[Joint House and Senate Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 110-810
LEAVE NO FAMILY BEHIND: HOW CAN WE
REDUCE THE RISING NUMBER OF AMERICAN FAMILIES LIVING IN POVERTY?
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 25, 2008
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
SENATE HOUSE OF REPRESENTATIVES
Charles E. Schumer, New York, Carolyn B. Maloney, New York, Vice
Chairman Chair
Edward M. Kennedy, Massachusetts Maurice D. Hinchey, New York
Jeff Bingaman, New Mexico Baron P. Hill, Indiana
Amy Klobuchar, Minnesota Loretta Sanchez, California
Robert P. Casey, Jr., Pennsylvania Elijah Cummings, Maryland
Jim Webb, Virginia Lloyd Doggett, Texas
Sam Brownback, Kansas Jim Saxton, New Jersey, Ranking
John Sununu, New Hampshire Minority
Jim DeMint, South Carolina Kevin Brady, Texas
Robert F. Bennett, Utah Phil English, Pennsylvania
Ron Paul, Texas
Michael Laskawy, Executive Director
Christopher J. Frenze, Minority Staff Director
C O N T E N T S
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Members
Hon. Shelton Whitehouse, a U.S. Senator from Rhode Island,
invited to attend hearing...................................... 1
Hon. Carolyn B. Maloney, Vice Chair, a U.S. Representative from
New York....................................................... 2
Witnesses
Statement of Hon. David N. Cicilline, Mayor, city of Providence,
Providence, RI................................................. 4
Statement of Dr. Rebecca M. Blank, Robert S. Kerr Senior Fellow,
Brookings Institution, Washington, DC.......................... 6
Statement of Angela Glover Blackwell, founder and CEO, PolicyLink
Center for American Progress, co-chair, Task Force on Poverty,
Oakland, California............................................ 9
Statement of John W. Edwards, Jr., chairman, Community Action
Partnership, Inc., Washing, DC; executive director, Northeast
Florida Community Action Agency, Inc., Jacksonville, Florida... 11
Statement of Robert E. Rector, senior research fellow, The
Heritage Foundation, Washington, DC............................ 13
Submissions for the Record
Prepared statement Carolyn B. Maloney, Vice Chair................ 34
Prepared statement of Senator Charles E. Schumer, Chairman....... 36
Prepared statement of Hon. David N. Cicilline, Mayor, city of
Providence, Providence, Rhode Island........................... 39
Prepared statement of Dr. Rebecca M. Blank, Robert S. Kerr Senior
Fellow, Brookings Institution, Washington, DC.................. 41
Prepared statement of Angela Glover Blackwell, founder and CEO,
PolicyLink Center for American Progress, co-chair, Task Force
on Poverty, Oakland, California................................ 50
Prepared statement of John W. Edwards, Jr., chairman, Community
Action Partnership, Inc., Washing, DC; executive director,
Northeast Florida Community Action Agency, Inc., Jacksonville,
Florida........................................................ 58
Prepared statement of Robert E. Rector, senior research fellow,
The Heritage Foundation, Washington, DC........................ 65
LEAVE NO FAMILY BEHIND: HOW CAN WE REDUCE THE RISING NUMBER OF AMERICAN
FAMILIES LIVING IN POVERTY?
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THURSDAY, SEPTEMBER 25, 2008
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The Committee met at 10 a.m. in room SD-562 of the Dirksen
Senate Office Building, the Honorable Carolyn B. Maloney,
presiding.
Representatives present. Maloney and Hinchey.
Staff present: Christina Baumgardner, Heather Boushey, Nan
Gibson, Gretta Goodwin, Colleen Healy, Aaron Kabaker, Tyler
Kurtz, Dan Miller, Justin Ungson, and Jeff Wrase.
Vice Chair Maloney. The Committee will come to order.
Chairman Schumer is unable to attend today's hearing on
poverty, and has asked me to chair, and I want to thank all of
our witnesses for being here to testify.
I have heard from Senator Reed. He is going to try to get
here. He is involved in the entire financial situation, as is
Senator Whitehouse. I'm so thrilled that he is here for a
special welcome to the Mayor from the great State of Rhode
Island.
Before I go to my opening statements, I'm going to
recognize Senator Whitehouse and thank him for being here, and
let him welcome Mayor Cicilline, and have his opening comments.
OPENING STATEMENT OF HON. SHELTON WHITEHOUSE, A U.S. SENATOR
FROM RHODE ISLAND
Senator Whitehouse. Well, first, let me thank you,
Congresswoman Maloney, for your courtesy in allowing me to come
and intrude on this Committee. I'm not a Member of the
Committee, and it's a great courtesy on the part of you and
Chairman Schumer, to allow me to do this.
I appreciate it very, very much, and I'm delighted that you
have invited Mayor Cicilline from Rhode Island's capital city,
Providence, to be a part of this very important panel that you
have called together today.
We are seeing now--and one of the reasons everyone is so
busy today is that we are seeing now the consequence, the harsh
consequence of many years of truly awful economic policy by the
Bush administration.
We have caused this day to come, or I should more clearly
say, they have caused this day to come, and along the way,
there were many warning signs about what the Bush policies were
doing to our economy.
There is nowhere, I think, in this country where those
warning signs were felt more painfully, were felt earlier, were
heard more clearly, than in America's cities and by America's
mayors, where the pain from those policies has been evident for
a long, long period of time.
So the role of mayors now, in working toward a new sense of
economic fairness in this country, I think is vital, and I'm
delighted that David is here as a mayor. I'm particularly proud
of him because of the wonderful job that he's done in
Providence.
Providence has a bit of an interesting and challenging
history. I spent 3 years beginning and overseeing a criminal
investigation into public corruption of a predecessor of
David's. I spent many years trying to work with the Providence
Police Department, which had wonderful people, but which was a
deeply, deeply challenged institution, based on its leadership,
and he has in many different respects brought a new day to
Providence, and in particular, on these economic issues, where
he has reached out to the community and developed a variety of
strategies and institutions through which he is trying to
overcome the difficulties that the national economy has forced
on our cities, and keep Providence as a place just recently
recognized yesterday as one of the hundred best places in
American for young people to live.
And so I'm very delighted that he's here, and I again,
appreciate your courtesy in allowing me to welcome such a
prominent and respected Rhode Islander to your Committee.
Vice Chair Maloney. I thank you so much, Senator
Whitehouse. You honor us with your presence.
OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE CHAIR, A
U.S. REPRESENTATIVE FROM NEW YORK
I, particularly, want to thank Senator Kennedy for
requesting today's important hearing on poverty in America.
Senator Kennedy has devoted his career to being a strong and
vocal champion for the poor.
Our hearts go out to him and his family, and we wish him
well with his recovery.
I also want to thank each and every witness for being here
and for all of their hard work in combating poverty. Today, our
Nation's leaders are focused on the unfolding financial crisis.
Yesterday, in testimony before this Committee, Federal
Reserve Chairman Bernanke said that the United States is,
quote, ``facing grave threats,'' end quote, to financial
stability, and warned that the credit crisis has started to
damage household and business spending.
We need to act swiftly to pass the legislation that will
bring stability to our financial system, but also shield Main
Street from paying too high a price for the mistakes made on
Wall Street.
The financial crisis may seem far removed from the problem
of poverty. The bottom 80 percent of households only own 9.4
percent of all stocks, including stocks in retirement funds.
But the financial troubles on Wall Street have already been
working their way down to Main Street. Unemployment is rising,
and real wages are now as low as they were in September of
2001.
As Chairman Bernanke said yesterday, and I quote,
``Economic activity appears to have decelerated broadly.'' He
went on to say that if we do not address the financial crisis,
more jobs will be lost.
Poverty tends to rise and fall with the strength of the
economy. During the economic expansion of the Clinton era, when
unemployment hovered around 4 percent, poverty fell to 11.3
percent, its lowest level in decades.
However, the weak recovery of the 2000s under the current
Administration did not lead to further reduction in poverty,
and it now stands more than a full percentage point above its
2000 level.
Today in the United States, 1 out of every 8 people--over
37 million--is living in poverty. That so many of our citizens
toil in poverty is a testament to how far we need to go to
ensure that all of us enjoy the fruits of our economic growth.
The majority of people living in poverty are among the
working poor. Poverty in America is the result of millions of
jobs that do not pay enough to ensure families can make ends
meet.
Over a quarter of U.S. jobs pay very low wages and do not
provide health insurance or a retirement plan, according to the
Center for Economic and Policy Research.
Other nations have made great strides against poverty by
establishing clear policy agendas. For example, the United
Kingdom has embarked on an ambitious plan to cut poverty in
half in 10 years, and we should look to them as a model.
As they have demonstrated, reducing poverty, requires a
variety of policy steps, from raising the minimum wage and
expanding the earned income tax credit, to guaranteeing child
care assistance. Parenthood should not put you on a pathway
toward poverty.
We must ensure that everyone, including low-wage workers,
can find the right balance and not have to choose between their
children and a paycheck.
In recognition of this as part of their anti-poverty
agenda, the UK policymakers passed legislation that always
allows workers to request a flexible schedule. Senator Kennedy
and I have introduced similar legislation, the Working Families
Flexibility Act, and I hope we can work together to get it
passed in the next Congress.
To fight poverty, we must understand who is poor. Most
analysts agree that the U.S. poverty measure is outdated and
inappropriate for measuring true need.
Our measure does not take account of how taxes, non-cash
benefits, and work-related and medical expenses affect well
being.
Further, the U.S. poverty measure does not account for how
the cost of basic goods and services have changed since the
1960s, or how costs differ by geography.
Our panelists today will provide recommendations for
addressing the measurement issue.
I look forward to today's testimonies, to help us
understand how we can take action to reduce poverty in America.
I first would like to recognize and introduce Mayor David
Cicilline. Mayor Cicilline served four terms as a State
Representative from Providence's East Side where he earned a
reputation as a fierce champion of political reform and gun
safety and his dedication to ethics in government.
In 2002, David Cicilline announced his candidacy for Mayor
of his hometown of Providence, Rhode Island. Mayor Cicilline
swept a four-way primary election and went on to win the
general.
He graduated from Brown University and earned his J.D. from
the Georgetown University Law Center. I welcome Mayor
Cicilline, and you are recognized for 5 minutes.
[The prepared statement of Representative Maloney appears
in the Submissions for the Record on page 34.]
