Implementing policies that actually help the poor

Overview

After spending trillions of dollars on a War on Poverty that has, at best, marginally improved outcomes, it’s time for a new approach.  Despite the success of welfare reform in the 1990s, millions of Americans are essentially prisoners of this “war,” and are trapped in dependency and despair.  Neither side has found a way to emphasize and encourage what works.  The left marches past today’s poverty to celebrate yesterday’s victories while the right chronicles failures and emphasizes restrictions to flawed programs.

Thankfully, there are local leaders working to end systemic poverty at the personal level, as we detail in our “Comeback” series:

 

  • Spending on poverty programs keeps going up, but poverty isn’t going down

    Our current approach to fighting poverty has failed in a big way.  As we’ve written about extensively at Opportunity Lives, the trillions of dollars we’ve spent since the mid-1960s fighting a “war” on poverty haven’t had the intended impact of lowering the percentage of people in poverty.  

     We’ve spent trillions of dollars fighting poverty, but the poverty rate has barely moved.  

    As recently acknowledged in a report from the House of Representatives “A Better Way” initiative, …”the official poverty rate in 2014 (14.8%) was no better than it was in 1966 (14.7%), when many of these programs started.”

    Despite the lackluster results of many antipoverty programs, costs for programs like food-stamps have skyrocketed.  As Jason Riley, a senior fellow at the Manhattan Institute, writes in the Wall Street Journal:

    [T]he food-stamp program has become the country’s fastest-growing means-tested social-welfare program. Only Medicaid is more expensive. Between 2000 and 2013, SNAP caseloads grew to 47.6 million from 17.2 million, and spending grew to $80 billion from $20.6 billion, according to the Agriculture Department. SNAP participation fell slightly last year, to 46.5 million individuals, as the economy improved, but that still leaves a population the size of Spain’s living in the U.S. on food stamps.

  • It’s incredibly hard for people who are in poverty to escape it

    When it comes to fighting poverty, the U.S. is in a tough place.  As shown below, data from the Pew Charitable Trusts shows almost 50% of kids who are born into the bottom income quintile will remain there as adults.  

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    In other words, it’s extremely hard for young people who are born into poverty to escape it.  We have a big mobility problem that needs fixing.

  • Important program changes that made it easier for people to get out of poverty have been undone in recent years

    In 1996, Congress passed important reforms to our welfare system that, among other things, strengthened work requirements for able-bodied adults.  Scholar Robert Rector, who helped design the reforms, notes the effectiveness of the reforms in a Washington Post article from 2012: 

    “The 1996 welfare reform law required that a portion of the able-bodied adults in the Temporary Assistance for Needy Families (TANF) program — the successor to the Aid to Families with Dependent Children program — work or prepare for work. Those work requirements were the heart of the reform’s success: Welfare rolls dropped by half, and the poverty rate for black children reached its lowest level in history in the years following.”

    In July 2012, however, the Obama administration took steps to undo the progress made in 1996.  Rector continues:

    “…I raised the alarm on July 12, when the Obama administration issued a bureaucratic order allowing states to waive those requirements. The law has indeed been gutted… the Obama administration has jettisoned the law’s work requirements, asserting that, in the future, no state will be required to follow them. In place of the legislated work requirements, the administration has stated, it will unilaterally design its own “work” systems without congressional involvement or consent. Any state will be free to follow the new Obama requirements “in lieu of” the written statute.”

  • Reform and improve one of the most successful federal anti-poverty programs, the Earned Income Tax Credit

    American Enterprise Institute economist Angela Rachidi explores the benefits and costs of expanding the Earned Income Tax Credit (EITC) to be more generous to childless workers. Such a proposal would help many struggling Americans, particularly younger workers, as the EITC overall has helped single mothers and families.

    However, any expansion raises concerns about extending government assistance to many people without dependents who should be able to adequately provide for themselves. And the cost of expanding the EITC could eventually reach billions of dollars a year.

