David Riemer and the Community Advocates Public Policy Institute have a plan that would allow poor Americans to earn wages they need to get out of poverty
Reducing poverty by 50 percent sounds like a bleeding heart liberal’s dream. Saying that people should work more sounds like the canned response of a free-market capitalist.
But David Riemer thinks such a dramatic reduction in poverty is possible — with the help of America’s free-market economy.
Riemer is a senior fellow at the Community Advocates Public Policy Institute , a think tank based in Milwaukee that promotes policies to reduce poverty. In March, Community Advocates released a report analyzing how poverty can be reduced from its current national rate of 14.5 percent to nearly 7 percent.
The report presents a package of policy proposals that would enable more than half of people living in poverty to earn wages that would lift them above the poverty line.
The report takes a five-pronged approach to reducing poverty: create “transitional jobs” for underemployed and unemployed people; increasing the federal minimum wage to $10.10 an hour; expand the earned income tax credit; increase funding for child-care subsidies; and increase support for people who are physically or mentally incapable of working — people with disabilities and receiving Social Security and Supplemental Security Income.
The policy proposals developed by Community Advocates relies on modeling software developed by the Urban Institute, a national organization that conducts research on social and economic policy, which is able to simulate a household’s eligibility for different assistance programs or tax credits, depending upon changes in income. The result is an empirical analysis of various factors that can lead to a reduction in poverty.
“Until this report came out, no one could say (how poverty could be reduced) with this level of certainty,” Riemer says.
Riemer has spent his career in the private and government sectors implementing ways to reduce poverty and improve health care and other social services without increasing spending. In 2003, he worked as the budget director for Wisconsin’s then-governor, Jim Doyle, and was responsible for balancing a state budget with a $3.2 billion deficit without cutting core services. He has also worked as the budget director for the city of Milwaukee and has authored numerous articles on poverty, health care reform and public administration.
Riemer will speak about the report 10:30 a.m. Thursday, July 30, 2015, at Portland State University’s Smith Memorial Student Union. His talk, “Working Our Way Out of Poverty,” is free and open to the public. It is sponsored by the Oregon Business Council’s poverty task force.
Amanda Waldroupe: Your report concludes that work is the primary way out of poverty. Why is that?
David Riemer: As we talk about poverty here, we’re talking about a shortage of income. The point that I was trying to make is that when you have a shortage of income when you’re underemployed or unemployed, it makes it more likely for you to become sick or ill. It makes it harder for children to learn. I know there’s often a lot of discussion that we shouldn’t only think of poverty as being a matter of money. But it’s hard to measure some of those other things — whether people’s emotional state or general well-being is getting better or staying the same as things that you would measure and point to to change public policy. You can measure whether people’s incomes stay the same or rise.
A.W.: Why the goal of cutting poverty in half?
D.R.: Our goal was to achieve a dramatic reduction in poverty. The single biggest way to achieve (this goal) is to get more people working. If you increase the minimum wage, (a reduction in poverty) just happens. When you increase the earned income tax credit, it just happens. If you were to achieve a higher rate of unemployed people transitioning to work, it just keeps adding to the reduction of poverty. It makes a big difference.
A.W.: Minimum wage.
D.R.: We know two things about the minimum wage. It’s true that when you raise the minimum wage, there is some job loss. There is, however, also an increase in the income for those who keep their jobs. The amount of the increase determines both the amount of the job loss and the amount of the income gain. It’s a complex trade-off. Striking the right balance is complex.
A.W.: What are transitional jobs?
D.R.: Broadly speaking, a transitional job is subsidized wage-paying employment that unemployed or underemployed adults are offered after their effort to find regular, unsubsidized employment has not succeeded after a reasonable time period. Transitional jobs have been given other names. They’re sometimes called temporary jobs, jobs of last resort, community-service jobs. In the last several years, in particular, transitional jobs have been made available at not only nonprofit organizations but also for-profit firms. The idea is if you think about poor people, poor adults, there’s really only a couple things to do. You can say, “We’re doing nothing. We’re not going to help you at all. All we will do is give you food stamps or give you shelter.” Historically, that’s what we’ve done with men and women who don’t have children or aren’t pregnant. The other thing we can do is give you money. The third thing you can do with an unemployed person is say, “I’ll offer you a job.” Transitional jobs are one key approach within that strategy.
A.W.: It sounds a lot like the jobs offered under the New Deal, especially the Civilian Conservation Corps and the Works Progress Administration. D.R.: The CCC and WPA were a type of transitional job. Today, that approach is still being used in a number of states. Anyone who gets a transitional job works for a government or nonprofit organization. What’s new about today’s version of transitional jobs is that a fair number of them include work in the for-profit sector. Even though we have a pretty dicey economy for a lot of people … transitional jobs are seen as an economic development tool. (For-profit firms) frequently have used transitional workers if they can justify adding a new position. Transitional jobs give (the firm) a chance to try out not only a new worker, but to literally try out adding the additional position to the company.
