be accrued. The most worker-friendly laws also allow the leave to be used to care for a sick family member, although these are less common than laws that restrict usage to the workers’ needs.

An Estimate of the Cost of Providing a Week of Paid Sick Leave

PaidLeave-Figure IXSince barely half of workers in New Mexico have paid sick leave benefits, the cost of mandating such a program is not insignificant. Some of this cost could be offset by productivity enhancements and reduced employee turnover as workers feel less of a need to change jobs. Using data published by the U.S. Bureau of Labor Statistics it is possible to estimate how much a paid sick leave law might cost. New Mexico private-sector wages and employment for 2014 based on major industry classification are given in the first two columns in Figure IX. The total wages for one week―$478 million―are a good proxy for the annual cost of providing one week of sick leave in New Mexico. Since approximately half of all private-sector employees in New Mexico already receive paid sick leave, the annual cost of providing one week of paid leave to those who do not currently have it would be $239 million.

PaidLeave-Figure XAnother way to look at the cost of providing paid sick leave is to look at it as a share of a state’s gross domestic product, or GDP. Each state’s GDP, which is the value of the output of goods and services produced in a state, is estimated by the U.S. Bureau of Economic Analysis (BEA) The New Mexico GDP for the private sector was $69 billion in 2014. Therefore, the cost to the New Mexico private sector of providing one week of sick leave would be $69 billion divided by $239 million or 0.34 percent of private sector GDP (see Figure X). This is a cost that employers could and should easily bear, and state lawmakers should require them to do so.

Conclusion

In his January 2015 State of the Union address President Obama called for the implementation of paid sick leave on a national basis so that parents are not forced to choose between earning pay and caring for a sick child. That same year the New Mexico state Legislature enacted a memorial to study the feasibility of a publicly managed parenting workers’ leave fund and a coalition pushed the Albuquerque City Council to consider a Fair Work Week initiative.

Several reports have drawn attention to the public health benefits of providing paid sick leave. The lack of paid sick leave results in workers neglecting primary care, which results in more expensive and inappropriate care in hospital emergency departments when the condition becomes acute.

Paid sick days bring multiple benefits to employers, workers, families, and communities at large. The economic and public health benefits of paid sick leave coverage are substantial, including safer work environments, reduced spread of contagion, and reduced health care costs. Access to this important benefit, however, is still too rare, and is unequally distributed across the U.S. population, with substantial differences by race and ethnicity, occupation, earnings levels and work schedules.

Because there is no national policy on paid sick leave, states vary widely on what percentage of workers have paid sick leave available. However, an increasing number of cities and states are mandating that employers provide paid sick leave. New Mexico is the state with the lowest percentage of workers with paid sick leave—about 50 percent. The lack of paid sick leave adds stress to families, exposes co-workers unnecessarily, and risks the spread of infectious diseases to children in schools and child care centers. It also exacerbates the economic troubles for low-income families and makes it harder for them to raise themselves and their children out of poverty.

The annual cost of providing one week of paid sick leave would be approximately $240 million or 0.35 percent of the state’s gross domestic product. This is a cost that employers should and could easily bear. There is obviously much room for New Mexico to do better in providing this important employment support to its workers—a support that would go a long ways to improving the well-being of the state’s families and children.

Endnotes

1. Workers Access to Paid Sick Days in the States, Institute for Women’s Policy Research (IWRP), Washington, DC
2. Valuing Good Health in Newark, Publication No. B324, IWPR, Washington, DC
3. No Time to be Sick: Why Everyone Suffers When Workers Don’t Have Paid Sick Leave, Publication B242, IWRP, Washington, DC
4. “Health, Absence, Disability, and Presenteeism Cost Estimates of Certain Physical and Mental Health Conditions Affecting US Employers,” Journal of Occupational and Environmental Medicine, 46 398-412
5. Paid Sick Days and Health: Cost Savings from Reduced Emergency Department Visits, Publication B301, IWRP, Washington, DC
6. Ibid
7. Workers Access to Paid Sick Days in the States, IWRP

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A Working Poor Families Project report.

The Working Poor Families Project is funded by the Annie E. Casey Foundation, Ford Foundation, Joyce Foundation, and The Kresge Foundation.

Too many New Mexicans cannot afford to earn college credentials

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college afordability fact sheet
college afordability fact sheet2

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Helping Food-Insecure Households in New Mexico Afford Healthier Choices through the SNAP Double Up Food Bucks Program

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New Mexico is a poor state with high rates of food insecurity and with too many adults and children suffering from nutrition-related chronic conditions, including obesity and diabetes. Programs that incentivize consumption of locally grown, healthy, fresh produce to food-insecure individuals offer both health benefits to low-income communities as well as economic benefits to local farmers.

