Rethinking Poverty in America

January 6, 2014

According to the official poverty measure, being poor means having very little cash income — for a parent with two children, less than $18,499, according to the latest Census Bureau thresholds.

For the Supplemental Poverty Measure, being poor means not having enough cash income and certain near-cash benefits like refundable tax credits and food stamps to pay for everyday basic needs, plus some other necessary expenses, e.g., medical out-of-pockets.

Those of a liberal persuasion, including yours truly, often cite analyses in the annual SPM reports as evidence that our anti-poverty programs work.

A recently-published study by some Columbia University professors was heralded because, by using a slightly modified SPM, they were able to show that major safety net programs reduced the poverty rate by 40% between 1967, shortly after the War on Poverty was launched, and 2012.

This isn’t going to make one whit of difference to the right-wingers who are fond of recycling former President Reagan’s (in)famous “We fought a war on poverty, and poverty won.”

On the other hand, we do have 16% of the population — 49.7 million people — in poverty, according to the SPM. And this isn’t because we gave up on the anti-poverty enterprise, though surely “welfare reform,” harsh anti-drug laws and diverse other policies help explain it.

Professor Mark Rank at Washington University in St. Louis argues that economist John Galbraith put his finger on the problem 30 years ago, when he said we were attacking poverty from the wrong end.

Instead of beginning with root causes, he says, we begin with preferred remedies and tailor our view of the causes to fit.

More generally, we begin with a fondness for our free enterprise system and the American Dream, which promises a reasonably comfortable lifestyle to anyone who works hard and plays by the rules.

Working backwards, we locate both the causes and solutions to poverty in the individual. For conservatives, this means finding character flaws, e.g., a propensity to laziness, imprudent choices like having children out of wedlock, indulging in alcohol and/or drugs.

So safety net programs are badly structured because … well, because they provide a safety net. So there are no bad consequences for bad behaviors. Indeed, some have long argued that the programs reward bad behaviors.

Liberals focus more on inadequacies that disadvantage individuals in the labor market — lack of education, training and thus of in-demand skills. So we have a variety of programs to level the playing field — for those who’ll exercise personal responsibility.

In either case, Rank says, “the poor are by and large at fault for their poverty,” though we make an exception for those unable to work for reasons that have nothing to do with their behavior.

And we as a society feel limited responsibilities for poor people because it’s up to them to take advantage of such opportunities as we offer. We tinker with the incentives and disincentives. We don’t doubt what Rank, like a true academic, calls the “paradigm” that underpins the remedies.

He calls for a new paradigm, based on “realities,” rather than “the myths of America.” It’s got five components — none of which, he acknowledges, is altogether new.

The first seems to me in some ways the most important because it speaks directly to the role of public policies. We need to recognize, Rank says, that poverty in America is largely the result of “structural failings.”

The most obvious of these is that there simply aren’t enough decent-paying jobs for the number of workers who need them. Indeed, there aren’t enough jobs, period. And there haven’t been even when the economy was booming along, according to research Rank cites.

At the same time, our social safety net is “extremely weak.” By way of contrast, we’re asked to consider the range and reach of income supports and publicly-funded insurance programs that are common in Europe, e.g., child or family allowances, expansive child care, universal health coverage.

Put the two together and you’ve got widespread deprivation — Rank’s preferred concept of poverty (and mine).

He asks us to think of a game of musical chairs. As you know, there are always fewer chairs than players. Those most likely not to get a seat have some disadvantage. In the game itself, that tends to be pushiness, as I unhappily recall.

In the economy, it’s lack of education and/or marketable skills. We focus on these, Rank says, when we should ask “why the game produces losers to begin with.” In other words, why aren’t there enough “viable economic opportunities and social supports” for everyone?

Rank is hardly the only one to call for a refocused approach to poverty in this country. Many progressives have, in various ways, urged us fellow travelers to shift our attention to structural economic reforms.

They’re pushing back against what Rortybomb blogger Mike Konczal refers to as “pity-charity liberal capitalism” — a doubling-down on “welfare” at the expense of policies that would empower workers, both in the workplace and the in political sphere.

At the same time, we do need those safety net and social insurance programs. They’re under such heavy attacks from the right these days that we’re forced into a defensive posture.

We should acknowledge, however, that the challenge ahead is not only to preserve what works, but  change what doesn’t — or does, but not as well as it should, including our economy.

I expect we’ll be hearing a lot about this in the days to come because we’re about to celebrate the 50th anniversary of the War on Poverty.


We Need More Than Just More Jobs

August 28, 2012

“Poverty in America: Why can’t we end it?” Professor Peter Edelman asks. Or maybe the New York Times headline writer asks, since Edelman proceeds to tell us that we can — and how.

Top of the to-do list is to create more jobs that pay decent wages.

