Fighting Poverty Wages

We’re at a critical moment in our economic recovery that requires real leadership and people power to ensure true economic democracy in our country. There is incredible work being done to build a strong antipoverty movement, and spaces like these are fundamental to encourage an open dialogue about our strategies and tactics as well as our successes and failures.

As corporate profits keep soaring, workers’ wages continue to stagnate, creating the widest income inequality gap our nation has seen in modern times. At Jobs With Justice we still believe that in America, people who work hard should be paid enough to live with dignity and raise a family. Today, millions of people go to work every day and still don’t earn enough money to feed their families. If people can work full-time and still can’t afford groceries, rent and medication, then the entire model is flawed and unfair. We can’t continue down this path of creating bottom-of-the-barrel, low-wage jobs that condemn our friends and neighbors to poverty.

A critical first step toward regaining our country’s shared prosperity is to insist that lawmakers adopt a meaningful increase in the minimum wage. The Fair Minimum Wage Act would update the federal minimum wage from $7.25 to $10.10 an hour and give the law teeth by indexing it to inflation. According to the Congressional Budget Office, even this slight increase—which would be the first since 2009—would raise 900,000 Americans above the official poverty level. And it would boost pay for 30 million people, many of whom are teetering just above the poverty line.

Raising the minimum wage is essential to combating poverty in America. After all, of the 46.2 million Americans who live below the official threshold for poverty in the United States (less than $18,284 annually for a family of three), at least 10.4 million—or more than one in five—are “working poor.” According to other studies, as many as half of all poor families—and more than 70 percent of nearly poor families—were working in 2011. In other words, for millions of Americans, poverty isn’t caused by the inability to work or find work, it’s caused by lousy pay.

The evidence of the “working poor” is everywhere. Food stamp participation since 1980 has grown the fastest among people who actually have jobs. Fifty-two percent of fast food industry workers, for example, rely on public assistance like food stamps because their jobs don’t pay well enough to make ends meet. The situation has only gotten worse as decent middle-class wage jobs lost during the recession have been disproportionately replaced by low-wage jobs, even as corporate profits have skyrocketed.

But a minimum wage increase isn’t a panacea. While $7.25 is not okay, $10.10 isn’t really enough for people to support themselves and their families. At Jobs With Justice, we are continuing to demand much more in order to counter decades of corporate-backed legislative policies that have driven down labor standards, burdened taxpayers and valued profits over people.

To achieve shared prosperity, all working people need to regain their bargaining power so that they have a real voice and opportunity in shaping their jobs and our economy. That means we need to continue fighting to ensure workers have the right to organize and bargain for better wages, standards and working conditions.

We also need to create more affordable housing for low-income families, improve our public education system and access to college and job training programs, and invest in public transportation and the growing caregiving industry so more Americans can afford to get to work and know their families are being cared for. We also need to fix fundamental structural problems—like skyrocketing executive pay, rampant income inequality, and regressive tax policies— that rig our economy to work for big business and the top one percent at the expense of everyone else.

We all deserve the chance to secure the quality of life we want for ourselves and our children. We can start turning the economy around by demanding higher wages and better jobs. Increasing the federal minimum wage to $10.10 an hour is a crucial first step toward alleviating poverty in America and creating an economy that works for everyone, not just the wealthy and well-connected.

Poverty—it’s a term we readily use, but don’t really understand very well, unless we’ve experienced it. It’s not enough to have just been down on your luck for a little while; you really understand poverty when you reach the point where you aren’t sure whether or how you will escape it.

We think we know what poverty is, but when pushed, it really isn’t easy to define. Poverty seems to be about not having enough, about deprivation. But sometimes it’s not easy to know how much is enough.

As it is, our measurement of poverty vastly understates the problem, allowing us to continue onward without effectively addressing it.

Poverty can be considered, and measured, as absolute—based on an agreed upon minimum level of resources that no one should be allowed to sink below, usually connected to a minimum level of basic needs. Or it can be considered as relative—based on some “standards of the community.” It can also be measured as “subjective”—based on levels of resources that individuals believe and report that they need in order to be healthy, satisfied, or happy.

In the US we use a “quasi-absolute” measure of poverty. It is historically based on an estimate of the cost of a minimally nutritious diet. So it is connected to a floor, or minimum level of resources that no one should be allowed to sink below, but a floor that supposedly supports a healthy life. This “official” poverty measurement emerged in the early 1960s based on the work and insights of Mollie Orshansky.

