Among the many gifts Dr. King bequeathed to our nation was a moral compass of words, and among them these words, no less relevant now than when he first spoke them1:

May I stress the need for courageous, intelligent, and dedicated leadership…. Leaders of sound integrity. Leaders not in love with publicity, but in love with justice. Leaders not in love with money, but in love with humanity. Leaders who can subject their particular egos to the greatness of the cause. God give us leaders. A time like this demands great souls with pure hearts and ready hands. Leaders whom the lust of office does not kill. Leaders whom the spoils of life cannot buy. Leaders who possess opinions and a will. Leaders who will not lie. Leaders who can stand before the demagogue and damn his treacherous flatteries without winking. Tall leaders, sun-crowned, who live above the fog in public duty and in private thinking.2 This is one of the great needs of the hour, but as we move on all over this nation we will need dedicated, courageous, and intelligent leaders.

May our leaders—may we all—echo Dr. King’s legacy on his birthday and beyond as we move forward.

Notes

1. Excerpted from “Desegregation and the Future,” address delivered at the Annual Luncheon of the National Committee for Rural Schools in New York City, December 15, 1956 [best guess]. Complete transcript and notes available online at the website of the Martin Luther King Jr. Research and Education Institute at Stanford University.

2. The King Institute editors note that “in these four sentences King paraphrases the poem ‘Wanted’ (1872) by Josiah Gilbert Holland.” (Josiah Holland was a Lincoln biographer and friend to Emily Dickinson.)

There is no mystery about what has brought us to this point. The immediate cause of the economic crisis we face is the fallout of the pandemic and the Trump administration’s failed response. As social distancing measures were enacted to slow the spread of the coronavirus, economic activity collapsed. A burst of new activity has accompanied some reopenings, but now, because the government has failed to curb the pandemic and failed to enact a just response, the economy is plunging deeper into crisis.

This all is taking place in a society that was already deeply unequal. Before the pandemic, 140 million people were poor or one emergency away from being poor, including approximately 60% of Black, non-Hispanic people (26 million); 64% of Hispanic people (38 million); 60% of indigenous people (2.15 million); 40% of Asian people (8 million); and 33% of white people (66 million).

The pandemic spread and deepened along the fissures of that inequality and the inadequate public policies that existed prior to the pandemic. It is no surprise that 8 million people were pushed below the poverty line in the past five months as COVID-19 economic disruptions continued.

So, what needs to be done?

This blog post from the Economic Policy Institute (EPI) and the Poor People’s Campaign: A National Call for Moral Revival shows that if America does not address what’s happening with visionary social and economic policy, the health and well-being of the nation is at stake. If poor and low-income people don’t vote and determine who is in office, and if policymakers don’t change course from one-shot policy activism, we will face even greater economic peril. What we need is long-term economic policy that establishes justice, promotes the general welfare, rejects decades of austerity, and builds strong social programs that lift society from below.

In this post, we provide several illustrative policy recommendations, which are by no means exhaustive, but aim to give a sense of how bold change must be. It’s important to understand where we are today and how we got here.

The pandemic recession (and a depression for the poor)

Because COVID-19 spreads so efficiently in face-to-face situations, economic sectors that relied on face-to-face interactions—including food service, retail, hospitality, education, and health sectors, among others—were essentially closed when social distancing measures came into force. These widespread closures resulted in a stunning collapse of economic activity and employment. In March and April of 2020, 21.5 million workers lost their jobs, and 12.7 million lost their health insurance when they became unemployed. While some jobs have been returning as sectors reliant on face-to-face interactions slowly open back up, the economic shock of COVID-19 remains historically large and damaging, far beyond the 2008–2009 Great Recession and even the Great Depression.

Many of these workers were facing extreme economic distress and insecurity before the COVID-19 shock that made them more vulnerable to the pandemic’s economic fallout:

• they were not paid enough to build up savings to tide them over in an emergency, let alone a long pandemic;
• they lacked paid sick, medical leave, and health insurance benefits;
• many lacked access to unemployment insurance or affordable options for high-quality child care;
• they often lived in expensive but crowded accommodations;
• and they lacked, and continue to lack, power and a voice at work to demand safe working conditions.

The disempowerment of huge swaths of the U.S. workforce is perhaps best summarized by the figure below. The wedge between what workers are being paid and the ability we have to pay workers higher wages (or the amount of income generated in an average hour of work, also known as productivity) has grown enormously since the 1970s. Instead of going to workers, the benefits of our increasingly productive economy have gone to corporate and business executives and holders of wealth.

Productivity-Pay Gap

This wedge is not a sad accident of apolitical market forces. It is the predictable outcome of intentional policy choices that aimed to redistribute economic leverage and bargaining power upward and away from typical workers. There was no one single piece of legislation that did this; instead it was the accumulation of dozens, if not hundreds, of policy choices made in the form of legislation, regulatory changes, and administrative decisions that consistently put a thumb on the scale of the conflict over who would see benefits from economic growth.

The need for policymakers to radically change course

The recovery from this point forward will be a long and slow slog, unless policymakers radically change their course. Most of what is needed in the COVID-19-driven recession is the same thing that is needed in every recession: safety net programs and additional federal resources that flow robustly and generously to state and local governments in a time of increased need.

