How to Cut Poverty in Half in Just Four Steps

Thirty-seven million Americans live in poverty. We can cut that number in half in the next decade. Here’s how.

Imagine if everyone in California were poor. In other words, all 36.5 million inhabitants of California—the most populous state in the richest nation in the world—are living lives of privation. Holding on to life and liberty, maybe, but with little hope of engaging in the pursuit of happiness. A pretty sad state of affairs, right?

Well, you can stop imagining. Not everyone in California is poor, of course—Steven Spielberg lives there, after all—but it is the sad case that 37 million Americans across the country live below the poverty line, and millions more are struggling to make ends meet.

The Center for American Progress has a plan for how we can cut the number of Americans living in poverty by half in 10 years as a first step to eradicating it in a generation. Fighting poverty won’t be easy or cheap, but CAP’s plan can be paid for in full by bringing better balance to the federal tax system. Serious action requires serious investment. And allowing millions of American families to languish in poverty—in what is supposed to be the land of opportunity, the American dream—is clearly not an option we can afford to choose.

Here’s how we can cut poverty in half in the next decade—in just four steps.

Step One: Make it easier for people to earn a living.

As of 2005, a quarter of all jobs did not pay wages high enough to keep a family of four out of poverty. We should make work pay by increasing the minimum wage—which, at $5.15, is the lowest it’s been in real terms in over 50 years. Congress should raise the minimum wage to $8.40, which would make it 50 percent of the average wage again (right now it’s just 30 percent of the average wage).

We should also make the lives of working families easier. Over 70 percent of working families have children. To give low-income families with children a hand, federal and state governments should expand the child care tax credit and guarantee child care help to families that make less than $40,000 a year.

Another way we can reduce poverty for workers is to help them get better jobs and working conditions by making it easier for workers to create unions. Passing the Employee Free Choice Act, which establishes stronger penalties for violations of employee rights and puts in place another method of creating unions, would achieve this goal.

Step Two: Help people achieve economic security.

After helping people get decent work, a good second step to cutting poverty is to help American families retain a minimum level of economic security. We can start doing that by patching up our tattered safety net. Right now, it doesn’t do enough to keep people from slipping even deeper into poverty if they are temporarily between jobs or to help them get work in the first place.

All levels of government could do much to simplify and improve access to benefits for working families. The Food Stamp Program could be strengthened to improve the benefits it provides, increase the number of people eligible for it, and make it easier to access. And the Temporary Assistance for Needy Families Program could be reformed to shift its focus from cutting caseloads to helping workers belonging to needy families find steady jobs.

The Unemployment Insurance system could also be reformed to allow low-wage workers to get unemployment insurance, broaden eligibility, and allow the unemployed to use their time without work to improve their skills.

There’s another way we can help people achieve economic security. Turns out that being poor is expensive: poor families often pay more than middle- and high-income families to buy the same products. The federal government should establish a $50 million Financial Fairness Innovation Fund to support states’ efforts to make mainstream goods and financial services available to people in predominantly low-income communities.

Step Three: Open up opportunities that will provide paths out of poverty.

To help people climb out of poverty we should provide better access to jobs and educational opportunities to people of all ages, from pre-school through adulthood.

States should be encouraged to improve the quality of their early education programs and make them accessible to all children. Teenagers and young adults from poor families could also be helped in various ways. About 1.7 million poor and near-poor 16- to 24-year-olds were not in school and jobless in 2005. The federal government should resume giving communities Youth Opportunity Grants, which fund effective and promising youth programs. CAP also proposes the creation of a new Upward Pathway program that would give low-income youth opportunities to take part in service projects like Americorps and get training in high-demand fields such as health care.

Making college affordable is another key area where we can open up opportunities for young people from low-income backgrounds, who are much less likely to go to college than their higher-income peers. The federal government could make the awards of Pell Grants, which fund college studies, more generous so that they’d cover 70 percent of the average costs of attending a four-year public school. As the federal government does its part, states should develop strategies to make college affordable for everyone, following some promising models already in place around the country.

We shouldn’t stop with the young: opportunities should also be opened up for adults. We should do more to help former prisoners find steady jobs and reintegrate into their communities. The United States has the highest incarceration rate in the world, and a recent Bureau of Justice report found that more than 5.6 million people are in prison or have served time there. That’s equivalent to the entire of population of Maryland – a whole lot of people to just write off.

Another strategy is to give people “opportunity vouchers” for housing that will help people live in communities that have employment opportunities and good public services. We can also encourage the creation of affordable housing in these communities and  efforts to make sure that economic growth that makes central cities more prosperous also benefits poorer neighborhoods.  

Step Four: Help people build wealth that will allow them to escape poverty for good.

The final part of CAP’s plan to cut poverty in half in 10 years is to help people build assets that will help them financially weather periods of crisis like the loss of a job or an illness in the family. Assets are a key to upward mobility.

The Earned Income Tax Credit supplements the earnings of low-income working families and helps them build wealth. But the current EITC doesn’t do much to help workers without children. We should triple the EITC for childless workers and make the aid packages we give bigger working families more generous. We should also make the Child Tax Credit—which provides a tax credit of up to $1,000 per child—available to poor families that are now ineligible or only eligible for partial credits.

Another way we can help people make economic progress is to help them save for education, homeownership, a small business, or retirement. The federal government can encourage saving by overhauling the federal Saver’s Credit to make it fully refundable and broadening it to apply to other ways people can invest in their future.

We can cut poverty in half in 10 years. It’ll take time and money. But we can cover the combined $90 billion cost of the recommendations in CAP’s plan by restoring balance to the tax system and recovering part of the money that’s been lost by the excessive tax cuts of the past few years. Consider that, in 2008 alone, the value of tax cuts to households with incomes over $200,000 a year is expected to be $100 billion—enough to cover all of CAP’s recommendations and then some.

We can take the time; we can get the money. All we need now is a shared national commitment to help the 37 million people living in poverty among us achieve prosperity and have a fair shot at the pursuit of happiness.

Read more about CAP’s plan to reduce poverty in America:

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