“During the recessions that occurred between 1980 and 1982, the national poverty rate increased by 2 full percentage points – more than 5 million persons entered poverty during that time. Poverty continued to increase after the 1982 recession officially ended, rising above 15% of the population in 1983. It wasn’t until 1998 that poverty rates returned to their pre-1980 levels. After a few years of robust economic opportunity in the late 1990s, poverty rates rose again during the jobless recovery following the 2001 recession. From 2001 to 2007, more than 4 million Americans fell into poverty because they were unable to find good paying jobs.
Today, we find ourselves in a position comparable to the early 1980s. What are the prospects for reducing poverty after we emerge from the current recession into recovery?
Although we assume poverty reduction is a policy goal for the Obama Administration and the Democratic Party, there are many reasons to be concerned about rising poverty levels and about the likelihood they will remain high.
One obstacle is political will. The focus today is on jump-starting the economy, ending two wars, shoring up financial markets, and pushing through health care reform. Success on these issues will be critical to future growth and development of our society, but even attempting to address these challenges comes with a heavy political price for Obama. As LBJ found during Vietnam, efforts to create a stronger safety net for working poor families is very difficult without political capital and popularity. Yet, if poverty reduction gets pushed to the next term, it will have to compete for space on the agenda with reducing record budget deficits and crumbling entitlements for retirees.
We should be honest though, reducing poverty is not exactly a top priority for the Left at this point. And, the broader public is unlikely to be concerned about poverty once unemployment rates begin to subside, housing markets appear stable, and investment portfolios regain most of what was lost since 2007.
A second obstacle to reducing poverty, however, is the very nature of the economy itself. When recovery comes, it again may be a jobless recovery where a wide swath of low- and formerly-middle income adults has difficulty finding good paying jobs even though GDP and the stock market are trending upward. We should expect it will be several years before the unemployment rates among individuals without college degrees return to pre-2008 levels. Even when jobs are found, many workers may find their job does not pay enough to lift their family out of poverty.
The weakened state of the nonprofit community also makes it difficult to fight poverty and help low-income families achieve greater economic well-being. Even though there have been few cuts to federal programs so far, the recession has hit every revenue source for nonprofit service organizations. State and local government budgets are cutting back, and the largest cuts to government funding for social services and antipoverty programs may be yet to come. In addition, private philanthropy is down and expected to remain down for the foreseeable future. Public and private funding cuts lead to what I refer to in my book as a “subtraction ripple effect.” Funding cuts don’t just translate into fewer clients getting help in the short-term. Instead, these cuts destabilize the operations of the nonprofit sector on which our safety net is founded and depends. Cuts today mean there will be fewer and fewer places to turn to for help next year when poverty rates are still on the rise.
Given the severity of the recession and the slow road ahead, poverty reduction needs to be more prominent on the policy agenda. If the country is to emerge fully from this downturn, we need to ensure that assistance is available to help the unemployed and underemployed deal with their economic troubles, find work, and increase their earnings so they may contribute to the recovery.”