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In America, The Poor Don't Work

September 10, 2008

By Steven Malanga

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Declaring that it's becoming "easier to fall into poverty" in America, Barack Obama has laid out an anti-poverty agenda that includes raising the minimum wage, increasing tax credits for low-income wage earners, and enacting legislation to make it easier for workers to start unions.

John McCain would attack poverty by cutting taxes to stimulate the economy and boost opportunity throughout the workforce. Although their agendas are starkly different, both men make the same fundamental mistake. They declare that labor-force solutions, like higher wages or creating better jobs, will significantly reduce poverty America. But that won't happen because the vast majority of the impoverished in America don't work and wouldn't even if we raised wages or created more jobs. They are in poverty because of social or physical problems or choices in life they've made which make it difficult or impossible for them to work. Some have simply chosen not to work. It's not that our economy doesn't work for most of the poor, but that most of the poor don't work.

Obama and McCain can be excused for not addressing poverty's real causes because rarely anyone else in public life ever does, including not only politicians but most reporters and editors who regularly cover the issue. When the Census Bureau released its latest figures on poverty in late August, on the day before Obama addressed the Democratic National Convention, the press's reaction was superficial and predictable: "Poverty Rate Reflects Stalled Economy," began a piece on National Public Radio, even though a close look at economic cycles over the last 35 years shows that poverty rates only change slightly when the economy turns up, or down.

But digging deeper into the layers of data that Census provided in its latest reports would be revealing—"I would dare say startling—"for the average American. For instance, what the latest data show is that of the 7.6 million families in poverty in America, more than 80 percent did not contain an adult who worked full time in the past year. In fact, in more than half of families in poverty the householder did not work at all in the last year. The problem was especially acute among single-parent families headed by women, which make up 19 percent of American families but 55 percent of all families in poverty. In only 17 percent of those impoverished families is the household head working full time. Still, even that is better than before welfare reform set time limits on public assistance in 1996. Back in the early 1990s, for instance, only 9 percent of all poor women who headed households worked.

It's especially revealing to see why the poor don't work. In this latest study, Census asked non-working impoverished adults between the ages of 16 and 64 why they are out of the workforce. Only 6 percent said it was because they could not find work. By contrast, 26 percent said they didn't work because of family commitments, 27 percent said they were in school, 32 percent said they were ill, and 9 percent said they had retired. Whatever their individual problems or circumstances, in other words, a shrinking economy, or wage levels that are too low, or the decline of unions have little to do with the poverty of most of these people.

That the poor don't work very much gets left out of all sorts of public policy debates, including those on the growing gap between the rich and the poor. A recent graph accompanying an Economic View column in the New York Times, for instance, showed that households in the lowest economic quintile make far greater income gains during Democratic administrations, while the top five percent of households do better under Republican presidents. The graph and accompanying commentary suggested that Democratic presidents are somehow producing more economic opportunity for those at the bottom of the economic scale, but as the Census numbers show, that's just nonsense. According to the latest Census figures, 60 percent of families in the lowest quintile in America do not contain a single adult earner. When their income surges, it is often because Washington is increasing transfer payments to the poor, not because economic opportunity is rising.

By contrast, the members of America's richest households are working like never before. About 76 percent of all families in the top 5 percent of household income contain two or more workers, Census data show, and the percentage of families with multiple workers increases as household income increases. As sociologist Dalton Conley recently wrote in the New York Times, "Today, the more we earn, the more we work."

Until we address the causes of poverty frankly instead of resorting to demagogy about the rich and the poor, we won't begin to make serious reductions in poverty. Social scientists, for instance, have understood for years now that one of the greatest problems we face in reducing poverty is the rise of single-parent households. As a 2006 paper published by the National Bureau of Economic Research noted, "Changes in family structure—notably a doubling of the percent of families headed by a single woman—can account for ... more than the entire rise in the poverty rate" from 1980 to today.

And the problem is only getting worse. More than one-third of all births in America today are to unmarried women, and nearly half of them are already in poverty, meaning their children are being born directly into poverty themselves. Many of these women do not have a high school education, so the prospects that they can find anything but entry level work are grim. And given what social science now tells us about children raised without a father—that they are far more likely than kids raised in two-parent families to drop out of school, to wind up on welfare, and in the case of girls to become unwed mothers themselves—the likelihood of current levels of poverty persisting no matter how many new jobs we create is enormous.

Finding solutions to these problems is far more complicated and politically risky than offering palliatives about minimum wage hikes or tax cuts. To address the issue of the more than 80 percent of poor families where no one works full time requires figuring out how to dissuade poor girls without a high school education from having children by a man who won't marry and support them. It also requires doing a much better job helping make ex-convicts—the 700,000 or so mostly men who leave prison each year—more employable. And it requires finding more successful ways of helping alcoholics and drug addicts—who make up a sizeable portion of those who say they can't work because they are ill—get straight and stay clean.

These are difficult problems, but there are pockets of innovation going on around the country which offer hope. We rarely hear about them, however, because our candidates and the press are too busy telling us that our economy is somehow failing the poor.

Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute

Original Source: http://www.realclearmarkets.com/articles/2008/09/in_america_the_poor_dont_work.html

 

 
 
 

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