Can We Really Do Something about Poverty in America?

24.July.14

Executive Director Deepak Bhargava delivered the following speech on July 1, 2014 at the Aspen Ideas Fest. For the full video of Deepak delivering this speech, click here.

In the richest country in the history of the world, we’re never more than a degree away from poverty.

That’s what hit me on my way out here. I thought about everyone whose life I passed through on the long trip from DC to Aspen. The woman who made my sandwich at the airport; the custodian who cleaned the restroom; the baggage handler who loaded my luggage on the belt.

Long after I left the airport, they would head home to their families, their elderly parents, or a second job— for them, it is just another day juggling to make ends meet.

And it struck me as patently clear and urgent: our lives depend on each other. My trip is part of their livelihood. Their labor fueled the engine that got me here—literally, yes, but figuratively too. And, by extension, our economy runs on their power.

If we want that engine strong, if we want it to grow more powerful as a nation, we can’t deny the fuel hardworking people need to make it run. That fuel is good jobs with fair, family-sustaining wages. What if we could find that fuel and make it renewable? My proposition to you today is that we CAN cut poverty in America by 80% in the next ten years.

People like Robert Daye are counting on it. When Robert started working at Potbelly’s in D.C. a few years ago, he was paid $8 an hour. Now he’s up to $9.75, but he still has no benefits. When I met Robert last year, he told me that he barely exists.

“I work hard every day to provide, but $9.75 an hour isn’t enough,” he said. “Rent, food, milk, diapers, electricity, heat—it has to be paid. I’m a hard worker, and I deserve a good job that allows me to pay those basic bills.” Robert asked, “How can I get ahead on poverty wages and no benefits?”

Last year, even though the restaurant chain had a mediocre year, Potbelly’s CEO Aylwin Lewis doubled his pay to $2.3 million. Mr. Lewis is paid more than $1000 an hour.

Robert’s not fighting for $1000 an hour. But he knows he deserves to be paid more. He needs this job to provide for his young son. That’s hard to do on $9.75 an hour.

But he’s fighting to change that. Robert joined his fellow workers, going on strike and bringing others with him to fight for higher wages in the Fight for $15. This fight has inspired millions of people who see themselves and their families in this story – and who measure our country’s future by how we resolve the crisis of poverty wages.

106 million people living in America— one third of the country— are like Robert and his little boy— struggling to get by, making tough choices between paying the rent and getting the car fixed so he can get to his job.

This includes 47 million who are “officially poor” under the woefully inadequate federal poverty guidelines. And another 59 million who are living on the brink— men, women and children who have about $45,000 for a family of four to get by. If we can’t imagine living on that, no one in America should have to.

I used to look at situations like Robert’s and see the need for a stronger social safety net. That’s where I focused most of my career.  Every year it was the same mainstream liberal fight: More public investments to fight poverty.

Meanwhile, conservatives promoted personal responsibility and free market solutions. In the meantime, the rich in this country got richer. The poor—especially women and people of color—worked harder and were paid less.

And I realized that we weren’t just failing to make headway. We were losing ground. We would never make real progress on poverty in this country with the same stale arguments between mainstream liberals and conservatives that we’ve been having since the ‘60s.

Here’s why.

Mainstream liberals and conservatives agree way more than they disagree. That’s the crux of the problem that stands in the way of breakthrough solutions.

We’ve got to reject both liberals’ and conservatives’ shared false assumptions if we’re going to solve this crisis. We can’t go on assuming that wealth in this country is created by corporations or entrepreneurs. It’s created by people’s hard work.

Hard work is the secret to success behind every company’s strong earnings report. For every hospital CEO with a satisfied board of directors, there are thousands of nursing assistants who have changed sheets and emptied bedpans on the midnight shift. Without the foundation of their labor, the whole pyramid collapses.  But it’s getting tougher and tougher for our nation’s workers to get by on what they earn, no matter how hard a day’s work they put in. The return to capital has far outstripped the return to labor.

Once I realized that, it became clear that government supports alone are woefully inadequate to the task of fixing poverty. I completely appreciate and support our social safety net – it’s critically important. But it’s not nearly enough.

We also won’t fix the problem by focusing on individual failings – personal responsibility as conservatives would call it, or inadequate skills as some liberals would say. We need to change the rules of the game. We need to value people’s labor in proportion to their contribution to our nation’s bottom line.

