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Here we have another economically clueless article purporting to solve poverty. Read on:
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This post first appeared at TalkPoverty.
Last month, the US Census Bureau released its annual figures on income, poverty and health insurance. It revealed that four years into the economic recovery, economic insecurity remains widespread, and low — and middle — income workers have seen no significant wage growth over the past decade. (This is why I used the word "clueless." If we are really in a recovery, how is it that the poor and middle class haven't recovered? Definitionally, in order to have a recovery, people need to be recovering, don't they?)
With the poverty rate at an unacceptable 14.5 percent and economic inequality stuck at historically high levels, one might assume that chronic economic insecurity and an off-kilter economy are the “new normal” — that nothing can be done to fix it. (More evidence there is no recovery.)
But there is nothing “normal” or inevitable about more than 45 million Americans living in poverty. It is the direct result of policy choices. With different policy choices, we will see a more equitable economy — it’s as simple as that. (So here is the identified problem, wrong policy choices. In other words, improving the economy, and therefore, the plight of the poor, is centered on what policies government implements. Government action is the only consideration.)
Here are 10 steps Congress can take to cut poverty, boost economic security and expand the middle class. (Ok, so government action is required. You might asssume that these 10 government actions required will be new ideas, things that have not yet been tried. You would be wrong.)
1) Create jobs.
The best pathway out of poverty is a well-paying job. To get back to prerecession employment levels, we (The ubiquitous "we,: which is never "you and I." "We" is government.)
must create 5.6 million new jobs. To kick-start job growth now, the federal government (See? "We" is government.)
should invest (Which means, "spend taxpayer money on.")
in our infrastructure by rebuilding our bridges, railways, roads, ports, schools and libraries, neighborhood parks and abandoned housing; expanding broadband; develop renewable energy sources; and make other commonsense investments that create jobs and boost our national economy. (This is exactly what the stimuli were supposed to fund, remember? Shovel-ready jobs? crumbling infrastructure? This recommendation is exactly what all those billions of dollars were spent on, and yet the number one recommendation is to simply do it again. Maybe this brand new approach will work this time, hmmm?)
For example, extending federal unemployment insurance would have created 200,000 new jobs in 2014. (Oh, my. My head is spinning. If you go to the link you will find that the CBO was attempting to ascertain the economic effect of extending unemployment benefits. In this they asserted that the unemployed would spend their benefits, thereby increasing demand for goods, which means business would need to hire to keep up with that demand. The CBO concludes, "...those policies would lead to greater federal debt, which would eventually reduce the nation’s output and income slightly below what would occur under current law."
Now, if I have to explain to you the complete idiocy of this, you might be beyond help. Suffice to say, the authors want the government to borrow more money to pay out to the unemployed, who will buy T.V.s and furniture, which will mean they will get hired to build T.V.s and furniture, but that will reduce the economic activity of the country. Yes, this is really what these people believe will create jobs.)
But Congress failed to act, leaving 1.3 million Americans and their families without this vital economic lifeline. We should renew federal unemployment insurance, and also build on proven models of subsidized employment to help the long-term unemployed and other disadvantaged workers re-enter the labor force.
2) Raise the minimum wage.
In the late 1960s, the minimum wage was enough to lift a family of three out of poverty. Not so anymore. The current federal minimum wage of $7.25 is a poverty wage, and had it been indexed to inflation it would be $10.86 per hour today. Raising the minimum wage to $10.10 an hour and indexing it to inflation would lift more than four million Americans out of poverty. Nearly one in five children would see their parent get a raise. Recent action by states and cities shows that boosting the minimum wage reduces poverty and increases wages. (The national labor participation rate is 58.6% [Which means that there are a lot of unemployed people who will not be helped by the minimum wage]. The minimum wage affects 4.7% of workers nationally. Interestingly, the great bulk of these workers are 16-19 years old:
This means that 8.5 million people are earning the minimum wage or less. But we don't know how many are part of a household where another wage earner is making more than that. We don't know how many are part time workers. We don't know how many are single wage earners there are vs. part of a "family." We do know that several states have minimum wage set above the federal amount, and as such will not be affected by an increase. And we do see from the chart that approximately 35% are under age 25. So, we can justifiably conclude that only a very small number of "families" will be lifted out of poverty, because getting $10.10 per hour is still poverty-level.
But more than that, the increase must come from somewhere. Employers will be faced with a substantial additional expense which will most likely be passed on to customers in the form of higher prices, or will result in less hiring. Employers will not simply "absorb" the extra expense, since most small businesses operate on very thin margins.
Lastly is the idea that government should force employers to pay their employees more without a commensurate increase in productivity. An employee renders a service to the employer, the value of which is determined ordinarily by mutual agreement. Government, however, enters the transaction and dictates that regardless of the worth of the employee's labor, the employee must be paid a a certain minimum level. So a minimum wage eliminates value as a determiner of wage and substitutes a forced redistribution of wealth.
