In short, Economic Growth DC’s theory of poverty and inequality is that both are symptoms of the disease, but the disease is unemployment and underemployment. Another way of putting it is the one thing that all of the adults in the District of Columbia who live in poverty have in common is they are either unemployed or underemployed — if you define underemployed as either working part-time or working full-time for low wages. Consider this:
The poverty rate in the District of Columbia for African-Americans is 39%, for Hispanics it’s 23%, and for whites it is 6%. The vast majority of the people who live in poverty in the District live in Wards 5, 7 & 8.
The real unemployment rate in those wards, known officially as the U6 unemployment rate, which measures the number of people who are unemployed and actively looking for a job, plus the people who are working part time involuntarily, plus the people who have given up looking altogether out of frustration — is approximately 35-40%. Our key observation is that the true unemployment rate in the predominately African-American parts of the District is almost identical to the African-American poverty rate and that is not a coincidence.
To further illustrate the situation, consider that as of 2010 the District of Columbia had 133,000 residents who lived in a family where the head of that household earned 150% of the poverty line or less. That’s nearly 25% of DC’s population. A majority of those families contain an adult who worked at least part-time. A third of them live in families with an adult working full-time. These facts align with our theory of poverty. Two thirds of the adults in the District’s low income families do not work full-time, and the third that does works for low wages — fitting our definition of underemployed.
The antidote for this problem, and the key to eliminating poverty is work — creating the number and kinds of living wage jobs required, and making sure our workforce is properly educated and trained to take advantage of those opportunities.
If you buy into the idea that poverty (and inequality, which stems largely from poverty) is predominately a function of lack of work, then the vast majority of the District’s anti-poverty efforts and financial resources devoted to fighting poverty should be re-oriented around job creation, incentives to work, work readiness, work supports and work itself. We quite literally have to work our way out of poverty.
Here are some things to think about:
- Job creation — slowed dramatically in the District in 2013. The single most important thing District policymakers and the District government can do is create conditions that are conducive to faster economic growth. Only a faster growing economy will create the number and kinds of jobs we need to address what is really an unemployment crisis.
- Job training — The District has a mixed record in terms of providing meaningful and effective job job training. One of of the primary problems is we don’t know if we’re training for the right jobs. Georgetown University’s Center for Education and Workforce is capable of analyzing which living wage professions are growing in a given region. Once we know what we’re training for, we can focus on making that training as employer driven and effective as possible.
- Education – Improvements to student achievement come too slowly. We cannot afford to wait twenty years to get our young residents to full proficiency and living-wage job ready.
- Technical/Vocational Education – This is underutilized in the District as are apprenticeships. Only about 35% of the jobs created in a given year require a four-year degree. There are many, many living wage jobs available that don’t require a degree, but they do require some kind of post-secondary technical training or certification. We must do a better job of matching residents to these professions.
- Work Incentives — Many unemployed and underemployed District residents face extraordinarily high marginal tax rates when their income rises beyond a certain threshold. Certain benefits are phased out abruptly as income rises. In many instances, the rational move is to stay underemployed rather than take a small raise and lose benefits. We must overhaul the incentives to work. The best way to do that is to lower the tax on it. We also have to figure out how to taper public benefits more slowly as a person’s income rises.
- Work Supports – In a social services regime oriented towards work, the District government must provide supports for lower income residents as they prepare and train for higher skill work. Work supports include things like transportation and child care. If these supports are always pointed towards helping a residents obtain and maintain a full-time, living wage job, it is money well spent.
- Barriers to Work – A significant portion of unemployed/underemployed residents face substantial barriers that make it difficult to obtain and a maintain full-time job. Some of these barriers include literacy issues, poor education, drug and alcohol issues, as well as mental and physical health issues. It is up the the District and its non-profit social service provider partners to remove as many of these barriers as humanly possible to give each resident their shot at upward mobility.