Four Things Government Could Do to Ease Poverty

Anti-poverty spending has soared while poverty rates have held steady. It's time to try something new.


The Census says 46 million Americans remain mired and poverty, and this is greeted as good news, because demographers had been expecting worse. About 15 percent of Americans are poor. That is the same ratio as in 2010 – and slightly higher than in 1966, despite the $16 trillion Washington has spent fighting poverty since Lyndon Johnson declared war on it. 

Jeffrey Miron, writing last year in National Affairs, notes that "if the $1.45 trillion in direct [federal] anti-poverty spending in 2007 had been simply divided up among the poorest 20 percent of the population, it would have provided an annual guaranteed income that year of more than $62,000 per household." Unfortunately, "much of the redistribution goes to middle-class families," while more is siphoned off to pay for the operation of the various programs aimed at fighting poverty.

"Fighting poverty" means at least two things: (1) alleviating the suffering of the poor by providing food, shelter, and other material necessities, and (2) actually reducing the ranks of the poor. Poverty programs are reasonably good at (1) and terrible at (2).

They are terrible at (2) because they cannot impose the one condition most likely to help people escape poverty: marriage. Families headed by a single parent are six times more likely to live in poverty, according to the Heritage Foundation. (Don't trust Heritage? The Brookings Institution largely agrees: "Children in female-headed families are four or five times (depending on the year) more likely to be in poverty than children in married-couple families.") And while anti-poverty spending has climbed steadily in the past three or four decades (see nearby chart), so has unwed parenthood.


(Source: http://www.nationalaffairs.com/publications/detail/rethinking-redistribution)

That is one reason income gains in recent years have accrued to better-off households: Those households have more married couples. The richest 20 percent of households contain almost 25 percent of the population, while the poorest 20 percent of households contain only 14 percent of the population. By household, there would be wealth inequality even if everyone were paid exactly the same.

The government cannot, and should not, force people to get married. But there are some things it could do to make climbing the economic ladder easier, such as:

(1) Call a cease-fire in the war on drugs. Although more white Americans than black Americans are poor, poverty and unwed parenthood are more acute in the black community, and the black community is disproportionately hurt by the drug war. According to the Charlottesville-based Rutherford Institute, whites use drugs at higher rates than blacks, but the black incarceration rate for drug crimes is 10 times that of whites. Doing prison time not only makes it harder to get a job, it also impedes wealth accumulation: People in prison aren't building home equity or 401(k) savings. And locking up black men for minor offenses only makes the marriage problem worse.

(2) Reduce barriers to work. According to the Arlington-based Institute for Justice (IJ), in the U.S. it takes an average of 33 days to get certified as an EMT who makes life-or-death decisions. Yet the national average to get a cosmetology license is 372 days – and thousands of dollars in schooling. The 49 states that license nail technicians require an average of 87 days' worth of training. Until IJ began filing lawsuits, even hair braiding sometimes required expensive cosmetology certification. Many other entry-level occupations also are walled off by strict licensing rules that are often supported by industry insiders fearful of competition.

Another barrier to work? Obamacare. The Patient Protection and Affordable Care Act forces all companies with 50 or more employees to offer health insurance. That hikes the cost of a new hire by several thousand dollars. What's more, next year the law will require minimum annual coverage of $2 million, and forbid all coverage caps in 2014. That will eliminate the "mini-med" plans currently offered by employers such as McDonald's and unions such as the United Federation of Teachers. (Both McDonald's and the UFT received one-year waivers last year.)

(3) Give zoning a break. Anti-poverty advocates often demand horrendously expensive public transit systems so poor people can get to jobs. Yet one reason jobs are hard to reach is overly restrictive zoning policies that segregate residential and commercial activity. Look up some city photos from the turn of the 20th Century and you'll see buildings with shops on the lower level, and apartments above. People didn't need billion-dollar light-rail lines to get to work – just some stairs. Progressives who complain about the lack of jobs and cheap, healthy food in the inner city also ought to reconsider their knee-jerk opposition to Walmart, which delivers both.

(4) Fix the schools. After marriage and a job, education is the best road out of poverty. Redistribution is a zero-sum game, but improving human capital enables economic growth that benefits everyone.

Teachers can't make students learn, but government can makes schools teach. Granted, doing so can be hard – as the Chicago teachers' strike shows. More competition would help. More money probably won't: Adjusted for inflation, since 1970 the cost of a K-12 public education per student has roughly tripled, while achievement has remained flat. By the same token, anti-poverty spending during the same period has soared while poverty rates have held steady. If that is mere coincidence, it is a remarkable one.