Working for the Social Security Administration , Orshansky was tasked with developing a response to a Congress member’s question about how much it costs a retired couple to live. Orshansky examined USDA data and found that in 1955 the average household of three or more people in the US spent about one-third of its annual income on food, which implied that it spent two-thirds on everything else it needed. So, if you knew how much a healthy diet cost, you could multiply that amount by 3 to arrive at the amount needed to meet basic needs, or the poverty threshold.

And it worked very well. Since she knew the cost of the USDA’s economy food plan (now known as the “Thrifty Food Plan”)—which was supposed to be the lowest cost, minimally nutritious diet—Orshansky multiplied its cost by 3, and she had the basic poverty threshold. Simple but elegant, and quite accurate in the 1960s. It’s still the basis of the official poverty thresholds today.

But there is a problem with this approach: if the average proportion of income spent on food changes, then the multiplier would need to change, and so would the poverty threshold. And the proportion of income spent on food has indeed changed, as housing and health care costs have absorbed an ever-growing percentage of our annual incomes. In 2012, for example, the average share of expenditures spent on food for all consumer units was just 12.8%—far below the 33% in Orshansky’s day. Using her elegant logic, we would therefore need to multiply the cost of the minimally nutritious diet by 7.8—instead of 3—to accurately arrive at the basic 2012 poverty thresholds.

Using 2012 costs, if you multiply the cost of the Thrifty Food Plan for a family of four people by 3, you get $22,604—very close to the Census Bureau’s poverty threshold of $23,283 for a family of four. But if you instead multiply the cost of the Thrifty Food Plan by 7.8, the poverty threshold would be $58,771 per year for that same family.

While that may seem high, it is actually very close to the “Economic Self-Sufficiency Standard” that Diana Pearce estimated was $59,027 for a family of four in Albany County, NY in 2010. And it is a little more than the economic self-sufficiency income level of $54,636 for that same family in Allegheny County, PA in 2012. So Mollie Orshansky’s logic still seems to work reasonably well, it just hasn’t been adjusted to reflect the higher costs of basic necessities for contemporary families.

It is clear that if we accurately applied Mollie Orshansky’s approach to measuring poverty, much higher thresholds would result, and many more households and people would be categorized as living in poverty. In 2012, the median income level for all US households was $51,017. If $58,771 (7.8 times the Thrifty Food Plan for a family of four in 2012) were the basic poverty threshold, more than half the households in the US would be classified as being in poverty. And that would probably be accurate in terms of the number of families that are unable to afford basic necessities.

Changing how we measure poverty would force a change in the narrative we tell ourselves as a nation. When something affects half of the nation’s households, it becomes the problem of many more leaders, at all levels of government and society, forcing a recognition that poverty really was never about “them”, it is truly about “us”. As it is, our measurement of poverty vastly understates the problem, allowing us to continue onward without effectively addressing it.

I frequently hear the argument that we can’t afford to reduce or eliminate poverty, and without doubt it would not be an inexpensive undertaking. But the unstated question this implies is “how much are we willing to pay not to eliminate poverty?” In 2007, four of the best poverty researchers in the country estimated that child poverty alone costs the US in excess of $500 billion per year. This estimate only includes costs arising from foregone earnings, crime, and health care, and is surely an underestimate of the actual total costs of poverty.

So the question we seem to be facing these days is this: “Do we value poverty more than not having poverty?” Are we as a country willing to pay more to have poverty than we are to eliminate poverty? It is an open question, but the answer is emerging rapidly.

Early childhood education is now at the forefront of the nation’s social policy agenda. The groundswell of support presents a real opportunity to ensure that low-income children get the most out of education throughout their school years, in part by making sure that undiagnosed health issues aren’t interfering with school performance.

If we make sure that every child entering pre-kindergarten has been properly screened for significant health conditions, we can treat and manage some of the conditions – like asthma and vision problems – that, unrecognized or under-treated, can jeopardize a child’s likelihood of succeeding in school.

There may be a broad assumption that every child gets a complete medical assessment as a requirement for school entry – but this is far from reality. The fact is that millions of children are educationally at-risk because of a host of medical challenges that are easily treated.

If standardized health screening and follow-up are mandated in any new universal pre-k legislation, educators and health providers – in partnership – can dramatically improve the education and health trajectories of students.

President Obama has placed expansion of pre-K programs at the center of his social policy agenda in successive State of the Union addresses – and his focus on this issue is already making a difference. The budget deal reached by Congress in December ensures that Early Head Start and Head Start will receive a $1 billion increase on top of a restoration of sequestration cuts. Funding was also added for competitive grants to states to help them expand pre-K programs. Thirty states have now chosen to expand access to universal pre-k through state run programs.