Well, how do we do that?

We need a full employment policy, Edelman says. This, I take it, means both public investments and diverse fiscal and labor policy changes that would achieve — and then sustain — a negligible unemployment rate.

We’d have more jobs, but also a relatively small pool of jobless job seekers. Employers would thus have to offer decent wages if they wanted to hire people qualified for the jobs they needed to fill.

Professor Robert Pollin, author of the new Back to Full Employment, says this happened in the 1960s and again in the late 1990s, especially for people “at the low end of the labor market.”

Progressives, Edeleman among them, also call for larger investments in education and skill-development.

Not the answer, according to an analysis by the Center for Economic and Policy Research.

We’ve already got a higher percent of college graduates in the workforce than we did at the end of the 1970s. Yet the share of good jobs, as CEPR defines them,* is smaller — and was even before the recession set in.

The problem, it says, isn’t that workers’ skills haven’t kept up with the pace of technological change — though many allege a “skills mismatch” as the source of our persistently high unemployment rate.

It’s that workers have lost their bargaining power, especially those at the middle of the income scale and below.

Diverse changes in the labor market are responsible for this, e.g., jobs outsourced from the public sector and from local manufacturing to cheap labor markets overseas, a “dysfunctional immigration system” that depresses both wages and other aspects of job quality.

For these and a variety of other reasons, many of the top-growing occupations are in service areas where wages are characteristically low — retail sales, home care, food preparation and other restaurant work, etc.

These jobs obviously can’t be exported. Nor can the people who do them be replaced by machines.

But barring policy changes, they’ll still be low-wage jobs with few or no benefits.

I’m all for improving our public education system and for making it possible for low-income people to go to college — and graduate. We’ve got a long way to go.

But if every working-wage person in the country had a college degree, we’d just have even more college graduates doing work well below their competencies — and effectively pushing out people whose skills match the job requirements.

So we obviously need more good jobs for these current and future college graduates.

But if we’re going to end poverty, we need to make those low-paying service and other proliferating bottom-of-the-barrel jobs better too.

I’ll have more to say about this. In the meantime, Happy Labor Day to you all.

* A “good job” pays at least $18.50 an hour — the 1979 inflation-adjusted median for men. It also offers employer-subsidized  health insurance and an employer-sponsored retirement plan. CEPR considers other aspects of job quality important, e.g., paid sick leave, but couldn’t get reliable data to measure changes since the end of the 70s.

“Poverty Is First and Foremost a Problem of Work”

July 2, 2012

A thought-provoking Q&A session with Professor Peter Edelman and Heather Boushey, a senior economist at the Center for America Progress.

The occasion was Edelman’s new book, So Rich, So Poor. And like the book, the discussion revolved around poverty in America — why we have so much of it, what we could do to have less.

For both Edelman and Boushey, the key to both is work. Poverty is “first and foremost a problem of work,” Boushey said.

She wasn’t referring to the current shortage of it, but rather, as Edelman later put it, “work that produces a decent income.”

Back in the mid-1970s, “something happened to male wages,” Boushey said. The “something” was a leveling-off in their real value — and an actual drop in wages for men with, at most, a high school diploma.

Family incomes were “held up by women.” Many more of them in the labor force and remaining there after marriage or rejoining when things got tough.

But workplaces are generally “hostile to families,” Boushey added. And it’s still the case that work/family conflicts affect women more than men.

The bigger issue, however, is the growing number of single-mother families — a major theme in Edelman’s book.

No second income here. And wage losses — job losses too — because there’s no dad around to help cope with the child who gets sick or the late-announced scheduling changes that throw child care arrangements out of whack.

Family-friendly workplaces won’t solve the wage problem, however.

Edelman attributed it in part to macroeconomic policies, citing trade and immigration specifically.

He’s referring, among other things, to trade agreements that advantage imports from countries with low labor standards.

Also, I would guess, to policies that allow employers to import temporary workers who will accept lower wages than would otherwise have to be paid. Policies that enable U.S. companies to maximize profits by exporting jobs belong in this category too.

Coming at the issue from a different angle, Boushey said that our macroeconomic policies need to focus on good jobs — specifically, on developing “human capital” by investments in education.

Edelman concurred. He’d like our high schools to offer pathways to work other than college prep — vocational and technical training for bona fide careers.

This, he said, is especially important for youth — most of them racial and ethnic minorities — who are in danger of becoming disconnected from both school and work.

Solutions like these could perhaps lift more of the upcoming generation into the endangered middle class. But what about people who are already working age?

Some, of course, are doing very well, thank you. But, according to Edelman, half the jobs in our economy pay less than $34,000 a year. For a family of four, that’s less than 150% of the federal poverty line — the standard commonly used for low-income.

No silver bullets identified. Edelman, in fact, said he was “very concerned about the next decade.”

