January 24, 2013

U.S. Poverty Scenarios

Peter Kennedy
Partner

Nicholas Kristof cut a chunk of optimism out of my day today. The New York Times columnist cited the depressing – no other word comes to mind – statistic that the proportion of Americans living beneath the poverty line stands at 15 percent.  This is actually higher than it was in the late Johnson Administration despite, as Kristof points out, the nation having spent some $16 trillion on means-tested programs since that time. 

That doesn’t mean the money has been totally wasted – the poverty rate might well be substantially higher today without those government programs.  But it does point out the extent, and the seemingly intractable nature, of the problem.  It can’t help leaving even the most committed social reformers scratching their heads for answers.

True, the resumption of economic growth will help, once employers start hiring again.  And yet even before the Great Recession, the poverty rate was still over 12 percent.   Add to that sobering data point the fact that near- and medium-term economic growth and job expansion are expected to be very modest.  Nor will a jump in low-end service jobs change much over the long-term if there’s not the possibility of upward mobility.  This is the case today, with good new jobs that promise of middle-class lifestyle limited to people with university degrees or technical skill-sets. (Recent studies indicate that upward economic and social mobility in the United States now lags that in many European countries.)

Maybe, as Kristof urges, President Obama will attempt to redeploy Afghanistan war resources to do nation-building at home.  While that would certainly be consistent with the spirit of his second inaugural address, anything ambitious will be very hard to pull off in the current political and budget environment. Perhaps the best that the Administration can hope for is to keep the deficit hawks at bay, protect the programs that help the most vulnerable groups, and innovate on the margins with promising new early-intervention initiatives – especially those that focus on child-rearing, pre-school and elementary education.

The daunting scenario-planning challenge is to imagine a substantial reduction in U.S. poverty in the years ahead.  Indeed, it’s somewhat easier to make the case for the more negative scenario of poverty continuing to rise.  But let’s not go there now.  We are bound to be surprised by something in the next four years – maybe even positive, substantive developments on the socio-economic front that are not yet apparent at the start of Barack Obama’s second term.  Anyway, let’s hope so.

Comments  | 

Walt Sandell
What will happen to unemployment and poverty rates when the military is cut?
Both unemployment and poverty rates will go up, undoubtedly, but it's hard to tell by how much. Depends on what the economy is doing and a host of other factor, including efficacy of incentives to hire vets. But it's a great question, Walt.
Mark Safford
This may offer us a great opportunity to offer a "New G.I. Bill" with educational incentives and programs designed to train veterans in the skills US employers need the most. This program could then be extended to a wider audience within the USA.

Thoughts?