Top 10 Solutions to Cut Poverty and Grow the Middle Class

Published on
by

Top 10 Solutions to Cut Poverty and Grow the Middle Class

(Photo: Wikimedia Commons)

Yesterday, the U.S. Census Bureau released its annual figures on income, poverty, and health insurance. It revealed that four years into the economic recovery, economic insecurity remains widespread, and low- and middle-income workers have seen no significant wage growth over the past decade.

With the poverty rate at an unacceptable 14.5 percent and economic inequality stuck at historically high levels, one might assume that chronic economic insecurity and an off-kilter economy are the “new normal”—that nothing can be done to fix it.

But there is nothing “normal” or inevitable about more than 45 million Americans living in poverty. It is the direct result of policy choices. With different policy choices, we will see a more equitable economy—it’s as simple as that. 

Here are 10 steps Congress can take to cut poverty, boost economic security, and expand the middle class.

1) Create jobs.  

The best pathway out of poverty is a well-paying job. To get back to prerecession employment levels, we must create 5.6 million new jobs. To kick-start job growth now, the federal government should invest in our infrastructure by rebuilding our bridges, railways, roads, ports, schools and libraries, neighborhood parks, and abandoned housing; expanding broadband; develop renewable energy sources; and make other commonsense investments that create jobs and boost our national economy. For example, extending federal unemployment insurance would have created 200,000 new jobs in 2014. But Congress failed to act, leaving 1.3 million Americans and their families without this vital economic lifeline. We should renew federal unemployment insurance, and also build on proven models of subsidized employment to help the long-term unemployed and other disadvantaged workers re-enter the labor force.

2) Raise the minimum wage.

In the late 1960s, the minimum wage was enough to lift a family of three out of poverty.  Not so anymore. The current federal minimum wage of $7.25 is a poverty wage, and had it been indexed to inflation it would be $10.86 per hour today. Raising the minimum wage to $10.10 an hour and indexing it to inflation would lift more than 4 million Americans out of poverty. Nearly one in five children would see their parent get a raise. Recent action by states and cities shows that boosting the minimum wage reduces poverty and increases wages.

3) Increase the EITC for childless workers.

The Earned Income Tax Credit (EITC) lifted more than 6.5 million Americans—including 3.3 million children—above the poverty line in 2012. Kids who receive the EITC are also more likely to graduate from high school and have higher earnings in adulthood. Yet childless workers largely miss out on the benefit—their maximum credit is less than one-tenth that awarded to a worker with two children. Policymakers across the political spectrum have called for boosting the EITC. Importantly, this policy change should be combined with a raise in the minimum wage—one is not a substitute for the other.

4) Support pay equity.

With female full-time workers earning just 78 cents for every dollar earned by men, we must take action to ensure equal pay for equal work. Closing the gender pay gap would cut poverty in half for working women and their families and add nearly half a trillion dollars to the nation’s gross domestic product.  Passing the Paycheck Fairness Act to hold employers accountable for discriminatory salary practices would be a key first step.

5) Provide paid leave and paid sick days.

The United States is the only developed country without paid family leave and paid sick days, making it exceedingly difficult for millions of American workers to care for their families without having to sacrifice needed income. Paid leave is an important antipoverty policy—having a child is one of the leading causes of economic hardship. Additionally, nearly 4 in 10 private sector workers—and 7 in 10 low-wage workers—do not have a single paid sick day, so they must forgo needed income in order to care for a sick child or loved one.  The Family and Medical Insurance Leave Act, or FAMILY Act, would provide paid leave protection to workers who need to take time off due to their own illness or that of a family member, or after the birth of a child. And the Healthy Families Act would enable workers to earn up to seven job-protected sick days a year.

6) Establish work schedules that work.

Low-wage and hourly jobs increasingly come with unpredictable and constantly shifting work schedules. These erratic schedules make accessing childcare even more difficult and leave workers uncertain about their monthly income. Further, things many of us take for granted—such as scheduling a doctor’s appointment or even a parent-teacher conference at school—become herculean tasks. The Schedules That Work Act would require that workers receive two weeks advance notice of their schedules, create and protect an employee’s right to request needed schedule changes, and provide guaranteed pay for cancelled or shortened shifts—important first steps towards making work-family balance possible for all workers.

7)Invest in affordable, high-quality childcare and early education.

