When It Comes to Fighting Poverty, We Actually Agree on A Lot

By Josh Bandoch

The American Dream is grounded in the idea that everyone ought to be able to pursue happiness. That idea has positioned the United States as a land of opportunity, motivating countless millions to flock here for over two centuries.

Yet the notion that we can all enjoy prosperity and success if we work hard enough is now under serious threat: a 2023 survey by The Wall Street Journal and NORC at the University of Chicago revealed only 36% of voters believe the American Dream is still achievable, down from an already worrying 53% in 2012.

With 37.9 million Americans living in poverty every day, it’s no surprise this dream looks like a mirage for so many. That’s especially true in urban environments such as Chicago, where I live and where prosperity is simply out of reach for too many individuals. While the overall poverty rate in America is already an unacceptably high 11.5%, in Chicago it is an even worse 17.2%. That means over 450,000 Chicagoans live with poverty daily. Their unjust situation threatens the American Dream itself.

For far too long – since at least the 1960s, when the War on Poverty’s expansive and expensive social welfare policies really hit their stride – we’ve mistakenly thought the answer to poverty was to spend more money. Since then, we have spent more than $12 trillion to help the poor by establishing and expanding programs like Medicaid and food stamps to help the truly needy. And yet poverty rates have stubbornly remained between 11% and 15%. Chicago’s poverty rate of 17.2% today is significantly higher than the city’s 12% rate was in 1960.

Worse still, the War on Poverty has become a war on dignity. Policies intended to alleviate poverty have stripped millions of Americans of purpose by disincentivizing work. America now has over 35 million able-bodied adults enrolled in programs like Medicaid and food stamps. That so many who can work opt for these and other government assistance programs siphons off over $400 billion annually from those who truly need those programs.

Disincentivizing work and stripping these individuals of dignity is wrong, it needs to change and it can change. Indeed, amid failed policies and unnecessary suffering there is reason for tremendous hope that a solution to poverty is within our grasp, especially in Chicago and other poverty-stricken urban areas.

From left-of-center think tanks such as the Brookings Institution, Urban Institute and Progressive Policy Institute, to right-of-center public policy groups such as the American Enterprise Institute and the Alliance for Opportunity, there exists remarkable consensus on how to empower individuals to rise out of poverty and into prosperity.

This consensus centers on seven “macro” solutions to poverty:

1)    Empower people through the dignity of work.

2)    Prepare individuals for the future of work through education and workforce development. (This issue is widely overlooked in the research on poverty.)

3)    Remove barriers to work, especially occupational licensing and burdensome regulations.

4)    Ensure the educational system prepares students for careers, particularly in industries that need more workers, through effective workforce development programs such as apprenticeships.

5)    Restructure safety net programs to empower people to rise out of poverty, including through rigorous program evaluation.

6)    Promote affordable housing, including through zoning reform.

7)    Promote family formation and stability, including by making it easier for people to follow the “success sequence” of education, job, marriage and then children.

While there are certainly disagreements about how to execute these solutions, this is greatly overshadowed by the overlap in approaches and the notable consensus that exists around the solutions themselves. I detail them in a new report for the Illinois Policy Institute. Let me briefly describe each in turn, starting with the importance of work.

Intuitively, we know that if you work hard and earn a living, you probably won’t be poor, especially once you establish yourself in the workforce. This is not just common sense; the data also bear it out. In Chicago, for instance, employment status by far is the single-biggest factor determining whether someone is in poverty. Chicagoans age 16 and older who worked full-time, year-round in 2022 had a poverty rate of only 2.3%.

By contrast, the poverty rate for those who were unemployed (i.e. looked for work and did not find it) was 39.7%; and for those who worked part time, it was 20.7%. Figures like these offer a strong argument for why we need policies and government programs that encourage individuals to work, including work requirements for able-bodied recipients of government benefits.

But we need to do more than just encourage people to work or even provide good jobs. That’s because the nature of work is constantly changing due to innovation, technology, economic shifts and other developments. Given this constant churn, it is vital that workers be prepared to meet these changes so we don’t “solve” poverty today, only to see it reemerge later because workers’ skills cannot sustain their careers throughout an ever-evolving economy.

We need to study workforce trends to identify needs in five, 10, and perhaps 20 years, and around preparing enough individuals for the jobs of tomorrow, while also meeting the needs of employers today. For example, schools need to align coursework with the growing need for students to have technical skills, especially in STEM fields.

Meanwhile, we know that while work empowers people to prosper, it can be tough to rise out of poverty even when conditions are favorable. The last thing the poor and disadvantaged need is for the government to make it harder for them to find and do their work. The distressing reality, however, is that the government often shackles people’s potential. That’s unjust. One particularly unfair mechanism the government uses to make it harder for people to work is occupational licensing.

