Federal Lawmakers Should Commit to Cut Poverty
The United States is a powerful and wealthy nation, yet one in seven-39.8 million-lives below the federal poverty threshold, and millions more hover near poverty and struggle to make ends meet. Census data from 2008 puts the national poverty rate at 13.2 percent, the highest level since 1997. For racial and ethnic minorities, the poverty rate is significantly worse: for blacks, the rate is 24.7 percent and for Latinos, the rate is 23.2 percent. As the recession and long-term unemployment take their toll, poverty is expected to climb. Solutions to cut poverty must be far-reaching and not only ameliorate immediate distress but also address long-term structural issues such as the need to build pathways to education and good jobs. As part of its broader 2010 federal policy agenda, CLASP recommends that Congress and the Obama Administration take the following steps to reduce poverty.
Establish a poverty target. A poverty target is a numerical goal with a deadline that creates a shared vision that tackling poverty is a priority. An effective target draws ongoing political and public attention to whether, and how much, progress has been made at different points before the deadline. Thus, a poverty target serves as a tool to propel policy solutions and investments that reduce poverty. For example, analysis by the Center for American Progress (CAP) demonstrates that the nation's poverty rate could fall 26 percent through improvements in four areas: minimum wage, the Earned Income Tax Credit, child tax credits, and child care subsidies. Other policies such as asset building, access to sound financial services, and a modernized unemployment insurance program could help achieve a 50 percent reduction according to the analysis.
Overhaul the federal poverty measure. The federal government should overhaul the official poverty measure to truly capture the extent of poverty in the United States. The current federal measure is antiquated, set too low and, fails to account for millions more families who seriously struggle to meet their basic needs. The poverty measure is based on a 1960s formula that considers how much American families spend on food. The measure has been updated to reflect inflation but not to capture how family expenses have changed. Food accounts for a smaller part of family budgets today, but other costs such as housing, health care, child care and transportation have risen. In addition, the formula doesn't consider policies and other sources of income that can help move people out of poverty such as the Earned Income Tax Credit and child care subsidies. The measure should be updated to more accurately reflect today's economic realities. At the same time, new types of measures, including those that provide relative income poverty status and those that measure families above poverty who struggle to make ends meet, are also needed to fully capture the extent and nature of poverty in the U.S.
Identify and create measures to address issues of well-being beyond income status. Poverty in the United States is typically considered to be synonymous with income. Progress on outcomes such as adult literacy or barriers such as high dropout rates within communities should be measured. Efforts are underway to develop mixes of measures and ways to understand complex data. As an integral part of poverty reduction efforts, the Obama administration should provide technical assistance to states to identify such measures and provide leadership to assess new measures. This assistance would enable states and the nation to capture improvements that build prosperity but do not immediately translate into income gains.