The lack of affordable, high-quality childcare serves as a major barrier to reaching the middle class. Federal child care assistance reaches only 1 in 6 eligible children. One year of childcare for an infant costs more than a year of tuition at most states’ four-year public colleges. Poor families who pay out of pocket for childcare spend an average of one-third of their incomes.  Boosting investments in Head Start and the Child Care and Development Block Grant, as well as passing the Strong Start for America’s Children Act—which would invest in preschool, high-quality childcare for infants and toddlers, and home visiting services for pregnant women and mothers with infants—will help families obtain the childcare they need in order to work, and improve the future economic mobility of America’s children.

8) Expand Medicaid.

Since it was signed into law in 2010, the Affordable Care Act has expanded access to high-quality, affordable health coverage for millions of Americans. However, 23 states refuse to expand their Medicaid programs to cover adults up to 138 percent of the federal poverty line, which makes the struggle for many families on the brink much harder. Expanding Medicaid means more than just access to healthcare—it frees up limited household income for other basic needs, like paying rent and putting food on the table. Having health coverage is also an important buffer against the economic consequences of illness or injury—unpaid medical bills are the leading cause of bankruptcy. Studies link Medicaid coverage not only to improved health, improved access to healthcare services, and lower mortality rates, but also to reduced financial strain. It’s time for all states to expand Medicaid.

9) Reform the criminal justice system and enact policies that support successful re-entry

The United States incarcerates more of its citizens than any other country in the world. Today, more than 1.5 million Americans are behind bars in state and federal prisons, a figure that has increased fivefold since 1980. The impact on communities of color is particularly staggering: One in four African American children who grew up during this time period have had a parent incarcerated.

Mass incarceration is a key driver of poverty. When a parent is incarcerated, his or her family must find a way to make ends meet without a necessary source of income. Additionally, even a minor criminal record can result in lifelong barriers to climbing out of poverty. For example, people with criminal records face substantial barriers to employment, housing, education, public assistance, and building good credit. More than 90 percent of employers now use background checks in hiring, and even an arrest without a conviction can prevent an individual from getting a job. The “one strike and you’re out” policy used by public housing authorities makes it difficult for individuals with even decades-old criminal records to obtain housing, and can obstruct family reunification. And in more than half of U.S. states, individuals with felony drug convictions are burdened with a lifetime ban on receiving certain types of public assistance.

In addition to common-sense sentencing reform to ensure that we no longer fill our nation’s prisons with non-violent, low-level offenders, policymakers should explore alternatives to incarceration, such as diversion programs for individuals with mental health and substance abuse challenges. We must also remove barriers to employment, housing, education, and public assistance. A decades-old criminal record should not consign an individual to a life of poverty.

10) Do no harm

The across-the-board spending cuts known as sequestration—which took effect in 2013—slashed funding for programs and services that provide vital support to low-income families. Sequestration also cost the American economy as many as 1.6 million jobs between mid-2013 and 2014.  As Congress considers a continuing resolution to fund the federal government past October 1 and avoid another government shutdown, it should reject further cuts to vital programs and services which would once again take us in the wrong direction. Thereafter, Congress should make permanent the improvements made to the EITC and the Child Tax Credit as part of the American Recovery and Reinvestment Act of 2009, which are set to expire in 2017. And it should protect and strengthen vital programs such as Section 8 housing, and the Supplemental Nutrition Assistance Program, formerly known as food stamps, which suffered two rounds of deep cuts in 2013 and 2014.

Conclusion

It is not only possible for America to cut poverty, it is possible for us to cut poverty dramatically.  Between 1959 and 1973, a strong economy, investments in family economic security, and new civil rights protections helped cut the U.S. poverty rate in half. Investments in nutrition assistance have improved educational attainment, earnings, health and income among our nation’s children when they reach adulthood. Expansions of public health insurance have lowered infant mortality rates. And, in more recent history, states that have raised the minimum wage have shown the important role that policy plays in reversing wage stagnation.

There is nothing inevitable about poverty, and there is nothing inevitable about the lack of political will to dramatically reduce it.  Share this article with your friends, and get involved.

Rebecca Vallas

Rebecca Vallas is the Associate Director of the Poverty to Prosperity Program at the Center for American Progress.

Melissa Boteach

Melissa Boteach is the Vice President of the Poverty to Prosperity Program and Half in Ten Education Fund at the Center for American Progress.  You can follow her on Twitter @mboteach.

Share This Article