The American Way of Poverty: How the Other Half Still Lives (46 page)

For Katherine Newman, this was another no-brainer. “Fundamentally, the problem of poverty is a problem of people either not having jobs or not having jobs that pay enough,” she explained. Yes,
even a healthy economy has a certain level of unemployment, as companies reinvent themselves and people shift between locations and between jobs. The danger occurs when the economy can’t regenerate jobs lost, when a pool of ex-workers builds up at the bottom of the economy, and a significant portion of the labor force remains without work for a prolonged period of time. At that point, she believed, even when the jobs return, they tend not to benefit those who have been excluded from the workforce for a long time. Remember those “unemployed need not apply” signs? Employers look at the sparse résumés of these men and women, at their absence of recent references, at their paucity of up-to-date skills, and they go elsewhere. “It becomes so hard for someone who’s been unemployed for a long period of time to convince an employer to take a chance on them. They just look like damaged goods.”

For these men and women, Newman argued, the federal government ought to create public works programs. It was, she felt, an entirely legitimate function of government to backstop employment when the private sector faltered.

Massive public works investment was done in the early years of the New Deal, to stunning effect—with the large, mechanized infrastructure projects of the Public Works Administration and then the labor-heavy projects of the Works Progress Administration, putting 4 million people back to work within a matter of months and providing those men and women with cash in their pockets that rapidly circulated throughout the entire economy. As a result of this stimulation, private employers then added another 4 million jobs. From 1933 to 1937, unemployment in America declined from 25 percent to 9 percent of the workforce.

What would the price tag for such a program be today? Newman’s son, Steven Attwell, a graduate student of the history of public policy at the University of California at Santa Barbara, thought he had some answers. Having crunched the numbers and then, he said, having run his estimates by experts at the American Enterprise Institute and Brookings Institution, he argued that one could have used the $787
billion that the 2009 stimulus package cost to create a large-scale public works program, along the lines of the Works Progress Administration, that would have been able to employ up to 20 million people, thus largely eliminating the huge well of unemployment and joblessness that bubbled up in the wake of the financial crisis and that has so stubbornly refused to go away. In contrast, he reminded audiences, the hodgepodge of investments and employment subsidies that the 2009 legislation unleashed cost a fortune and only created, or saved, between 3 and 4 million jobs.

Obviously, what’s done is done. There’s no rewinding the clock on how the stimulus package was shaped, and no ability to recoup the hundreds of billions of dollars spent so as to respend them more effectively. But that doesn’t mean there isn’t room, still, for a more limited public works program. Thirty billion dollars, said Attwell, could create a million jobs. Those men and women could, he argued, get to work on the $2 trillion of repairs that the American Society of Civil Engineers estimates needs to be carried out to bring the country’s infrastructure up to par.

How could such a program be funded? One way, Attwell explained, would be to set up a social insurance system, similar to Social Security, based on a small payroll tax—Attwell calculated that it would need to be in the 1 percent range—that all workers and employers would pay into, which would then be put into a reserve fund, initially seeded by a loan from the Federal Reserve, used only for public works programs during periods of high unemployment.

Attwell’s Public Works Fund, in combination with the Educational Opportunity Fund that I have proposed and a reinvigorated Social Security trust fund, would go a long way toward re-creating a viable social compact that all Americans felt they had a stake in protecting. It would, as a side benefit, help neutralize Grover Norquist’s destructive “starve the beast” argument; after all, why starve a beast that demonstrably improves your and your children’s chances to get an education, keep a job during the down times, and retire without fear of destitution?

Yes, these are expensive concepts, but arguably not nearly as expensive as throwing millions of workers into long-term unemployment, ultimately pushing them out of the labor force, and giving them precious few alternatives other than to scramble for any and every method of public assistance they could find. It was no accident, for example, that as the numbers of long-term unemployed rose in the wake of the 2008 collapse, so too did the number of enrollees on the federally funded disability assistance program. It was, quite simply, one of the few welfare institutions with the capacity to provide economic assistance to an increasing number of people. And in many ways, as TANF and other programs shrank, it had been occupying that role for many years before the rug was pulled out from under the broader economy.

As early as 2006, in fact, the economists David Autor of the Massachusetts Institute of Technology and Mark Guggan of the University of Maryland had published a paper in the
Journal of Economic Perspectives
warning that the numbers on disability were growing at an unsustainable rate. They wrote that in 1985, “2.2 percent of individuals between the ages of 25 and 64 were receiving DI [disability insurance] benefits, but by 2005 this fraction had risen to 4.1 percent. If recent entry and exit rates continue in the years ahead, then more than 6 percent of the nonelderly adult population will soon be receiving DI benefits.”
¹²
By May 2012,
Bloomberg News
was reporting that 5.3 percent of the population between the ages of 25 and 64 were on disability; Autor and Guggan’s prediction was well on the way to being realized.
¹³
In four years, the number of enrollees had gone up by 23 percent, causing a massive undermining of the trust fund’s viability and a warning to Congress, from the Social Security Board of Trustees, that it would run out of cash and have to start slashing benefits as early as 2016.
¹⁴

Richard Parker, at Harvard’s Kennedy School of Government, has termed this massive overuse of disability programs a “refugee camp for people who’ve been disqualified from welfare.”

