Making Poverty History

There is no secret about what it takes to end poverty. We just have to get serious about doing it.

We might not expect TV’s American Idol to be out in front of most presidential candidates on issues of national importance, but that’s what happened this spring. AI‘s producers announced that they would dedicate two evenings to raising funds and awareness for children and young people in poverty, in both America and Africa. The show’s commitment stands in contrast to most of the 2008 candidates. What does American Idol know that they don’t?

American Idol isn’t alone. In the last two years, there has been a surge of interest in ending poverty in America. In the faith community, Sojourners and Call to Renewal announced a Covenant for a New America and urged others to help them cut child poverty by half in 10 years. Catholic Charities USA created a Campaign to Reduce Poverty in America. New York City Mayor Michael Bloomberg created an Economic Opportunity Commission and charged it with proposing ways to promote opportunity and reduce poverty in the city, and he has begun implementing the commission’s recommendations. A Task Force on Poverty, Work and Opportunity of the U.S. Conference of Mayors, led by Los Angeles Mayor Antonio Villaraigosa, made a set of ambitious recommendations. Governors, mayors, and legislatures in Connecticut, Minnesota, California, and Wisconsin — among others — have launched or proposed initiatives. These efforts are occurring against the backdrop of the larger international efforts to make poverty history.

Among presidential candidates, John Edwards has proposed a goal of ending poverty within the next 30 years, and put forward a plan to get there. Barack Obama, in announcing his candidacy, declared, “Let’s be the generation that ends poverty in America.” Can the other candidates be far behind? Will anyone want to go into a presidential debate saying it’s a bad idea to try to eliminate poverty?

Why Now?

Why this revival of interest in tackling poverty now? There are many reasons, but three stand out.

First, Hurricane Katrina gave poverty a human face. The horrific images, and the stories behind them, made painfully clear that not far from the Mardi Gras part of town, thousands of city residents didn’t own cars and couldn’t afford a night in a hotel when disaster was approaching. Pre-Katrina New Orleans represented an exceptionally bad case of concentrated poverty, but not a unique one. The Brookings Institution reports at least one neighborhood of extreme poverty — where at least 40 percent of residents live in poverty — in 46 of the 50 largest cities in the country.

Second, the extraordinary growth of wealth at the top has called attention to the corresponding growth of inequality and poverty. In 2005, the top 20 percent of American households had 50.4 percent of the nation’s income, while the bottom 20 percent had 3.4 percent — the largest margin between top and bottom since this data series began, in 1967. The Center on Budget and Policy Priorities reports that between 2003 and 2004, the post-tax income of the bottom fifth rose by $200 a year, while that of the top fifth rose by $11,600, and post-tax income for the top 1 percent rose by $145,500. And the wealth gap is far more extreme, with the top 1 percent of households holding one-third of the nation’s net worth, while the bottom 40 percent have less than one percent of the nation’s net worth. This is the widest gap since the 1920s.

Third, there is increasing recognition that in a globalized economy, the nation should not have millions of children growing up in persistent poverty. Our economic success increasingly depends on having a well-educated, adaptable workforce.

A new study by Harry Holzer and several colleagues, commissioned by the Center for American Progress’ Task Force on Poverty, underscores how serious the drag on the economy turns out to be. Holzer and colleagues estimate that the net loss to the economy from persistent childhood poverty is about $500 billion each year. That is about 4 percent of the gross domestic product, more than $1,600 for every person in the country. The economic loss is almost evenly divided among lower productivity, higher health costs, and increased crime costs for adults who grew up in persistent poverty.

How much we lag behind other developed nations is starkly apparent in a new UNICEF study of child well-being. UNICEF found that the United States had the highest share of children with family incomes below half of median income among 21 rich nations — 22 percent, as compared with an average of 11 percent for the others. Compared with 24 other nations, the United States tied for 22nd on infant mortality, ranked 22nd in terms of low–birth-weight babies, and was 22nd on the share of children age 15 with fewer than 10 books in the home.