STATEMENT OF HON. DAVID N. CICILLINE, MAYOR, CITY OF
PROVIDENCE; PROVIDENCE, RHODE ISLAND
Mayor Cicilline. Thank you, Vice Chair Maloney. It's a
great honor to be here as a representative of mayors and other
elected officials from across the country who are working to
address the serious economic issues that are the subject of
this hearing.
For many generations, during those moments when America has
faced difficult economic times, some view our cities as our
greatest burden. In the national imagination, cities were
frequently viewed as the ball and chain of the national
economy, dragging America down.
Words like ``devastated,'' ``blighted,'' and ``ruined,''
were so often associated with the word, ``urban,'' that they
effectively became synonymous.
But something remarkable began happening a decade or so
ago. American cities began a striking comeback, benefiting from
effective Federal policies in the 1990s, as well as the
transition to a knowledge-based economy, and cities are again
the center of culture, innovation, and most of all, economic
growth.
Additionally, cities house our great scientific research
centers that will give birth to the innovations that will power
America with new forms of energy.
Also, contrary to most people's ideas about urban America,
cities are the greenest places we can live, based on existing
consumption patterns.
Cities are the solution, but as a Nation, we are not
tending our metropolitan garden. In recent news, the evolution
of cities has continued in spite of national policy, not
because of it.
As a result, we are severely restraining or metropolitan
transformation, at a time when we need to accelerate it. We
need a Federal partnership again.
Foremost among those constraints--without a doubt--is
poverty. Poverty is to a family and to a community, what
inflation is to an economy. Its consequences spill over into
everything else and have a lasting and devastating impact.
But what makes it worse is that there are effective
measures we know we can take to prevent poverty from
persisting. Not surprisingly, the headway we made on poverty in
the 1990s, coincided with this metropolitan comeback, but in
recent years, that headway has been reversed.
In my view, one of the reason for this is the sharp decline
in funding first focused on by the Children's Advocacy Group,
on whose advisory board I sit, who, in a recently released
report revealed that the share of non-defense spending on kids
has declined by a full 10 percent in just 5 years.
But I know you're presented with statistics and requests
for funding all the time. I just want to share with you my
perspective, as the Mayor, of the work that we're doing, and
that's currently working to reduce poverty in our community.
Many people view poverty as a complex and interrelated set
of problems. I view it very simply: Poverty is a lack of
opportunity, so to me, the fight is not so much a war on
poverty, as it is a war for opportunity.
The long-term answer does not lie in merely relieving the
stresses and pain of poverty; the long-term answer lies in
rebuilding upward mobility in America.
The wary for opportunity means rebuilding the economic
ladder. When there is upward mobility, there is hope. Families
will work harder to make sure their children are educated, stay
out of trouble, and develop a strong work ethic, but when there
is not, it creates an environment for many of the social ills
that can ruin lives and drive up the cost of social programs.
Unfortunately, all across the country, the economic ladder
has been badly weakened in recent years. It used to be that the
American dream was available to anyone who was willing to work
hard enough, but in today's economy, too many families are
doing everything right and still getting left behind.
At my second inauguration in 2006, I identified restoring
economic prosperity as one of the highest priorities for my
city. I signed an Executive order creating a task force made up
of our foremost experts on workforce development, poverty, and
early childhood development and family supports.
I asked them to offer me their best recommendations for
what we can do at the city level, as a government and as a
community, to reestablish upward mobility for our working poor
and to help rebuild the middle class in our city.
Similar efforts were undertaken by Mayor Villaraigosa in
Los Angeles, and Mayor Bloomberg in New York City. In
Providence, this task force developed a set of action steps
called Pathways to Opportunity, to move people into the
workforce, keep them in the workforce, and open up more
opportunity to get ahead, once they're in.
With that report in hand, I formed a partnership with the
N. E. Casey Foundation, to open an office that is charged with
overseeing the implementation of these recommendations in
coordination with the city and the agencies that helped to
develop them. It also serves as a community-based site for
residents to connect to new opportunities.
We launched a number of ambitious projects as part of this
new initiative. We have young people from across the city, who
are integral parts of a major construction project in our
schools, that involves cutting-edge green technology and
learning how to build lead-to-lead standards.
We have partnered with our hospitals that are facing a
serious nursing shortage to get young people access to the
skills they need to begin a good career in the healthcare
field.
Taking the lead from the Brookings Institute work on the
high cost of being poor, we're working with local banks and an
organization called Bank on Providence. It's developing
financial instruments specifically designed for low-wage
families and individuals who have no prior banking
relationship.
I'm also working with the State Legislature to regulate the
ability of predatory lenders and check-cashers to extract
usurious rates and charges from their customers, most of whom
haven't had access to mainstream banking.
We're aggressively engaging with ex-offenders to
reintegrate them back into the community, and many, many other
efforts. I see my time is up, but I'll just end by saying,
Madam Vice Chair, that if I had more time, I'd talk about the
wonderful after-school programs that we're creating in the
community, the policing model in Providence, and all the things
that impact on poverty.
But I want to conclude with a general comment. Our cities
represent tremendous opportunities for the 21st century
economy. We can unleash that potential by making opportunity
for every American, a national priority again.
After all, the other name for a robust economic ladder and
upward mobility is the American dream. That's what made our
economy the envy of the world and it's the only way we can
preserve its position in our global economy. Thank you.
[The prepared statement of Hon. David N. Cicilline, w/
attachment, appears in the Submissions for the Record on page
39.]
Vice Chair Maloney. Thank you. Your time is up, but your
entire statement will be in the record, along with your very
interesting report that you have submitted.
I agree with you, the cities are the center of thought and
activity. I come from a city, and a lot of great things are
happening in yours, so we appreciate your being here today.
Mayor Cicilline. Thank you so much.
Vice Chair Maloney. Professor Rebecca M. Blank is the Henry
Carter Adams Collegiate professor of public policy at the
University of Michigan.
She is also professor of economics and the co-director of
the National Poverty Center at the Ford School.
She is currently on leave as the Robert V. Kerr Visiting
Fellow at the Brookings Institution. She is the author of
``Working and Poor: How Economics and Policy Changes Are
Affecting Low-Wage Workers; Measuring Racial Discrimination.''
Professor Blank graduated in Economics from the University
of Minnesota, and received a Ph.D. in economics from the
Massachusetts Institute of Technology. We thank you for being
here, for your books, for your research, and for your testimony
today.
Thank you.
STATEMENT OF DR. REBECCA M. BLANK, ROBERT S. KERR SENIOR
FELLOW, BROOKINGS INSTITUTION, WASHINGTON, DC
Dr. Blank. Thank you, Congresswoman Maloney. I appreciate
being invited here. I should say that the bio you have is a
little old. I'm actually permanently at the Brookings
Institution right now, so I've moved to Washington, DC.
Vice Chair Maloney. OK.
Dr. Blank. The Census Bureau recently released the official
numbers on income and poverty for 2007, and I want to
underscore a few key facts from that release.
First, poverty did not fall to any appreciable extent
throughout the economic expansion of the 2000s. If you look in
past decades, when unemployment rises, poverty goes up; when it
falls, poverty goes down.
When unemployment fell after 2003, poverty essentially
stayed flat. This sluggishness on the part of the poverty rate,
reflects general sluggish growth in income by all people in the
bottom half of the income distribution. Both those in the
middle, as well as at the bottom of the distribution had lower
incomes in 2007 than they did in 2000.
Of course, if the 2007 data doesn't look as good as we had
hoped, 2008--I promise you--will look substantially worse,
given the rapidly rising unemployment and the recent economic
news that's been dominating all of the newspapers. Poverty is
going to be a major issue in the agenda of the next
Administration.
I've been asked to spend most of my time this morning
focusing, however, not on these numbers, but on the measurement
of poverty itself.
There's widespread agreement that our poverty measure is
badly flawed and needs to be updated. A bill to improve and to
produce a modern poverty measure, was just introduced in the
House by Congressman McDermott, and Senator Dodd is working on
companion legislation in the Senate.
Our current poverty measure was defined in 1963 by the
Social Security Administration. It contains two components: A
line, a poverty line, and a resource definition, against which
you compare families' resources to see if they're above or
below that line. Let me talk about each, in turn.
The current poverty line is easy; it's three times a
subsistence food budget. The subsistence food budget was
defined by the USDA in 1961 based on 1955 household consumption
survey data.
The multiplier of three came about because the average
family in 1955 spent one-third of their income on food. If you
spend a third of your income on food, take three times the food
budget and you have a poverty line.
With only minor changes, our current poverty line is this
number, c alculated in 1963, based on 1955 data and updated by
the Consumer Price Index. There is no other economic statistic
in use today that relies on 1955 data and on such outmoded
methodologies.
The resource measure in the poverty line was, very simply,
a family's cash income. While that might have made sense in the
early 1960s, it is also badly outdated. It is no longer an
adequate description of the sort of resources that families
have available.
If a disabled individual starts to receive Medicaid, this
doesn't show up in their poverty count. If a family receives
food stamps, it doesn't affect the poverty count. If a worker
receives an EITC refund check, it doesn't affect the poverty
count.
Why does this matter? Our measured poverty rate, is simply
insensitive to most of the dollars and most of the policies
that we have expanded in the last three decades. In a
fundamental way, our poverty measure has undercounted policy
gains and made it easy to claim that public spending on the
poor has had little effect.
Now, this doesn't mean that our official measure is
completely meaningless. In a year like 2007, with no policy or
tax changes, it does measure what the economic effects were on
the low-income population.
But we can and should do better in an official economic
statistic.
In the mid-1990s, the National Academy of Sciences was
asked by Congress, to make a recommendation for improving the
measure of poverty, and they came out with a rather major
volume that describes how to improve this statistic.
The panel recommended calculating a poverty line based on a
set of expenditures--food, shelter, clothing, utilities, plus a
little bit more.
They recommended a resource definition that started with
cash income, but took account of taxes, added in in-kind
benefits, and subtracted off unavoidable payments on medical
expenses or on work expenses.
All of these changes have been much discussed in the years
since then, and in fact, a good number of states and localities
have been expressing interest in this new line, as well. This
last summer, for instance, New York City developed a city-
specific poverty measure, based on the National Academy
approach.