A 2015 White House report issued during the Obama administration estimated over 1,100 occupations required a license in at least one state. Research from the Brookings Institution contends occupational licensing has spread to around 30% of the U.S. workforce, up from just 5% in the 1950s. In Illinois, 24.7% of all occupations are licensed, and another 5% of the state workforce has some kind of certification. Policy reforms such as repealing and reducing licensing barriers would offer more opportunities to millions of poor Americans.

Education is also key. With an excellent education, students get the tools they need for empowerment and a pathway to prosperity. But we need an educational system that puts careers and skills, not degrees, first. That requires both better schools and a new policy direction.

Sadly, public schools are failing poor students all over the country, including in my hometown of Chicago. The 2023 Illinois Report Card, for instance, shows that only 22.3% of 11th grade students in Chicago Public Schools met or exceeded proficiency levels on the SAT in reading in 2023. Only 19.1% achieved proficiency in math. The math score comes as no surprise because only 30% of eighth graders passed Algebra I. Despite those poor scores, the graduation rate was 83%. That means students are getting passed through a failing system without acquiring the skills they desperately need.

There are two ways to fix our broken education system. First, as many states have recently recognized, school choice, while not a panacea, is a good first step toward immediately helping students and their families find alternate educational options and injecting much-needed competition into failing and unresponsive public school systems.

Second, our educational system needs a reorientation, away from a misguided “college is best” approach and move towards a “career training first” model that employs apprenticeships and other skills-based training programs to prepare students for meaningful work throughout their careers.

In addition to rethinking education, we need to restructure safety net programs. As already noted, the sad, stark reality of many of these programs is that they perversely make people dependent on government payments and rob them of not only of their self-reliance but their dignity as well.

Three promising proposals that empower people to thrive are 1.) eliminating the “benefits cliff”, which is an increase in a person’s income triggers the immediate loss of benefits and thereby discourages the poor from working and trying to make more money 2) administering workforce services more effectively, along the lines of Utah’s “one door” model, where aid is focused on helping recipients find work; and 3) rigorously evaluating the effectiveness of all programs through data collection and analysis.

The poor and disadvantaged also need to be able to put a good roof over their heads. That is why ensuring affordable housing is another key to defeating poverty. Unaffordable housing is due in large part to bad housing policies. Fortunately, there is agreement across the ideological spectrum about one particularly bad policy that needs reform: zoning and local land use laws. These laws regulate where and what kind of housing can be built in an area. In many places, it is illegal to build anything but detached single-family homes.

Progressive Policy Institute scholar Richard Kahlenberg has detailed the perverse nature and origins of these laws: they favor the rich and others in upper income brackets who can afford detached single-family homes and hurt the poor, young and minorities. To provide more affordable housing, we need to ease zoning and land use restrictions to make it is easier to supply more multi-family housing.

We also need to remove barriers to housing construction, like “in-lieu fees,” in which local governments offer developers of residential housing the “choice” of either building some unprofitable “affordable housing” in their development or paying in essence a fee or financial penalty to the local government. Whatever choice the developer makes, the cost of construction is higher than it needs to be.

The pathway to prosperity is not merely an economic one; it also is social and in particular is driven by family formation. Family structure is a critical element in determining whether someone is in poverty and whether they will stay there. We need to support strong family structures and support those who lack them.

What’s the best way to do that? The answer is to promote what is known as the “success sequence.” This sequence, which was popularized by two Brookings Institution researchers, Ron Haskins and Isabell Sawhill, involves finishing high school, getting a full-time job, getting married, then having kids. People who follow this sequence have a poverty rate of about 2%.

Public policy makers should focus in particular on the first two steps in the sequence: finish high school and get a full-time job. They can do so by implementing many of the reforms already mentioned in this essay as well as investing sufficient resources in ensuring children finish high school, including by reducing chronic absenteeism, ensuring education excellence so students are prepared to find work that will allow them to enter the middle class, and eliminating disincentives to marriage, such as the marriage tax penalty.

America needs to rediscover its roots and return to its optimistic position as the world’s pre-eminent land of opportunity, where all people can discover and unleash their potential. In an age of ever grater polarization, that probably seems unlikely, maybe even impossible. Happily for those most in need of empowerment, and for the very idea of the American Dream, these seven solutions establish a bipartisan working agenda to empower people to rise out of poverty and into prosperity.

Originally published by Discourse magazine, a publication of the Mecatus Center at George Mason University. Republished with permission.

For more Budget & Tax News.