In November 2013, Senator Tom Harkin, Chairman of the Senate Committee on Health, Education, Labor and Pensions introduced the Strong Start for America’s Children bill. A marginally bipartisan companion bill has also been introduced on the House side. With billions in new funding to states, Strong Start proposes the expansion of comprehensive, high-quality pre-K programs that include health screenings and referrals for vision, oral and mental health conditions. These provisions stand solidly on the preponderance of research which demonstrates a correlation between persistent health-related barriers to education and poor performance in the classroom.

Still, the provisions to identify important health conditions among young children entering school don’t go far enough. We also need to make sure that children are not educationally impaired by other conditions like chronic anemia, hearing deficiencies, behavioral problems and so on. And beyond identifying these health barriers, it is essential to provide guidance and resources to do follow-up and management of identified medical challenges.

Federal, state and local governments have an opportunity to pass early education laws that mandate a focus on health care, as well as access to education. Maybe Congress will put aside partisan and political grandstanding and pass a popular bill that funds universal, comprehensive pre-K for all children as well as screening for and management of health-related barriers to learning—it would be a major step forward in definitively addressing chronic poverty.

In his post, “The Ghetto Is Public Policy,” Ta-Nehisi Coates, national correspondent at The Atlantic states, “The wealth gap is not a mistake. It is the logical outcome of policy and democratic will.” For decades, federal leaders invested in the stability of affluent, predominantly white communities, while giving localities the autonomy to neglect and exclude low-income communities and communities of color. Such practices included redlining, beginning in the 1930s, where banks were allowed to exclude African American communities from receiving home loans. Or following World War II, when many metropolitan regions saw highways rammed through many low-income, mostly African American communities, displacing thousands of residents and small businesses and ripping apart the fabric of long established neighborhoods. And then there was the federal government’s “Urban Renewal” effort of the 1950s and 1960s, which gave local governments and private developers free rein to develop downtowns and displace residents with no clear policy for relocation. At best, residents were moved to public housing located in already segregated, poor neighborhoods with few resources.

Today, concentrated poverty persists, with many communities facing inferior housing, poor health outcomes, failing schools, inadequate public infrastructure, and few employment opportunities. A growing body of research shows that being raised in such high-poverty communities undermines the long-term life chances of children. For example, poverty has been shown to genetically age children, and living in communities exposed to violence impairs cognitive ability. Even when income is held constant, families living in areas of concentrated poverty are more likely to struggle to meet basic needs than their counterparts living in more affluent areas.

However, it is important to note that low-income people are not the only residents of high-poverty neighborhoods. According to research by Professor Patrick Sharkey of New York University, the average African American family making $100,000 a year lives in a more disadvantaged neighborhood than the average white family making $30,000 a year, revealing how past social policies continue to affect neighborhood choice. Sharkey explains that the same, mostly African American families have lived in the most disadvantaged neighborhoods over long periods of time and over multiple generations, limiting access to better opportunities. “Neighborhood poverty experienced a generation ago doesn’t disappear. It doesn’t become inconsequential. It lingers on to affect the next generation,” he explained.

The enduring effects of concentrated poverty require long-term, comprehensive strategies that will be experienced across generations.

It is clear that the federal government has a role to play in undoing the effects of past policies that contributed to these outcomes. Further, as research shows that income inequality and social mobility place a downward drag on national prosperity, the federal government has a vested interest in ensuring that all communities connect people with the opportunities critical to helping them succeed.

Federal and local efforts must move away from short-term investments, such as relocating a fraction of families to more prosperous communities, towards transforming communities in order to alter their trajectories. “When I’m asking for durable urban policy, I’m not asking for a unique commitment to low-income, nonwhite communities. I’m proposing that we extend the commitment and the massive investments that have been made in affluent, predominantly white communities and extend them to…communities across the country,” Sharkey explained.

This is why place-based strategies, such as the Promise Zones initiative, are so important. Such strategies involve policies and practices that take into account how a community—both the built environment and the social and economic opportunities available—impacts its residents. The intersection of place with poverty comes with unique challenges that require place-based strategies to complement our national investments to cut poverty and create greater economic opportunity.