It's time to break through the political logjam that has
prevented the development and the utilization of an updated
poverty measurement. The new legislation in front of the House
and the Senate, will do this, directing the Census Bureau to
develop a modern poverty measure, using the National Academy
recommendations.
Of course, improving the measure of poverty will not reduce
poverty. We also need to combine that with policies such as--
and you mentioned these earlier--expanding the EITC to workers
who do not have children in their household; increasing
assistance to help working mothers, in particular, to pay for
childcare.
In addition, we need to assure the presence of an effective
safety net, helping, in particular disconnected women--women
neither working nor on welfare--to be able to stabilize their
incomes.
We also need to make sure that unemployment insurance
serves those who are without a job. Right now, it serves less
than 40 percent of them.
Our official statistics indicate that poverty in this
country rose last year. It's going to rise further and faster
in the year ahead.
We need the legislation that will help us measure this
problem and know what its boundaries are and who is most
affected by it. We also, of course beyond good measurement,
need good policy as well, supporting those who are working and
giving assistance to those for whom jobs are not immediately
available. Thank you.
[The prepared statement of Dr. Rebecca Blank appears in the
Submissions for the Record on page 41.]
Vice Chair Maloney. Well, I want to thank you for your hard
work. I will certainly be a co-sponsor of Congressman
McDermott's bill, and agree wholeheartedly that without good
data, we don't have good policies, and if we can improve our
way of measuring it, it would be tremendously important. Thank
you for your testimony.
Dr. Blank. Thank you.
Vice Chair Maloney. Ms. Blackwell is the founder and chief
executive officer of Policy Link, a national research and
action institute advancing economic and social equity.
In 1987, she founded the Urban Strategies Council in
Oakland, California, and received recognition for pioneering a
community building approach to social change, through in-depth
understanding of local conditions, community-driven systems
reform, and an insistence on accountability.
Ms. Blackwell earned a Bachelor's Degree from Howard
University, and a Law Degree from the University of California
at Berkeley. She co-chairs a Center for America Progress Task
Force on Poverty, called Hope, Opportunity, and Mobility for
Everyone; Home, the National Initiative to End Poverty.
We thank you for your hard work and leadership in this
area, and please proceed.
STATEMENT OF ANGELA GLOVER BLACKWELL, FOUNDER AND CEO, POLICY
LINK, CENTER FOR AMERICAN PROGRESS; CO-CHAIR, TASK FORCE ON
POVERTY, OAKLAND, CA
Ms. Blackwell. Thank you and good morning. I do chair the
Center for American Progress Task Force on Poverty, along with
Peter Edelman of the Georgetown University Law School.
And in addition to the 37 million people living below the
poverty level that you mentioned, an additional nearly 50
million, live below 200 percent of the poverty level, making 90
million people living below 200 percent of the poverty level
one health crisis, one family emergency away from poverty's
door.
It really doesn't have to be this way. The Center for
American Progress Task Force, recommends that the United States
set a national goal of cutting poverty in half in the next 10
years.
To accomplish this goal, the Task Force proposes 12
recommendations grouped under four principles: Promote decent
work--people should work and jobs should pay enough to ensure
that employees and their families, avoid poverty; provide
opportunity for all--children should grow up in conditions that
maximize their opportunities for success, and adults should
have opportunities throughout their lives to connect to work
and become better educated; ensure economic stability--
Americans should not fall into poverty when they cannot work or
when work is unavailable; and help people build wealth--all
Americans should have the opportunity to build assets that
allow them to weather periods of flux and volatility.
These four principles and the following recommendations
will cut poverty in half only if they work in tandem.
Through the strategies outlined below, America can
cultivate a new cycle of prosperity. To promote decent work,
the Center for American Progress Task Force recommends that we
raise and index the minimum wage to half the average hourly
wage; expand the earned income tax credit and the child tax
credit; promote unionization by enacting the Employee Free
Choice Act; and guarantee childcare assistance to low-income
families; and promote early education.
Compared to other countries, in this country the poverty
rate does not represent low work effort. People who work,
really should be able to maximize that work to get out of
poverty, and by doing just three of these things--increase the
minimum wage, expand the earned income tax credit and child
credit, and provide childcare assistance--we could cut poverty
by 26 percent, instantly, according to modeling done by the
Urban Institute.
To provide opportunity for all, the Task Force recommends
that we create 2 million housing opportunity vouchers that will
allow low-income families to live in communities rich with
opportunity.
We need to connect disadvantaged and disconnected youth to
work and school, simplify the Pell Grants so that higher
education is more accessible to all, and help former prisoners
find stable employment and reintegrate into communities.
To ensure economic security, the Task Force recommends that
we ensure equity for low-wage workers in the unemployment
insurance system and that we modernize means-tested benefits
programs to develop a coordinated system to help workers and
their families.
And to help poor families build wealth, the Task Force
recommends that we reduce the high cost of being poor and
increase access to financial services, and expand and simplify
the saver's credit to encourage savings for education, home
ownership, and retirement.
In addition, the Nation's infrastructure is crumbling, and
as we think about doing that, we need to think not only about
how to invest in infrastructure, but how to build the workforce
capacity so that low-income people can get those jobs.
Many low-income people are being left behind because the
communities they live in are being left behind, without
broadband, without public transportation.
And we need never forget that many people who are poor are
poor because of poor health, and while we work to try to
increase access to healthcare coverage, we need to know that
the places where people live are often making them sick. People
who are in low-income communities have little access to fresh
fruits and vegetables because of the absence of grocery stores,
little access to exercise because there aren't safe streets or
places to exercise. These need to be part of our investments.
Poverty is multidimensional. Its causes and its effects are
myriad and its solutions are multidimensional, and when done
well, the benefits can be multidimensional, as well.
For example, investing in the construction of a hospital in
a low-income community, when the project is tied to job
training and local hiring, delivers immediate construction
jobs, eventual health services, and long-term community
benefits.
Creating tax credits and incentives for affordable housing
in mixed-income communities can bring families in closer
contact with jobs, put children in contact with good schools.
Poverty results in adverse economic effects for the entire
Nation, and alleviating poverty can improve all of our lives.
Thank you.
[The prepared statement of Angela Glover Blackwell appears
in the Submissions for the Record on page 50.]
Vice Chair Maloney. Thank you so very, very much, for many
ideas and directions that we can work in in public policy.
John W. Edwards, Jr., is chair of the board of trustees for
the Community Action Partnership. The Partnership's mission is
to be a national forum for policy on poverty and to strengthen,
promote, represent, and serve its network of member agencies,
to assure that the issues of the poor, are effectively heard
and addressed.
He is executive director of the Northeast Florida Community
Action Agency, which assists low-income persons with specific
services involving their day-to-day existence, including, but
not limited to: LIHEAP, the Low-Income Home Energy Assistance
Program; temporary food assistance; and home weatherization.
We thank you and recognize you for 5 minutes. Thank you,
Mr. Edwards.
STATEMENT OF JOHN W. EDWARDS, JR., CHAIRMAN, COMMUNITY ACTION
PARTNERSHIP, INC. WASHINGTON D.C.; EXECUTIVE DIRECTOR,
NORTHEAST FLORIDA COMMUNITY ACTION AGENCY, JACKSONVILLE, FL
Mr. Edwards. Good morning and thank you for being here. As
you mentioned, I represent the 1,000 Community Action Agencies
nationwide, and you have adequately covered, basically, our
mission.
I won't repeat what Dr. Blank and Ms. Blackwell and others
have said, and you as well, Mrs. Maloney, related to the
statistics and whatnot, but I would like to make some comments
with regard to the changing nature of poverty in America, who
we are seeing throughout this country at the local ground level
of the 1,000 Community Action Agencies nationwide.
In addition, I would like to also talk with you
specifically about some of the demographics of the people that
we're seeing in America today, and that will give you, I
believe, some idea in terms of the nature of the people who are
coming to Community Action Agencies around this country.
Then finally, I have a few recommendations for you to
consider as you look at policy and laws governing how we help
more people to get out of poverty in America.
What we do know, is that the face of poverty is changing
every day. We have seen that through the number of people who
are coming to Community Action Agencies nationwide.
We are seeing more people who are coming to us who are
traditional families. That means a working husband, a working
wife, and children.
That's nontraditional to us, because historically, we've
not seen that level of family unit coming to our doors to avail
themselves of our services.
What we do know, is that more middle class families are
asking for public assistance today, than ever before, and
that's reflective of the state of the economy, loss of jobs,
outsourcing of jobs to other countries, and the like.
I just came from a 3-day meeting of community action
professionals that we had in Philadelphia over the last 3 days.
There were 17 States represented there: Washington, Oregon,
California, Montana, Wisconsin, Missouri, Kentucky, South
Carolina, Florida, Indiana, Virginia, New Hampshire, Iowa,
Pennsylvania, Nevada, Illinois, and Alabama.
So I took this little research, if you will, by asking them
a question based on their experiences, most of which are
executive directors and other practitioners in Community Action
Agencies nationwide. What they reflected is that they're seeing
now, 80 percent of their population are nontraditional people
who avail themselves to Community Action Agencies.
And I think that's remarkable, in terms of seeing a
different person who lives in poverty today. These are
nontraditional, why? Because they don't come to us, they
haven't come to us in the past.
The other thing is that because of the state of the
economy, related to layoffs in the finance industry and the
like, which also indicates that there is a tremendous draw on
resources throughout Community Action Agencies in this country.
In addition to that, there is a recent trend toward more
people asking for basic assistance of food, shelter, cooling,
heating costs, transportation, childcare, and the like.
And clearly, I agree with Dr. Blank in terms of what she
indicated about the poverty level and how that was all
configured, you know, over 40 years ago, so I won't repeat that
because I concur with what she said, and of course, my
testimony is there.
What I do want to do is spend a couple of minutes giving
you an idea of 22 months of demographics of people that we have
seen in Northeast Florida. We're based on Jacksonville, but we
have offices in the six counties surrounding Duval County or
the city of Jacksonville.
In the last 22 months, we've seen 24,466 people, and of
those people that we've seen, 15,000 are females, 9,400 are
males. We're also seeing a situation where most of the people
that we're seeing are working-age people, in other words,
they're between the ages of 18 and 54, and of the 24,000
people, about 16,000 of those are in those age categories,
which are people who should be working.
Educationally, most of the people we see have either a high
school diploma or less, so of the 10,000 people from which we
collected data, around 8,500 of them have high school education
or less.
