Brainstorming Anti-Poverty Programs

Brainstorming Anti-Poverty Programs

Timothy Taylor 27/06/2018 6

There are legitimate concerns about how the poverty line is set. It was set back in the early 1960s and adjusted for inflation since then, but without regard for other changes in the economy.

It doestn't vary according to regional differences in the cost of living and it doesn't include in-kind benefits like Medicaid and food stamps. It is based on income levels, rather than consumption levels (or see also  here). At least for a bloodless social scientist, it's possible to become focused on these conceptual issues to such an extent that basic empathy for those living with very low income levels gets crowded out. But just as one should remember that the poverty line is an arbitrary but useful convention, one should also remember that households living with very low income levels have a hard time.

Thus, it seems to me a profoundly useful exercise, every now and then, to set aside the questions of how to measure poverty and instead to focus on what might be done about it. In that spirit, the Russell Sage Foundation Journal for the Social Sciences has put together a special double issue on the theme of  "Anti-poverty Policy Initiatives for the United States" (February 2018, vol 4, issues 2-3). After an overview essay by Lawrence M. Berger, Maria Cancian, and Katherine Magnuson, the two issues include 15 papers with a wide range of concrete proposals: focused on children in low-income families, the elderly, renters, food stamps, the earned income tax credit, the minimum wage, subsidizing or guaranteeing jobs, postsecondary training and higher education, contraception, and more.

There's a lot to contemplate in these issues, and I'll list the table of contents, with links to specific papers, below. A number of the papers are focused on how to adjust existing programs at a moderate cost. Here, I'll just sketch a couple of proposals that think much bigger. 

For example, a "universal child allowance" means that any household with children, regardless of income level, would receive a per child payment from the government. Luke Shaefer, Sophie Collyer, Greg Duncan, Kathryn Edin, Irwin Garfinkel, David Harris, Timothy M. Smeeding, Jane Waldfogel, Christopher Wimer, Hirokazu Yoshikawa  lay out what such a proposal might look like in "A Universal Child Allowance: A Plan to Reduce Poverty and Income Instability Among Children in the United States."

The point out that the US has oriented much of it social safety net toward work, with the result that children in families where the adults don't work much can be very badly off. Their baseline proposal is to that every US family with a child  would be about $250 per month ($3,000 per year).  Because the allowance doesn't depend on income or hours worked, it is not reduced if an adult works more hours or gets higher pay. There is no need for a large bureaucracy to monitor eligibility and sliding-scale reductions in benefits.

Lots of other countries have enacted policies along these lines. They write (citations omitted):

Part of the reason that other nations have fewer poor children than the United States is that they provide what the OECD terms a universal child benefit—a cash grant that goes to all families with children. Austria, Canada, Denmark, Finland, France, Germany, Ireland, Luxembourg, the Netherlands, Norway, Sweden, and the UK have all implemented a version of a child benefit. Some call their measures child allowances (CA). Others implement their CA through the tax code as universal child tax credits. A notable feature of these universal child benefit plans is that they are accessible to all: families with children receive them regardless of whether parents work and whatever their income. The level of these child benefits varies by country. The benefit in U.S. dollars for two children in Belgium and Germany is about $5,600 per year; in Ireland $4,000, and in the Netherlands $2,400 (. Canada has a base child allowance, in U.S. dollars, of roughly $5,000 per child under six and $4,300 per child age six to seventeen ...  

To pay for the allowances, they would start by scrapping the existing "$1,000 per child per year Child Tax Credit and a $4,000 per child per year tax exemption (often referred to as the child deduction)," which as they point out mostly go to families with incomes well above the poverty line." This saves $97 billion.  The total estimated cost of the baseline proposal about $190 billion, so the additional spending needed would be $93 billion. For those who are skeptical about whether the money would actually benefit children, the author point to a body of evidence that for low-income families in particular, available cash seems to make a real difference in many measures of well-being. 

Another aggressive proposal is that the federal government should guarantee a job to everyone who wants one. Mark Paul, William Darity Jr., Darrick Hamilton, and Khaing Zaw sketch a proposal long these lines, and respond to some of the common concerns, in "A Path to Ending Poverty by Way of Ending Unemployment: A Federal Job Guarantee." Their proposal is: "Any American wanting a job, at any time, would be able to obtain one through the public employment program."

Their proposal is that local, state and federal governments would "conduct an inventory of their needs and develop a jobs bank. ... At the federal level, we anticipate a wide array of major public investment activities, which may include fostering a transition to a green energy economy, extending access to high-speed rail, improvements in our public park service, revival and product diversification for the postal service, and an increase in general services across the economy. At the state level, we anticipate the states to undertake major infrastructure investment projects, as well as projects to improve the services they offer to their citizens. At the local level, we expect communities to undertake community development projects, provide universal daycare, maintain and upgrade their public school facilities, and improve and expand the services provided by their libraries."

They envision that workers would be paid a starting hourly wage of of $11.56 per hour, plus health and retirement benefits. The program would have some room for promotions and pay raises, so they envision that the average wage about 35% above that level. Total cost of course depends on  how many people would come looking for these jobs. But their estimates for a time of fairly low unemployment, like July 2016 the costs could run $651 Billion to $2.1 trillion. On the other hand, anyone who takes this kind of job would have reduced eligibility for other kinds of government assistance: for example, they would no longer get Medicaid.  

As they emphasize, this job guarantee would be most useful to those who have the hardest time finding a job now. Moreover, the guaranteed federal job would become a floor for the rest of the labor market: if a private employer wanted to hire someone, you would need to offer at least as much as the federal job guarantee. Although they don't emphasize this point, it would be interesting to live in a US society where no one would be ever be able to say that they just can't find a job. 

I tend to be an incrementalist at heart, so both of these proposals stretch beyond my comfort level. I'm OK with the idea of a child allowance for a majority of families with children, but the "universal" part goes a little too far for me. The authors offer a number of choices that would hold down costs, and I'd be looking for more ways to do that. 

It would be fascinating to watch the politics of a job guarantee program evolve. There would certainly be concerns from a wide array of workers--from construction unions to day care workers-- that the government would use the cheaper guaranteed jobs to cut back on wages. Politicians would bid for votes by offering higher pay to the guaranteed job workers. They authors argue that concerns over phantom workers collecting paychecks are overblown, but I"m not so sure. Ultimately, I'm more comfortable with targeted job subsidies for employers (as discussed in other chapters). 

But whatever my specific preferences, these essays are the intellectual equivalent of splashing your face with cold water first thing in the morning. They offer a useful jolt and a wake-up call about what the shape of a serious anti-poverty agenda. 

A version of this article first appeared on Conversable Economist.

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  • Amber Diaz

    So much could still be done to our public educational system. Education improves individual and national productivity. It leads to better decisions in the lives of people including better family planning and the election of qualified presidents and other public servants.

  • Elias Brown

    Social insurance programs have had much stronger effects on reducing poverty rates than have social assistance programs.

  • Steve Mckean

    Anti-poverty programs have failed to alleviate poverty among single mothers and their children.

  • Nathan Trinh

    Excellent post !!

  • Claire Alexander

    It's not that these programs don't work, it's that conservatives are absolutely ego-centric, self-interested and genuinely believe they have no social obligation to their fellow Americans.

  • Rick Frazier

    I think the only ones standing up for anti-poverty programs are the likes of Bernie Sanders and Elizabeth Warren. The rest don't seem to care since their donners didn't tell them to. 

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Timothy Taylor

Global Economy Guru

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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