“Poverty Rate Falls, Number of Uninsured Rise” declared headlines following Tuesday’s release of the U.S. Census Bureau’s annual report on income, poverty and health insurance. While admirably balanced, the headlines were misleading, because the report contained more bad news than good. It confirmed a worrisome decline in median earnings, as well as a surge in the number of Americans without health insurance. True, poverty rates declined, but only slightly, from 12.6 percent in 2005 to 12.3 percent in 2006. Before we applaud too much, we should step back and figure out what has really happened to poverty on President Bush’s watch.

In a nutshell, the story is this: after falling sharply in the 1990s, America has made no headway against poverty in this decade. Consider these facts:

• 35.6 million people, including 12.8 million children live in poverty in the United States. Any decline is welcome, but let’s not forget the poverty rate actually tended upward slightly earlier in this decade. Overall, the picture is one of stalled momentum, and America continues to lag other advanced nations when it comes to using public policy to help citizens lift themselves from poverty.
• The Bush Tax Cuts helped the very wealthy — but he never developed a plan to fight poverty or expand the middle class. Unlike previous decades, expansions in the economy have not helped families at all ends of the economic spectrum. In fact, over the past five years as real GDP has risen by 14.4 percent and unemployment has decreased by 1.2 percent, poverty rates have still risen. Middle- and low-income Americans have not seen the “trickle down” effect as the current administration has promised. The rewards of growth have been concentrated in families at the top of the economic ladder. Those in the lowest income quintile received only 3.4 percent of U.S. income increases during the past year; those in the second quintile received 8.6 percent; those in the third quintile received 14.5 percent; those in the fourth quintile, 22.9 percent; and finally, those in the highest quintile received 50.4 percent.
• Americans have witnessed a decline in median earnings, yet an increase in overall income. If that statement sounds like a riddle to you, then you’re not alone. For the third year in a row, full-time workers experienced a decline in median earnings. Income went up because Americans must work more hours to make up for their falling wages.

Next Steps in Poverty Reduction

Welfare reform of the 1990s brought great successes to poverty reduction in American. Now we have reached a plateau. In order to regain the momentum, it is time for another dramatic set of creative anti-poverty policies. Progressive social policy experts agree that this next step must primarily focus on poor American men who aren’t working steadily and who mostly aren’t eligible for welfare.

Cutting poverty among low-income men is a complicated matter. It begins, however, by drawing men into labor markets. But if we want to affirm the dignity of labor, we can’t ignore the reality that entry-level jobs don’t pay enough to help families obtain what most Americans would consider a minimally decent living standard. Public policy, therefore, should remedy the defects of markets by subsidizing low-wage work through an expanded federal Earned Income Tax Credit (EITC) that provides working men with the same benefits their female counterparts have been receiving since the early 90s. (Stay tuned for a more detailed plan from the PPI.)

Tuesday’s news should motivate policymakers across the country to focus on the next big round of anti-poverty programs. And if there were any need to remind the nation of the ongoing spectre of poverty, one need not look any further than New Orleans, where the depths of American destitution were unearthed two years ago after Hurricane Katrina, and where calls for help remain too frequently unanswered. This is not a time to rest on our laurels and applaud ourselves for the work we have done, for we are far from solving the complex problems facing low-income men, women and children.

This entry was posted on 8.30.2007 at 8:28 am and is filed under Economic Opportunity, Government Reform, Helping Families, Ending Poverty. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response.