One example of a healthy food incentive program is Double Up Food Bucks (DUFB), which allows SNAP (Supplemental Nutrition Assistance Program) recipients to double their purchases of fresh, locally grown produce when they shop at participating farmers’ markets. This helps qualifying households access more food at no extra cost and eat more locally grown, fresh fruits and vegetables while creating demand for such produce and circulating more money in the local economy. Programs like SNAP DUFB—that generate a win-win for vulnerable New Mexicans as well as local farmers—should continue to be supported and be expanded throughout New Mexico.

SNAP-DUFB-Figure ILow-income status and food insecurity

In New Mexico, 21 percent of the total population, and 30 percent of our children live at or below the federal poverty level—$19,790 for a family of three (see Figure I). This places New Mexico second highest in overall poverty and highest in child poverty nationwide.1 Many New Mexico families are working hard despite the slow statewide economic recovery but 42 percent of our working families are low-income, meaning they earn less than 200 percent of the poverty level2 (see Figure II). Racial and ethnic minorities are more likely than whites to live in poverty or earn low incomes (see Figure III).

SNAP-DUFB-Figure II
SNAP-DUFB-Figure III

Low-income families are more likely to suffer from food insecurity3 and they have to spend a much larger portion of their income on food purchases than middle- or upper-income families. On average, the lowest 20 percent of households spends 26 percent of their income on food purchases, while the highest income earners spend only 3 percent (see Figure IV). Food insecurity affects 17 percent of New Mexico’s entire population and 28 percent of New Mexico’s children4 (see Figure V). New Mexico ranks eighth in the U.S. in overall food insecurity and third in child food insecurity.5 Of the more than 70,000 hungry New Mexicans who seek food assistance every week, between 30 and 40 percent are children and 21 percent are seniors over the age of 60.6

SNAP-DUFB-Figure IV

SNAP-DUFB-Figure VFood insecurity and poor nutrition

Eating healthy is expensive. A recent study showed that the cost of a healthy diet is $1.50 more per person per day than the cost of an unhealthy diet. While this seems small, it translates into big barriers for healthy eating when you consider that a family of four would have to pay an additional $2,200 per year on top of their existing grocery bills to provide a healthy diet.7 It is not surprising then that low-income families with tight food budgets often buy more processed foods because these foods are usually cheaper and have longer shelf lives than healthier, less processed foods.8 A survey done by the New Mexico Association of Food Banks found that 75 percent of food bank customers reported purchasing inexpensive, unhealthy food as the most common way to have at least some food at home to eat.9 Recently conducted focus groups with SNAP-eligible low-income community members in New Mexico found that this was indeed the situation for many of the participants. One community member from McKinley County shared that “I want to eat better, I want to be healthier, but I can’t afford it…” while another community member from Albuquerque mentioned that “(My son) gets a lot of not-great-for-him foods, just to make sure he’s getting enough to eat.”10

Poor nutrition and chronic health conditions

The strong link between food insecurity and obesity can be counter-intuitive but studies show that cost constraints often force low-income individuals to decrease their intake of more costly lean meats, dairy and fresh produce while increasing their intake of cheaper and more satiating foods containing processed grains and added sugar and fats.11 In addition to obesity, food-insecure individuals with poor nutrition are more likely to have chronic conditions such as diabetes and cardiovascular illnesses.12

Racial and ethnic minorities in New Mexico, who are more likely than non-Hispanic whites to be poor or low-income, are also more likely to suffer from a variety of nutrition-related chronic health conditions (see Figure VI). Economic and health statistics showcase the need for increased funding for programs like SNAP DUFB that help low-income individuals have access to healthier foods, particularly fresh produce.

SNAP-DUFB-Figure VI

SNAP Double Up Food Bucks increases access to affordable fresh produce

In 2014, SNAP benefits helped partially cover food expenses for 431,000 very low-income New Mexicans (or 21 percent of the state’s population compared with 15 percent nationwide), with an average monthly benefit per person in New Mexico of $121.13 An estimated 88 percent of New Mexico SNAP households are poor (below 100 percent of the poverty line) and 45 percent are in deep poverty (below 50 percent of the poverty line). Additionally, the majority of SNAP beneficiaries (63 percent) in the state are children, or elderly or disabled adults (see Figure VII)—in other words, people with high nutrition needs.14 Unfortunately, the state is considering reinstating work rules that go beyond the requirements mandated by the federal government. These new rules would require individuals between 16 and 59 years of age, including parents with children older than 12, to work in order to access SNAP benefits. Those unable to find employment would be required to participate in many hours of volunteering or job training just to get the nutrition assistance.

