This year marks the 50th anniversary of the War on Poverty. As we reflect on the efforts to address poverty in this country over the past half-century, it is a good time to take stock of the current state of poverty and inequality. Recently, the Stanford Center on Poverty and Inequality issued a report that does just that. The Poverty and Inequality Report: 2014 examines key indicators of hardship and unequal opportunity across several domains to pull together a comprehensive national picture of poverty and inequality today.
The findings are sobering. Across the domains of unemployment, poverty rates, income inequality, and wealth inequality, a host of indicators show that last year was among the worst since the year 2000:
• The employment rate has not fully recovered since the Great Recession, and seems unlikely to grow much more in the near future – suggesting that the labor market recovery from this recession will parallel other recessions since the 1980s, where prime-age employment never regained its pre-recession levels. This pattern has been particularly consistent for less-educated workers.
• The poverty rate increased as a result of the Great Recession, though it is good news that the rise was not greater.
• Wealth inequality increased during the Great recession for the first time in almost 30 years, with black and Hispanic households taking a particularly large hit. And income inequality has been on the rise since the end of that recession.
• In health and education, disparities in outcomes by race and socioeconomic status remain large. The overall picture shows a country where poverty and inequality are moving in the wrong direction.
The report includes a few more positive notes. The safety net has been functioning reasonably well, particularly in response to the Great Recession – poverty rates would have risen much higher without the benefit expansions included in the American Recovery and Reinvestment Act. But those expansions are now being cut back, and safety net programs still fall significantly short of addressing all of the existing need. In the area of health, the Affordable Care Act may improve disparities in health care access. And there is evidence that racial disparities in educational achievement are narrowing – but racial gaps in college graduation remain large, and disparities by socioeconomic status are growing.
Why are we stuck in this troubling state of poverty and inequality, despite significant investments in safety net programs, health interventions, and educational reform? The data suggest that the economy is the upstream structural problem.
Over the past 40 years, the labor market has increasingly failed to produce a sufficient number of living wage jobs, particularly for less-educated workers. The resulting unemployment, underemployment, and inadequate incomes drive the hardship and inequality that are visible in poverty rates and income and wealth disparities. Downstream institutions like schools, health care systems, and safety net programs can only do so much to compensate for this upstream lack of access to economic opportunity.
What does all of this mean for our work at Living Cities? It reinforces our conviction that jobs and economic development are key systems required to achieve better results for low-income people. In our work at the scale of cities and regions, that means continuing to catalyze system changes that help create the conditions to grow jobs in the cities where low-income people live, and that create workforce pipelines to give low-income residents opportunities to access high-quality employment.
It also means that we must continue to work across sectors, not just institution by institution. And it means recognizing that representatives from the private sector, including especially employers, are key stakeholders who need to be brought to the table in order to achieve the changes that will make a difference.