No one wants to be poor. No one enjoys figuring out how to stretch meals to last just three more days. No parent wants to tell their child they can’t play a sport or get a new backpack because there is simply no money. No one wants to be evicted. Poverty in America is a reality; so what are we going to do about it?
The American Enterprise Institute has a few ideas. They’ve taken a look at where we are 50 years after the War on Poverty was declared. The conclusion is that we’ve not been successful in that war. Poverty in America—and What to Do About It is a compilation of essays on the topic.
Aparna Mathur says the talk of late about “income inequality” is misleading. We must address poverty, not differences in individual income.
We are now in the fifth year of an economic recovery that does not seem like a recovery to most people in the labor market. There are more than 10 million unemployed workers, of which nearly 4 million have been jobless for longer than 27 weeks. In addition, there are another 10 million who are either in involuntary part-time jobs, or are too discouraged to look for work. Therefore, I would argue that the focus on income inequality is somewhat misplaced. This is essentially a problem of poverty.
Mathur says that lack of quality education is a sure-fire way to keep poverty levels high, and that unemployment benefits must come with job-skills training. Mathur also points out that raising minimum wage is a terrible way to fight poverty.
By some estimates, less than 25 percent of minimum wage workers live at or below the poverty line based on family cash income. An alternative to the minimum wage is the Earned Income Tax Credit program. The EITC arguably is one of the federal government’s most efficient means of encouraging work and fighting poverty. As per the Census Bureau, the EITC lifted 5.4 million people above the poverty line in 2010. While the EITC has some disadvantages, such as the significant tax penalties on earners in the phase-out range, it has been shown to encourage labor force participation for single mothers, and has lifted millions of adults and children out of poverty.
In another essay in the same compilation, Robert Doar discusses the need for responsibility at the most fundamental levels in order to break the cycle of poverty. He illustrates his point by telling of the Doe Foundation in New York City.
The program they run is based on a clear contract between the shelter managers and the homeless men. “You get up every day and go to work and stay drug free-and we will pay you and house you and feed you. It’s as simple as that,” Mr. McDonald said at his shelter on 155th street in Harlem. Doe Fund facilities areunded by revenue generation from their maintenance and cleaning business, government funding for homeless services, and private donations. The breakdown is roughly one-third each. Anyone who enters one of the four Doe Fund facilities in New York City is handed a paper entitled: “Some of the Rules that You Will hear ALL the time.” Among the regulations are Rule No. 4: No standing or loitering in front of the building at any time of the day. Rule No. 10: You must not drink or drug while you are in the program. Rule No. 11: No cellular phones are allowed while you are working.
If the men in the program are fathers, they must also pay child-support. The residents work for salary and a place to live by doing commercial cleaning, while participating in either a six-month or nine-month program. The key to the Doe Fund is simple: work hard, follow the rules, get ahead. We will teach you, support you and help you, but only if you do your part. Poverty ends where hard work begins.
Read “Poverty in America—and What to Do About It” at the American Enterprise Institute.