In the aftermath of Hurricane Katrina, which struck the Gulf Coast with such ferocity in late August 2005, Americans were shocked by the broadcast images of desperately poor people left to fend for themselves. The depth and consequences of poverty in America, normally hidden from public view, had once again become the subject of debate and national soul-searching. And yet, a year and a half later, the subject of poverty has fallen so far off the public’s radar screen that President Bush did not give it a mention in his recent State of the Union Address. How can our prosperous nation continue to tolerate such deep pockets of despair as were seen in New Orleans?
It’s easy to blame the public’s infamously short attention span, limited budget resources, or our preoccupation with the wars in Iraq and Afghanistan for this state of affairs. But there is another explanation: poverty has been off the public agenda for so long that there is no consensus among policymakers about what to do. The cupboard of innovative, effective anti-poverty proposals looks bare.
The nation’s mayors have now stepped into the breach. Aiming to fill the leadership void, the U.S. Conference of Mayors called upon Los Angeles Mayor Antonio Villaraigosa to lead an effort to develop a coherent, integrated plan to address the problem of poverty in America. In late January, Villaraigosa and a team of mayors from across the country -- including Newark’s Cory Booker, Detroit’s Kwame Kilpatrick, and Miami’s Manny Diaz -- released a forward-thinking blueprint for action. Their plan reflects not only a sophisticated understanding of the dynamics of poverty, but represents a bold and serious attempt to update the social contract, revising the division of rights and responsibilities between government and its citizens.
While the mayors did not shy away from recommending the allocation of addition federal dollars, they made clear that they were not interested in simply throwing money around. They acknowledged that reductions in the poverty rate are unlikely to come from expanding traditional entitlements and subsidies. Eschewing the traditional laundry list of requests, the mayors put forward three primary proposals, which, if implemented together, have the potential to serve as a truly transformative investment strategy. They propose we use public resources to create a lifelong ladder of opportunity.
The first rung of this ladder consists of preparing children to succeed in school and making sure they are ready to compete in a global economy. This means investment in high-quality public education, with the federal government being asked to help make pre-Kindergarten available to every child. Limited access to affordable, quality child care is one of the main obstacles to labor force participation in many households, and preschool has the additional advantage of helping prepare disadvantaged children for primary school. Research has confirmed that children entering primary school with no previous classroom time are less prepared to learn than children who attended preschool programs. We should be building on the success of Head Start, which offers children from lower-income families access to learning designed to accelerate their cognitive and emotional development.
The mayors make the case that failure to commit resources to early education programs will have substantial costs down the road. That’s because children without access to these opportunities have poorer educational outcomes, and are more likely to struggle as young adults, as reflected in lower achievement test scores, higher rates of criminal activity, and uneven attachments to the labor force. Conversely, the potential economic upside to investing in early childhood education is remarkable. One recent study by the Brookings Institution found that $2 trillion in new GDP could be generated by 2080 from a new federal investment in high quality, universal preschool -- making it one of the most powerful ways to invest in tomorrow’s workforce. The mayors are prepared to strike a deal. If Washington were to invest in early childhood education, state and local governments could focus their resources on workforce training programs that could be included in high school curriculum, giving vocational training the modernization it desperately needs.
The mayors’ second proposal calls for investment in lifelong learning and skills development. They suggest creating a savings account for every child at birth and seeding this account with a $500 endowment. Additional savings into these accounts would be matched up to $500 each year. Since access will be restricted until each account-holder graduates from high school, the mayors believe these accounts will create a powerful new incentive to complete high school and lower the drop-out rate. Once 18, account-holders can use their savings to access post-secondary education and career-directed workforce training -- investing in their own human capital development and learning money management skills along the way.
This "accounts-at-birth" approach represents a social investment in every child, and at the same time it gives the child a stake in broader society. Each child will grow up knowing they will have a modest pool of resources at their disposal to help them succeed. Beyond the individual benefits, investing in children could have large multiplier effects, especially when it is linked to increasing social engagement and ensuring access to asset-building opportunities. The mayors are betting that the experience of asset holding will be far reaching -- and lead to positive psychological and behavioral effects for both parents and children alike. They are adding their voice to a growing chorus of policymakers supporting this idea. At the national level, a bipartisan coalition of legislators in both the House and Senate have introduced the ASPIRE Act, which would create just such a universal accounts-at-birth system here in the U.S. And just last week in California, a bipartisan team of legislators proposed a bill -- called The California KIDS Account Act -- which would do the same at the state level.
The third proposal in the mayors’ antipoverty strategy focuses on ensuring that work pays. It builds on the success of the Earned Income Tax Credit as a work incentive and wage subsidy. The EITC currently benefits over 21 million American workers. However, over 98 percent of the benefits go to families, essentially ignoring low-wage workers without dependents. The mayors are cognizant of the power of role models in their communities and are concerned that too many children are growing up surrounded by adults who are working hard but not getting ahead. They propose that increasing the EITC for single adults, many of whom are unmarried fathers, from its current level of $399 to $1,600 will provide a boost to these working adults. In turn, it will be up to the mayors and other local leaders to encourage the type of economic activity which can support job growth.
So, what are the prospects for this ambitious agenda? Big and bold proposals are not enacted over night. Breakthrough policies often must take a circuitous route or require a convergence of circumstance. The EITC began as an afterthought in the horse trading that led to increasing the payroll tax in the mid-1970s. But it didn’t become a valuable anti-poverty tool until it was expanded, first in the ‘80s and then in the ‘90s. It seems like it’s due for another boost. The case for universal pre-K is already being taken up at the state level. While Villaraigosa had a front row seat for California’s recent debate on enacting universal pre-K, which was voted down in a 2006 referendum, Los Angeles is already offering it in its schools. Several other states, such as Oklahoma, Vermont, and Georgia, have forged ahead with policies of their own. Getting the feds to step in to equalize the financial burden is a logical next step. Creating an "accounts-at-birth" savings system won’t be accomplished over night, but it’s already been done in the UK, where the government has implemented a scheme that gives every child born since 2002 a savings account.
Poverty is not an easy issue to keep on the public agenda. Its causes are complex, and past efforts to address it have not always faired well. The challenge is compounded by the tendency of elected officials to prefer programs that promise quick results, which is why the traditional chorus is a cry for more federal handouts. This select group of mayors, who are on the front lines in the fight against poverty, have taken a different approach. They have acknowledged that there are no quick fixes. What they have done is to identify an innovative, long-term agenda. They are not only adding their voices to the public discussion of poverty, but are highlighting a discrete set of proposals which are gaining credibility for their potential to make a difference in the decades to come. Their call deserves a larger hearing.