The Promise Zones initiative is designed to revitalize high-poverty communities through comprehensive, evidence-based strategies and help local leaders navigate federal funding. Promise Zones designees receive priority access to federal resources to support job creation, increase economic security, expand educational opportunities, increase access to quality, affordable housing, and improve public safety. Equally important, the initiative pulls together lessons from the administration’s previous efforts to improve struggling communities and is serving as an opportunity to rethink how the federal government can be a more effective partner to communities facing barriers to upward mobility.

The enduring effects of concentrated poverty require long-term, comprehensive strategies that will be experienced across generations. The Promise Zones initiative has the potential to serve this role and finally extend the benefits of stable communities to all people.

You can count on your fingers, and maybe a toe or two, the number of otherwise progressive public officials and policy experts inside the Beltway who want to talk about the gaping hole in our safety net for mothers and children. Up to and including President Obama, the mainstream Democratic position on cash assistance for families with children is that we reformed welfare in 1996 and that the ensuing policy regime is a roaring success.

This is just plain wrong.

Lest I be immediately dismissed in what I am about to say (and the usual suspects will do so anyway), let me be clear that the main way to end poverty is jobs that result in a livable income, and the education necessary to get and keep those jobs. The totality of strategies to reduce poverty also includes healthy communities and necessary services—including health and mental health services—child care, legal services, and more. A discussion of welfare is not the same as a discussion of how to end poverty.

Whatever the facts were about the success of TANF in the flush times of the late 1990s...the recession exposed the utter bankruptcy of TANF as a public policy.

But one part of an antipoverty strategy is indeed a safety net. And this is where people who should know better (or actually do) are averting their eyes.

Short history: The old welfare system—Aid to Families with Dependent Children, or AFDC, which existed from 1935-1996—needed to be reformed. It did not work hard enough at helping people get jobs and become self-sufficient. There were 14.3 million people receiving it when President Clinton was elected and that’s too many.

In 1996, Temporary Assistance for Needy Families (TANF) was enacted. Just then, and quite unforeseen, the economy heated up and jobs became plentiful. The welfare rolls plummeted and the number of never-employed single mothers obtaining jobs increased substantially. But even then, because states had no legal obligation to grant benefits, about 2 out of 5 people who left welfare did not obtain jobs, and large numbers were turned away at the front door.

Beginning in 2001, the impressive numbers of single mothers at work began to go down, and now is nearly back to where it was before the 1996 law was passed. But that didn’t mean that the TANF rolls went back up, because states did not extend benefits to those who were losing their jobs. By the time the recession started, the TANF rolls were at 3.9 million.

TANF was absolutely useless as an antirecessionary tool. Food stamps went up from reaching 26.3 million people to 48 million people, because there is a legal right to receive them. TANF went from helping 3.9 million people to 4.4.million—and even reached fewer people during the recession in some states—because there is no legal right to assistance.

Here’s the bottom line: TANF is basically defunct in more than half the states and the percentage of children in poor families receiving cash assistance nationally has dropped from 68 percent to 27 percent. In more than half the states, fewer than 20 percent of children living in poor families are receiving TANF. Wyoming is the poster state. About 600 people—4 percent of children living in poor families—receive cash aid in Wyoming. Before 1996, with all of the faults in AFDC, the safety net at the bottom consisted of AFDC and food stamps combined. The median income from welfare and food stamps combined was only half the poverty line, but there was a legal right to both. No longer.

So, now 6 million people have incomes composed only of food stamps. Stunning? Who knew? These are government figures and they have appeared on the front page of the New York Times. A lot of people are averting their eyes. Whatever the facts were about the success of TANF in the flush times of the late 1990s—and I think they weren’t so fact-based even then—the recession exposed the utter bankruptcy of TANF as a public policy.

This is enormously frustrating. The minute the government gives someone a nickel we hear a chorus of aversion to handouts, a cacophony of complaints that these are people who do not want to work, a concert of disapproval of the character of anyone who would accept cash help (and now the disapproval extends to anyone receiving food stamps).

Of course we want to have a minimum number of people receiving cash assistance. Of course we want to help mothers receiving TANF find work—and that help has to include child care assistance and health care coverage. And we not only want to do those things well, which is not the case now, but we also need a safety net that is responsive to the individual problems and needs of the families it serves. A properly designed cash assistance program for families with children would take into account the availability of work as well as the fact that recipients vary in their capacity to work.

It’s past time to acknowledge that we have blown a huge hole in our national safety net for the very most needy among us. Shame on us.

How We Measure Poverty: Catching up with Mollie Orshansky

Fighting Poverty with Early Education and a Focus on Health

Concentrated Poverty and The Case for Promise Zones

We Have Blown a Huge Hole in the Safety Net

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