Some folks, particularly on the left, wave away studies that show a negative impact on work from Obamacare or sharply raising the minimum wage. But here is a fact to keep in mind: while the official US poverty rate is 15%, according to the Census Bureau, it is only 2.9% for year-round, full-time workers.
Now that is still a lot of people, nearly 3 million Americans. But the stat shows the power of work to reduce poverty. We need to be careful of implementing policies that reduce full-time work. At the same time, we need to reward the return to work for low-skill Americans, via ideas such as expanding the Earned Income Tax Credit and create wage subsidies that don’t encourage business to alter how they hire.
Recently AEI’s Robert Doar, who ran social services for former New York City Mayor Michael Bloomberg, explained why, in addition to a strong economy, NYC is the only city among the nation’s 20 largest that has not seen an increase in poverty since 2001:
Secondly, we had a work focus. We said to people who asked for cash welfare, you need to go to work right away, we need to get you started on that right away. We were very, very aggressive proponents of President Clinton’s welfare reform insistence that assistance be based on work. That contributed a great deal. It’s just a fact that a very small percentage of people who work full-time, for a full year, are poor. And we had a lot of people working. In fact, when we left at the end of Bloomberg’s term, more people were working in New York City than ever before in its history. We regained the number of jobs lost in the recession months and months and months before, and now have exceeded the jobs that we had at the previous peak.
So, strong economy, strong work-based welfare policies were, in my opinion, the most important, and I should say about those work-based welfare policies that they had sanctions, consequences if you didn’t comply. We cut benefits, we closed cases, we reduced benefits for people who didn’t comply. The whole focus was, let’s get to work as rapidly as possible.
And then, third, we rewarded work. We were big supporters and big proponents of what I call “work supports,” which allowed low wage workers to make a little more, to feel a little more economically secure, because the government was providing healthcare insurance, for instance, or the government was providing a food stamp benefit to allow their monthly budget to go a little further in the purchase of food for their family. Or the Earned Income Tax Credit-New York has the most generous in the country, we have both a city, state, and of course the federal EITC. So these important work supports for low income workers also made the atmosphere for a work-based welfare policy and a strong economy better.