A.W.: It’s interesting that you’re couching all your arguments to reduce poverty on free-market capitalism. Rather than making any moralistic argument, you’re saying this is good for employers and businesses.
D.R.: It’s important when you’re pushing most reforms and policy changes to have three legs to stand on, so to speak. One leg is evidence. One of the really powerful and unique things about this model is that it’s backed by incredibly rigorous and independent analysis coming from the Urban Institute. The second leg of the stool is to appeal to people’s basic values — liberal values, conservative values, values about reducing poverty. The third leg is a recognition that the overwhelming majority of people in this country have always got their jobs because of the free-market economy. So our model rests on evidence, values and a recognition that the private market is ultimately a key part of the solution.
A.W.: So there’s a recognition that attacking poverty is something the private sector can benefit from. I’m not sure that’s always been obvious.
D.R.: There’s the underlying moral concern. Do we want to live in a society where so many people are poor? There are all kinds of practical reasons for (reducing poverty). An unemployed worker is someone who isn’t producing anything. They’re not paying taxes, or at least not paying as many taxes. We have overwhelming scientific evidence that being unemployed and being poor is damaging to people’s health. What does that mean to general society? … We pay more for Medicaid. We pay more for insurance. There’s also evidence that poor people and their children (achieve) less in school. It also means that they’re less likely to graduate. You have more people going on welfare. There’s a social cost.
Even if you are a middle-class person and don’t have any moral reason to care about poor people, you have an economic reason. Poverty costs the middle class. There are more moral and totally pragmatic reasons for wanting to tackle this program. The challenge is how do you do it and what would actually work? We’re no longer groping in the dark about what would work.
A.W.: The report talks about tapping into and reflecting widely shared American values. Why is that important? It seems like many important changes in our culture — the civil rights movement, for instance — occurred because there was a movement that said our values were wrong.
D.R.: I actually think that the values of the American people are pretty much in the right place when it comes to poverty. I say that not out of gut instinct. We had a national opinion poll done where we asked people about the policies in this policy package. There were very strong, favorable responses to that public opinion poll cutting across Democrats, Republicans and independents. Republicans supported all those policies —not quite as much but still with heavy majorities. I think Americans are figuring out that we need to shed old values and replace them with new ones, which was the case with slavery, with African Americans in general, with women, with same-sex relationships. When it comes to poverty, there’s no change in values that is needed. What is needed are changes in understanding what those values have to be translated to in light of today’s economy.
Here’s part of the problem. When the U.S. emerged from World War II, there literally was a job for everybody. The U.S. economy was the world economy. We didn’t face any international competition. If you had said, in 1955, we’re at risk of losing your jobs to China, people would have thought you were crazy. It was not rational to expect China, Japan, India would be competing with us. What happened was not so much the values changed, but the world changed. It was a world that could never last. Therefore, some of the problems we did not face back in the day we now face. Back in the day, we didn’t face the problem of a large-scale unemployed population who had limited education and skills. A.W.: Creating transitional jobs, raising the minimum wage and the earned income tax credit are pretty hot-button issues but also require systemic change. It seems impossible without large-scale government intervention and changing laws.
D.R.: The goal of our project is to persuade policymakers to consider and implement large-scale policies. It’s quite likely that small-scale transitional-jobs programs will continue to be enacted. The politics surrounding transitional jobs are quite different from the politics surrounding welfare. As budget director of Milwaukee, Wisconsin, I was not keen on spending money or raising taxes. The costs associated with these large-scale policy changes can be offset by cutting other wasteful or ineffective or low-priority government programs, including tax loopholes. I’m not arguing for an overall increase in government size or government spending. … Implementing this model will not necessarily require overall that government gets bigger.
THE POLICY PACKAGE
The Community Advocates Public Policy Institute has tested five policies that “make jobs available, make work pay and reduce obstacles to work.”
Policy 1: Create a transitional jobs program
Policy 2: Increase the minimum wage
Policy 3: Reform the EITC and eliminate the marriage penalty
Policy 4: Strengthen child-care funding
Policy 5: Enact a secure retirement and disability income tax credit
SOURCE: Community Advocates Public Policy Institute’s “Working Our Way Out of Poverty” report (PDF)
IF YOU GO
What: “Working Our Way Out of Poverty” with David Riemer When: 10:30 a.m. to noon July 30, 2015 Where: Smith Memorial Student Union, Room 296, Portland State University Cost: Free Information: Beverly Stein, steinbev@pdx.edu
