The Fight for Job Creation and the Path to Shared Prosperity
Avril Lighty
Low-income families continued to face a broad array of challenges in 2011, from a decline in quality jobs to persistent high employment. Many economists, civil rights organizations, and advocates for low-income families argued that revenue increases and investments to create jobs and spur economic growth now would be far preferable to years of continued sluggish job growth and high unemployment. But protracted congressional debates over the debt ceiling and deficit reduction provided little encouragement for Americans struggling to make ends meet.
While the White House’s comprehensive job creation legislation struggled to gain traction in Congress, a late-summer protest in a New York City park called Occupy Wall Street sparked a national grassroots movement that brought renewed attention to income inequality and the problems of people at the bottom “99 percent” of the income scale. In the fall, civil rights and anti-poverty advocates unveiled a comprehensive roadmap designed to cut poverty in half while increasing economic security over the next decade. As the first session of the 112th Congress came to a close, however, major policy fights brewed over an extension of long-term unemployment benefits and a payroll tax cut.
Poverty and Unemployment in the U.S.
More than two years after the recession officially ended in
June 2009, unemployment remains high, job growth is stagnant, and millions of
Americans are living in poverty.
The number of people living in poverty has risen by nearly nine million since the start of the Great Recession in 2007. The latest census data revealed that in 2010, 46.2 million people were living in poverty, the most since the Census Bureau began tracking poverty 52 years ago. The poverty rate of 15.1 percent is the highest it’s been since 1993. More than one in five children nationally lived in poverty. And the share of Americans in deep poverty—with incomes below half of the poverty line—also reached an all-time high.
One-quarter of all jobs in the U.S. don’t pay enough to support a family of four, according to the National Employment Law Project (NELP). Today’s federal minimum wage of $7.25 an hour would need to be at least $10.34 an hour to have the same purchasing power it had 40 years ago. Yet median incomes declined by 2.3 percent in 2010 and almost three million more Americans fell below the official poverty line—defined as an annual income below $22,314 for a family of four.
The nation’s most vulnerable communities have been hit the hardest. The median wealth of an average White family in 2009 was 20 times greater than that of the average Black family, and 18 times greater than for an average Latino family. That’s the largest wealth gap recorded since the government began collecting the data a quarter of a century ago, and twice what it was before the start of the Great Recession.
In 2011, the unemployment rate hovered around 9 percent before falling to 8.6 percent in November, a drop primarily attributed to a reduction in people actively seeking work. While the sluggish economic recovery generated some job growth, almost half of new jobs have been in low-wage industries, while higher-wage industries have accounted for only 14 percent of recent growth, according to NELP.
Anti-poverty advocates argue that the best way to address wealth inequality and child poverty is to create jobs that provide decent wages, benefits, and a pathway out of poverty for heads of households. “We know that poverty diminishes children’s success in school, and more recent evidence confirms that it can even dampen their earnings as adults,” Erica Williams of the Center on Budget and Policy Priorities (CBPP) wrote in an analysis of child poverty. “The rising share of children growing up in poverty undermines one of the key ingredients to a strong economy and shared prosperity: our human capital.”
Congressional Efforts Fall Short
Millions more Americans would have
fallen into poverty or become uninsured due to the economic decline if not for
programs such as unemployment insurance, food stamps, the Earned Income Tax
Credit (EITC), and Medicaid. Analysis from the CBPP shows that just seven
provisions for low-income families in the 2009 American Recovery and
Reinvestment Act kept more than six million Americans out of poverty in 2009.
At the end of 2010, the lame duck 111th Congress extended federal unemployment benefits for one year while approving a two-year extension of Bush tax cuts, which disproportionately benefit the wealthy. Congress also approved a one-year cut the payroll tax paid by all workers that funds Social Security.
In 2011, however, a newly emboldened House Republican majority announced budget plans that took aim at domestic program funding as a way to reduce the federal deficit. Republicans—backed by the conservative tea party movement—resisted numerous proposals to balance program cuts with revenue increases, which they opposed. This led to several proposals seeking draconian cuts to government programs that provide a safety net for struggling middle- and low-income families.
The aggressive focus on cutting government spending forced civil rights groups and advocates for low-income families to defend existing social safety net programs. The Coalition for Human Needs, for instance, rallied national and local advocacy groups, service providers, faith-based organizations and others to join the SAVE (Strengthening American’s Values and Economy) for All coalition, which worked throughout the year to counter attacks on Medicare, Medicaid, Social Security, Head Start and other critical programs.
