Anti-Poverty Policy
The recent blog post, Rethinking the Federal Budget, described U.S. underperformance in provision of numerous services that provide for the population’s education, health, infrastructure, and well-being in preparation for their future; and it reviewed misappropriation or underfunding of the budget necessary to meet needs. The post stated, “Poor education and healthcare beget poverty. Inadequate infrastructure places good jobs out of reach, limiting potential for some workers to raise their income. More to the point, a subset of the US population carries the burden of all these shortcomings.”
The emphasis was on the level of taxation required to meet those needs. However, government actions, or inaction, beyond budgeting make it likely a life in poverty will be passed from generation to generation. That is the subject of a just-released book by sociologist Matthew Desmond titled Poverty, By America.
Desmond notes that in order for households to receive a higher allocation of food stamps, an unmarried partner of the head of household must not live in the same residence. The cost of maintaining two households increases poverty, defeating the purpose of providing food stamps.
Low wages leave workers unable to afford basic necessities. Raising the minimum wage is purported to increase unemployment, even though, as Desmond asserts, “the employment effect of raising the minimum wage is inconsequential.” Unionization is opposed by major corporations. Workers want the right to bargain collectively for better wages and working conditions. Union households have on average 10-20% better pay than non-union households, and nearly 30% when benefits are included.
Several states have passed legislation to limit the use of non-compete clauses. Non-compete clauses barring employees from working for a rival business restrict workers’ ability to find employment in the industry in which they have experience, trapping them in their current jobs.
Low pay causes high employee turnover. Research by the Good Jobs Institute has documented significant reductions in employee turnover after increasing worker pay. Sales, productivity, and customer loyalty increased as well. Desmond adds, “When poor workers receive a pay raise, their health improves dramatically. Studies have found that when minimum wages go up, rates of child neglect, underage alcohol consumption, and teen births go down.”
Research on policy counterproductive to reducing poverty has a long history. Desmond’s examples are not new. Instead, Desmond’s objective is to acknowledge that the general public’s pursuit of personal interests contributes to the plight of low-income households. Shoppers shop for the lowest price on the goods they purchase, disregarding the effect on wages. Homeowners oppose intrusion of higher density/lower cost housing in their neighborhoods. Scarcity of housing drives up cost of what low-cost housing exists. Quality of education varies with the taxable property of school districts. Public benefits offered by the federal government, such as tax deductions for interest on mortgages and student loans, disproportionately accrue to higher-income households.
Desmond argues that those who these arrangements favor must be willing to forego some of their advantages, and repudiate the pretense that the U.S. cannot afford to reduce poverty.