A Simple Solution to Poverty?
Posted by Brian Levy on Wed, 25 Apr 2007 23:25 PST The death of Mollie Orshansky, creator of the initial ‘poverty line,’ was announced just over a week ago. Although she fashioned a somewhat basic conception of what constituted poverty, her actual thoughts were anything but simplistic. In reality, she had progressive views and saw poverty as a complex problem.
On the day that Orshansky’s death was announced, the New York Times also published an editorial entitled Counting the Poor. It briefly outlined how the current poverty line undercounts the impoverished and proposed a greater Earned Income Tax Credit (EITC) and improved early education as solutions.
What the editorial did not do is highlight the many factors that can contribute to poverty here in America. Moreover, its proposals failed to recognize the variable nature of the problem. Once this is acknowledged, it becomes abundantly clear that there is no poverty panacea.
The first distinction to note is that there are both working and non-working poor. In 2000, more than half of the impoverished actually held jobs. For these individuals, combining an EITC with a minimum wage hike would prove extremely beneficial.
The minimum wage is at a 55 year low in value, and 85 percent of Americans support an increase. Paying a fair wage for work is a valuable goal, as well as an important notion of justice. Expanding the EITC would help additional individuals. Only 5% of workers, approximately 6.6 million people, would stand to gain from Pelosi’s minimum wage hike, and 30% of those are teenagers, many from families that are not poor. A larger EITC, on the other hand, could affect many more wage-earners.
For those who do not work, job training and creation programs are imperative. Into the foreseeable future, America’s schools will produce approximately one-million dropouts per year. These individuals, coupled with many of the previous ‘welfare moms’ who no longer receive support or are in low-paying jobs, represent a population of poor Americans who have a serious skills deficiency.
Empirically, job training has proven effective in combating such problems. The most robust training programs have not only put individuals to work, but they have also enlarged earnings through increased working hours. Perhaps the greatest failure of some training programs is not having matched skills education to job availability. Policy implementation must take this into account regionally while remaining aware of increasing globalization.
It is also important to note that the poverty population is largely transitory. This means that people will experience brief stints in poverty interspersed between brief stints out of poverty. Two of the main causes of the slippages into poverty are bankruptcy from health costs and loss of a job.
Half of the 1.5 million personal bankruptcies filed annually result from healthcare costs. National health insurance would alleviate this problem, all the while saving the government at least $150 billion per year.
That is the easier problem to solve. For individuals who fall victim to the tidal wave of unemployment, the answer is less apparent. During recessions, public service employment (PSE) has been effective at alleviating cyclical unemployment. In addition, targeted PSE demonstrates promise in helping the hardcore, long-term impoverished. Some policymakers also tout unemployment insurance as a potential solution to short-term joblessness, and it could prove useful.
Ultimately, the important thing to realize is that we have all the tools necessary to combat the many factors associated with poverty. The problem of poverty is not monolithic, but it is not insolvable either. Thankfully, we need no ‘great experiment.’ Communities, states, and the federal government must identify their problems and implement the necessary programs. Maybe it is as simple as Orshansky had it after all.
Permanent link: http://rooseveltinstitution.org/blog/post/127/a_simple_solution_to_poverty
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