Poverty Level 2013: It Will Be High, And It Will Be the Politicians' Fault


Politicians will tell you they have been waging "War on Poverty" since the 1960s. But the fact of the matter is that for politicians, poverty is a tried and true friend, and they have no intention of ever reducing – much less ending – it. Consider all the advantages for politicians of having poor people. 

First, you have a ready-made constituency who will uniformly and reliably vote for you if you just promise them more government handouts or if you portray your opponent as willing to cut the handouts they are already getting. You don't even have to deliver on your promises; all you have to do is make them. Next, you have the benefit that comes from non-working poor with lots of spare time, since they are often willing and able to staff your campaigns or show up at rallies.

But maybe the most important consequence of having lots of poor people is that they give politicians control over billions of dollars. Without the poor, the nearly $2 trillion dollars now in the federal budget to "help" the poor would disappear, along with the power and influence it gives the politicians who control it. 

Whatever politicians may say, promise, or do, they have no intention of getting rid of poverty. The evidence speaks for itself. Poverty rates when the "War on Poverty" was started were about 22%. It dipped as low as 12% in the 1970s, but has, under the guidance of politicians, climbed back to its present rate of 16%. More importantly, the absolute number of people living in poverty has risen from about 40 million in 1959 to nearly 50 million we have today. 

Clearly, poverty is a growth industry for Washington!

The sad part is that this simply does not need to be. We can fix poverty almost overnight if we really want to. 

Consider that the standard for a single person to be classified as living in poverty is making less than $11,170. Someone working 40 hours a week at minimum wage, $7.25 per hour makes $15,080, or 35% above the poverty level. Clearly, all that is necessary to eliminate poverty in America is to create an economic climate that provides sufficient minimum wage jobs for everyone who wants one to have one. And yet our politicians refuse to do the simple things necessary to create these conditions. 

What are some of the things we can do?

First, end all regulations that discourage businesses from creating and filling minimum wage jobs. Support measures such as eliminating the employer portion of the payroll tax for minimum wage jobs. There is evidence that every 1% increase in the cost of an employee increases unemployment by .24%. Eliminating the 7.65% employer portion of the payroll tax would decrease unemployment by nearly 2%, just by itself.

Drop the minimum wage back to $5.40 per hour. This would decrease unemployment by another 8%. 

These two steps alone have the potential of dropping our poverty rate by nearly 10 percentage points, but there is so much more that can be done if we really want to end poverty. The National Labor Relations Board could mandate that union contracts are not allowed to escalate off the minimum wage, meaning companies are not required to give employees earning $30 per hour a raise simply because of a minimum wage increase. Regulations against the employment of students or young adults could be eliminated, reducing costs and helping poor youths and minorities get those critical "first jobs." 

One additional step we could take to reduce poverty by creating more minimum wage jobs is ending the penalties imposed on low-income workers by the progressive income tax system. Since a progressive income tax takes a larger portion of each extra dollar earned, it strongly discourages work and progression out of poverty. Replacing our current system with one that rewards work and success would have a major impact in job creation. By some estimates, it would create 10 million new jobs, most of which would be paying wages far above minimum. 

The question isn't really how do we win the "War on Poverty," but rather why we are allowing politicians to hold so many of our fellow citizens in economic bondage!