On April 26, the House Ways and Means Subcommittee on Income Security and Family Support held a hearing on proposals to reduce poverty and improve economic opportunity in America.
In his opening remarks, Chair Jim McDermott (D-WA) said, “When income inequality continues not only to grow, but to accelerate, we should ask why and what can be done. When the number of Americans struggling in poverty climbs by over five million over the last five years, we should ask why and what can be done. When two-thirds of poor families have a working mother or father, we should ask why and what can be done. And when America has one of the highest poverty rates among all relatively prosperous nations, we should ask why and what can be done. Fortunately, a growing number of people have begun to ask these questions and suggest some answers.”
Ranking Member Jerry Weller (R-IL) said, “One senior member of the subcommittee has his doubts. He flatly stated in 2004 that ‘using a deficient poverty measure that fails to accurately reflect the impact of important economic, policy and societal changes may create misperceptions about the effectiveness of public policy and ultimately lead to misguided policymaking.’ It’s hard to argue with that…So today’s poverty rate, by failing to count literally tens of billions of dollars in anti-poverty benefits provides an ‘inaccurate’ picture of poverty.” Rep. Weller continued, “[A] better understanding of who is poor will allow policymakers to more accurately judge how current anti-poverty programs work. And we will then be better positioned to decide what changes are needed.”
After dismissing some of the “misleading ideas that define many discussions of poverty,” John Podesta, president of the Center for American Progress, recommended “a four-part strategy to fight poverty: promote decent work; ensure opportunity for all; ensure economic security; [and] help people build wealth.” Mr. Podesta explained: “We start from the belief that people should work, and that work should pay enough to ensure that workers and their families can avoid poverty, meet basic needs, and save for the future…Children should grow up in conditions that maximize their opportunities for success; adults should have opportunities throughout their lives to connect to work, get more education, live in a good neighborhood, and move up in the workforce…Americans should not fall into poverty during times when they cannot work or work is unavailable, unstable, or pays too little to make ends meet…all Americans should have assets to allow them to weather periods of flux and volatility and to have the resources that may be essential to upward economic mobility.”
Linda Gibbs, deputy mayor for health and human services in New York City, testified about the efforts underway in New York City to reduce poverty. Ms. Gibbs said, “I am encouraged by the success of welfare reform in helping single mothers transition to work and it serves as an example of how a large-scale government program can make a critical difference. However, it only provides a piece of the solution, leaving a gap in programs that target men in the same way.” She encouraged Congress to “increase the Child Care and Development [Block Grant] by a minimum of $6 billion over five years; restore funds to the Child Support Enforcement Incentive Grant program; remove restrictions on rehabilitation and other activities that were recently placed on TANF [Temporary Assistance for Needy Families]; allow states to integrate and count job search as an integral part of all TANF employment-related activities; and provide funds to measure poverty at the local level.”
Citing the Earned Income Tax Credit (EITC) as an effective tool in reducing poverty, Gordon Berlin, president and chief executive officer of Manpower Demonstration Research, said, “Over the next ten to twenty years, it is hard to imagine reducing poverty without finding a way to make low-wage work pay better. The compelling body of evidence…suggests that expanding the EITC, preferably in combination with a boost in the minimum wage, would be an effective way to supplement low wages.” Mr. Berlin continued, “There are essentially three options for expanding the EITC: increase the EITC for families with children and especially for large families; increase it for married couples only (in order to further reduce marriage penalties and incentivize marriage); or increase the EITC for individual wage workers,” but noted that the first two strategies do would do “little to address the companion problems of single parenthood, single men’s and women’s low wage earnings, or remaining marriage penalties in two-earner families.” Mr. Berlin added that “indexing the minimum wage to inflation…would forestall a quick return to the erosion in value [the minimum wage] has seen in the last decade.”
“If we could increase education, marriage, and work, poverty rates would fall substantially,” said Isabel Swahill, senior fellow of economic studies at the Brookings Institution. She continued, “More specifically, our research shows that if all able-bodied adults worked full-time, even at the wage they currently earn (or, if unemployed, at a rate commensurate with their education), poverty would plummet by 42 percent. We also analyzed the impact on poverty rates of increasing the marriage rate to the level it enjoyed in 1970 by simulating marriages between single males and females…The effect of this simulation was to reduce poverty by 27 percent.” Dr. Swahill added, “Insuring that everyone had a high school education reduced poverty by 15 percent. It had a less powerful effect than work and marriage. That said, I believe that education is more important than these results might imply because of its indirect effects on everything from improving health to opening up new employment opportunities and making people better parents.”
Lawrence Mead, professor of politics at New York University, said, “Most analysts think that the main forces behind [gains from the Personal Responsibility and Work Opportunity Reconciliation Act (P.L. 104-193)] were the new work tests in welfare; expanded support benefits especially EITC and the superb economic conditions of the 1990s. There is some debate about the relative importance of these factors, but everyone thinks that work requirements were essential to forcing change.” Dr. Mead added, “Government should follow the same general approach as it seeks to reduce poverty further. Neither ‘help’ nor ‘hassle’ will achieve much without the other. Government should not extend new benefits or opportunities to the employable poor without expecting work. Neither should it cut back spending, in an indirect attempt to force them to work. Rather, it should expect work directly while also providing the benefits people need to reorganize their lives around employment.”
Reverend Larry Snyder, president of Catholic Charities also testified.
