10 Special reportPoverty in America The EconomistSeptember 28th 2019
(^2) Policymakers have long wanted to use public dollars to jump-
start private investment in poor areas, but the results of such pro-
grammes have consistently disappointed. Most follow-up assess-
ments for “enterprise zones”, created in the 1980s to provide tax
credits for businesses in high-poverty areas, have found no em-
ployment growth or poverty reduction, yet higher house prices.
“Opportunity zones”, the latest iteration of a place-based policy
signed into law by the Trump administration, seem destined for a
similar fate. There is little oversight over which zones qualify for
tax credits, and no plan to track results systematically. Planned
projects include a gastro-tourist spot in Portland, Maine, and the
construction of a glassy new office building in Miami. The anti-
poverty results of such investments may be minimal.
Federally funded retraining programmes for displaced workers
also seem to have achieved little, though some economists argue
that is because they have not been properly financed. Federal pro-
grammes paid for by the Workforce Investment Act, in place from
1998 to 2014, seemed actually to reduce the earnings of displaced
adult workers. Its predecessor, the Job Training Partnership Act,
had similarly weak returns. The current version, the Workforce In-
novation and Opportunity Act, has even less funding and is the
same basic model. The mixed results reflect a general trend in pov-
erty research: as people get older, it becomes harder to discern
which policies are best. It also becomes more expensive to fix.
Private efforts—whether philanthropy or more effective re-
training—are most helpful when they show innovative approach-
es to poverty reduction that can then be scaled up with public dol-
lars. This can help sidestep one problem of relying on charity
alone: well-endowed foundations focusing on the plight of cities,
not small towns. While Barack Obama was president, the Depart-
ment of Education began a “Promise Neighbourhood” programme
that sought to replicatehcz-style zones in places like eastern Ken-
tucky. But measuring the ultimate success of these initiatives re-
quires decades of tracking. In the meantime, poverty prevention
among children is almost certainly cheaper than rehabilitation. 7
Social mobility, Harlem-style
E
ven criticswho think that poverty results from a defective
character concede that poor children, all 13m of them in Ameri-
ca today, are not to blame for their plight. But as soon as they reach
the age of 18, many of those children will become poor adults who
will then be unceremoniously deemed culpable for their predica-
ment. By the official statistics, nearly one in six American children
is poor. By thespm, which takes benefits and cost of living into ac-
count, things look only a bit better: just over one in six is poor.
They are concentrated in clusters across every state in America.
They are found in depressed areas like Cleveland, where half of
children live below the federal poverty line, rural South Dakota and
central Appalachia. They are also found among immense prosper-
ity—the children living in the Bronx or of the service workers who
drive three hours each way to do menial jobs in San Francisco.
This American tragedy is an ignored one. Poor children neither
vote nor hire lobbyists. It is also morally senseless, punishing chil-
dren for the sins or misfortunes of their parents. It is economically
pointless, too. Poor children who grow up to be poor adults have
not just reduced incomes, but shorter lives and a higher risk of
criminality. The safety net, although important, does less to blunt
poverty in children than in adults.
It was not always this way. When Michael Harrington wrote
“The Other America” in 1962—a seminal study which helped spark
Lyndon Johnson’s war on poverty—the elderly, hobbled by medical
and housing costs, were the poorest age group in the country. “Fif-
ty per cent of the elderly exist below minimum standards of decen-
cy,” he wrote. Today, the problem has been inverted. With the ad-
vent of universal programmes like Medicare, the health-insurance
scheme for the elderly, and Social Security, the public-pension
programme, there is no age group better served. According to the
spm, 48% of elderly Americans would have been poor without the
safety net. After taxes and transfers, that figure is down to 14%.
What America has done for its elderly, it can also do for its chil-
dren, with less complication and cost. The primary lever is reori-
enting public safety-net spending around poor children. It is im-
portant to spend so that poor adults do not go hungry, homeless or
untreated for illness. But while it is hard for a person reliant on
food stamps at the age of 40 to achieve self-sufficiency, opportuni-
ties still abound for the poor child receiving free lunches at school.
Everyone learns together
The second imperative is for integration. Increasingly, poor chil-
dren are segregated, living and attending school with others like
them. A bifurcated society is more than just damaging democrati-
cally. Living in concentrated poverty worsens outcomes in future
health, criminality, employment and happiness.
Severely reducing or eliminating child poverty through the
simplest means imaginable—unrestricted cash transfers—can
seem starry-eyed until one studies the details. David Grusky of
Stanford University says that the state of California, which has the
highest share of poor people after accounting for taxes, transfers
and cost of living, could end deep child poverty with targeted cash
transfers that amount to a mere $2.8bn per year. This is “insane”,
he adds. It is a quarter of the sum the state spends on prisons.
Targeted anti-poverty programmes in America usually attract a
The kids are not alright
Poverty has long-lasting, destructive consequences for children
Children
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