Opinion

Reihan Salam

From Marco Rubio, a new approach to ending poverty

Reihan Salam
Jan 10, 2014 19:22 UTC

I realize that I ought to be writing about Chris Christie, the recently re-elected Republican governor of New Jersey, who has just had a brush with political death. But though I wish Christie well, and though I continue to believe that he is one of the most promising elected conservatives to have emerged in my lifetime, the Republican future rests less on the fate of individuals and more on the fate of ideas. And this week, one of Christie’s fellow presidential aspirants, Florida Sen. Marco Rubio, introduced a genuinely new idea for helping tens of millions of Americans escape poverty.

On Thursday, the 50th anniversary of President Lyndon Baines Johnson’s declaration of a “War on Poverty,” Rubio gave an address that weaved together stories from the lives of his immigrant parents with the barriers to upward mobility facing people very much like them today. “America is still the land of opportunity for most, but it is not a land of opportunity for all,” Rubio told the assembled crowd, drawing on the fact that 70 percent of U.S. children raised in poverty never achieve middle-income status.

Conservatives are known for celebrating American exceptionalism, and Rubio does so himself. Yet in this speech, he raised a number of awkward truths, like the fact that more Canadians surpass their parents’ incomes than Americans. Moreover, he offered a clear-eyed, if not complete, diagnosis of the reasons why so many Americans raised at the bottom of the income distribution remain stuck there. In the past, the U.S. economy was dynamic enough to replace jobs lost to automation or offshoring with new jobs. Yet that dynamism has suffered in recent years, and the result has been a series of jobless recoveries, each more disappointing than the last. After decades during which the educational attainment of Americans steadily increased, educational gains have stagnated. Nonmarital childbearing has grown more common, a seemingly self-reinforcing development in which the diminished economic prospects for less-skilled men make them less attractive as partners, and the sons of single mothers find it exceptionally difficult to stay in school.

Recognizing the complexity of the problems facing poor Americans, Rubio doesn’t propose a single silver bullet for fighting poverty. Rather, he calls for a two-pronged approach that rewards those who step on the first rungs of the economic ladder by taking low-wage jobs, and gives state and local governments more flexibility in meeting the needs of their most vulnerable citizens.

Though there are major details to be ironed out, Rubio’s basic idea is to consolidate anti-poverty programs into a single Flex Fund, which would be disbursed to state governments to design and fund their own anti-poverty initiatives. At the same time, he calls for replacing the earned income tax credit with a federal wage enhancement designed to raise the effective hourly wage for low-wage jobs. Rubio states that whereas the EITC offers very little to single workers without children, his wage enhancement would help increase disposable income. And whereas the EITC arrives in the form of a lump sum payment, the wage enhancement would come with every paycheck.

A poor solution

Reihan Salam
Feb 15, 2013 16:55 UTC

The minimum wage debate is back, thanks to President Barack Obama. In his State of the Union address this week, he noted that a full-time worker earning the federal minimum wage of $7.25 an hour would earn $14,500 a year. This is an amount that would be very low for a single adult living alone, let alone the parent with two children whom the president invoked in his speech. And so he called for a sharp increase in the federal minimum wage from $7.25 an hour to $9 an hour, an amount that would be indexed to inflation, as a way to fight poverty and to give the economy a boost.

What the president didn’t mention is that the share of full-time workers who earn the federal minimum wage is very low. Mark Perry, an economist affiliated with the right-of-center American Enterprise Institute, observes that as of 2011, only 1.7 percent of full-time hourly employees were earning the minimum wage or less. Minimum-wage earners were more common among those aged 16 to 19 – 22.8 percent of these workers were earning the minimum wage or less. Of course, many of these workers live with their parents and are generally not the sole source of support for themselves or their families.

Another reason why so few workers earn the federal minimum wage is that as the value of the federal minimum wage has eroded, dozens of states have established or raised their own minimum wages. Thus far, only the state of Washington has a minimum wage, at $9.19 an hour and indexed to inflation, higher than the president’s proposal.

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