Almost 50 million Americans live below the governmental poverty line today – with 16 million among them being children. Roughly one in seven adults and one in five children suffer from the challenges of poverty. Two out of three Americans will live in poverty at some point in their lives. Adults, without adequate skills and education, often are trapped in unemployment. For children, the lack of a stable home, quality education, and nutritious meals, make them more likely to remain in poverty in adulthood.
Today in America, poverty has become a crisis.
The Hamilton Project at the Brookings Institute began a two-day summit June 19 entitled “Addressing America’s Poverty Crisis.” The Hamilton Project is centered on innovative and strategic policy proposals designed to grow the American economy and benefit our citizens. The Project focuses on embracing a role for effective government in making needed public investments. A myriad of esteemed scholars, economists, business leaders, and policymakers addressed the poverty crisis from different angles. A total of 14 policy proposals were released at the summit, focusing on apprenticeship, skill-building, disadvantaged youth and early childhood care.
At the summit’s last session, experts focused on “The Role of Work-Sharing and Minimum Wage Policy in Supporting Workers.” Arindrajit Dube and Katharine G. Abraham each proposed policies that would address employment issues for low-income people.
In analyzing the effectiveness of these policies, we must recognize that the fundamental problem is persistent poverty in America today. This is not the by-product of the recession, but rather a consequence of long-term trends. Since 1973, economic growth and wage growth have severed – full-time workers are making essentially the same as four decades ago.
Dube, Associate Professor at the University of Massachusetts Amherst, authored “Designing Thoughtful Minimum Wage Policy at the State and Local Levels.” He believes that states and localities should consider median wages and local costs when setting minimum wages, index the minimum wage for inflation, and engage in regional wage-setting. Targeting low wage workers, Dube believes a state and local centered minimum wage policy will raise the earnings of low-wage workers with minimal negative impacts on employment.
Next, Abraham, Economics Professor at the University of Maryland, together with Susan N. Houseman, proposed “Encouraging Work Sharing to Reduce Unemployment.” Abraham proposes enhancing work sharing programs through increasing federal funding, making work sharing a requirement of state unemployment insurance systems, and encouraging employer participation. Abraham believes that this policy will immediately impact workers who would otherwise become unemployed during an economic downturn. Ultimately, work sharing would increase employers’ usage of the policy rather than layoffs during cyclical downturns.
Together with the authors Dube and Abraham were panelists including Jared Bernstein from the Center on Budget and Policy Priorities, Gregory Mankiw from Harvard University, and Christopher Edley from the University of California Berkeley.
The panelists debated fiercely on the two topics, attempting to find different weaknesses from the two authors. Mankiw questioned the policy of raising the minimum wage, stating that it would only lead to higher unemployment based on “basics in Economics 101.” Bernstein defended Dube’s arguments by citing long-term research that demonstrates how the rise in minimum wage over time has not reduced employment overall. Dube bolstered his statements by referring to the 23 states that have exceeded federal standards of minimum wage policy, and their respective economic performances.
Although Abraham’s policy received some praise, the panelists were also sharp on the potential loopholes and negatives of work-sharing. Although more people can keep their jobs, each individual would also be making less total income than before – thus leading to potential reductions in spending and saving. Abraham defended her arguments by comparing the relatively small impact of work sharing compared to actual layoffs for the workforce. She cited the example of Rhode Island, which has the most successful model of work sharing in the country.
The Hamilton Project is a part of the larger movement to strengthen and grow the currently stagnant American individual economic welfare. In-depth policy proposals and discussions are crucial in the path of restructuring the American workplace and policies. Yet we must push our local/state level legislators and Congress in order to truly push forward meaningful labor policies.