Worse Than We Thought, but We Can Solve This

Article excerpt

We have two basic poverty problems in the United States. One is the prevalence of low-wage work. The other concerns those who have almost no work.

The two overlap.

Most people who are poor work as much as they can and go in and out of poverty. Fewer people have little or no work on a continuing basis, but they are in much worse straits and tend to stay poor from one generation to the next.

The numbers in both categories are stunning.

Low-wage work encompasses people with incomes below twice the poverty line--not poor but struggling all the time to make ends meet. They now total 103 million, which means that fully one-third of the population has an income below what would be $36,000 for a family of three.

In the bottom tier are 20.5 million people--6.7 percent of the population--who are in deep poverty, with an income less than half the poverty line (below $9,000 for a family of three). Some 6 million people out of those 20.5 million have no income at all other than food stamps.

These dire facts tempt one to believe that there may be some truth to President Ronald Reagan's often-quoted declaration that "we fought a war against poverty and poverty won." But that is not the case. Our public policies have been remarkably successful. Starting with the Social Security Act of 1935, continuing with the burst of activity in the 1960s, and on from there, we have made great progress.

We enacted Medicaid and the Children's Health Insurance Program, and many health indicators for low-income people improved. We enacted food stamps, and the near-starvation conditions we saw in some parts of the country were ameliorated. We enacted the Earned Income Tax Credit and the Child Tax Credit, and the incomes of low-wage workers with children were lifted. We enacted Pell grants, and millions of people could afford college who otherwise couldn't possibly attend. We enacted Supplemental Security Income and thereby raised the income floor for elderly and disabled people whose earnings from work didn't provide enough Social Security. There is much more--housing vouchers, Head Start, child-care assistance, and legal services for the poor, to name a few. The Obama administration and Congress added 16 million people to Medicaid in the Affordable Care Act, appropriated billions to improve the education of low-income children, and spent an impressive amount on the least well-off in the Recovery Act.

All in all, our various public policies kept a remarkable 40 million people from falling into poverty in 2010--about half because of Social Security and half due to the other programs just mentioned. To assert that we fought a war against poverty and poverty won because there is still poverty is like saying that the Clean Air and Clean Water acts failed because there is still pollution.

Nonetheless, the level of poverty in the nation changed little between 1970 and 2000 and is much worse now. It was at 11.1 percent in 1973--the lowest level achieved since we began measuring--and after going up sharply during the Reagan and George H.W. Bush years, went back down during the 1990s to 11.3 percent in 2000, as President Bill Clinton left office.

Why didn't it fall further? The economics have been working against us for four decades, exacerbated by trends in family composition. Well-paying industrial jobs disappeared to other countries and to automation. The economy grew, but the fruits of the growth went exclusively to those at the top. Other jobs replaced the ones lost, but most of the new jobs paid much less. The wage of the median-paying job barely grew--by one measure going up only about 7 percent over the 38 years from 1973 to 2011. Half the jobs in the country now pay less than $33,000 a year, and a quarter pay less than the poverty line of $22,000 for a family of four. We have become a low-wage economy to a far greater extent than we realize.

Households with only one wage-earner--typically those headed by single mothers--have found it extremely difficult to support a family. …