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What's the Best Way to Fight Poverty?

David Callahan

Imagine there are two ways to fight poverty: Option A, we accept an economy where a third of all jobs pay near-poverty wages, but we spend hundreds of billions of dollars annually on transfer payments to lift millions of Americans technically above the poverty line. Or Option B: we do what it takes to transform the economy so enough good jobs exist that anyone who works hard can afford a decent life and save enough for a secure retirement.

I'd say Option B sounds better, if that were the choice. And ostensibly, that puts me on the same page with Senator Marco Rubio. As he lays the groundwork for a presidential bid, Rubio plans to spend the next year talking about economic mobility. He just released a video around the 50th anniversary of LBJ's famed War on Poverty speech in which he says: 
[I]sn't it time to declare big government's war on poverty a failure? Instead of continuing to borrow and spend trillions of dollars on government programs that don't work, what our nation needs is a real agenda that helps people acquire the skills they need to lift themselves out of poverty and to pursue the American dream. This agenda would create an economy with more good-paying middle class jobs and a government with less debt. 
That does sound appealing. While anti-poverty programs do "work" extremely well by lifting millions out of poverty, most of this spending doesn't address the underlying reasons people are poor. Social Security is great at lifting seniors from poverty, but it doesn't do anything to ensure they have jobs in the prime of their lives that allow them to save more for retirement. The EITC is another hugely successful program that operates as a cleanup program to pull people out of poverty -- but does nothing to transform the low-wage economy. Indeed, the EITC subsidizes the low-wage economy and helps make it feasible for employers to pay so little. 
So, in a way, both progressives and conservatives are right about the War on Poverty. The left is right that we'd have much more poverty without government programs. And the right is correct that most of this spending doesn't make a dent in the real problem. 
Where the more interesting debate lies is how to attack the underlying problem of tens of millions of Americans trapped in low wage jobs, or not working at all. Marco Rubio thinks we can do this by cutting taxes and red tape, repealing Obamacare, improving schools and skills through more choice, and strengthening the American family and values. 
It's not clear, though, how any of those steps would change the fact that the U.S. economy mainly produces a lot of lousy and low-paid jobs that don't require many skills -- a trend that has steadily worsened for decades and may intensify as more jobs are automated or outsourced. What we need to really reduce poverty are two things: We need an economy that produces more skilled middle class jobs and we need to turn the lousy jobs into better jobs with better wages and more room for advancement.
The latter challenge is far easier to meet. Remember, a lot of factory jobs decades ago were lousy jobs. But unions turned these jobs into a path to the middle class and corporate investment in workers often created ladders of advancement within companies That can happen again as workers organize in the fast food and retail industries. Historically, the most successful anti-poverty measure in advanced countries has been collective bargaining. Too bad Marco Rubio sees unions as the enemy. 
The tougher challenge is how to create more skilled middle class jobs in the United States -- especially as we move to rein in health spending, which has been a main area of such job growth in recent years. Progressives have a lot of ideas in this area, including creating new green jobs. I'll be interested to see what Rubio offers up in this department.