Mitt Romney was basically right about makers versus takers— he just had the villains and the heroes wrong. That is why we can’t continue with this clichéd debate that has stymied dramatic action on the poverty crisis for 50 years.

Most conservatives and even some liberals both get skittish when they hear this. They say that if we propose bold policies to change the structure of the labor market, then we will undermine the foundations of prosperity.

Conservatives say it’s a zero sum game between equity and prosperity— a high level of inequality is the price we pay for vibrant growth. Some liberals say that we have to accept the basic structure of the economy, but try to make up for its harsh results with more generous government programs. If you approach it from this perspective, equity is always going to be the underdog, fighting the uphill battle.

But what if we reject the idea that there is fundamental conflict between equity and prosperity? We see this refuted across the world— countries with greater inequality don’t have an economic edge over those with much lower levels of inequality.

We can choose a different path for our country— a path that aligns with our values and improves everyone’s lives across the board— a path where equity and sustainable growth are aligned. Let’s make this the path more traveled.

If we are going to tackle the fundamental structure of our economy, we’ve also got to recognize that racism and sexism are deeply baked into that structure. The New Deal, which is rightly viewed as having made seismic positive changes in the country, left domestic workers and farmworkers outside the scope of basic labor protections, a legacy that persists to this day.

And is it a coincidence that care work and service work— the fast growing sectors of our economy— pay so poorly?  They have been devalued because these hard jobs are done largely by women.

And what if we understood how poverty gets concentrated in communities of color as long as they’re disproportionately locked up in prisons and jails? What if we tackled our unfair dependence on undocumented immigrants’ labor head on?  Millions of largely African-American and Latino workers are subject to super-exploitation because of their records and their status.

We have to face that poverty is a systemic problem, not an individual one.

Conservatives would have to stop blaming the victim.

Liberals would have to stop saying individuals can be rescued from poverty solely through the social safety net or education and skills training alone.

We’d have to face that it’s the rules— and the lack of rules— in the labor market that exploit low-wage labor for excess profit that produce mass poverty in this country.

We’d need to confront the reality of job growth in this country, where eight of the ten fastest-growing jobs are in the service sector.

Don’t get me wrong; many low-wage men and women need and want higher skills. And we need to improve access to college degrees for low-income students and students of color if we’re to give them a shot at mobility.

But just as autoworkers took low-paid manufacturing work and made these middle class jobs in the 1940’s— so too today, we need to focus on changing the quality of the jobs, not fixing the quality of the workers.

Because at the end of the day, 80% of the poverty problem in America has one cause: our broken labor market that delivers too few jobs and unfair pay in exchange for hard work.

And the best anti-poverty program is a job that pays a decent wage.

Okay, so you’re probably thinking:  “Sure, if everyone had a good job we wouldn’t have so much poverty.  But we can’t really do that.”

Actually, it’s not as hard as you think. We can reduce poverty by 80% by taking three steps.

First – wages must rise to catch up to productivity growth.

Imagine a system where, no matter how much money you brought into your company, you got paid whatever the CEO could get away with while he or she kept the difference plus a bonus for driving down costs.

We live in that system.

That’s why millions of people are poor. And women and people of color get the shortest end of the stick.

From 1959 to 1973, there was a strong relationship between economic growth and the poverty rate. They broke up in the ‘70s. If they had stayed together, the poverty rate in the United States would have fallen to zero by 1986 and stayed there ever since.

If wages had kept pace with productivity, America’s lowest paid workers would be earning $17 an hour.

Even at the most conservative estimate, a minimum wage of $17 per hour would provide an income of $34,000 a year for a full-time worker. That’s more than double what a minimum wage worker is paid today and more than the federal poverty level for a family of six!

We’re getting close in Seattle! Community groups and labor unions, civic leaders and an important part of the business community came together to support a $15 an hour minimum wage. They recognized that its local economy is stronger when low-income and middle class families have greater economic security and more money to spend.

Low-wage workers will take home a $2.9 billion raise as a direct result. For Crystal Thompson, a Domino’s pizza worker who’s been on the job for five years and still is paid minimum wage, that raise means she can move to a better neighborhood where her son can ride his bike outside and he won’t have to sleep on the couch anymore. “If I had $15 an hour,” she said, “I’d have a little more peace of mind.”