In addition to that, we also see that most people don't
have income based on employment, and clearly in our country,
that's one of the best ways that we're going to be able to do
that. Most people rent their homes and the like.
Obviously, the Federal formula just needs to be changed,
based on what Dr. Blank said and other statistical information
that's reflected in my report.
And then finally, I want to indicate this report, ``Rooting
Out Poverty,'' that the Community Action Network has developed,
and two themes: Building an economy that works for everyone,
and invest in the future.
And so when we look at these kinds of things, we would
really like to emphasize that the LIHEAP program, the Low-
Income Home Energy Assistance Program, needs to be expanded.
Certainly, the earned income tax credit needs to be expanded,
full appropriations for the Community Services Block Grant and
the like would be wonderful to help many of the Americans get
out of poverty today. Thank you.
[The prepared statement of Mr. Edwards appears in the
Submissions for the Record on page 58.]
Vice Chair Maloney. Thank you so much. You entire testimony
and your report, will be part of the record. We really thank
you for bringing information, really, from the front lines of
the war on poverty, and the work that you've been doing is
greatly appreciated.
Robert Rector is a Heritage Foundation senior research
fellow. Prior to joining the Heritage Foundation, he worked as
a legislative assistant in the Virginia House of Delegates, and
as a Management Analyst at the U.S. Office of Personnel
Management.
He is the author of ``America's Failed $5.4 Trillion War on
Poverty: An Examination of U.S. Welfare Programs,'' and co-
editor of ``Steering the Elephant: How Washington Works.''
Rector holds a Bachelor's Degree from the College of
William and Mary, and a Master's Degree in political science
from Johns Hopkins University. Thank you for being here today,
for your books, and for the testimony. All of your statement
will be put in the record, and we recognize you for 5 minutes.
I want to also mention that my colleague, Congressman
Hinchey has joined us, so we're pleased he's here.
STATEMENT OF ROBERT E. RECTOR, SENIOR RESEARCH FELLOW, THE
HERITAGE FOUNDATION, WASHINGTON, DC
Mr. Rector. Thank you very much for the opportunity to be
here to testify today. I have seven basic points that I would
like to make today.
The first point is that the welfare state in the United
States is simply enormous. Last year, this year in fiscal 2008,
Federal, State, and local governments spend $679 billion on
means-tested welfare assistance to poor and low-income people.
Total means-tested welfare spending this year considerably
exceeded the entire budget of the Defense Department, including
all expenditures in the war on Iraq. Since the beginning of the
War on Poverty, the United States has spent over $14 trillion
on means-tested assistance to the poor. Over the next 10 years,
if current expenditure levels continue, we will spend $9
trillion on assistance to the poor, providing cash, food,
housing, medical care, and targeted social services.
As a result of that $9 trillion, we can expect--as we found
in the past--that the capacity of low-income people to support
themselves will actually go down.
Point number two: Most so-called poor people in the United
States are not poor in any normally understood sense of the
word. For most Americans, the word ``poverty'' suggests
destitution, an inability to provide food, basic shelter, or
clothing. But if that's what you mean by ``poverty,'' virtually
none of the 37 million people defined as poor by the Census
Bureau, in fact, meet those criteria.
My favorite statistic from the Government's own data on the
poor is that two-thirds of them have cable and satellite
television. According to the Government's own data, the typical
American defined as poor by the Government has a car, air
conditioning, a refrigerator, stove, clothes washer, dryer,
microwave. This individual has two color televisions, cable or
satellite TV, has a VCR and a DVD player, and a stereo.
By his own report, he's able to obtain medical care for his
family whenever needed, his home is in good repair and is not
overcrowded. By his own report, his family is not and has not
been hungry, and he has had sufficient funds to meet all his
family's essential needs.
While this individual's lifestyle is certainly not opulent,
it is extremely far from the popular images of dire poverty
promoted by activists.
Point number three: The United States does not have a
higher poverty level than countries in Europe. Statistics that
purport to show that, use a skewed standard in which poverty is
more difficult to escape from in the United States because the
hurdle is higher here than in other countries.
If you use a uniform standard, the income of the bottom of
the U.S. population is roughly similar to that of most European
countries.
Point number four: Poverty levels in the United States
remain high because the United States is currently aggressively
importing poverty from abroad through both legal and illegal
immigration. For example, when we hear about poor children in
the United States, no one realizes that 1 out of 8 of the poor
children in the United States, as measured by the Census, is
actually the child of an illegal immigrant.
Over the last 25 years, through both legal and illegal
immigration, we have imported 12 million high school dropouts
into the United States.
These individuals cause a massive increase in welfare
expenditures. Currently, 1 out of 4 poor people in the United
States is an immigrant who we have brought here from abroad. It
is impossible for us to reduce poverty if we are aggressively
importing it as rapidly as we can from other nations.
Point five: The major cause of child poverty in the United
States is the high level of out-of-wedlock childbearing. In the
last measured year, 38 percent of American children were born
out of wedlock. If the mothers of those children were actually
married to the fathers of the child--the actual father of the
child--70 percent of them would immediately be raised out of
poverty, but we will do nothing whatsoever to correct this
problem because promoting marriage is politically incorrect in
our country.
Point six: The second major cause of child poverty is very
low levels of parental work. In any given year--it does not
vary much from one year to another--when you look at poor
families with children, on average they have only about 600 or
700 hours, maybe 800 hours of work in that family per year.
That's about 16 hours a week.
These families are poor because no one is working very
much. If you raise that family to the point where labor in the
family was the equivalent of one worker working full-time,
full-year, 75 percent of those families would be immediately
raised out of poverty without any additional expenditure from
the taxpayer.
Point Seven: In order to reduce poverty, we need to address
the root causes of poverty, not merely the symptoms. That means
we must address low-skilled immigration, the collapse of
marriage, and the very low work effort of low-income families.
Our goal should no be to reduce poverty, but to promote
prosperous self-sufficiency, to promote a society in which
individuals can support themselves above the poverty line,
without endless and ever-expanding handouts from the taxpayers.
Thank you very much.
[The prepared statement of Mr. Rector appears in the
Submissions for the Record on page 65.]
Vice Chair Maloney. Thank you very much, and I thank all
the panelists for their important testimony and for being here
today.
Yesterday, Federal Reserve Chairman Bernanke warned us that
if Congress does not approve of the Treasury's $700 billion
backstop, then unemployment will increase and the economy will
enter a potentially protracted recession.
I would like to ask any of you to comment and articulate
how the troubles on Wall Street are affecting poor and near-
poor families, and I open it up to whomever would like to
comment.
Dr. Blank.
Dr. Blank. I'll make a comment on that. So our economy runs
on trust. We believe that those little pieces of green paper in
our pockets mean something.
What has been happening in the last number of months has
been a real breakdown in trust in the financial institutions of
this country for a variety of reasons.
We can talk about who's to blame or not to blame for any of
that, but at the end of the day, the effect of this is going to
ripple through the rest of the economy in all sorts of ways.
Consumers, as a result of this, are going to be much more
cautious about spending in the next several months, and that's
going to reduce consumer spending.
Businesses are going to be much more cautious because
either they can't get credit, or they're simply not going to go
about investing in the very near term. The effect of all of
this is to slow down the economy and lead to rising
unemployment.
Trying to take actions to stop the problems within the
financial sector are absolutely mandatory for preventing an
extended and long-term recession in the rest of the economy.
Vice Chair Maloney. Thank you.
Mayor Cicilline, would you like to comment on that?
Mayor Cicilline. We are seeing in cities all across this
country, and certainly in Providence is no exception, the
consequences of the downturn in the economy already. We have
record high unemployment in the State of Rhode Island with an
increasing number of people availing themselves of community
action centers, and of assistance in housing. There are
difficulties in people finding and retaining employment and
great anxiety about their future.
So that we are seeing, as a result of reductions in
investments in education and in child care and in Community
Development Block Grants, and all the things that support
strong communities, strong neighborhoods, and strong families,
the consequences frankly of the past number of years.
My concern of course is that the markets be stabilized of
course, but it is very important that the challenges that
American families are facing in cities all across this country
also be addressed, particularly in the area of housing, health
care, and educational opportunity.
Vice Chair Maloney. Mr. Rector, and then Ms. Blackwell.
Mr. Rector. The figure of $700 billion in the bailout is of
course very large, but I would remind this Committee that next
year, according to the projections of OMB, total means-tested
welfare spending in a single year alone will exceed $700
billion.
Over the next 10 years we are going to spend close to $9
trillion on welfare. And most of this spending consists of
obligations on the part of the taxpayer with little or no
obligation on the part of the welfare recipient.
And so just as when we look at the Wall Street bailout, I
think we need to look--not have unilateral obligations on the
taxpayer.
One of the major failures of the welfare state is that it
is primarily a unilateral taxpayer obligation with little or no
requirement on the part of the recipient and the poor to take
steps to improve their own well being.
Vice Chair Maloney. Ms. Blackwell.
Ms. Blackwell. Agreeing with the comments of the Mayor and
Dr. Blank, I just want to add that we need to make sure that in
the bailout that we are paying attention to those who are
impacted by the foreclosure crisis.
At the base of all of this is Americans working very hard
trying to play by the rules and achieve the American dream
having the rug completely pulled out from under them, and that
is essential in terms of making sure that they do not continue
to suffer.
But also, when we think about this issue of what we are
doing in Washington, it is moving from Wall Street to Main
Street all the way to people living on the street. People who
are poor, and homeless, and dependent on food banks, and soup
kitchens, and homeless shelters are going to feel this as well,
because we have shifted so much of the responsibility for the
people who are most vulnerable to private donors, to
foundations, and to corporate giving.
As we see the impact on those people, we need to make sure
that the safety net is strong, and that those people who are
most vulnerable in society are not just thrown out with no
support at all.
Vice Chair Maloney. That is very important, and Democrats
are paying attention to that, and many of my bipartisan friends
also. We also passed a very important bill in the Financial
Services Committee, the Hope Housing Bill, that has many
initiatives in there to work with localities, to work with
individuals, to help people stay in their homes.
The economy is experiencing a crisis in its financial and
credit markets, and the labor market is experiencing a
downturn. To address some of these problems Congress is
considering a second stimulus package.
Do you think that an economic stimulus package would help
reduce poverty? If so, how? And how would you target such a
package? Mayor Cicilline and I will go to other people who
would like comment, and then my colleague has some questions.
