From Poverty to Prosperity

When Hurricane Katrina struck in August 2005, “it revealed that in one of the nation’s proudest cities, racial and economic disparities were enormous. Tens of thousands of families were living in severe poverty, jobless, and unable to afford transportation out of town or a night  in a motel as disaster approached.” In an economy that produces $13 trillion annually, 37 million Americans still live below the official poverty line. “Millions more struggle each month to pay for basic necessities or run out of savings when they lose their job or have a health emergency.” Last year, the Center for American Progress put together a Task Force on Poverty, gathering “a diverse group of national experts and leaders to examine the causes and consequences of poverty in America and make recommendations for national action.” Today, the Task Force released its final recommendations in a report — “From Poverty to Prosperity” — which calls for “a national goal of cutting poverty in half in the next 10 years and proposes a strategy to reach that goal.”

• Poverty in America is bad, and it is getting progressively worse. There are more Americans living in poverty today than there are total people living in the state of California, the most populous state in the nation. The number of poor Americans has grown by five million in the past six years, while inequality has reached historically high levels. The richest one percent of Americans in 2005 had the largest share of the nation’s income — 19 percent — while the poorest 20 percent of Americans had only 3.4 percent of the nation’s income. Though the number of poor Americans in deep poverty has climbed slowly but steadily in the past three decades, a study by the American Journal of Preventative Medicine found that since 2000, “the number of severely poor has grown ‘more than any other segment of the population.'” In 2005, 16 million people — 5.4 percent of all Americans — had incomes below half the poverty line. The number of Americans living in such extreme poverty grew by over three million between 2000 and 2005, and the share of poor people living in extreme poverty is now greater than at any point in the last 32 years.

• There are proven, cost-effective means for combating poverty and building a stronger middle class. The task force took four of its 12 recommendations and partnered with the Urban Institute to model their effects on poverty. By enhancing the Earned Income Tax and Child Tax Credits, indexing the minimum wage to half the average hourly wage, and expanding child care support for working families, the Institute estimates that poverty levels would be cut 26 percent. This translates into nine million fewer people in poverty and a national poverty rate of 9.1 percent — the lowest in recorded U.S. history. The racial poverty gap would be narrowed. Child poverty would drop by 41 percent. The number of people in extreme poverty would fall by over two million. And millions of low- and moderate-income families would benefit.

• We cannot expect to reduce poverty and strengthen the middle class without a serious federal strategy and coordinated effort, but that does not mean an extensive new bureaucracy or more government programs. Our country has made great strides against poverty in the past. Amid the strong economy of the 1960s and the War on Poverty, the poverty rate fell from 22.4 percent to 11.1 percent between 1959 and 1973. In the 1990s, a strong economy was combined with policies to promote and support work; the poverty rate dropped from 15.1 percent to 11.3 percent between 1993 and 2000. In these periods, a near-full employment economy, sound federal and state policies that focused on rewarding work, individual initiative, supportive civic institutions and communities, and a sustained national commitment led to significant progress. Smart policies to fight poverty will actually increase the value of work and the commitment to work and help low-income families become more economically self-sufficient in the long run.