by James Parks, Apr 27, 2007

This is the second in a series of posts on the findings of a new report by the Center for American Progress on the nation’s poor, From Poverty to Prosperity: A National Strategy to Cut Poverty in Half. 

With the economy growing at its slowest pace in four years, the number of Americans living in poverty is growing. It will take renewed political will to combat this growing poverty.

The Commerce Department reported today that economic growth slowed to a near crawl of 1.3 percent in the first three months of 2007, the worst performance in four years. Meanwhile, consumer prices jumped by a 3.4 percent annual rate in the first quarter, after falling in the last quarter of 2006.

The upshot is that prices went up and there was less economic growth to offset the increased inflation. These trends hurt all working people, but the poor get hit hardest. About 37 million people—one in eight Americans—officially are considered poor, while one-third of Americans are defined as low income. And the numbers are growing. Over the past six years, the number of poor people has grown by more than 5 million.

A major study, From Poverty to Prosperity: A National Strategy to Cut Poverty in Half,  by the Poverty Task Force of the Center for American Progress (CAP) takes a look at the extent of poverty and outlines a pragmatic plan to reduce it by half over the next 10 years.

We can certainly afford to achieve this modest goal: CAP estimates the combined cost of the main recommendations in the report would cost about  $90 billion a year, about 0.8 percent of the nation’s gross domestic product. That’s just a fraction of the almost $400 billion a year spent on the Bush administration’s tax cuts for the wealthy.

But it will take a strong renewal of political will to reduce poverty, Sen. Edward Kennedy (D-Mass.) and Rep. Charles Rangel (D-N.Y.) said at the release of the CAP report Wednesday.

Kennedy, who chairs the Senate Health, Education, Labor and Pensions Committee, says:

The goal to cut poverty in half over the next [10] years is not an overly ambitious task when you look at what other industrialized countries are doing. In the United States education and health care have an enormous resonance … We have to tie those into poverty. This means increasing funding for each of these policy areas. The 2.5 billion dollars a week being spent on the war in Iraq may be causing some barriers to progress in the areas that affect poverty.

Rangel, chairman of the House Ways and Means Committee, said poverty is costing the nation in many ways:

Poverty is expensive, poverty causes [such national disasters as] Katrina. With the exception of getting the hell out of the Middle East, I can’t think of anything more patriotic that Americans can do than to eliminate poverty. To me, the best way to get out of poverty is to never get in it. And the best way to never get in it is to have an education [that prevents it]. We have to start investing in youngsters … Don’t say they can’t be educated. They just can’t be educated under the system we have today.

The value of education as a way out of poverty was again shown clearly today when the Bureau of Labor Statistics reported the college enrollment rate of high school graduates dropped in 2006 to its lowest level in three years. At the same time, unemployment increased among those who did not attend college. The unemployment rate for recent high school graduates not in college rose to 25 percent last year from 21 percent in 2005.

Although reducing poverty is not at the top of the nation’s political agenda, polls indicate the American public strongly backs measures to reduce poverty. For example, a poll conducted by the Pew Research Center in January shows that 69 percent agree “the government should guarantee every citizen enough to eat and a place to sleep.” An identical 69 percent agree “it is the responsibility of the government to take care of people who can’t take care of themselves.” These figures are up 10 and 12 points, respectively, relative to their recent low point in 1994.

The CAP report outlines 12 key steps for cutting poverty in half. One of the recommendations is passage of the Employee Free Choice Act, which would allow workers freedom to decide for themselves without employer interference whether to form a union.  

The House passed its version of the Employee Free Choice Act (H.R. 800) on  a 241-185 vote March 1. The Senate version (S. 1041) was introduced March 29 by Kennedy and has 46 co-sponsors.

According to the CAP report, it is clear that workers should be able to freely join unions because:

Among workers in similar jobs, unionized workers have higher pay, higher rates of health coverage and better benefits than do nonunionized workers. Unions help nonunionized workers, too, by creating competitive pressure for employers to improve their wages and benefits. Joining a union can be especially important to low-wage workers. For example, union cashiers earn 46 percent more than nonunion cashiers, union food preparation workers earn nearly 50 percent more, and union maids and housekeeping cleaners earn 31 percent more.

Other recommendations in the CAP report include action to:

• Raise and index the minimum wage to half the average hourly wage.
• Expand the earned income tax credit (EITC) and the child tax credit.
• Guarantee child care assistance for low-income families and promote early education for all.
• Create 2 million new “opportunity” housing vouchers to help people living in poor neighborhoods to move to areas where economic opportunities are more available.
• Connect disadvantaged and disconnected youths with school and work through programs such as Youth Opportunity Grants that develop high-quality programs to help individuals find better jobs and increase their education. 
• Simplify and expand Pell Grants and make higher education accessible to residents of each state.
• Help former prisoners find stable employment and reintegrate into their communities.
• Broaden eligibility for low-wage workers in the unemployment insurance system.
• Modernize means-tested benefits programs, such as food stamps, to develop a coordinated system that helps workers and families.
• Reduce the high costs of being poor by expanding mortgage assistance programs and increase access for low-income residents to good financial services.
• Expand and simplify the federal Saver’s Credit to encourage saving for education, home ownership and retirement.

The Urban Institute estimates that putting into practice just four of the CAP recommendations—raising the minimum wage and expanding the EITC, child tax credit and child care assistance—would reduce poverty by 26 percent. This would mean 9.4 million fewer people in poverty and a national poverty rate of 9.1 percent—the lowest in recorded U.S. history.

According to the institute, the racial poverty gap also would be narrowed:

• White poverty would fall from 8.7 percent to 7 percent;
• Poverty among African Americans would fall from 21.4 percent to 15.6 percent; 
• Hispanic poverty would fall from 21.4 percent to 12.9 percent; and
• Poverty for all others would fall from 12.7 percent to 10.3 percent.