Mayor Cicilline. Yes, Vice Chairman. I think a second
stimulus package would certainly assist, and I would strongly
urge the Congress to consider including in that a real
investment in rebuilding America's cities and its
infrastructure.
There are cities all across this country that are dealing
with very old infrastructure. We at the U.S. Conference of
Mayors, along with the American Society of Civil Engineers, do
a report card on the state of America's infrastructure each
year, and in every category--bridges, roads, water systems--the
grades are F, and D- and D+.
This is an opportunity to rebuild our cities, rebuild the
infrastructure to support an economy of the 21st century so we
can move goods and services, and at the same time create good
jobs that cannot be shipped overseas, that are in our cities,
in our communities to help rebuild the economic life of
families who live in our cities.
So I hope as part of the stimulus package there will be a
serious investment in infrastructure.
Dr. Blank. Can I add on to that, for more immediate short-
term needs with the problem of rising unemployment, I think
there are two things that it is really important to have in
that stimulus package, and I know they are in certain drafts of
it right now.
One is a short-term increase in Food Stamp benefits, which
is an excellent way to get a lot of dollars to the families
that are being most impacted by rising unemployment and by a
failing economy.
Secondly, to increase the appropriations to LIHEAP, the Low
Income Home Energy Assistance Program, given the high fuel
prices right now, particularly in the Northeast and northern
parts of the country. Over this coming winter that is going to
be absolutely mandatory and needs to be part of the package.
Vice Chair Maloney. Any other statement?
Mr. Edwards.
Mr. Edwards. Yes. Thank you very much. In addition to what
is being said, of course what we are seeing is that we would
like to see more people use the money in the stimulus package
to help with investing in assets, long-term assets, home
ownership, maybe even starting small businesses, saving for
post-secondary education, those kinds of things over the long
haul that would help people to really assist themselves to come
out of poverty.
Vice Chair Maloney. And Mr. Rector.
Mr. Rector. I think it is important before we propose new
spending that we actually have an accurate assessment of what
is currently being spent.
I am very shocked that most of the people on this panel
seem to be coming here before you and suggesting that welfare
spending has somehow declined in recent years. Welfare spending
on the poor is at a record level. It has never been higher. Per
capita welfare spending is at a record level. It has never been
higher, after adjustment for inflation.
I really think that most of this testimony is abusing and
maligning the taxpayers of the United States, and I think
before we propose new waves of spending we ought to at least
get an accurate accounting, and get some kind of credit to the
taxpayers for what they are currently spending, which as I said
exceeds the entire budget of the Defense Department, including
the War in Iraq.
Dr. Blank. May I say something about those numbers?
Vice Chair Maloney. Dr. Blank.
Dr. Blank. The spending on means-tested programs has gone
up in recent years. A great deal of that increase has all gone
into health insurance costs, and rising prices in the health
insurance industry I think are not the main issue that Mr.
Rector here is talking about. There's a whole set of reasons
for that that have little to do with what we are doing for
means-tested programs, but it is driving means-tested programs
up.
If you look at health insurance spending, a
disproportionate share of those rising prices are coming from
payments to institutionalized individuals, either disabled or
elderly. That is not the image of the poor that Mr. Rector is
presenting to you, but that is where the vast majority of the
increases in dollars are going. And I think we need to know
that.
Vice Chair Maloney. Thank you. I would like to now
recognize Congressman Hinchey from New York State who has been
an active and important Member of Congress and of this
Committee especially.
Mr. Hinchey.
Representative Hinchey. Madam Chairwoman, thank you very
much. I very much appreciate being here.
I want to just open up by apologizing for not being here
earlier so I could have listened to the testimony that was
being presented. I was at a caucus meeting for the Democratic
Party which was focused on this bailout suggestion which has
come from the Secretary of the Treasury, $700 billion to bail
out the financial circumstances that our economy is
confronting.
That $700 billion request I think is just another example
of how so much attention in the economic circumstances of our
country has been based upon the top levels, the upper levels,
and that would include things like the tax cuts, for example.
I would disagree with Mr. Rector that not enough attention
is being focused on the working people of our country and the
results of that failure of attention has on the general
population.
For example, we have seen that just in this year--which is
not nearly over yet--we have already lost more than 600,000
jobs across America. And as the population goes up and the loss
of jobs continues to go up, that has a very profound effect on
all of the people across America.
So the economic circumstances that we are dealing with is
very, very serious. We have seen an increase in the number of
people in poverty. We have seen a decline in the middle class.
We have seen a decline in the standard of living of most of the
people across our country. We have seen a greater concentration
of wealth in the hands of fewer people than we have seen at any
time in our history since 1929. All of these things are causing
a very serious set of circumstances that have to be dealt with.
I think obviously the lifting of people out of poverty is the
main part of that.
So I would just ask this question, if you wouldn't mind
responding to it: We are considering a stimulus package now.
Obviously a stimulus package is necessary because of the
downturn in the economy and the way that that downturn is
impacting on working people all across the Nation.
So I wonder if you might have some suggestions about what
might be contained in this stimulus package, what we might do
to effectively upgrade the economic circumstances particularly
of working Americans.
Mr. Mayor, if you would like to start, I would appreciate
it.
Mayor Cicilline. Sure. In addition to the investments in
infrastructure, one of the things that has been a very
successful way to both stimulate our economy, but also to
rebuild cities and to help those who are in most need of
assistance, has been the Community Development Block Grant
Program.
Every city that has communities that are in need that meet
those guidelines has ready to go programs, and systems in place
that can quickly move those resources into the neighborhoods
and into the cities and into the communities.
They have already identified those that are eligible for
the program that are in desperate need: poor, elderly,
disabled, communities that need that kind of assistance. It is
a system which has worked. It is a system that is modest. It
has been reduced every year for the last 4 or 5 years at a time
when we should have been increasing it.
I would say, these are not handouts. These are making
investments in families, and neighborhoods, and cities in this
country that produce huge returns. So increasing that
investment by, as the U.S. Conference of Mayors has
recommended, doubling the Community Development Block Grant
Program so we can really make investments to the people who
most need it in the communities. Rebuilding our infrastructure.
Reestablishing partnerships with the Federal Government in the
COPS Program that keep our communities safe. Job training
programs that help to bring young people into the work force.
Supporting after school programs, and increasing funding there.
Those are things that will not only stimulate our economy
but strengthen our neighborhoods, and strengthen our families
who will then contribute to strengthening our economy.
Vice Chair Maloney. Mr. Edwards.
Mr. Edwards. Yes. Thank you very much.
In addition to that, anything that rewards work. I think
that in our economy what we really want to be able to do is to
help people to be gainfully employed. Somehow we need to figure
out a way to ensure that when people do work that they have
good wages, good benefits, so that they themselves can get out
of poverty.
So such things as expanding the Child Tax Credit would be
certainly something that we would recommend. Certainly
increasing the Earned Income Tax Credit. And really fully
funding the Community Services Block Grant is a program that
really helps people to get out of poverty in America.
Representative Hinchey. Mr. Rector.
Vice Chair Maloney. And then Ms. Blackwell.
Mr. Rector. One of the recommendations of things that
should be included in the stimulus package is an expansion of
the Food Stamp program. I would strongly oppose that because
welfare and assistance in the United States should not be a
one-way handout. It should be based on giving assistance, but
requiring constructive behavior on the part of the recipients.
The current Food Stamp program is a fossil which does not
reward work. It rewards idleness. It discourages labor. And it
penalizes marriage. It does everything exactly the opposite of
what you would want to do.
I would say that if you wanted to consider reforming or
expanding the Food Stamp program, one of the principal things
that you would do in it is require able-bodied non-elderly
adults who receive benefits to either work or prepare for work
or undertake organized job search, or something like that, in
exchange for the aid that they get.
We did that, at least temporarily, as part of welfare
reform in the 1990s and we had a dramatic reduction in poverty
as a result of that policy.
Unfortunately, there is a very strong political momentum
against that type of work obligation, and as a result we have
made no additional progress. I have proposed for 10 years that
the sorts of reforms that we did in the Aid to Families With
Dependent Children Program to induce and promote work should
also be done in Public Housing and Food Stamps, but so far
Congress has taken no steps whatsoever to improve those
programs.
Representative Hinchey. Well I think it is clear that work
has to be encouraged, and I think there are an awful lot of
people out there who want jobs.
Let me just give you an example. 84,000 jobs were lost in
August; 61,000 of those were manufacturing jobs. We are losing
the best jobs that we have with the highest salaries. Now more
than 9.4 million Americans are unemployed, and almost 2 million
of those Americans who are unemployed have been unemployed for
more than 27 weeks. So they are not eligible for the
Unemployment Benefits.
You have an unemployment rate right now that has gone up to
6.1 percent, but when you include in that unemployment rate
people whose unemployment has run out--in other words, they
have been unemployed for 27 weeks or more--and you include
people who are working maybe 1 or 2 days a week, but are really
desperately trying to find a real job, then the unemployment
rate goes up above 10 percent.
So that is some of the situation that we are confronting. I
would agree that we need to encourage people to work, and we
need to help find jobs for them, but it is increasingly
difficult to find jobs in an economy that has been organized in
a way to downgrade those jobs.
So, Ms. Blackwell.
Ms. Blackwell. Thank you. I certainly agree that we need to
increase Food Stamps, we need to focus on green jobs, and we
need to make sure that people can get to work and that people
who go to work can support their families.
I want to underscore the comments made by the Mayor,
though, about the need to invest in the Nation's
infrastructure. Poverty policy needs to get embedded in all of
our spending so that we are always thinking about whenever we
are spending dollars how do we do that in a way that we reduce
poverty?
And so an investment in infrastructure, particularly when
we are looking at the fact that most Americans live in our
metropolitan areas, is an investment that actually reaches the
people. It allows those communities that are being left behind
because they are trying to build a 21st century economy on a
100-year-old infrastructure to begin to have the environment
that allows them to be competitive.
We need to focus on the jobs, and not just say we want to
make sure jobs go to low-income people, but invest in our
community colleges to help them prepare the work force for the
21st century infrastructure investments.
And when we are thinking about economic stimulus, we need
to think about the fact that so many communities do not have
the kind of economic activity that allows them to be viable and
to be healthy.
For example, we have food deserts all over this country
where people who live in low-income communities--particularly
African American communities--have no access to fresh fruits
and vegetables.
