Land of Plenty, Land of Poverty January 27, 2014 5 Comments Share tweet Op Ed By: Op Ed We often think of the United States as the land of plenty, but in fact it’s also the land of poverty. In its first annual report, the Stanford Center on Poverty and Inequality described a “broadly deteriorating poverty and inequality landscape,” with the overall U.S. poverty rate as high as 15 percent and a child poverty rate as high as 21.8 percent. Why is there so much poverty in the land of plenty? There are two main reasons: The economy isn’t delivering the jobs we need, and workers aren’t receiving the education they need. Although it’s now six years after the start of the Great Recession, the proportion of 25-54 year olds who are working is still 5 percent lower than it was before the recession. For males without high school degrees, more than 1 in 4 in the prime working age (i.e., 25-54 years old) are not working, a jobless rate far higher than what prevailed before the Great Recession. These two causes — a jobs disaster and a labor market disaster — are pretty much the full poverty story. We should outlaw the platitude that poverty is just too complicated to figure out and that our only hope is to find some magic bullet that will cure it. The “disease model” of poverty, which treats it like some rare and incurable form of cancer, is an immensely destructive rhetoric on poverty. It’s destructive because it wrongly suggests that we don’t know what causes poverty and that we don’t know how to end it. The claim that poverty is immutable is typically trumped up with official poverty data showing that, while the amount of poverty has fluctuated up and down as recessions come and go, there hasn’t been any long-term decline over the last four decades in the underlying rate. This intransigence is sometimes taken as evidence that our government and nongovernment programs to assist the poor simply aren’t working. If these programs were really working, so it’s argued, shouldn’t the poverty rate be declining? This line of argument is disingenuous: The fact of the matter is that our safety net, in both its government and nongovernment forms, is delivering real relief. The Center on Poverty and Inequality has recently released a new measure of poverty in California that allows us to document the safety net’s work. If we imagined a California without food stamps (i.e., CalFresh), tax credits (e.g., EITC), or a cash assistance program (i.e., CalWORKs), child poverty would be approximately 12 percentage points higher — raising it from 25 to nearly 37 percent of all children. That’s real and meaningful anti-poverty work. This result is obscured by conventional poverty indices, like the official poverty measure, that do not take noncash benefits into account. If a measure of poverty doesn’t factor in the anti-poverty work of government programs, then it will perforce create the impression that government programs do no anti-poverty work. The California Poverty Measure, by contrast, factors in the effects of noncash benefits and thus allows us to calculate the effects of those benefits in reducing poverty. What is, then, to be done? In the short run, it’s just more of the same: We have no choice but to maintain and strengthen the safety net. Unless and until a decision is made to take on poverty at its source, we have to continue to support those who can’t get jobs or can’t get the type of jobs that keep them out of poverty. This programmatic work, undertaken by the quiet heroes of our country, is all-important. But our commitment to reducing poverty ought not to stop there. As we mark the 50th anniversary of the War on Poverty, the national debate has focused relentlessly on the legitimacy of safety net benefits, a debate that has distracted us from asking whether the country should fix the economic and labor market institutions that cause poverty and lead to a need for the safety net in the first place. How might a no-holds-barred attack on poverty look? The first step is to solve the employment problem. There are many ways to do so: We could provide guaranteed government jobs of last resort; we could ramp up demand for existing products via another round of stimulus; or we could incentivize job creation in the private sector. It doesn’t matter how we do it or which political party proposes it. It just matters that we get the job done. There’s of course no free lunch: Although all approaches to solving the employment program have downsides, the key question is whether those downsides come close to the costs of continuing to run a high-poverty country. It is unimaginable that they do. The second step is to solve the labor market problem by eliminating the mismatch between the skills offered by workers and the skills demanded by employers. Because there are far more poorly educated workers than there are jobs for them, such workers experience disproportionate unemployment, underemployment and poverty. We can reduce the size of this reserve army of undereducated workers by providing quality preschool, primary school and secondary school experiences to poor children. If poor children had full and equal access to the type of early training that makes a quality college education possible, we could ramp up the college graduation rate, lower the number of workers chasing after low-skill jobs, and raise their wages to boot. Although everyone talks about school quality, the school reform movement needs to be refocused on school equality in the most aggressive way possible. We need to mean it. Here again, we know what to do and how to do it, but we’re seemingly satisfied with narrow-gauge reform that doesn’t get us close to realizing the country’s commitment to equality of opportunity. The simple upshot: The sources of poverty are well-known, and the reforms needed to eliminate it are straightforward. If we nonetheless decide against taking on poverty, we can’t any longer pretend that it’s because we don’t know how. Professor David Grusky is the director of the Stanford Center on Poverty and Inequality. Contact him at firstname.lastname@example.org CalFresh California Poverty Measure CalWORKs David Grusky EITC Stanford Center on Poverty and Inequality 2014-01-27 Op Ed January 27, 2014 5 Comments Share tweet Subscribe Click here to subscribe to our daily newsletter of top headlines.