Published on Portside (https://portside.org)
Don’t Blame the Poor for the Faults of Our Economy
Alyssa Davis
Wednesday, May 20, 2015
Economic Policy Institute
When assigning blame for our nation’s persistent poverty problem, many
policymakers tend to focus on underlying demographics or behavior of the poor—factors
like racial background or the rise of single parent households, instead of the
stark economic reality the poorest Americans have to contend with. While
demographics and individual behavior have a place in the policy discussion,
growing inequality is the primary reason the poverty rate has remained elevated
over the last several decades.
The chart below breaks down the poverty rate and shows how demographic and
economic factors affected the poverty rate between 1979 and 2013. Since 1979,
increasing inequality has been the largest poverty-boosting factor, outweighing
racial identity and family structure and completely eclipsing the effects of
overall economic growth and educational attainment in driving down the poverty
rate. Despite our growing economy and the fact that poor workers are now more
educated than ever, rising inequality has worked to keep low-income people in
poverty. This increase in inequality was driven by stagnating wages for low-
and middle-income households (for example, 10th percentile real
wages were actually lower in 2013 than they were in 1979).
My recent paper, Broad-Based Wage Growth is a Key Tool in the Fight against
Poverty [1],
written along with Elise Gould and Will Kimball, looks at how the lack of wage
growth for low- and middle-income families fuels poverty. We show what could
have happened to poverty if wages had actually grown over the last several
decades and if the poor and the middle class had shared more widely in the
gains made by a growing economy. We find that adopting policies to promote full
employment and significant wage growth could bring down poverty as much as 4.2
percentage points—bringing 11.2 million people out of poverty.
It’s not fair to say the poor aren’t holding up their end of the social
contract when almost two-thirds of employable poor people work and over 40
percent work full time (and their incomes have become more and more dependent
upon wages over time). The truth is that the economy the poor are working in—an
economy which has grown more and more unequal over the last several decades—has
made it harder and harder for them to get by.
Instead of focusing on the characteristics of the poor when assigning blame
for poverty, we should examine the policy choices we have made that led to such
an unequal economy. Going forward, we should focus on policy solutions
that will spur wage growth—such as raising the minimum wage, targeting full
employment, strengthening worker’s bargaining power, and updating labor
standards—in order to make our economy work for all.
Links:
[1] http://www.epi.org/publication/broad-based-wage-growth-is-a-key-tool-in-the-fight-against-poverty/
[1] http://www.epi.org/publication/broad-based-wage-growth-is-a-key-tool-in-the-fight-against-poverty/
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has always declared the wars; the subject class has always fought the battles.
The master class has had all to gain and nothing to lose, while the subject
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