What that means is they have no access to grocery stores.
The jobs are missing. The economic activity is missing. And the
essentials for healthy living are also missing. So when we are
doing the stimulus package we need to pull all of those things
together. Thank you.
Representative Hinchey. Thank you. Dr. Blank, do you have
anything to add to that?
Dr. Blank. The only thing that I would say is strictly in
response to your comments about rising unemployment. I would
underscore the need not just in terms of the stimulus package
but in the longer run to really reform our whole Unemployment
Insurance system.
Less than 40 percent of the unemployed are able to receive
Unemployment Insurance. Many of the lowest income workers are
never eligible for it when they lose their jobs. And the whole
point of the system is to provide a safety net when jobs are
not available to those who want to work and who have been
working.
Mayor Cicilline. May I just add one thing? I just want to
strongly underscore Dr. Blank's recommendation for inclusion of
LIHEAP in the stimulus package. Senator Reid, my Senator, has
been one of the Nation's leaders on that program, and it will
be particularly urgent for cities. And cities are where the
rubber meets the road, when we have families who do not have
heat and can no longer afford to heat their homes. The things
that follow from that are the people's properties are
foreclosed. The people start huddling in abandoned houses,
fires get started, and all the kind of really dangerous
consequences that follow.
So I would really urge the Congress to include an increase
in LIHEAP in the stimulus package as well.
Representative Hinchey. Thank you.
Vice Chair Maloney. Thank you very much.
Dr. Blank, in your testimony you talked about having a
modern poverty measurement, but you wanted this responsibility
in the Census Bureau instead of OMB. Could you elaborate why
you would prefer it in the Census Bureau over OMB?
Dr. Blank. So our current poverty measure is the only
official economic statistic that is regularly reported on and
used as widely as it is that resides not in one of our
statistical agencies but inside the Office of Management and
Budget.
It was basically ordered in the late 1960s by OMB that this
definition that I discussed would be produced and reported on
regularly by Census.
The problem is that OMB sits within the Executive Office of
the President. So any changes in the statistic have to go
through the entire byzantine process of political approval
inside the White House, and it is simply not to the benefit of
any President to make changes to statistics in ways that either
raise or lower those numbers, because they will be accused of
playing politics, however good their motives. It makes no sense
to have the White House in control of your statistics. There is
a reason why almost no major industrialized nation puts its
statistical agencies under its immediate executive.
Vice Chair Maloney. But the Census Bureau does have a
poverty measurement in the Census Bureau now. I believe it's
called the SIPP Program. How is that different from what you
are trying to do? Because they do measure. They release their
own numbers on poverty, don't they?
Dr. Blank. One thing the Census has done a very good job
on--recognizing the problems with the current poverty measure--
is that they have produced quite a variety of alternative
measures. I think they report on somewhere around 26--it may be
24, it may be 28--but they regularly give you other poverty
numbers.
These are in web pages that you have to go looking for. It
is not the same as a released piece of data that receives
attention, and one discusses its implications and is used
broadly throughout the Nation.
So that the need is to basically take the National Academy
recommendations and to produce a poverty number that is
released at the same time as that OMB number. I have no
problems with continuing our historical number. It's one we
have looked at for a long time. But to have an alternative
measure here along the lines that this new House legislation
proposes I think would vastly improve our understanding of who
is poor.
Vice Chair Maloney. Mr. Rector.
Mr. Rector. I would just like to go on record to strongly
oppose this new type of poverty measure. I regard it as highly
deceptive. It is in fact a moveable measure. It is kind of like
running a race but when you get close to the goal line at the
end of the race we quietly, in the middle of the night, move
the goal line further on and you have to continue to run
further.
Also, one problem about this type of relative poverty
measure, is you cannot solve poverty by economic growth under
such a measure because poverty is measured more or less as a
relative share compared to the median family income.
So if everybody's incomes go up proportionately, there is
no change in poverty. The only way that you can really reduce
poverty under this proposed system is by radical income
leveling, by taxing the middle and redistributing. And again
it's kind of like playing football game when you get down to
the five yard line, then you go out and quietly move the goal
post back further. I think it is a way of basically defrauding
the taxpayers of the United States.
Vice Chair Maloney. I would like to ask Dr. Blank. Any
change in the official poverty measurement suggests that there
may be a change in the number of American households defined as
poor. The Commission of Economic Opportunity in New York City
has utilized this alternative definition that you've discussed,
and can you comment on what they have learned from that change,
and what conditions would we need to consider before
implementing such a change in the national level?
Dr. Blank. Yes. New York City released these alternative
numbers for their city only this last summer. One of the things
that New York did, which the National Academy recommends
happening on a nationwide basis, is that they actually define a
threshold that is reflective of the prices in their particular
local area.
Right now we have a threshold that is identical whether you
are in New York City or Providence, or whether you are in rural
Mississippi.
So the poverty numbers in New York go up, but they go up
almost entirely because of the cost of living adjustment. If
you look at their numbers before they do their cost of living
adjustment from New York, they are quite similar to those that
come out of the official national statistic.
From what I know of New York City, it is utterly
appropriate for them to have higher poverty counts because they
face much higher housing expenses in particular for living in
the city.
What you find with this new measure is that it does
redistribute poverty in slightly different ways. You find a
greater degree of elderly poverty because many elderly people
are paying more out-of-pocket expenditures.
You find a little less poverty among some of your single
parents in part because you are allocating housing benefits,
and Food Stamps, and other things to them. So there is a
change. But it is exactly those differences that you want to
measure, you want to look at, they say something about the
resources that families have available.
Vice Chair Maloney. Thank you.
Mr. Hinchey.
Representative Hinchey. It seems to me, and I am sure that
this was mentioned in the context of some of your testimony,
that there are a number of ways in which we can deal with this
issue, and some of them are very constructive.
I would say that among those constructive means of doing it
would be to make sure that education is available to every
American. That means education at the earliest stage,
prekindergarten education, all the way up through community
colleges at least. So that anyone who was interested in
education could have that interest stimulated at a very early
age, and then addressed and encouraged throughout those very
important parts of their life as they grow up.
As we grow up, a lot of the things that we believe in and
determine and focus on and develop in forms of ambition, all of
those things are developed during that period of time. So it
seems to me that education would be one of the most important
things we could focus our attention on, improving our
educational system.
Ms. Blackwell. One of the things that I did comment on
before you came in the room was the need to really increase
investments in early education. We have established again and
again that investments in early education that prepare children
to begin school ready to learn pay off not only in terms of
school improvements, but they pay off in terms of lifelong
improvements. So we need to increase there.
I also mentioned the need to simplify and expand the Pell
Grants so that more people can have access to support to pursue
higher education, and how important it is to make sure that we
invest in young people who are out of school, and out of work
to give them that second chance to be able to get either back
in school, get into work, or figure out how to combine both so
that they can get back on a path to prosperity.
Representative Hinchey. Mr. Edwards.
Mr. Edwards. Thank you. Early education is critically
important to helping people to get out of poverty. Certainly
funding programs like Head Start would certainly be very
important.
And then tie that to parents working. It is good to have
the children, the young children involved in educational kinds
of activities during the day, but it has to be coupled with the
parents involved in some type of job training, or educational
endeavor that will help them to get better paying jobs in the
local economy.
Representative Hinchey. Mr. Rector.
Mr. Rector. I would disagree that Head Start is an
effective antipoverty tool. I think it has a marginal or
nonexistent effect on poverty. Education itself is beneficial.
But if you were to look at the causes of child poverty, as we
have talked about already today, low levels of education are an
important factor. But lack of marriage is also an incredibly
important fact. And lack of work is an incredibly important
factor.
Now we will spend about a hundred thousand dollars or more
educating each poor child through the primary and secondary
system in the United States. We spend close to $250 billion a
year subsidizing single parents.
I would ask, how much money do we spend trying to restore
marriage in low-income communities? And the answer is we spend
about $1 on promoting marriage for every $2,000 we spend
subsidizing and increasing single parenthood.
How much money are we spending trying to establish work
requirements that have been shown effective to increase the
amount of work performed by low-income parents? The answer is,
virtually nothing.
So we already put in an enormous amount of money on
education, and education is important. We also put in a lot of
money on job training, which is not particularly effective at
all. But the other two elements of this strategy, marriage and
work, are severely neglected by our current public policy.
Representative Hinchey. Yes, Mr. Mayor.
Mayor Cicilline. Congressman, I just want to agree with you
strongly that I believe the single most powerful tool we have
to reduce poverty and create opportunity for children and
families is education. That is both from early childhood
education, pre-K and Head Start programs, high quality
educational opportunities through junior college and college,
and also alternative educational opportunities like Youth
Build, and Year Up, and other programs that provide young
people with access to trades and vocations.
Those are very--in my city at least--those are incredibly
successful programs that are giving young people access to good
paying jobs to support a family. Obviously, high-quality public
education and a system of public education is key to that. And
so continuing to make good investments to create that kind of
opportunity I think is our single best way to reduce poverty in
this country.
Representative Hinchey. Dr. Blank, anything additional? No?
Dr. Blank. Only to agree on the comments about education.
Representative Hinchey. One of the other things that of
course we need to deal with is the salaries that people are
paid, the minor amount of income, upgrading the level of income
that people have.
I think that that is something that has not been focused
on. The low income situation in America today is one of the
worst that we have had in decades, quite a few decades at
least.
So I am wondering about that situation. And also the fact
that we are not yet engaged in equity pay in terms of the fact
that women, for example, get on average about $.77 as opposed
to $1 that is paid to men doing the same kind of job. So that
kind of equity in education would deal much more effectively
with the situation which was mentioned earlier where you have
families where the family is controlled and led only by the
mother and the father is not there. So raising up that level of
pay obviously would be something very significant. And
increasing the minimum wage which I think is something that
must be done.
What would you say about that?
Dr. Blank. Could I respond to the low-wage issue? The
problem of falling wages among lower and less educated workers
has been a very real problem in this economy, as you point out,
and particularly for less-skilled men.
There has been a real decline in labor force participation
among less-skilled men, and particularly among less skilled men
of color, which is of course a serious problem if you want
people working, tied into the mainstream economy, able to
support themselves and their families.
That decline in wages has been very directly linked to the
decline in labor force participation. Not surprisingly, if you
don't get paid as well, you don't work as much. It is just not
worth it to you.
