Twelve Steps to Cutting Poverty in Half
Posted 04/30/2007 | TheNation.com
Katrina Vanden Heuvel
Last Wednesday, at the Center for American Progress (CAP) in Washington, the CAP Task Force on Poverty released the results of fourteen months of work in its report, From Poverty to Prosperity: A National Strategy to Cut Poverty in Half.
The report offers twelve concrete recommendations to reduce over the next ten years, creating a stronger middle class and setting our country on a course to end American poverty in a generation.
Sen. Edward Kennedy and Ways and Rep. Charles Rangel, chairman of the Ways and Means Committee, were both on hand to pledge their leadership on what Task Force co-chair Peter B. Edelman, professor of Law at Georgetown University, called "a national shame…. There should be no one [in this country] who's poor."
This is one of the great scandals of our times. In the richest industrialized nation in the world, 37 million Americans--one in eight citizens--live below the official poverty line (just $19,971 income for a family of four); in 2005, more than 90 million Americans had incomes below 200 percent of the poverty threshold (less than $40,000 for a family of four); the United States ranks 24th out of 25 developed nations in the share of the population with an income below 50 percent of the national median income--and the US is dead last among 24 rich nations when the same measurement is used to assess child poverty. Nearly 20 percent of American children are poor, and it's estimated that allowing children to grow up in persistent poverty costs our economy $500 billion per year. Lastly, income inequality has reached record highs and is getting worse.
"From 1947 to 1973, we saw every economic quintile growing together, and those at the lowest level were growing the fastest," Kennedy said. "In 1980, with President Reagan, you see the beginning of growing apart...And now, those at the lowest end of the ladder are not even keeping up while there is an explosion at the highest level."
In fact, the post-tax income of the top 1 percent rose $145,500 between 2003 and 2004; it rose just $200 for the bottom fifth during that same period.
"The goal to cut poverty in half over the next [ten] years is not an overly ambitious task when you look at what other industrialized countries are doing," Kennedy said. He noted that Great Britain has raised its minimum wage to $9.78 an hour and brought 900,000 children and 2.5 million workers out of poverty in the last three years. Ireland has reduced childhood poverty by 40 percent with a minimum wage of $9.60.
"No single measure is going to answer the problem," Kennedy said. "But nonetheless we can see how important it is that we put [actions] together... [The Task Force] summary of what we can do to move a whole group of our fellow citizens forward makes enormous sense."
"With the exception of getting the hell out of the Middle East," Rangel said, "I can't think of anything more patriotic that we can do than eliminate poverty."
Edelman said that the Task Force worked hard to pull out some key points from the extensive list of what needs to be done to address poverty. It was not a top-down process, he said, but rather a response to what people in diverse communities feel is needed.
"The focus here is not just what we technically call 'poverty' in this country," said Edelman. "That's a concept that's deeply flawed. Thirty-seven million people is bad enough. But when you take the idea that an income of a little bit over $15,000 gets a family of three out of poverty, an income of $20,000 gets a family of four out of poverty, it's a really bad joke. It's not true. In vast, vast, vast parts of this country, when you get a dollar over those numbers, you're not out of poverty. And so this report is really about everybody in this country who's having a difficult time... who has trouble making ends meet, who has trouble paying the bills at the end of the month...Who has to make a decision whether or not to go see a physician for something quite important because they're not sure that they're going to [be able to] pay for it. And so really this report is about roughly 90 million people whose incomes are up to twice the poverty line… all the way down to the bottom--those nearly 16 million people who have incomes below half the poverty line--below $7,500 for a family of three--astonishing! And that's gone up by over 3 million people under the current administration. Our focus is on full inclusion in this country for everybody who has a tough time."
The twelve recommendations revolve around four core principles: promote decent work that pays enough to avoid poverty, meet basic needs, and save for the future; provide opportunity for all--maximizing people's opportunities for success from childhood through adulthood; ensure economic security so that no American falls into poverty when work is unavailable, unstable, or doesn't pay enough to make ends meet; and help people build wealth so that they can weather periods of flux and have the resources that may be essential to upward mobility.
Here are key excerpts from the twelve recommendations:
1. Over a 10-year period, raise and index the minimum wage to half the average hourly wage--that would presently be $8.40 an hour. The report notes that for most of the 1960's and 1970's a worker with a full-time minimum wage job could lift a family of three above the poverty line. Now it's at its lowest level in real terms since 1959.
2. Expand the Earned Income Tax Credit and Child Tax Credit. The EITC is an earnings supplement that raises incomes and helps low-income working families build assets. The Task Force recommends tripling the EITC for childless workers and expanding help to larger working families. The Child Tax Credit provides a tax credit of up to $1,000 per child but provides no help to the poorest families. It should be made fully refundable so that it's available to all low- and moderate-income families. (Currently people with incomes below $10,000 do not receive this credit. "Totally absurd," Edelman said. "This is a powerful anti-poverty step…. It will get over 3 million people out of poverty just from that one, single public policy step alone.") Doing all of the above would move as many as 5 million people out of poverty.
3. Promote unionization by enacting the Employee Free Choice Act. This would require employers to recognize a union after a majority of workers signs cards authorizing union representation. "It's very important that we get this legislation enacted this year," Edelman said. "Unions are absolutely a backbone of getting fair labor standards and fair wages in our country."