    Among Rachidi's key findings:

    • "Proposals for an earned income tax credit (EITC) expansion for childless workers vary in terms of the size of the credit, the earnings limits for eligibility, and eligibility exclusions. These variations have important implications for who benefits and the associated costs.
    • An expansion of the EITC for childless workers could reach 8-14 million workers and cost $5-8 billion in new spending, depending on whether students are excluded and work requirements are adopted. A more generous option could reach 21 million workers but would require as much as $22 billion in new spending.
    • Young people (ages 21–24) are the primary beneficiaries of proposed expansions, as are men, who would receive approximately 55–60 percent of benefits from any expansion. Women, older workers, and married couples also benefit, but to a lesser extent.
    • Student exclusions and work requirements would lower costs but may be difficult to administer."

    Read Angela Rachidi's full briefing on the Earned Income Tax Credit here.

    Additionally, American Enterprise Institute economist Michael Strain in a column for Tribune Media breaks down the problems with the simplistic approach of raising the minimum wage. While some impacts, including job losses, are widely discussed as the policy debate continues, Strain highlights other problems.

    For example, only 19 percent of the expected earnings increase for those working at the minimum wage would actually go to households living in poverty. Almost 30 percent would go to households with an income level three times the federal poverty limit. Because many of the workers earning minimum wages are young people living at home with their parents and are middle class already, the minimum wage is a deeply flawed anti-poverty solution.

    A much more targeted approach would be to raise the Earned Income Tax Credit, which is targeted at workers with low wages. It incentivizes work, doesn't destroy jobs and impacts those who need it most.

    Read Michael Strains column on the advantages of the EITC over a minimum wage hike here.

  • Get rid of government policies that are undermining the family

    Aparna Mathur of the American Enterprise Institute critiques "the Great Gatsby Curve," an increasingly popular idea on the left that claims income inequality negatively impacts economic mobility and damages the American dream.

    Drawing on several studies on inequality, mobility, and family structure, Mathur concludes that the data show inequality has not likely impacted mobility or poverty. Instead, the declining health of the American family has worsened conditions for low-income Americans:

    "But the real problem facing us is not rising incomes at the top, but deepening poverty and poor economic opportunities at the bottom, which are strongly correlated with a decline in traditional family structures.

    The Great Gatsby Curve, with its focus on rising inequality, distracts from the real issues facing American families. Improving mobility and reducing poverty requires addressing the challenges of single parenthood, particularly teenage pregnancies; improving the human capital of disadvantaged children; and encouraging labor force participation for both men and women. A host of policies such as expanding the EITC, boosting child care subsidies and improving access to quality education through school choice programs would help in this regard. Strengthening the family is the key to American opportunity."

    Click here to read more of Mathur's thoughtful critique at the Brookings Institution.

  • Tie welfare to work — and make sure the jobs and wages are there to match

  • Heather Reynolds
    President & CEO of Catholic Charities Fort Worth - implementing best practices on the ground to help families escape poverty once and for all

    “Our goal is to provide such in-depth, well-planned services, that once families are done with CCFW, they are done with ...

    “Our goal is to provide such in-depth, well-planned services, that once families are done with CCFW, they are done with poverty, too...”
    Why They Matter

    From her bio at Catholic Charities Forth Worth:

    Heather Reynolds is the President and CEO at Catholic Charities Fort Worth (CCFW). Reynolds, 36, oversees the strategic direction for the Fort Worth based, $27 million non-profit. With nearly 400 employees and four locations throughout the 28-county diocese, CCFW served over 100,000 people last year, up from 55,112 when she took the helm as CEO at only 25.

    A 14-year veteran at Catholic Charities Fort Worth, Reynolds has extensive ...

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  • Bob Woodson
    Community leader dedicated to changing individual lives and helping elected officials understand which policies most effectively help people get out of poverty

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    “The most effective community leaders...agree that it's transformation and redemption that changes the heart”

    Why They Matter

    From his bio at the Center for Neighborhood Enterprise:

    “Robert L. Woodson, Sr. is Founder and President of the Center for Neighborhood Enterprise. Often referred to as the “godfather” of the movement to empower neighborhood-based organizations, Bob Woodson’s social activism dates back to the 1960s, when as a young civil rights activist, he developed and coordinated national and local community development programs. During the 1970’s he directed the National Urban League’s Administration of Justice division. Later he served as a Resident Fellow at the American Enterprise ...

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  • Robert Doar
    Scholar using his on-the-ground experience to shape policies that help people escape poverty

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    “The key to success will always be to create an environment where individuals can work and move up economically based ...