That is one of the reasons why I think a number of people--
and again Congresswoman Maloney mentioned this earlier--are
very, very concerned about expanding the Earned Income Tax
Credit so that it provides more support to workers, even those
who do not have children in their immediately family. It is a
policy that would encourage greater labor force participation
at the same time that it subsidizes those low wages that you
have just mentioned.
Ms. Blackwell. We also need to remember all of the people
who are not in communities because of prison. One of the
recommendations from the Center for American Progress Task
Force is to really invest in re-entry programs for people who
have served their time and are returning to the community.
Since 1950 we have seen a 900 percent increase in the
number of incarcerated black men, and the legacy of absence
that this creates in communities in terms of people who are not
there is something that very much needs to be addressed. And we
need to make sure that people can get a second chance, can come
back, can get jobs, and can become contributing members of the
society.
And so those kinds of programs, programs like YouthBuild,
combined with continuing to raise the minimum wage--the raise
that happened was a very good thing, good progress--we need to
continue to raise the minimum wage and to index it to be half
the average hourly wage, increase the Earned Income Tax Credit
and make it more available, promote unionization so that people
who have jobs can know that they have good jobs, and guarantee
child care so that we will not pull so much resources out of
salaries for people to pay child care. But absolutely we need
to focus on the equity in terms of earnings issue.
Vice Chair Maloney. The gentleman's time has expired.
I would like to ask Ms. Blackwell and Mr. Edwards
specifically this on the jobless claims rate. The Department of
Labor reported that the jobless claims are at the highest level
in 7 years. And now the claims for unemployment benefits are at
493,000 for the week ending September 20; 400,000 per week is
typically seen as recession-level claims.
So I specifically would like to ask--and I recognize myself
for this questioning period for 5 minutes--millions of
Americans that are poor and working families have one wage
worker, yet despite having a worker in the family these
families are just not getting by.
This highlights the importance of strong work support as a
poverty reduction strategy. What do you believe are the most
important steps that we can take to support low-income workers
in obtaining and maintaining employment?
I would like to start with Ms. Blackwell and Mr. Edwards.
Ms. Blackwell. Low-income workers, much of what we have
already talked about responds to that, but we really do need to
recognize that so many people who are low-income are working.
When people lose their jobs they ought to have access to
Unemployment Insurance, and we need to expand the Unemployment
Insurance so that more people have access to it.
People who are working should get the benefit of the Earned
Income tax credit. People who are jobless need to have more
access to Earned Income tax credits. And families who have
multiple children need to have it extended on that side. To
repeat, that when people go to work they need to have a minimum
wage that actually is closer to being a living wage, and there
needs to be support for people to be able to have the child
care that they need and not have to continue to live in
poverty.
Vice Chair Maloney. Mr. Edwards.
Mr. Edwards. Yes, thank you very much.
Vice Chair Maloney. Then Mr. Rector.
Mr. Edwards. Thank you very much. Let me start with what
Ms. Blackwell just mentioned.
The living wage is critically important to this. I know
that that may be a taboo word at this level in our Government,
but clearly the living wage, or a living wage is critically
important to helping people to get out of poverty.
You know, what we are experiencing today is really a
downturn in the economy. Anything that happens on Wall Street,
clearly there's a trickle-down effect that really hurts the
people at the bottom rung of the ladder. So we really need to
invest more time and energy and money into job training and
help people to get into jobs that really pay decent wages.
Vice Chair Maloney. Thank you.
Mr. Rector, and then Dr. Blank, and then my time is
expired.
Mr. Rector. Low wages are not a significant cause of
poverty in the United States. Anyone who examines the Census
Bureau for even a few moments can clearly recognize that.
Again I would emphasize the fact that any year when you
look at poor families with children, on average, a very small
number of those families have full-time, full-year workers.
On average, poor families with children are working about
800 hours a year, or about 16 hours a week. Now let's say you
added $2 an hour to their hourly wage rate, that is only going
to bring the family's income up about $1,600. It has a minimal
effect on poverty because the problem is not that their wages
are too low--not that I wouldn't like their wages to be higher,
I mean to be honest--but the principal problem is not that
their wages are too low, but that there are very few hours of
work being performed.
And that is consistent every year you look at this data. It
is not a result of the current depression or anything. That
happens in good times, too.
So if you are serious about this, instead of reworking
trite slogans, the real issue is how do you increase the hours
of work? Because just raising wages is almost totally
irrelevant to the real problem. OK?
Secondly, most people who get minimum wage are not poor.
They're teenagers, or young adults in middle class families.
It's an extraordinarily poorly targeted policy to say that you
want to raise the minimum wage in order to deal with poverty.
OK?
It just costs the tax--the consumer a lot of money and you
are benefiting a whole bunch of teenagers like my son who
really don't need a wage increase. OK? It's not the group that
you're trying to benefit.
Vice Chair Maloney. Thank you. Dr. Blank, and then my time
has expired.
Dr. Blank. Just a quick comment on low wages. Low wages and
labor force participation are very closely linked. When wages
go up, labor force participation goes up. So that you have a
multiplier effect from this, which is one reason why I think--I
certainly care about things like the EITC expansion, and the
levels of minimum wage, but I want to say that not only when we
think about assistance to the poor and getting them into jobs
and employment, we should be very clear that at the end of the
day it is not the employment programs and the wage subsidies
that matter the most; what matters the most is that there are
jobs out there for them to move into.
Therefore, having a macroeconomy that is not in recession,
where jobs are expanding and where low-wage workers who are
looking for work can easily find it is by far the most
important anti-poverty program. That takes us right back of
course to the macroeconomy and to the current discussions of
what is happening on Wall Street and how it affects Main
Street.
Vice Chair Maloney. Thank you.
The Chair recognizes Congressman Hinchey for 5 minutes.
Representative Hinchey. Well I very much appreciate what
you said, and I think it is absolutely true. The situation with
wage equity is very, very important. The availability of jobs
is essential to the economy and to the circumstances of people.
And the level of the minimum wage is also very important.
It is very important to all those people who are working at
the minimum. And I think it is a lot more than just a few
children.
The fact of the matter is that when you increase the
minimum wage you increase effectively the wage of almost
everybody else. When you jack up the minimum wage to where it
ought to be--and the minimum wage has not been increased now in
a very long time in any significant way; it is far below where
it ought to be--the minimum wage today should be somewhere in
the neighborhood of $10. That is where it really should be.
And if you increase the minimum wage even a little bit
above where it is, you are going to increase the wages of other
people who are now above the minimum wage and have a very
positive effect on the economy. And you have a very positive
effect on the economy because most of the economy--more than
two-thirds of it--is driven by the Gross Domestic Product. And
the Gross Domestic Product is driven by working people, blue
and white-collar working people.
So I think what we are talking about here is very
important, and it is something that really needs an awful lot
of attention.
There is another element, too, that I think needs a lot of
attention, and that is health care. The situation with health
care I think is causing a lot of problems for low- and now
increasingly middle-income people. Because more and more people
are finding themselves without health insurance. And they are
also seeing that when they do have health insurance that the
cost of that health insurance is going up very dramatically.
So I would be interested, if anyone would like to comment
on the initiative that really needs to be taken to promote a
national health insurance program in order to drive down the
cost of health care and to make health care available for all
Americans, particularly early health care when people begin to
feel that they need some health care attention, but are not
eligible to get it, and they are not eligible to get it if they
do not have any health insurance until they are really
seriously ill and they have to go into the emergency room of a
hospital and then make it more expensive for everyone.
So if there is anything that you would like to say about
health care and what we need to do with health insurance, I
would be interested in hearing it.
Ms. Blackwell. Actually I will leave it for others to talk
about what we need to do about health insurance, but I do want
to state that we need to make sure that every American has
access to health care when they need it, and we need to have a
system of universal access to health insurance and health care
services.
I want to use my time, though, to talk about the fact that
so much of poor health in this country is not tied to health
care, but it is tied to environmental factors, and behavior.
What we really need to focus on is that 70 or 80 percent of
health that is not about access to health care at all; it has
to do with people living in communities with air pollution. It
has to do with people not having access to fresh fruits and
vegetables. In too many communities in this country it is
impossible for anybody to go out in their neighborhood and buy
a tomato--buy a tomato! So we need to invest in making sure
that people have access to fresh fruits and vegetables. Parks
and safe streets where they can exercise. And communities where
the air is safe to breathe.
If we would pay more attention to making sure that every
community is a healthy community, we would have less strain on
our health care system. But absolutely every American ought to
have access to health care.
Representative Hinchey. Mr. Edwards.
Mr. Edwards. Yes. Just to give you just an indication of
what we are doing in northeast Florida, of the 24,466 people
that we saw in a 22-year period--this is coming from our
management information system--21,115 of those individuals had
no health insurance; 3,342 had health insurance. So obviously
health insurance is real, real critical.
People are going to get health care somewhere, somehow, and
they are going to abuse, perhaps the emergency room situation
because they do not have health care, and they have to go to
either the emergency room, or to public health facilities in
order to access health care.
A universal health care system is critical.
Vice Chair Maloney. Could the gentleman sum up? Your time
is about to expire.
Mr. Edwards. I did.
Vice Chair Maloney. Oh, you did? OK.
Mr. Edwards. That was a period.
Vice Chair Maloney. OK, Mr. Rector, very quickly.
Mr. Rector. One thing I think it is important to recognize
is that when you are looking at low-income uninsured people,
about a third of them in the census report are illegal aliens.
I hope no one is suggesting that we need to provide Medicaid
coverage or something to illegal aliens. That is a growing
problem.
The other thing I would say is that there is a considerable
waste in Medicaid that could be harnessed, which is that in the
Medicaid program if an individual currently has employer
coverage they can drop that coverage and obtain Medicaid. That
is a very significant problem that's called ``crowd out'' and
it costs the taxpayers billions and billions of dollars a year.
If you had reasonable rules about dropping the coverage
that you have in order to get on Medicaid, you could save a lot
of money and redirect those savings to provide expanded care
for other people. It is basically a total waste the way the
system works now.
Vice Chair Maloney. Thank you. The Chair recognizes herself
for 5 minutes.
Economic growth suggests that poverty not only affects
individuals, but also creates larger challenges for economic
growth. There has been a great deal of literature written about
this, and can you discuss the effect of poverty on economic
growth? Anyone? Who would like to discuss this? The effect of
poverty on economic growth.