He floated some policy changes that could make a difference, but added that we’d first have to decide we have “an income problem.” We’re not facing up to that, he said.

People deflect attention from the wage issue, e.g., by blaming single mothers for having children. Those low on the income scale think that’s where they are because of their “failings” — or because that’s “just how things are.”

Edelman is refreshingly optimistic. We’ve “had other times that were really terrible,” he said. Think of the robber-baron era at the beginning of the 20th century.

But then “people stood up.” They voted to put an end to it. We’re “voting against our own interests now” — and at a time when “we need the largest we we can get to defend what we have.”

Recall that Congressman Paul Ryan, among others, is claiming that we’re helping people too much — and for too long.

So where will the “largest we” come from? Ironically, given the context, Edelman’s said that what we need to do is get people outside of think tanks thinking and talking about poverty — or perhaps about specific poverty-related problems.

This seems to me one of the big challenges of our time.

What will create a broad-based, sustained conversation about work, wages, income supports and the rest? What will translate talk into a political force?

Why Are So Many People So Poor in America?

June 11, 2012

The gross national income in our country was nearly $14.6 trillion in 2010 — more than $47,300 for every man, woman and child.

So, as Professor Peter Edelman observes, if the GNI were divided equally, everyone would be middle class.

But, of course, it isn’t. In fact, a greater share has been flowing to the notorious 1% for quite awhile now. For Edelman, this is a key reason it’s so hard to end poverty in America — the subtitle of his new book, So Rich, So Poor.

Or more precisely, income inequality is a key reason. For the last 40 years, he says, “our economy has been very unkind to the bottom half of our people.”

At the very bottom, we’ve got nearly 20.5 million people so poor that their household incomes fall below 50% of the Census Bureau’s very low poverty thresholds.

In 2010, about six million — roughly one in 50 — had no income at all except the cash value of their food stamp benefits. For a family of three, this meant, at most, $526 a month — and, of course, available only to buy groceries.

We’ve got terrific public policy, Edelman says. It’s simply not true, as some say, that anti-poverty programs don’t work. Without them, over 40 million more people would be poor.

But the enactment of the Temporary Assistance for Needy Families program ripped “a terrible hole … in the safety net.”

In fact, “welfare is gone,” Edelman says. It’s “basically disappeared in large parts of the country” because states have no obligation to provide cash assistance (or any equivalent) to families who would qualify according to a common standard of need.

This, however, is only one part of Edelman’s far-ranging analysis.

We’ve had “a flood of low-wage jobs,” he says. And “people in the bottom half have been absolutely stuck.”

Well, not quite, but pretty damn near. Between 1968 and 2010, inflation-adjusted incomes of households in the bottom half grew, on average, about half a percent a year.

And at the end, incomes of households in the bottom tenth averaged just $11,904 — well under the federal poverty line for a family of two.

It’s a stretch to attribute this to a flood of low-wage jobs, however. And I doubt Edelman means to.

If there are relatively more of those jobs now, it’s partly because our economy has fewer living wage jobs for workers with no more than a high school education.

Many of been exported to low-wage countries. Many have simply vanished. When was the last time you called, say, the gas company and didn’t get a recorded message?

I suppose it’s also the case that more jobs have become low-wage — relative at least to rising living costs.

What we know for sure is that wages have been stagnating for a long time. In other words, workers haven’t been getting a fair share of productivity growth, as they did during the post-World War II period.

This is especially true for workers without a college education.

The Economic Policy Institute reports that real wages for high school graduates in the private sector increased by 4.8% between 1989 and 2010 and by just 2.6% for those in state government. During the same period, productivity, i.e., the total output of goods and services per hours worked, grew by 62.5%.

Lots of reasons for this. I’ve mentioned a couple. A fine paper from the Economic Policy Research Network takes up these and many others.

Edelman deals not only with low-wage work, but with poverty children inherit from their parents, disparities rooted in race and gender discrimination and the problems single parents (usually mothers) face trying to support themselves and their children.

Also housing policies, public education and, as Nation blogger Greg Kaufmann says, “much, much more.”

Notwithstanding the complexities, however, Edelman believes that poverty in our country is not an unsolvable problem — or rather, collection of problems.

We need “much more political will” to attack them. That, he thinks, will require, above all, a widely-shared view that it’s in our common interest to have “an economy that includes everybody.”

The sticking point here, he says, is that the vast majority of us middle-class voters think we have more in common with the people at the top than the people at the bottom.

This, I suppose, has something to do with the extraordinary hold the myth of boundless upward mobility has on our imagination. The Great Recession has certainly shaken it, though by how much and for how long is hard to say.

But, says Edelman, if we in the middle don’t see “which side of the line” we’re really on — that our fate rests with what happens to the bottom half — “we are cooked.”