Confronting Poverty

by Joel Bleifuss

In These Times magazine, November 1999


The presidential candidates have recently put the issue of poverty back on the national agenda, and that is a very welcome change.

George W. Bush rebukes his fellow Republicans for "trying to balance the budget on the backs of the poor." But talk is cheap. Al Gore and Bill Bradley have both put forth similar plans-expanding the Earned Income Tax Credit, devoting more resources to child-care and early education programs, and raising the minimum wage to $6.15 per hour. Gore says holding deadbeat dads accountable is "one of the most important things we can do to reduce child poverty." While Bradley, who offers the more far-reaching proposal, is committed to "lifting" 7 million of the 13.5 million poor children "out of poverty" by 2008.

Why should we help "the poor"? One can say that helping the less fortunate is the moral thing to do, but ideals of Christian charity have a tendency to turn paternalistic. Or, one can make the case that "the poor" put a costly and unnecessary strain on the nation's social fabric that negatively impacts everyone's quality of life. While this is true, viewing poverty as a societal plague takes in only part of the picture. The argument that best holds water acknowledges that the majority of the "the poor" are poor not because they don't work, but because society has failed to create an economy that employs all people at a living wage. Consequently, we as a society are collectively responsible for people living in poverty.

So what's the solution? A good place to start would be to stop talking about the "the poor" and use the more accurate term "working class." After all, most poor people work, a fact Bradley acknowledges, observing that "very large numbers of children who live below the poverty line come from hardworking families with parents whose wages simply are not adequate to support them."

Raising the minimum wage to $6.15 per hour is a step in the right direction. Adjusting for inflation, the current $5.15 per hour rate is worth 19 percent less then it was in 1979. According to the Economic Policy Institute, if the minimum wage were raised to $6.15 per hour, 11.8 million American workers would receive a pay increase. Fifty-eight percent of those receiving a raise would be women. (We are not talking teenage girls; three quarters of these women are 20 or older.) And 50 percent of those receiving a raise live in households with annual incomes under $25,000 a year.

But does increasing the minimum wage by $1 really address the problems of working people?

Increasing the minimum wage to $6.15 an hour would translate into an annual wage of $12,792, a figure well short of the government poverty level of $16,600 for a family of four, itself a woefully inadequate measure. To set things right, the Census Bureau has been considering a proposal to raise the poverty level for a family of four to $19,500. Were this to happen, 17 percent of Americans would be officially defined as poor as opposed to the current 12.7 percent. These figures make a mockery of October's front-page headlines, which proclaimed that the booming new economy had lifted 1.1 million Americans out of poverty. In response to this news, President Clinton crowed, "Finally we have stemmed the tide of rising inequality and this new report documents the strong income growth among all groups of people."

Well, not quite. A recent analysis by the Center on Budget and Policy Priorities found that in 1999 the gap between the rich and the poor will be as great as anytime since the Great Depression. This year, the richest 2.7 million Americans (1 percent of the population) are expected to have as much after-tax income as the poorest 100 million (38 percent of the population).

While the booming economy has made the rich richer, their good fortune has been helped along by Congress, which since 1977 has rewritten the tax codes to benefit the wealthy. These changes in tax policy will provide the richest 1 percent of households with an average tax cut of $40,000 this year. This trend will accelerate next year, when Congress' new tax cuts go into effect. According to the Treasury Department, the richest 20 percent of households will reap 78.5 percent of the tax cuts and the poorest 60 percent will receive 7.5 percent of the tax cuts. These statistics demonstrate two things. First, Congress, as an agent of wealthy special interests, is hellbent on transforming our democracy into a plutocracy. Second, Congress has the power to make policy that redistributes income.

If it wanted to, Congress could up the minimum wage to a living wage of $9.37 per hour. This 82 percent increase would be enough to raise the income of a single parent with three children to $19,500, the new poverty level currently under consideration. Sure, that would put inflationary pressures on the economy, but those could be balanced by a sharp increase in the tax rate for those 5 percent of families with incomes of more than $145,000.

Maybe that sounds silly. But so does applauding a modest proposal to raise the minimum wage to $6.15 as an adequate solution to the problem of working class poverty.

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