Our low international ranking is not the result of the poor working less in the United States than elsewhere. On the contrary, research by Timothy Smeeding of Syracuse University found that among seven developed nations, poor households in the United States worked the most. The big difference was government policy, or the lack of it. In a comparison of 12 nations, Smeeding found that the U.S. poverty rate was below average when one looked at market income alone, before the effects of taxes and government-transfer policies. But after taxes and transfers, the United States had the highest poverty rate of all 12 nations.

What’s Holding America Back?

Why isn’t every presidential candidate already proclaiming the need to tackle poverty? One apparent reason may be that since 9/11 and Iraq, foreign-policy questions have crowded out domestic issues. But that seems to be changing.

A second reason is that poverty in America is often seen as being about “the other” — especially minority, inner-city others. Poverty rates for African Americans (25 percent) and Hispanics (22 percent) are nearly triple those of whites (8 percent), even though a much larger number of the poor are white. Persistent poverty also disproportionately affects minorities. Economist Rebecca Blank found that in a 13-year period, one-third of all Americans (34 percent) were poor for at least a year, and about 10 percent were poor for most of the time, but fully 30 percent of African Americans were poor most of the time. It would be wrong to minimize the racial component of poverty in America

At the same time, a single-minded focus on who is above or below the poverty line misses the bigger story of what is happening in the U.S. economy, and leads to focusing on how to “fix” the poor — instead of asking why our social and economic institutions result in millions of workers and their families living paycheck to paycheck, or worse.

The official poverty line — about $20,000 a year for a family of four — is an arbitrary one, created in the 1960s and only adjusted for inflation since then. Over time, it has fallen steadily further from the social mainstream: It used to be about 50 percent of median income; now it’s about 30 percent. Studies of a minimally decent standard of living routinely find that the typical cost is twice as high as the poverty line, or higher. Ninety million Americans — nearly one-third of the nation — have household incomes below twice the poverty line, a figure far larger than the “official” number of 37 million in poverty.

Millions of workers and families live at or near poverty levels because one-fourth of all jobs in the U.S. economy do not pay enough to produce even a poverty-line income for a family of four. The Economic Policy Institute has found that the share of low-wage jobs declined some in the 1990s, when we approached a full-employment economy, but it has been stubbornly fixed at one-quarter since then. Bureau of Labor Statistics projections tell us that of the 30 jobs projected to account for the largest share of job growth between now and 2014, 18 are low-wage or very low-wage. And the jobs that are low-wage are the least likely to offer health care, retirement plans, paid sick leave, or virtually any other employment benefit.

We should encourage people to get more education, and encourage many to work more. But given the realities of our labor market, it’s clear that unless the nation changes the way we reward work, tens of millions of Americans will remain mired in or near poverty.

What Should We Do?

It’s not hard to identify a set of policies that would help the poor and millions of other Americans. These include an increased minimum wage, more income-support measures such as the Earned Income Tax Credit, a renewed focus on unionization, a framework of lifelong learning, health-care reform, child-care assistance for all who need it, comprehensive immigration reform, initiatives to help underemployed groups get in or back into the workforce, and strategies to promote asset building, among others. But we need more than a list of policies; we need a national commitment to seriously tackle poverty.

Here, we should take inspiration from the United Kingdom, where the Labour Government took office facing the worst child-poverty numbers in Europe, and committed itself to ending child poverty in a generation, with benchmarks of one-quarter by 2005, one-half by 2010, and elimination by 2020. Having a national goal has contributed to dramatic progress: Between 1998 and 1999 and 2005 and 2006, the number of poor children in the United Kingdom fell by more than half in absolute terms, and by 18 percent in relation to a “relative” poverty standard used to measure progress. The British still have a long way to go to meet their goals, but having policy guided by a national commitment has made a critical difference.

The United States can afford to be a nation where no one is poor. If American Idol thinks we ought to act now to reduce poverty, how about the presidential candidates?

Mark Greenberg is the director of the Task Force on Poverty at the Center for American Progress. He is on leave from the Center for Law and Policy, where he is the Director of Policy.

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