    “The key to success will always be to create an environment where individuals can work and move up economically based on their own efforts..."
    Why They Matter

    From his AEI bio:

    “Robert Doar is the Morgridge Fellow in Poverty Studies at the American Enterprise Institute (AEI), where he studies and evaluates how improved federal policies and programs can reduce poverty and provide opportunities for vulnerable Americans. Specifically, he focuses on the employment, health, and well-being of low-income Americans and their children.

    Mr. Doar has served as a cochair of the National Commission on Hunger and as a lead member of the AEI-Brookings Working Group on Poverty and Opportunity, which published ...

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  • Paul Ryan
    U.S. Congressman working to enable more “comeback” stories

    In this Nov. 5, 2015, photo, House Speaker Paul Ryan of Wis. smiles during his news conference on Capitol Hill in Washington. Late nights dealing with scores of amendments on the House floor. An invite to the famously staid Senate majority leader, Mitch McConnell of Kentucky, to appear at an open mic session. Welcome to Ryan’s House. A week into his tenure, the new speaker looks determined to make good on promises of opening up the House of Representatives to participation from all lawmakers.  (AP Photo/Pablo Martinez Monsivais)

    "...There are people in communities who are actually out there fighting poverty eye to eye, soul to soul, in ...

    "...There are people in communities who are actually out there fighting poverty eye to eye, soul to soul, in neighborhoods that actually do well, that succeed."
    Why They Matter

    From his official website bio:

    Born and raised in the community of Janesville, Paul Ryan is a fifth-generation Wisconsin native. Currently serving his ninth term as a member of Congress, Paul works on many important issues affecting Wisconsin residents and is an effective advocate for the First Congressional District. 

    In October 2015, after then-House Speaker John Boehner retired from Congress, Paul was elected House Speaker. A committed conservative and public servant, Paul has spent ...

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  • After 20 Years On Welfare, A Single Mother Discovers Life On The Other Side

    “I didn’t know I could work.” This was the revelation made by a single mother from Syracuse, New York – a revelation that changed her life. After more than two decades on welfare, the single mother of seven is finally discovering life off of government support. And she is also …

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  • Mile High Workshop: Rebuilding Lives Through Work

    While some states continue to struggle to create jobs and attract talent, Colorado is a bright spot. Its economy is booming and the state consistently finds itself in lists of best places to live. And yet, there is still suffering in a state of natural beauty. Consider the following: one …

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  • More Than a Soup Kitchen: This Program Provides Job Training to the Homeless

    (Denise Becker, right, of the Corvallis HELP program helps Roberta Smith, left, in Smith’s backyard. / Photo: Corvallis Gazette-Times) Many programs all across the country are already working to improve the lives of the homeless population. Soup kitchens provide food, shelters provide warmth, but these are only short-term fixes to a …

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  • How to Help the Homeless from Someone Who Spent Two Years Without a Home

    When you meet Savannah Tedesco, you’d never guess that she spent two of her teenaged years homeless. She is a successful Millennial with a career in politics, serving the North Carolina General Assembly. Overcoming the odds, Tedesco managed to break out of her situation of homelessness. She said her experiences …

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  • Love INC: Providing Food, Shelter, and Skills for Michigan’s Needy

    Imagine living in Traverse City, Michigan, when you find yourself in a personal crisis. You’re about to lose your house, you’re pregnant and have little financial support and you’ve been ordered to take parenting classes by the state’s division of Child Protective Services. You need help, but you aren’t sure …

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  • This Bakery Decided to Employ the Homeless, and its Business Has Taken Off

    If you told Fred Domke five years ago that he would be baking bread to help homeless people get off the streets, he never would have believed you. Domke was the owner of a small computer consulting company at the time. Today, he’s the proprietor of St. Louis-based Bridge Bread, …

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  • Opportunity Bus Brings Job Prospects to Buffalo’s Poorest Neighborhoods

    The bus is purple and white and emblazoned with the word “opportunity” on its body. In any other city, it could be a roving food stand, maybe an ice cream truck. But in the job-deprived inner city neighborhoods of Buffalo, New York, the truck is a ride to a brighter …

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  • Once-Homeless Man Becomes Employee of the Year

    Three years ago, Wes Byington was a homeless man living on the streets of Sarasota, Florida. Back then, he had no idea what he was doing with his life, and the prospect of change filled him with paralyzing fear. But finally he decided it was time to make a change. …

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