The Policy Shop: Solving poverty the right way

This edition of The Policy Shop is by Director of Fiscal and Economic Research Bryce Hill.

America has lost the War on Poverty. After nearly 60 years, the poverty rate remains stuck between 11% and 15%. It focused on making poverty less painful rather than helping people escape a trap that lasts for generations.

The free market has lifted people out of poverty worldwide, but at home we’ve created policies that keep people in poverty by making it more bearable – but at the cost of their dignity. Government programs don’t try to help people find a purpose or build their self-worth. They don’t focus enough on helping people get out of poverty. They don’t figure out what barriers need to be removed so people can prosper. They just perpetuate dependency.

So, the Illinois Policy Institute is creating the Center for Poverty Solutions. It is starting in Chicago, where poverty has grown and impacts over 450,000 people. The center will work to understand the challenges our neighbors face, identify and optimize partners who don’t just hand people a fish so they eat for a day but rather teach them to fish so they eat for life, craft proven policy solutions and pass good legislation. Then as the center develops answers to poverty, it will spread them beyond Chicago.

But first, we have a report that assesses where we are at.

The War on Poverty has been ongoing for 60 years and cost nearly $12 trillion. But official poverty rates during that time have remained between 11% and 15%. While attempting to eradicate poverty, America created countless government welfare programs that leave people with impossible choices: struggle to provide for their family at a job or reduce work activities and receive greater benefits from the government.

This is especially true in America’s big cities such as Chicago, where the poverty rate is now higher than when the War on Poverty began. Communities will only eliminate poverty when they correctly diagnose the problem.

Poverty is typically assessed by the simple poverty rate that lumps everyone together. But poverty looks much different depending on a person’s age, race, education and employment. The solutions are very different, too.

The Center for Poverty Solutions’ initial, diagnostic report also uses a “poverty composition” lens for a more complete picture of poverty in Chicago. By looking at the absolute number of people in each demographic in poverty, it offers a more complete picture of who needs help and what the overall implications are for truly eradicating poverty.

A few highlights from the report:

• Black Chicagoans face poverty rates nearly triple that of white Chicagoans
• More than 1 in 4 children is living in poverty
• Poverty remains more common among women than men
• A job matters, with only 2.3% of those with a full-time, year-round job facing poverty
• Education matters but is no guarantee. In Chicago 1 in 5 adults living in poverty has at least a bachelor’s degree – a group you’d think would be doing better.

The data also offers hope for how to begin truly defeating poverty. Simply stated, education and employment are the keys.

Now we just need to assess and understand how to open the compassionate traps we’ve set through government and other programs for our impoverished neighbors. We need to figure out how to help them restore their dignity and purpose.