We also need to note that increasing the minimum wage has no effect on the economy, because the amount of money in play is the same regardless of whose pocket it is in.)
3) Increase the EITC for childless workers.
The Earned Income Tax Credit (EITC) lifted more than 6.5 million Americans — including 3.3 million children — above the poverty line in 2012. Kids who receive the EITC are also more likely to graduate from high school and have higher earnings in adulthood. Yet childless workers largely miss out on the benefit — their maximum credit is less than one-tenth that awarded to a worker with two children. Policymakers across the political spectrum have called for boosting the EITC. Importantly, this policy change should be combined with a raise in the minimum wage — one is not a substitute for the other. (Tax breaks have a positive effect on families? Now THAT is a surprise admission. I never thought I would see the day when a Leftist organization would favor tax cuts. Now they just need to go the whole way and admit that everyone would be better off to keep more of their own money.)
4) Support pay equity.
With female full-time workers earning just 78 cents for every dollar earned by men, (A persistent lie promulgated by the Left, but now debunked on the Leftist website Slate.)
we must take action to ensure equal pay for equal work. Closing the gender pay gap would cut poverty in half for working women and their families and add nearly half a trillion dollars to the nation’s gross domestic product. Passing the Paycheck Fairness Act to hold employers accountable for discriminatory salary practices would be a key first step. (Another redistribution, which simply means some who used to have that money in their pockets no longer have it, because it has been redistributed to someone else. No net economic effect.)
5) Provide paid leave and paid sick days.
The United States is the only developed country without paid family leave and paid sick days, making it exceedingly difficult for millions of American workers to care for their families without having to sacrifice needed income. Paid leave is an important anti-poverty policy — having a child is one of the leading causes of economic hardship. Additionally, nearly four in 10 private sector workers — and seven in 10 low-wage workers — do not have a single paid sick day, so they must forgo needed income in order to care for a sick child or loved one. The Family and Medical Insurance Leave Act, or FAMILY Act, would provide paid leave protection to workers who need to take time off due to their own illness or that of a family member, or after the birth of a child. And the Healthy Families Act would enable workers to earn up to seven job-protected sick days a year. (Remember the article is supposed to tell us how to cut poverty. So this recommendation simply makes it so people will get paid to not work. Therefore, there is no productivity from non-workers, which does not add to the economy. Once again we see the nearsightedness of the author, who thinks that this sort of thing is a pathway out of poverty.)
6) Establish work schedules that work. (I address this here. Suffice to say, this has nothing to do with alleviating poverty. When you do your hours has nothing to do with wealth.)
Low-wage and hourly jobs increasingly come with unpredictable and constantly shifting work schedules. These erratic schedules make accessing child care even more difficult and leave workers uncertain about their monthly income. Further, things many of us take for granted — such as scheduling a doctor’s appointment or even a parent-teacher conference at school — become herculean tasks. The Schedules That Work Act would require that workers receive two weeks advance notice of their schedules, create and protect an employee’s right to request needed schedule changes, and provide guaranteed pay for cancelled or shortened shifts — important first steps towards making work-family balance possible for all workers.
7) Invest in affordable, high-quality child care and early education.
The lack of affordable, high-quality child care serves as a major barrier to reaching the middle class. Federal child care assistance reaches only one in six eligible children. One year of child care for an infant costs more than a year of tuition at most states’ four-year public colleges. Poor families who pay out of pocket for child care spend an average of one-third of their incomes. Boosting investments in Head Start and the Child Care and Development Block Grant, as well as passing the Strong Start for America’s Children Act — which would invest in preschool, high-quality child care for infants and toddlers and home visiting services for pregnant women and mothers with infants — will help families obtain the child care they need in order to work, and improve the future economic mobility of America’s children. (If we really had an economic recovery, people would be making more and government would not be trying engineer society with its hare-brained redistribution schemes. People would not need so much childcare because they wouldn't be forced to work to make ends meet.
The financial burdens imposed by government on society, its profligate spending, its inability to conform to its constitutional limits, its crony capitalist arrangements, its ability to pay off political donors, all contribute to the destitution of Americans, forcing them to desert their children and go to work. And the author want more of this?)
8) Expand Medicaid.
Since it was signed into law in 2010, the Affordable Care Act has expanded access to high-quality, affordable health coverage for millions of Americans. However, 23 states refuse to expand their Medicaid programs to cover adults up to 138 percent of the federal poverty line, which makes the struggle for many families on the brink much harder. Expanding Medicaid means more than just access to healthcare — it frees up limited household income for other basic needs, like paying rent and putting food on the table. Having health coverage is also an important buffer against the economic consequences of illness or injury — unpaid medical bills are the leading cause of bankruptcy. Studies link Medicaid coverage not only to improved health, improved access to healthcare services and lower mortality rates, but also to reduced financial strain. It’s time for all states to expand Medicaid. (It's simply crazy to think that increasing handouts to the poor will help them. Rather than create an environment where businesses are freed up to innovate and expand and hire because there is a demand that needs to be satisfied, the authors are content to simply call upon government to do more of the same stuff it's always done, despite none of it having worked.