Those attacks were especially fierce from the political right wing, which argued that helping low-income families not only undermined job growth but was unnecessary. The Heritage Foundation, for instance, released a report relying on old, pre-2007 data, which focused on the types of appliances in low-income households—everyday items such as refrigerators, air conditioners and microwave ovens—as if these were items of luxury.
Low-income advocates fought back. Half in Ten—a joint project of the Coalition on Human Needs, the Center for American Progress, and The Leadership Conference—noting the rising costs of such real basics as child care and out-of-pocket medical costs, began highlighting the stories of everyday Americans living in poverty and how social programs help them survive. In June, leading up to the 10-year anniversary of the 2001 Bush tax cuts, Half in Ten released an interactive map documenting testimonies of Americans affected by programs under siege in the deficit-reduction debate. The map, entitled “Road to Shared Prosperity,” pairs data on each state’s economic situation with personal stories like those of Rep. Gwen Moore, D. Wis.:
“I was poor … I was eligible for welfare and I was also able to continue my education and receive Aid to Families with Dependent Children to prepare myself for a work career. So yes I received food stamps, yes I received welfare, but I’ve paid so much more back in taxes to the United States of America than I ever took and have made a contribution to my community.”
In July, Congress and the White House reached a deal that permitted the statutory debt ceiling to be increased in exchange for $1 trillion in spending cuts over 10 years with no additional revenues. The deal also omitted any additional help for the unemployed or the economy in general.
The deal also stipulated the creation of a bipartisan Joint Select Committee on Deficit Reduction, also known as the “super committee,” which was charged with finding another $1.2 trillion in deficit reduction. Civil rights groups and advocates for low-income Americans feared that essential safety net and opportunity programs, including food stamps, Supplemental Security Income, education, Head Start, child care, jobs programs, environmental protections, low-income housing, and unemployment compensation—would be sacrificed in the negotiations. But the supercommittee failed to reach agreement, an outcome many advocates cheered. “Simply put, no deal is better for America than a bad deal,” said Nancy Zirkin, executive vice president of The Leadership Conference.
A Path to Prosperity
With the budget debate behind him,
in September, President Obama proposed the American Jobs Act, a comprehensive
legislative initiative designed to put people back to work and strengthen the
economy. The Leadership Conference and its coalition partners strongly supported the bill. After the Act stalled due to congressional obstruction,
lawmakers supportive of the president’s agenda sought to move discrete pieces
of the package as separate legislation. Only one piece passed Congress,
however, and in November, Congress passed and the president signed the VOW to
Hire Heroes Act, which focused specifically on job creation for veterans.
The Brookings Institute estimates that by mid-decade, the aftermath of the Great Recession will drive an additional 10 million people into poverty, six million of them children. The Leadership Conference and other advocates for low-income communities argue that the nation can have a different outcome if it summons the political will to deal forthrightly with the issue. That is a key conclusion of a new Half in Ten report, “Restoring Shared Prosperity: Strategies to Cut Poverty and Expand Economic Growth,” which starts the campaign’s clock on the goal of cutting poverty in half in ten years and establishes metrics to track the nation’s progress in creating good jobs, strengthening families and communities, and ensuring economic security. The report details policy recommendations to ensure pathways out of poverty for millions of Americans, such as creating more decent-wage jobs, investing in nutrition assistance programs, supplying sufficient affordable housing units, expanding child-care assistance, and other foundational supports for American families.
In the near term, prospects for such relief look uncertain. Congress will be starting the 2012 session having nearly shut down the government over a standoff between lawmakers on extensions of the payroll tax cut and emergency unemployment benefits. But as Secretary of Labor Hilda Solis has observed, many Americans have grown weary of congressional gridlock. “Americans are frustrated that one political party is blocking progress on the single most important thing we can do to fight poverty: create more jobs,” said Solis at the October 26 launch event for the Half in Ten report. “At Half in Ten, you’re right that we can’t separate the poverty discussion from the discussion about economic opportunity. Good jobs are the single best solution to poverty.”
Avril Lighty is the communications associate for The Leadership Conference on Civil and Human Rights and The Leadership Conference Education Fund.
