Report: Poverty persists despite investments in income support programs

Dec. 31—Despite investing billions of dollars in income support programs such as food stamps and Medicaid, New Mexico hasn't moved the needle on poverty rates, consistently ranking among the poorest states in the nation.

A recent report by the Legislative Finance Committee found New Mexico spent more than $10.1 billion of state and federal funds in fiscal year 2023 on programs to subsidize low wages and support people who were unemployed, a $2.6 billion increase over fiscal year 2019.

"Over the same time, poverty levels have remained stubbornly high with poverty rates staying around 18%," the report states. "In 2022, New Mexico had the highest poverty rate in the nation at 17.6%."

LFC program evaluator Sarah Dinces told lawmakers earlier this month income support programs, including Medicaid and the Supplemental Nutrition Assistance Program, or SNAP, provide "immediate benefit" to people in or near poverty.

"However, while our state has a generous benefits package, these large investments have not correlated with decreases in the state's overall poverty rates," she said.

The LFC report resulted in a pointed discussion among lawmakers about whether the state is keeping poor people "shackled in generational poverty."

After the presentation, House Minority Leader Ryan Lane, R-Aztec, referenced The Millionaire Next Door, a research-based book about wealth in America.

"In that book, they studied a large group of first generational millionaires," he said. "By the third generation, almost all of that wealth had dissipated, and what they discovered is those folks who became first generational millionaires, they didn't want their children to struggle like they struggled, so they made life very easy for their children."

But part of what had made them successful in the first place was the struggle itself, Lane said.

"I don't have a problem with social safety nets to an extent — I know that sounds crazy coming from a Republican — but what I find troubling is there doesn't appear to be any connection between the social safety net itself and making certain that there's workplace and educational requirements built into those systems," he said.

"If we as a state are providing taxpayer dollars to these impoverished families and the results are showing that they remain impoverished, I think that's where we need to have a gut check about what we're doing," he added.

Rep. Rod Montoya, R-Farmington, said it's his experience all Republicans support what he called a true safety net for people in need or unable to provide for themselves.

"But when it comes to able-bodied people ... it's a moral issue as to whether or not we stop people from being able to support themselves," he said. "What we're stopping people from is from self-determination."

Montoya and other lawmakers cited the so-called cliff effect, which occurs when an increase in income pushes a household past the eligibility cap for food assistance, child care aid and other public benefits, as an inhibitor.

"For folks who have not been employers, you don't run into this, but ... how many people come to work that are afraid to work too many hours because they will lose all of their benefits?" Montoya said.

In a 2018 report, New Mexico Voices for Children described the cliff effect as one step forward, two steps back.

"The cliff effect occurs when an increase in income is enough to disqualify a family from receiving a work support but is not enough to cover the cost of the lost benefit," the report states. "The cliff effect leaves many breadwinners having to make the terrible choice between accepting a pay raise and keeping a critical work support, such as child care assistance for their children. In some instances, they choose to decline the raise."

Sen. George Muñoz, a Gallup Democrat who chairs the Legislative Finance Committee, said lawmakers — and state agencies — need to figure out a solution.

The Human Services Department "is also part of that problem because they keep raising the amount [to qualify for a program], and so as people are more wealthy, they're still able to get benefits," he said. "... So there's less for those people that really need it."

The LFC report recommends all income support programs have "off-ramps" by increasing copays as income increases.

"The state can also connect those on income support programs to higher education because increasing degree attainment is highly correlated with increased wages," the report states.

Lane said he's lived in low-income housing and has been on food stamps and Medicaid but didn't receive any guidance on how to break the cycle of poverty.

"When we were at that point in life, we received zero training in terms of how to get off them, how to move and improve your life," he said.

"Those are things that we had to figure out on our own, but not everybody has the ability to do that," Lane continued. "As both appropriators and then generally as legislators, I think we have a moral duty to make sure what we're doing is not keeping people shackled in generational poverty even though we may have the best of intentions."

Dinces said poverty rates are most affected by labor force participation, wages and educational attainment. New Mexico's labor participation rate is persistently lower than the nation's, likely driving the state's poverty rate, she said.

"Most individuals receiving income supports work but likely not full time and likely not for wages that meet the rise in cost of living," she said.

Sen. Bill Sharer, R-Farmington, said he was concerned about "support versus employment."

At a recent meeting in Farmington with the Department of Workforce Solutions and about 30 employers, "we were told there's about 2,000 jobs in San Juan County ... and about 1,800 people that just don't want to work," he said.

Sharer said low wages in some industries disincentivize people from seeking employment.

"If you're only going to earn a couple of hundred dollars a year more by working versus not working, why have a boss tell you want to do for $300 bucks," he said. "That's an issue."

He added, "Do people need support? Absolutely," he said. "I'm not saying that we shouldn't help people that need help. We need to help them also by getting them to help themselves.

"It goes back to the old saying, 'Are you going to give someone a fish or are you going to train them to fish?' I think what we're doing is giving them fish. They don't know how to do anything else."

Follow Daniel J. Chacón on Twitter @danieljchacon.