We can build a new social contract in this country that rewards work— through new rules of the game that increase pay and recouple productivity growth and wages.

But that social contract isn’t just about money— it’s about voice and building power. It’s about workers in fast food, at Wal-Mart, carwashes, restaurants, retail stores and other parts of the service sector standing up for themselves and their families and fighting for what they earn – and having a way through collective bargaining to negotiate with employers.

This solution is the game changer for poverty in America.

Okay, so wages are now aligned with productivity. What’s the second step?

The second step is to make it fair for the folks who’ve been kept back for too long. Because poverty is not just an economic issue – it’s a women’s rights issue. It’s a racial justice issue.

Two out of three minimum wage workers are women and 42% are people of color.

We know that women succeed when they get equal pay for equal work. We need to put an end to new mothers being fired or demoted and make sure they have paid sick days to care for their children and access to affordable childcare.

41% of all single-mother families live in poverty. This fact demands that we need to dramatically increase the compensation of work in the care and service sectors.

Women are often locked in poverty because of their gender, while too many men— predominately African American and Latino— are locked in because they were locked up.

In 2008, six out of ten prisoners were African American or Latino, even though they make up just a quarter of the US population. Their options for employment when they return to society are grim. Boxing all of these people out of employment is disastrous not only for these individuals but for their families, their neighborhoods and our economy.

The third and final step? Full employment at that higher wage floor.

Right now, there are about three people for every one job opening. The market isn’t providing enough employment opportunities for everyone who wants a job.

We can and should get unemployment down below 4%. We did it in the 50s and 60s and again in the late 90s.

We can do it again.

If everyone who is able to work had a job, we would add 10 million jobs to our economy.

We can put over a million people to work fixing our crumbling infrastructure—the roads, bridges and airports in dire need of repair.

We can retrofit offices and homes to reduce our energy consumption— and put people to work.  We can grow jobs with investments in renewable energy. We can invest in caring for the young and the old and transform the care industry.

This isn’t make-work— it’s a genuine need that benefits workers AND our nation.

We’re going to need the public and the private sector to work together to create jobs to get to that number down below four percent.

Okay, let me guess what you’re thinking right now: “If we take these three steps— if we raise wages to $17 an hour to match productivity— if we dismantle structural barriers to equity for people of color and women, and if we achieve full employment, won’t we harm growth and hurt the people we seek to help?”

The opposite is true. The push for high wages and full employment reinforce each other. As wages rise and demand increases, we create jobs. And as we create jobs and get the unemployment rate down, we create pressure to increase wages and benefits to attract workers.

This higher minimum wage— along with a guarantee that everyone who wants a full-time job would have one— would reduce the poverty rate by more than 80%!

This is the path to sustainable and equitable growth

So we’ve taken those three steps— okay, maybe more like leaps— and we’re about 80% of the way there, lifting about 39 million of the 47 million people who are currently officially poor out of poverty, and dramatically improving the economic security of millions more on the brink of poverty.  But that’s when our work starts paying off.

Because like I said at the outset, there’s only one degree between any of us and poverty in this country. Our entire economy is interconnected. When the bottom third gets paid what they’ve earned, we all win.

There are sparks of a growing movement around the country. From the fast food workers fighting for $15 an hour, to the huge win in Seattle to many other successful efforts around the country, low-wage workers are coming together to demand more. They get it. They know that they should be paid more for their work. They know that if they are, not only will their individual lives get better, but so will our entire economy.

Big change in America happens through social movements.  Social movements make the impossible possible.  Fifteen years ago, few in this country could have imagined that marriage equality or a path to citizenship for undocumented immigrants would move to the center of the political debate. Now, it’s a question of when— not if.  As a beneficiary of one of those movements and a participant in another, I have learned that leadership by those most affected by injustice creates the energy for change.  But social movements must win support from other sectors of society if they are going to win the day.

That’s why, this morning, I challenge you to join the emerging movement to tackle poverty in this country. Together, we can break out of 50 years of gridlock and stale debates and build an economy powered by equity and sustained by fairness.

When you leave Aspen in the next couple of days to fly home, I hope you take a few minutes to consider the woman who makes your sandwich at the airport, the custodian who cleaned the restroom, the baggage handler who loads your luggage on the belt, and consider how we can take three simple steps to change their lives and the lives of millions more Americans.