4. Guarantee child care assistance to low-income families and promote early education for all. Federal and state governments should guarantee child care help to families with incomes below about $40,000 a year. "We're not going to achieve this unless communities take the initiative with civic leadership to pull that together," Edelman said. "We would have an Innovation Fund as part of that effort." The funding would be about twice the level of current federal funding for quality state initiatives. This childcare expansion would raise employment among low-income parents and help nearly 3 million parents and children escape poverty.
5. Create 2 million new "opportunity" housing vouchers, and promote equitable development in and around central cities. Nearly 8 million Americans live in neighborhoods where at least 40 percent of residents are poor. We should seek to end such concentrated poverty. Over the next ten years, the federal government should fund 2 million new "opportunity vouchers" designed to help people live in opportunity-rich areas. "The housing vouchers that we currently have reach only a quarter of the people who are eligible," Edelman said. "People should also be able to choose where they live, they should be able to live near the jobs and get to the jobs." Any new affordable housing should be in communities with employment opportunities and high-quality public services, or in gentrifying communities.
6. Connect disadvantaged and disconnected youth with school and work. About 1.7 million poor youth ages 16 to 24 were out of school and out of work in 2005. The federal government should restore Youth Opportunity Grants to help the most disadvantaged communities and expand funding for effective and promising youth programs--with the goal of reaching 600,000 disadvantaged youth through these efforts. A new Upward Pathway program would offer low-income young people opportunities to train in fields that are in high-demand and provide needed public services.
7. Simplify and expand Pell Grants and make higher education accessible to residents of each state. Low-income youth are much less likely to attend college than their higher income peers, even among those of comparable abilities. Pell Grants play a crucial role for lower-income students. The Pell grant application process should be simplified, and the grants gradually raised to reach 70 percent of the average costs of a four-year public institution. States should develop strategies to make post-secondary education affordable for all residents, following promising models already underway in a number of states.
8. Help former prisoners find stable employment and reintegrate into their communities. The United States has the highest incarceration rate in the world--600,000 prisoners are released to their communities each year. Most are low-income, minority men returning to high-poverty communities. Two-thirds are rearrested within three years and about half return to prison. States should not bar former prisoners from receiving public benefits like food stamps or deny them the right to vote. All states should develop comprehensive reentry services aimed at reintegrating former prisoners with full-time, consistent employment.
9. Ensure equity for low-wage workers in the Unemployment Insurance system. Approximately 35 percent of the unemployed, and a smaller share of unemployed low-wage workers, receive unemployment insurance benefits. States should reform eligibility rules that screen out low-wage workers, broaden eligibility for part-time workers and workers who have lost employment as a result of compelling family circumstances, and allow benefits to continue when workers are in programs that upgrade their skills and qualifications.
10. Modernize means-tested benefits programs to develop a coordinated system that helps workers and families. A functional safety net should help people get into or return to work and ensure a decent level of living for those who cannot work or are temporarily between jobs. Our current system fails to do so. The government should simplify and improve benefits access for working families and improve services to individuals with disabilities. The Food Stamp Program should be strengthened to improve benefits, eligibility, and access. And the Temporary Assistance for Needy Families Program should be reformed to shift its focus from cutting caseloads to helping needy families find sustainable employment.
11. Reduce the high costs of being poor and increase access to financial services. Lower-income families often pay more than middle and high-income families for the same consumer products. Federal and state governments should address the foreclosure crisis through expanded mortgage assistance programs and by new federal legislation to curb unscrupulous practices. The federal government should also establish a $50 million Financial Fairness Innovation Fund to support state efforts to broaden access to mainstream goods and financial services in predominantly low-income communities.
12. Expand and simplify the Saver's Credit to encourage saving for education, homeownership and retirement. For many families, saving for purposes such as education, a home, or a small business is key to making economic progress. The federal "Saver's Credit" (a relatively new tax provision which matches voluntary contributions to retirement savings accounts with a tax credit) should be reformed to make it fully refundable. This Credit should also be broadened to apply to other savings vehicles such as individual development accounts, children's saving accounts, and college savings plans.
The Urban Institute studied the impact of just four of the Task Force recommendations--the minimum wage, EITC, child tax credit, and child care assistance expansion--and found that together they would reduce poverty by 26 percent, more than halfway toward the ten year goal.
The combined cost of the twelve recommendations is approximately $90 billion a year. The current annual costs of the Bush tax cuts (skewed for the wealthy) enacted in 2001 and 2003 are approximately $400 billion. In 2008, the value of tax cuts solely for households exceeding an annual income of $200,000 is projected to be $100 billion.
"Making a commitment to cut poverty in half in a ten year period is a bold goal," said Angela Glover Blackwell, Task Force co-chair and Founder and CEO of PolicyLink. "This isn't just about lamenting the fact that we have so much poverty, this is about doing something about it, and doing something in a time period that people can measure and hold us to…. Also, this report comes at a time when the mayors, when the faith institutions, the civic organizations, are all looking at what we're going to do about poverty… [So it] comes into an atmosphere in which Americans are saying 'we can do something about this'."
"What we need here is a massive effort to reach out both through every communications method and the grassroots," Edelman said. "Maude Hurd, National President of ACORN is a member of the Task Force--they work with millions of people around the country who are struggling for economic justice. [We are] working with the unions--Linda Chavez-Thompson [(Executive Vice President of the AFL-CIO)], was on the Task Force...with faith-based groups...This has got to reach all around the country and people need to own it, and bring it back, and say this is what we have to do...We know what to do, we know what it will accomplish. The question is the political will. Are we as a nation going to do what we should be doing?"
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