How America’s War on Poverty is changing

January 8, 2014

     By Duncan Green     

One of Oxfam’s better kept secrets is that we work in rich countries too. Here Minor Sinclair, who runs Oxfam’s US domestic programme, looks back onminor-sinclair-200x263 what has changed in 50 years of the ‘war on poverty’.

Fresh out of college, I jumped into the trenches of the War on Poverty – and have been there ever since. Fifty years ago today, I heard the call of President Johnson’s Declaration of the War on Poverty.  In his State of the Union address, he asked us to summon the political will and the national resources to construct a Great Society.  I joined up, and headed into the heart of poverty: coal country Appalachia and the black belt of the Deep South. And it was a good fight. I helped families living in tar paper shacks–some of whom were chopping up their floor boards as firewood to heat their homes—move into decent housing. I’ve seen ghetto kids become the first in their family to go to college and then go on to earn PhD’s. I’ve witnessed various programs transform people’s lives for their better: food and nutrition, early education, and health clinics.

As we mark the anniversary, we can see the results of anti-poverty programs which today serve upwards of 100 million people (eg, food stamps, VISTA, Medicare and Medicaid). Some skeptics may call the programs a failure, but they clearly haven’t seen the reality that I have. Nor have they seen the studies that show that without these programs, our poverty rate would be 31 percent instead of 16 percent (factoring in government transfers).

President_Johnson_poverty_tourBut if President Johnson were in office today, would he double-down on his original big bet?  I doubt it. The nature of American poverty has changed, and so too must the policy response.

Johnson’s declaration was originally a war not just on poverty, but on “human poverty and unemployment.” He assumed, reasonably enough at the time, that moving poor people into paying jobs would lift them out of poverty.

Though our country saw its share of crises in the 1960s, we did enjoy a healthy economy. We saw steady growth, a strong manufacturing sector that provided middle-class jobs, and a decent minimum wage.  Unions ensured that productivity gains were fairly distributed, and global competition was not a serious threat to US goods and services.

That’s not so easy when there are still 1-2 million fewer jobs today than in 2007.

Just as troubling, millions of low-wage jobs today are not a path out of poverty, but a trap within it.  Nearly 40 percent of new jobs pay less than $14 an hour, according to a study by the National Employment Law Project.

While true that today’s economy has spit out 45 continuous months of job growth, the middle income jobs we lost in the Great Recession are now being replaced overwhelmingly with low wage jobs in services, retail and healthcare.  It’s been a long trend in response to a globalized economy where our comparative advantage is seemingly reduced to fast food restaurants and temp agencies.

Today, President Johnson would need to go no further than a local strip mall (instead of Appalachia) to find the face of the poor and near poor. A third of all workers — roughly 59 million Americans–earn less than $14 an hour.    Millions of people are working full-time—or even more–but still not earning enough to meet basic needs. For these people, it’s not a problem of motivation or social determinants or poor choices.

The problem is that while jobs are scarce, good jobs even scarcer, and people are forced to take what they can get even if it doesn’t pay the bills. By and20070712-AMX-US_NEWS_HOUSING_3_MCT large, these jobs aren’t held by high school kids living at home, but by the providers in the family.

Conservatives may be right that government transfer programs create disincentives—but not for individual’s receiving the aid.  Instead, it’s the corporations that rely indirectly on government aid to help keep their low wage workers fed, housed, clothed and receiving health care.  And the lower the wages, the more the government needs to step in to make up the difference.  That’s why at least one conservative and deficit hawk is calling for a higher minimum wage.

As government anti-poverty programs have expanded, the floor for wages has collapsed.  In real terms, the minimum wage has atrophied and pays, on average, only 1/3 of basic living expenses for a family of three. The few companies that have chosen the high road, showing you can pay a living wage and still make profits, haven’t shifted the corporate strategy of their brethren.

In 2014, the Democrats have announced that they’re ready to launch a battle to raise the minimum wage (an exceedingly helpful development if it’s a legislative effort and not a re-election tactic). If income inequality is the defining issue of our times, as President Obama says, I hope he is as successful in raising the bottom third as he is in reining in the top 1 percent (who raked in 95 percent of all income growth over the last five years).

An easy place to start would be for the President to change the rules in government procurement so that federal contractors can’t pay two million people sub-living wages.   And it wouldn’t take another War on Poverty for the President to tap majority support from the general public and the working poor for a few policies that would make a big difference:  improving access to paid family and medical leave, strengthening access to job training, making child-care more affordable, providing universal preschool.

Maybe addressing the poverty in wages is as idealistic as exploring the moon. But then, I’m still a true believer.

January 8, 2014
Duncan Green