It’s not that the country’s able-bodied millions are suddenly, en masse, becoming dramatically sicker. There’s absolutely no evidence to support such a scenario. Rather, it’s that disability assistance, operating largely under the radar of conservative critics, is one of the few parts of the safety net not to have been shredded in recent decades. If someone’s out of work, it’s entirely rational to look for any assistance that’s available, and if that assistance happens to be there for people who can show that they are disabled, then it makes perfect sense to claim you are too sick to work. Thus the emergence of a large number of ex-workers who have what might be termed a “disability-lite,” a problem that previously didn’t prevent them from working but that, in an era in which jobs have vanished for millions of Americans, now becomes a core part of that person’s identity.

Far better, Parker and Attwell argued, to encourage more people to remain within the labor market, paying them to work and acquire job skills rather than to totally, and permanently, opt out of the labor market. Far better to make the minimum wage more closely approximate a living wage—as has been done in a handful of cities, as well as the state of Washington, in recent years—and ensure that work is accompanied by benefits such as healthcare, child and sick leave, and pensions. Make work available and viable, and the attractiveness for the marginally disabled of parking themselves on the disability rolls at the first sign of recession diminishes. Leave disability for the truly and seriously disabled, and the program’s long-term financial viability is increased.

Not that this will be easy. For those on disability, in particular, reentering the workforce, and perhaps taking on less stressful and demanding jobs to meet their diminished physical capacities, is difficult at the best of times. Absent significant societal investments in job retraining programs, oftentimes it is impossible. Yet instead of making more money available to retrain out-of-work Americans, post-collapse Congresses have been busily slashing such funding. In April 2012, the
New York Times
reported that the federal government was spending a
mere $1.2 billion per year on job training programs, a decline of 18 percent since 2006—when unemployment was less than half of what it was in 2012. Even more disheartening, the amount of federal money being spent on job training in 2012 was close to $1 billion less than what it had been in 2000, at the tail end of the Clinton presidency.

MISSION “DO RIGHT”

That was a huge shame. After all, job training programs had a long track record of taking poor people from poor communities and getting them into jobs.

For Josephine P. Rhymes, it all began with listening to people: What sorts of job training programs did the poor want? What teaching methods worked best with people taught for years to think that their voices have no power? After all, it was one thing getting someone a job; it was quite another providing them with a ladder to economic success.

Rhymes had worked with the unemployed and partially employed in the Mississippi Delta town of Clarksdale for decades, linking them up with job training via a group called the Tri-County Workforce Alliance.

The alliance ran a nationally recognized program teaching young, unemployed women the basics of carpentry, electricity, and plumbing. “Once they’ve completed the program, they have to do forty hours of community service with Habitat for Humanity or Council of Aging,” she explained.

The program is free to them; we provide them with the tools they need, transportation, childcare, and training. We have several young ladies who have helped to build their own homes, some who have remodeled their homes, some who have increased their businesses. We have one young lady who has started her own business;
she makes doghouses, screen porches. She told us she did not have a high-school diploma, so we enrolled her in a GED class; she actually got her GED. They also get self-skills training; financial education, what is sexual harassment, conflict resolution, how to choose childcare, how to balance work and stress, how to write a résumé, go to an interview. Those are the survival skills they get in the program.

What made the curriculum of particular interest was the fact that it was generated after a series of focus groups held with out-of-work young adults in the Delta, who explained what skills they felt they needed, and with employers who explained what skills and personal traits they were looking for in new workers. “We brought both groups together. They were both saying basically the same thing. We had ideas of what we needed to do in order to bridge the gap. We chose two unemployed people, two educators, two employers, and two social services people. And they sat down, over a six-week period, and wrote a curriculum. The components were education—how to get the GED, where to go, what does it entail; a lot of things came out about the use of drugs. We put in education, finance, leadership, work ethics, computer literacy, conflict resolution.” When Rhymes’s clients completed their training, they were given a small stipend. When they stayed with their jobs for three months, they were given a second small amount of cash.

The program was small-scale, but most of its graduates had found long-term employment. “They had low self-esteem coming into the program; and now they are proud workers.”

On a far larger scale, Focus: HOPE in Detroit, with financial backing from the Open Society Foundation and other organizations, was also working with young adults who had grown up in calamitous
economic environments. It was, said CEO Will Jones, one of the biggest games in town. In the thirty years since it had begun workforce development projects, approximately 12,000 people had participated in its Fast Track math and reading programs, followed by intensive job training. Because it was in Detroit, the program emphasized teaching people to be machinists and machine operators.

Six feet, seven inches tall and thin, his graying hair and mustache carefully trimmed, Jones had spent decades working as a financial officer with Chrysler in Detroit and overseas. He knew machines inside out, and he knew the needs of employers. There was nothing half-hearted about the training regimen that he ran, or, as he put it, “There’s no jive in our program.” Test dirty for drugs, his staff would send you away and tell you to come back when you were clean. Employers, he explained, wouldn’t let you near sensitive machinery if you were high. Come to work late, you’d receive a dressing-down. On the other hand, show your skills in the basic program, prove you could use the machines to make precision parts, and you’d be moved into the Center for Advanced Technologies, a converted Ford Tractor plant with soaring sheet-metal walls and shiny green floors. There, you would work on a project coordinated by the National Science Foundation and several local universities. You’d be put on a path to getting an associate’s degree, possibly even a bachelor’s in engineering. You would make components for the much-touted Chevy Volt car, use robotic manufacturing methods, and even do some specialized welding work for the Department of Defense.