The Best Anti-Poverty Program Is a Good Job
Algernon AustinDr. Algernon Austin is a Senior Research Fellow at the Center for Global Policy Solutions. Previously, he directed the Economic Policy Institute’s Program on Race, Ethnicity, and the Economy (PREE). As the first director of PREE, Algernon built the program over six years into a nationally-recognized source for expert reports and policy analyses on the economic condition of America’s people of color.
This week, we will once again see that the Latino and African American poverty rates are more than double the non-Hispanic white poverty rate. The persistence of high poverty rates among these two groups can lead one to think that there are no policy options to address this problem, but this is not the case. We can reduce poverty in these communities and strengthen the American economy at the same time.
The lowest poverty rates for Hispanics and blacks correspond to each group’s lowest unemployment rates, which occurred just a decade and a half ago. The poverty problem in communities of color, therefore, is to a large degree a jobs problem. The Hispanic unemployment rate is typically about 1.5 times the white rate. The black unemployment rate runs about twice the white rate.
If we lower the Latino and African American unemployment rates to 4.4 percent, where the white unemployment rate is today, we would reduce Latino and African American poverty significantly. But not every job provides a wage sufficient to lift a family out of poverty. Large shares of Latino and African American workers earn poverty-level wages. However, when there is a high demand for workers and low unemployment rates, wages and work hours also rise [PDF]. These changes tend to affect low-wage workers disproportionately. Higher wages and longer work hours would further reduce Latino and African American poverty rates. Additionally, when men are steadily employed in a good job that provides decent earnings and benefits, they are more likely to marry, which would also reduce poverty rates.
So how do we get to low unemployment for African Americans and Latinos?
The Policy Agenda for Closing the Racial Wealth Gap identifies three important sets of policies that can achieve this: (1) increase investments in infrastructure, (2) create a federal jobs program, and (3) eliminate unnecessary and racially discriminatory background checks for securing employment.
Increase investments in infrastructure
America’s infrastructure received a D+ grade from the American Society of Civil Engineers in their last assessment. America has many roads and bridges that need repair, water mains and sewers that need replacing, electrical grids and internet systems that need modernizing, schools that need major renovations or rebuilding, and public transportation systems that need to be developed or expanded. A true 21st-century infrastructure will create millions of jobs and produce a stronger and more productive American economy.
Some may assume that infrastructure investments will only benefit white construction workers, but this view is incorrect. Hispanics are well represented in the construction industry and would benefit from an increased demand for workers with those skills. Also, infrastructure investments create a large share of support and supply jobs in the transportation, manufacturing, and other industries. While blacks are poorly represented in the construction industry, they are better represented in the transportation and other industries where jobs are also created. A serious commitment to addressing infrastructure needs will create hundreds of thousands of jobs for Latinos and African Americans.
Create a federal jobs program
A 21st-century infrastructure program, however, would still not resolve the significant racial and ethnic disparities in unemployment rates. Even in the best economic times, the Latino unemployment rate is about 1.5 times the white rate and the African American unemployment rate runs about twice the white rate. Even among those with science, technology, engineering, and math (STEM) degrees, we see these same unemployment disparities. This means that when whites have low levels of unemployment, Latinos still suffer from relatively high levels of unemployment and African Americans from even higher levels.
There is no short-term solution to this problem other than a federal program that directly creates jobs that Hispanics and blacks can obtain when they cannot find other jobs. Such a program could be broad and universal, or targeted to high-unemployment geographic areas or to specific populations such as the long-term unemployed. Each approach has political and economic strengths and weaknesses, but they all would address the racial and ethnic disparities in the unemployment rate that are currently part of the “normal” inequities of the American labor market.
Eliminate the indiscriminate use of criminal-background checks and credit checks for obtaining employment
The Latino and African American incarceration rates are higher than the white rate. An individual can have an arrest record purely as a result of racial profiling by police. An arrest is not a conviction of a crime. Not all conviction records are relevant for all jobs. Additionally, we know that as time passes from a person’s last criminal offense, the person’s likelihood of reoffending diminishes.
To provide a fair opportunity to ex-offenders, it is necessary to first assess whether an individual meets the qualifications for a job. After determining that an individual is a candidate for a position, then an employer can assess whether the individual’s arrest and conviction history is relevant to excluding the individual from the position. To do this, we must “ban the box” as a method of screening out job applicants with a criminal record.
Credit histories and credit scores were not created to assess an individual’s ability to perform a job. An individual may have a poor credit history or low credit score precisely because he or she is unemployed. Credit background checks generally should be prohibited in assessing candidates for employment.
Part of the reason for the persistent racial and ethnic disparities we see in poverty rates is because communities of color suffer from high unemployment rates. The way to lower Latino and African American unemployment rates is by investing in America and re-committing ourselves to true equal employment opportunity. With these policies, we can reduce poverty in communities of color.