SNAP-DUFB-Figure VII

Although the state is looking to reduce SNAP enrollment numbers, the Legislature in 2015 appropriated $400,000 for the SNAP DUFB program to enable SNAP recipients to match their SNAP benefits one-to-one at participating farmers’ markets across the state. Programs that promote the consumption of fresh produce are needed in New Mexico where only 18 percent of adults and 21 percent of children and teens eat the recommended five or more fruit and vegetable servings per day.15 Additionally, too many areas in New Mexico are considered food deserts without ready access to fresh, healthy, and affordable food.16 The state ranked ninth in the rate of difficulty accessing affordable fresh fruits and vegetables (2008-2010) in both households with children and in all households. Urban areas are also affected, with Albuquerque ranking fourth among 100 U.S. metro areas for the highest rate of difficulty accessing affordable fresh fruits and vegetables in households with children and 13th in all households.17

SNAP Double Up Food Bucks creates demand for locally grown produce

SNAP benefits not only improve food security but also directly added $630 million to the New Mexico economy in 2014.18 The economic multiplier is strong: The USDA estimates that every $5 spent in SNAP benefits generate $9 in local economic activity.19 With the SNAP DUFB program, more SNAP beneficiaries shop at farmers’ markets for healthy produce and more of the economic stimulus benefits local farmers and other New Mexico food producers. The New Mexico Farmers’ Marketing Association reports that 2015 sales significantly increased at most farmers’ markets that offered the program.20 SNAP sales at farmers’ markets went from $128,000 in 2014, when the DUFB program was locally funded in a handful of farmers’ markets, to more than $350,000 in 2015, when a combination of federal and state funds spurred the expansion of the DUFB program to 34 farmers’ markets and two farm stands in 20 counties across the state. This 175 percent increase in SNAP sales was welcomed by local farmers, many of whom say they plan to expand farming operations due to increased demand. Counties with high food insecurity or SNAP participation rates that received large boosts in SNAP sales in 2015 through the DUFB program included Socorro, San Miguel, San Juan, Sierra, Rio Arriba, and Taos.

The New Mexico Farmers’ Marketing Association is currently compiling survey data for the New Mexico DUFB program but evaluations of similar SNAP voucher and coupon programs at farmers’ markets across the U.S. have shown that SNAP transactions usually double and can even quadruple.21 In surveys done in other states, 78 percent of vendors shared that they had more repeat customers because of the program and managers of farmers’ markets reported that DUFB programs brought in new and more diverse customers.22 Looking at SNAP recipient feedback, more than 75 percent shared that DUFB was a strong incentive to shop at farmers’ markets and that they increased their purchase of fruits and vegetables as a result.23 Almost half of New Mexico’s farmers’ markets are already participating in the DUFB program (see Figure VIII) but additional funding, support, and outreach could make this program truly statewide.

SNAP-DUFB-Figure VIII

Policy recommendations

Support and expand SNAP DUFB. New Mexico’s farmers’ markets currently generate around $9 million in annual sales, according to the New Mexico Farmers’ Marketing Association. Those participating in DUFB in 2015 earned more than $350,000 in combined SNAP and SNAP DUFB sales. By 2016, more than half of all farmers’ markets will be participating in the DUFB program. Expanding the program to more farmers’ markets (including those in food insecure counties like Torrance, Lea and Chaves), to farm stands and co-op grocers will help increase access to healthy, nutritious foods for food-insecure New Mexicans while increasing demand for locally grown produce. Since SNAP DUFB state funding will likely leverage matching federal USDA funds, future recurring state funds should bring an additional $2 million in federal funds into the state during the next four years.

Increase participation in SNAP DUFB. Barriers to SNAP DUFB participation include insufficient access to information about the program; limited hours and locations of farmers’ markets; misconceptions around actual and perceived prices; inability to do bulk or one-stop shopping; unfamiliarity with how to prepare less-common produce; and limited marketing budgets that make it difficult to reach broad target audiences. Strategies for improving SNAP DUFB participation include: promoting the program directly to SNAP participants through the New Mexico Human Services Department; increasing training and outreach to statewide Income Support Division personnel who work directly with SNAP participants; increasing the administrative capacity of farmers’ markets staff and volunteers to run the program; conducting cultural competency training to increase the capacity of farmers’ market staff and volunteers to engage with, and better serve, diverse audiences; increasing the production and distribution of locally grown food to corner stores and other grocery stores so SNAP DUFB is available at more retail outlets; creating additional marketing materials (and translate into Spanish) that can be more widely disseminated in libraries, banks, post offices, DMV locations, child care sites, and schools; conducting more outreach via cooking demos on site and other community locations; leveraging SNAP-Ed funding to further crosslink nutritional education efforts; and working with health professionals to spread the word about the program.24