Mayor Cicilline, you probably have a lot of experience in
that.
Mayor Cicilline. There is no question that the ability to
create good-paying jobs and move people out of poverty by
having a high-quality system of public education, by ensuring
that people are growing up in health communities as Ms.
Blackwell was mentioning, and having access to quality health
care are all things that are essential to strong communities
and to strong cities.
So that as we try to grow jobs in our communities, and as
we try to create economic opportunities in our communities, the
issue of poverty is at the center of all of that work--ensuring
that people have access to good jobs, have access to good
health care, have access to quality education, live in a
neighborhood that is safe from violence, that has good public
spaces for exercise, but all of that are the things that lead
to a positive image of a city, and a positive image of a place
to work and bring capital and make investments to create
economic opportunity.
So they all relate to each other. And the effects of
poverty obviously affect most personally and directly on the
child and the family that lives in poverty. But it has a
corrosive effect on the whole community. Anyone who is a member
of a community who lives in a place where there are people who
remain poor continue to feel the effect of that.
So we have a joint responsibility as residents of a
community to eradicate poverty, and economic development is a
key way of doing that.
Vice Chair Maloney. Mr. Rector, and then Dr. Blank.
Mr. Rector. I would say that poverty has no effect on
economic growth other than on the incomes of the poor people.
Obviously if you can get their incomes up they are better off,
but if you mean does poverty reduce the standard of living of
the average American, the answer is no.
What does reduce the standard of living of the average
American is welfare spending. Having spent $14 trillion on the
war on poverty with very little effect, not only imposes a
direct cost on the taxpayers who had to pay for that spending,
but if even a portion of that money had been invested in
capital or in new technology or in entrepreneurial activity,
the overall economy and the standard of living of the average
American would be considerably higher.
As we look forward to spending the next $9 trillion on
welfare over the next decade, the same rule applies. Now I am
not suggesting that we ought not to spend that $9 trillion. I
do think we have obligations to the poor. But I also think we
have an obligation to spend that money wisely in a way that is
not just one round of one-way handouts after another. We need
to reform welfare so that it requires and demands and
encourages constructive behavior on the part of the poor, and
which begins to end the self-inflicted behaviors which are the
major cause of poverty, particularly the 38 percent out-of-
wedlock childbearing rate, and the very, very low levels of
work among poor adults.
Vice Chair Maloney. Dr. Blank.
Dr. Blank. There is a substantial body of literature that
is growing rapidly looking at the effects of poverty on
children and on adults. It finds that not only that poverty has
these effects, but the longer that a family and children spend
in poverty the greater the effects.
So you find that longer periods in poverty produce greater
health problems. It produces lower educational achievement. It
produces greater likelihoods of being involved in crime.
Now all of those things--low educational achievement, poor
health, and high rates of crime--are basically impediments to
productivity and to economic growth in this country.
So I would not think that the only reason you want to
reduce poverty is because it is going to make all the rest of
us better off. I mean, there are a variety of reasons to reduce
poverty because we have responsibilities to these individuals
and the lives that they lead as fellow American citizens. But
it is true that if we do reduce poverty, the rest of us will be
better off, as well.
Vice Chair Maloney. Thank you very much. My time has
expired, but I would like to close by first thanking my
colleague for being here today and participating, but all of
you. Many of you travelled quite a distance to be here. Your
testimony, your insight, your research will help all of us
formulate hopefully new policies for the 21st century to help
us combat poverty, which will help not only the individual but
our overall economy, in my belief.
I also want to close by remembering Senator Edward Kennedy
and his lifelong commitment to ending poverty, to attacking
poverty. I send him all my best wishes, as I am sure all of you
do, for his speedy recovery. He did request this hearing, and
my thoughts are with him. The entire transcript will be given
to him to study during his period of recovery.
And I want to end by just really thanking all of you for
your life's work, your research, and your dedication to helping
individuals and helping our country. Thank you so much for
being part of this hearing.
The hearing is adjourned. Thank you.
[Whereupon, at 11:31 a.m., Thursday, September 25, 2008,
the hearing was adjourned.]
Submissions for the Record
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Prepared Statement of David N. Cicilline, Mayor, Providence, Rhode
Island
Thank you Chairman Schumer, Vice-Chair Maloney, and to all
members of this esteemed committee.
I am honored to be here as a representative of mayors and
other elected city officials from all over the Nation who are
working to address these issues.
Mr. Chairman, for many generations, when America has faced
difficult economic times, some have viewed our cities as our
greatest burdens.
In the national imagination, cities, and the people who
lived in them, were described as the ball and chain of the
national economy, dragging America down. Words like devastated,
blighted, and ruined were so often associated with the word
``urban'' that they effectively became synonymous.
But something remarkable began happening a decade or so
ago. American cities began a stirring comeback. Benefiting from
effective Federal policy in the 1990s as well as the transition
to a knowledge-based economy, cities are again the centers of
culture, innovation, and, most of all, economic growth.
A slew of recent research underscores the fact that in our
shaky economy cities are not the problem. They are the
solution.
The reality is that the American economy is a metropolitan
economy. In fact, the nation's 100 largest metro areas, which
make up only 12 percent of the Nation in land area account for
68 percent of all jobs and 75 percent of national GDP.
Furthermore, as we expedite the transition of our economy
into one that meets the demands of the information age and our
need to become independent from foreign oil, the strategic
importance of cities grows even more.
Already, cities have 76 percent of the knowledge jobs and
are poised to grow an even higher proportion.
Additionally, cities house our great scientific research
centers that will give birth to the innovations that will power
America with new forms of energy. Also, contrary to most
people's ideas about urban America, cities are the greenest
places we can live based on existing consumption patterns.
Chairman Schumer, you may already know that those living in
the New York metropolitan region have on average half the
carbon footprint of the average American. The more Americans
that continue to move to cities, the less dependent America
will be on foreign sources of energy.
Cities are the solution. But, as a nation, we are not
tending our metropolitan garden. In recent years, the evolution
of cities has continued in spite of national policy, not
because of it. As a result, we are severely restraining our
metropolitan transformation at a time when we need to
accelerate it.
Foremost among these restraints, without a doubt, is
poverty. Poverty is to a family and a community what inflation
is to an economy. Its consequences spill over into everything
else and have a lasting and devastating impact. But, what makes
it worse, is that there are measures we know we can take to
prevent it from persisting.
Not surprisingly, the headway we made on poverty in the
1990's coincided with the metropolitan comeback. But in recent
years that headway has been reversed. In my view, one of the
reasons for this is the sharp decline in funding. First Focus,
the children's advocacy group on whose advisory board I sit,
recently discovered that the share of non-defense spending on
kids has declined by a full 10 percent in just 5 years. And, as
you know, the Community Development Block Grant--one of our
country's great domestic programs for cities--has also been
significantly cut in recent years. Just to name two examples.
But you are presented with lots of statistics every day and
the call for funding is constant. So my job today is to report
to you from a Mayor's perspective about what can work and is
currently working to lessen poverty in our communities.
I know that many view poverty as a great complex of
interrelated problems, but I view it very simply. Poverty is a
lack of opportunity. So to me, the fight is not so much a war
on poverty as it is a war for opportunity.
The long-term answer does not lie in merely relieving the
stresses and pain of poverty. The long-term answer lies in
rebuilding upward mobility in America. The war for opportunity
means rebuilding the economic ladder. When there is upward
mobility there is hope. Families will work harder to make sure
their children are educated, stay out of trouble and develop a
strong work ethic. But when there is not, it creates the
environment for many of the social ills that can ruin lives and
drive up the costs of social programs.
Unfortunately, all across the country, the economic ladder
has been badly weakened in recent years. It used to be that the
American Dream was available to anyone who was willing to work
hard enough, but in today's economy too many families are doing
everything right and still getting left behind.
At my second inauguration in 2006, I identified this as one
of the highest priorities for my city. I signed an executive
order creating a task force made up of our foremost experts on
workforce development, poverty, and early childhood development
and family supports.
I asked them to offer me their best recommendations for
what we can do at the city level--as a government and as a
community--to reestablish upward mobility for our working poor,
and to help re-build the middle class in our city.
They developed a set of action steps called Pathways to
Opportunity to move people into the workforce, keep them in the
workforce, and open up more opportunity to get ahead once
they're in.
With the report in hand, I formed a partnership with the
Annie E. Casey foundation, to open an office that is charged
with overseeing the implementation of these recommendations in
coordination with the city and the agencies that helped to
develop them. It also serves as a community-based site for
residents to connect to new opportunities.
We have launched a number of ambitious projects as part of
this initiative.
We initiated a major long-term effort to rebuild many of
our old and decaying school facilities and replace them with
21st-century learning environments. As part of this, we
launched a large-scale apprenticeship program in the
construction trades. We have young people from across the city
who are integral parts of these major construction efforts that
involve cutting edge green technology and learning how to build
to LEED standard.
We have partnered with our hospitals that are facing a
serious nursing shortage to get young people access to the
skills they need to begin a good career in the health care
field.
Taking the lead from Brookings' work on ``the high cost of
being poor,'' we are working with local banks in an
organization called Bank on Providence. It is developing
financial instruments specifically designed for low-wage
families and individuals. I am also working with the state
legislature to regulate the ability of predatory lenders and
check cashers to extract usurious rates and charges from their
customers--most of whom haven't been able to access mainstream
banking services.
We are aggressively engaging with ex-offenders who come
back to their communities to make absolutely sure they meet all
of their re-entry obligations or else face consequences. But at
the same time ensuring that the support necessary for their
success is in place.
These are a few examples of the kinds of meaningful,
measurable, and effective strategies being undertaken by this
office. It is all about creating more opportunities and
removing any barriers to existing opportunities.
Mr. Chairman and honorable members of the committee, if I
had more time I would love to also describe to you the
incredible effect that city-wide after school is having in
Providence. I'd like to describe the success we've had with
integrating our police force with the communities they serve.
There is so much that has an effect on opportunity and poverty
that we know will be effective.
But instead I will quickly conclude with a general comment.
Our cities represent tremendous opportunities for our 21st-
century economy. We can unleash that potential by making
opportunity for every American a national priority again. After
all, the other name for a robust economic ladder and upward
mobility is the American Dream. That is what made our economy
the envy of the world, and it is the only way we can preserve
its position in our global economy.
Thank you.
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