Fighting poverty, the Biden way
For too long the United States has badly misread the true nature of poverty. This misunderstanding has been steeped in the belief that the poor are lacking the right attitudes, motivation, skills and education, and that poverty is ultimately the result of individual failure. To avoid impoverishment, the poor are told that they must simply exert themselves and work harder.
In contrast, social science research suggests that the fundamental problem of poverty lies in the fact that there are simply not enough viable opportunities for all. While it is certainly true that individual shortcomings, such as the lack of education or skills, help to explain who is more likely to be left out in the competition to locate and secure good opportunities, it cannot explain why there is a shortage of such opportunities in the first place. To answer that question, we must turn to the inability of the economic and political structures to provide the supports and opportunities necessary to lift all Americans out of poverty.
For the past 50 years, presidential administrations have failed to recognize this dynamic. Rather, the emphasis has been on adjusting the incentives and disincentives surrounding the welfare system, while ignoring the larger structural issues. Emblematic of this was former President Bill Clinton’s legislation to “end welfare as we know it.”
Therefore, it has been quite refreshing to see the Biden administration’s emphasis on addressing the structural causes of poverty and inequality, rather than simply redressing individual shortcomings. A case in point is the newly implemented child tax credit, which provides families with children a monthly cash benefit of up to $300 per month over the next year. Most families with children will now qualify for this benefit, and it is estimated that child poverty can be cut by up to 45 percent as a result. A child allowance has long been in place in most European countries but is completely novel to the United States. It recognizes the importance of economic support in the raising of children. Such assistance can be a lifesaver in protecting children from the ravages of poverty.
Although it is currently scheduled to end after a year, the hope is that the child tax credit will continue. President Biden has proposed a four-year extension, and Democrats are looking to make it permanent. In doing so, it would represent a significant social policy change. As Sen. Cory Booker (D-N.J.) recently said, “It’s the most transformative policy coming out of Washington since the days of F.D.R.”
Another Biden initiative is the effort to raise the minimum wage up to $15 per hour. Far too many Americans are working at jobs that simply don’t get them out of poverty. In a recent analysis using Census Bureau data, my colleague Steve Fazzari and I found that for Americans between the ages of 25 and 59 currently in the labor force, 31 percent were working at a job that paid less than $16.50 an hour. By increasing the minimum wage up to a livable wage and indexing it to future rates of inflation, millions of workers will be lifted out of poverty. In addition, such a policy reinforces the principle that an honest day’s work should be rewarded by an honest day’s pay. Expanding the Earned Income Tax Credit (also proposed by the administration) can further support those who are working in low-paying jobs.
Another Biden proposal that will provide more opportunities for Americans is the administration’s infrastructure plan. In addition to generating good-paying jobs through the development of green technology, there is an emphasis placed on improving the social infrastructure of low-income Americans. This includes investing and upgrading the country’s housing stock, modernizing public schools and opening up access to good quality child care. The United States is clearly an outlier among the industrialized nations when it comes to providing these essential social goods for all of its citizens. In recognizing the importance of the social infrastructure, the Biden administration is again redirecting federal resources to attack the structural failings found today.
Taken as a whole, it is extremely encouraging to see a presidential administration, at last, proposing a range of policies designed to rectify the structural nature of poverty and inequality. Rather than simply focusing on who loses out at the game, the current administration is looking to address some of the root causes as to why the game produces losers in the first place.
Mark R. Rank is the Herbert S. Hadley professor of Social Welfare at Washington University in St. Louis. He is the co-author of “Poorly Understood: What America Gets Wrong About Poverty.”