Support a variation of the Fruit and Vegetable Prescription (FVRx) program using SNAP DUFB funding. In FVRx programs, enrolled patients with nutrition-related illnesses receive nutritional counseling as well as “prescriptions” for no-cost fresh fruits and vegetables redeemable at participating farmers’ markets. A new pilot program created by the New Mexico Farmers’ Marketing Association called SNAP Rx will pair such a program at three federally qualified health clinics in Northern New Mexico with the existing funding and infrastructure of SNAP DUFB. This promising and innovative program should help foster partnerships between health care providers and low-income individuals dealing with diet-related illnesses while improving health outcomes of at-risk populations and further increasing the demand for locally grown fresh produce. Upon successful pilot implementation, the SNAP Rx program should be expanded across the state.

Increase funding for the New Mexico Grown Fresh Fruits and Vegetables for Schools Meals program. In 2015, with $364,300 of recurring state funding from the Legislature, more than 30 farms looking to expand their businesses participated in this program to provide locally grown fresh produce to as many as 218 School Food Authorities and school districts across the state, according to Farm to Table NM. For many food-insecure children, their school meals end up being their main meals of the day and providing nutritious foods that include locally grown fresh produce help improve children’s health while creating demand for locally grown produce. This funding also helps schools align with new federal school nutrition rules that now require twice as many servings of fresh fruits and vegetables in school meals.

Optimize and streamline SNAP enrollment. The state should take full advantage of federal SNAP offerings including: drawing down all available SNAP outreach dollars for increasing SNAP participation; continuing the federal exemptions from work requirements; eliminating excessive and administratively burdensome verification requirements; and implementing “express-lane” enrollment to link SNAP, Medicaid, and child care assistance. As mentioned earlier in the brief, every $5 spent in SNAP benefits generate $9 in local economic activity. This leads to a very positive economic multiplier effect for communities across New Mexico while increasing the food security and health outcomes of vulnerable children and adults in the state.

Endnotes

1 U.S. Census Bureau, 2014
2 Working Poor Families Project analysis of 2013 U.S. Census American Community Survey data
3 Hunger in America, 2014, Feeding America, 2014
4 Ibid
5 Map the Meal Gap, Feeding America, 2015 (2013 data)
6 Hunger in New Mexico, New Mexico Association of Food Banks
7 “Off the Cuff: The $1.50 Difference,” Harvard School of Public Health Magazine, 2014
8 “Poverty and Obesity: The role of energy density and energy costs,” The American Journal of Clinical Nutrition, 2004; and “Obesity, diets, and social inequalities,” Nutrition Reviews, 2009
9 Missing Meals in New Mexico, NM Association of Food Banks, 2010
10 A Health Impact Assessment of a Food Tax in New Mexico, New Mexico Voices for Children, 2015
11 “A cost constraint alone has adverse effects on food selection and nutrient density: An analysis of human diets by linear programming,” The Journal of Nutrition, 2002
12 “Food insecurity is associated with diabetes mellitus: Results from the National Health Examination and Nutrition Examination Survey (NHANES) 1999–2002,” Journal of General Internal Medicine, 2007; and “Food insecurity is associated with chronic disease among low-income NHANES participants,” The Journal of Nutrition, 2010
13 USDA SNAP state activity report, FY 2014
14 Center on Budget and Policy Priorities analysis of data from USDA food and nutrition services, FY 2013
15 NM Youth Risk and Resiliency statewide survey, NM Department of Health, IBIS, 2007, 2009, 2011 compiled data; https://ibis.health.state.nm.us/query/builder/yrrs/YRRS3_PENutriWgt/5aDay.html
16 “Food Access Research Atlas Data File,” U.S. Dept. of Agriculture, Economic Research Service, August 2015
17 A Half Empty Plate: Fruit and Vegetable Affordability and Access Challenges in America, Food Research and Action Center (FRAC), 2011
18 NM SNAP Fact Sheet, Center on Budget and Policy Priorities, 2015
19 The Food Assistance National Input-Output Multiplier Model and the Stimulus Effects of SNAP, 2010
20 NM Farmers’ Marketing Association 2015 report to the New Mexico Legislature
21 Double Value Coupon Program Diet and Shopping Behavior Study, Wholesome Wave, 2012
22 Double Up Food Bucks 2011 evaluation, Fair Food Network Project
23 SNAP Healthy Food Incentives Cluster Evaluation, 2013 Final Report, Community Science
24 Exploring Efforts to Increase Participation of SNAP Recipients at Farmers’ Markets, Emory University, 2015

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