And that's the crux of the issue. The government is already doing every one of these things already, and by the authors' own admission, it's getting worse and worse. At what point does the Left abandon its ideological blinders and realize that doing more of what caused the problem will not solve the problem?)
9) Reform the criminal justice system and enact policies that support successful re-entry.
The United States incarcerates more of its citizens than any other country in the world. Today, more than 1.5 million Americans are behind bars in state and federal prisons, a figure that has increased five fold since 1980. The impact on communities of color is particularly staggering: One in four African-American children who grew up during this time period have had a parent incarcerated.
Mass incarceration is a key driver of poverty. When a parent is incarcerated, his or her family must find a way to make ends meet without a necessary source of income. (This assumes that the criminal was doing legitimate work prior to incarceration, that the criminal was actually supporting a family, and it assumes that the criminal has a family to support. None of these things are known.)
Additionally, even a minor criminal record can result in lifelong barriers to climbing out of poverty. For example, people with criminal records face substantial barriers to employment, housing, education, public assistance and building good credit. More than 90 percent of employers now use background checks in hiring, and even an arrest without a conviction can prevent an individual from getting a job. The “one strike and you’re out” policy used by public housing authorities makes it difficult for individuals with even decades-old criminal records to obtain housing, and can obstruct family reunification. And in more than half of US states, individuals with felony drug convictions are burdened with a lifetime ban on receiving certain types of public assistance. (Since the recidivism rate is approximately 75%, so who would want to hire or rent to a criminal?)
In addition to common-sense sentencing reform to ensure that we no longer fill our nation’s prisons with non-violent, low-level offenders, policymakers should explore alternatives to incarceration, such as diversion programs for individuals with mental health and substance abuse challenges. We must also remove barriers to employment, housing, education and public assistance. A decades-old criminal record should not consign an individual to a life of poverty. (The authors tell us that 1.5 million people are behind bars, which represents .048% of Americans. This small amount of people are being treated unjustly, and their ascent from poverty will make a difference how?)
10) Do no harm.
The across-the-board spending cuts known as sequestration — which took effect in 2013 — slashed funding for programs and services that provide vital support to low-income families. Sequestration also cost the American economy as many as 1.6 million jobs between mid-2013 and 2014. (Another CBO link, which as is typical, looks at the issue as a static equation. But even they admit that "although output would be greater and employment higher in the next few years if the spending reductions under current law were reversed, that policy would lead to greater federal debt, which would eventually reduce the nation’s output and income below what would occur under current law." So the authors are essentially saying, "keep spending, keep going into debt, keep pushing the country to financial ruin." All for the fictitious 1.6 million jobs.)
As Congress considers a continuing resolution to fund the federal government past October 1 and avoid another government shutdown, it should reject further cuts to vital programs and services which would once again take us in the wrong direction. Thereafter, Congress should make permanent the improvements made to the EITC and the Child Tax Credit as part of the American Recovery and Reinvestment Act of 2009, which are set to expire in 2017. And it should protect and strengthen vital programs such as Section 8 housing, and the Supplemental Nutrition Assistance Program, formerly known as food stamps, which suffered two rounds of deep cuts in 2013 and 2014. (This entire paragraph is abject nonsense. The sequester cut nothing, it simply decreased the rate of spending growth. Food stamps were not cut. The Democrats proposed a whopping 65% increase to the SNAP budget, while the Republicans ended up passing a 57% increase. I know math is hard, but answer me this: How much was the SNAP program budget cut? If you answered "zero," go to the head of the class.)
Conclusion
It is not only possible for America to cut poverty, it is possible for us to cut poverty dramatically. Between 1959 and 1973, a strong economy, investments in family economic security, and new civil rights protections helped cut the US poverty rate in half. (Note the tacit admission that poverty was declining prior to the installation of the "great society programs of the mid 1960s.)
Investments in nutrition assistance have improved educational attainment, earnings, health and income among our nation’s children when they reach adulthood. Expansions of public health insurance have lowered infant mortality rates. And, in more recent history, states that have raised the minimum wage have shown the important role that policy plays in reversing wage stagnation.
There is nothing inevitable about poverty, and there is nothing inevitable about the lack of political will to dramatically reduce it. Share this article with your friends, and get involved.
The views expressed in this post are the author’s alone, and presented here to offer a variety of perspectives to our readers.
Rebecca Vallas is the Associate Director of the Poverty to Prosperity Program at the Center for American Progress. You can follow her on Twitter @rebeccavallas.
Melissa Boteach is the Vice President of Half in Ten at the Center for American Progress Action Fund and the Poverty to Prosperity Program at the Center for American Progress. You can follow her on Twitter @mboteach.
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