This includes policies that can address the precarious economic status of low-wage, “essential” workers who have been on the front lines of the hardest-hit sectors of the pandemic recession. While all recessions are hard on lower-wage workers, most recessions do not start in low-wage sectors. Traditionally they have begun in manufacturing or construction and then radiated outward, harming low-wage workers in their wake. However, the economic sectors requiring face-to-face interactions in the U.S. economy are disproportionately staffed by low-wage workers, and these sectors have been the epicenter of the COVID-19 shock.

This is in part why the CARES Act was not enough—not for the crises at hand nor the longer, festering policy choices and overall direction this country has shifted to over the past decades. It will take more than one-shot policy activism to bring us out of these depths, but this is essentially what the CARES Act offered.

The best parts of the CARES Act included substantial federal aid for control and treatment of the virus, and a reimagining of how protective and expansive the nation’s unemployment insurance (UI) system could be. But because we have disinvested for decades in the state systems that administer UI, these huge changes led to much disruption—including often-delayed benefits for those in need. And while those who received benefits through the CARES Act were thrown a lifeline that kept them above water, the extra $600 in UI benefits ran out at the end of July and the PUA program that made normal benefits available even to nontraditional workers runs out at the end of this year.

Also, millions of people were excluded from these benefits, including the 11 million undocumented workers who are working on the front lines of this pandemic. Neither they nor their citizen children received the one-time stimulus check (Economic Impact Payment or EIP). Meanwhile, unbanked people, who include a large number of the nation’s indigenous people, received the EIP weeks late.

This withdrawal and delay of critical economic aid even as the economy remains profoundly damaged isn’t just cruel to families struggling to get by. It is also bad economics.

This aid—largely going to families with workers who were in sectors shut down by the pandemic—essentially kept the COVID-19 shock contained in those sectors and kept it from spilling over into the rest of the economy. As of September, the direct economic shock from COVID-19 has been getting smaller, at least for the moment, but the negative effects are starting to spill over again, as the measures to contain the economic hardship of the pandemic—the EIP and enhanced UI—have been stripped away.

Another glaring weakness of the CARES Act was its insufficient aid to state and local governments. In the federalized U.S. system, state and local governments provide many of the most important on-the-ground tasks people expect of the public sector generally. Health and education spending dominate state and local budgets. The COVID-19 shock caused incomes and spending to plummet and, in turn, will lead tax collections of state and local governments to plummet. Because these governments have balanced-budget rules, this puts intense pressure on these governments to reduce spending in the face of much lower tax collections.

We must do more

We have seen this before. In the aftermath of the Great Recession, recovery was throttled by a Republican-led Congress. Public spending grew more slowly in the recovery following the Great Recession than during any other recovery since World War II. Federal aid to state and local governments was stopped too soon and Republican governors embraced austerity as an economic strategy. By our estimate, these measures delayed a full recovery back to pre-recession (2007) unemployment levels by four full years. This drag on growth stemming from state and local budget distress always comes with a lag: Employment losses in state and local governments, for example, persisted for four full years after the official end of the Great Recession of 2008–2009.

This was, in short, a policy disaster.

We do not need to repeat these mistakes. Indeed, there are discrete, ambitious policy changes that could happen quickly and would be transformative, especially for the 140 million poor and low-income people who were facing multiple pandemics even before COVID-19.

Sustained full employment

Policymakers must commit to ending recessions and restoring full employment as quickly as possible. They need to refrain from cutting recoveries short in the name of safeguarding against potential inflation. Instead, they should aggressively push unemployment down as far as possible, only stopping expansionary measures when actual inflation begins. Tight labor markets with low unemployment fundamentally change the bargaining dynamic between workers and employers, forcing employers to go begging for workers rather than workers begging for jobs.

Living wages

In 1963, the March for Jobs and Freedom demanded a federal minimum wage of $2 per hour. Adjusted for inflation, this would be roughly $15 today. Adopting the March’s demand and boosting the federal minimum wage to $15 by 2025 would give a raise to 33 million workers, with Black workers and women seeing disproportionate gains. A labor market is only as strong as its floor, and the federal minimum wage needs to be significantly strengthened to bolster this floor.

Fundamental reform of unemployment insurance

We should follow the lead of other rich countries and greatly expand the share of the unemployed who receive UI benefits in normal times, and normal UI benefits should be made significantly more generous. A transformed UI system can be a revolutionary change for U.S. workers, significantly blunting the anxiety and deprivation inflicted by even short spells of joblessness.

Universal health care

The COVID-19 shock has just been the latest crisis highlighting the perversity of tying access to health insurance coverage to specific jobs. Nearly every other rich industrialized nation has delinked health insurance and the labor market and has instead made access to insurance coverage a universal right. The U.S. should join this community and provide coverage to all and, more importantly, this coverage should not become degraded or ruinously expensive whenever one loses a job. The steps forward in health security made by the Affordable Care Act (ACA) have laid bare an important truth about these efforts: Their bedrock needs to be substantial increases in publicly provided insurance, beginning with the expansion of Medicaid.

Taxing the economic ‘bad’ of inequality

In the 30 years following World War II, the fruits of economic growth were far more evenly distributed than since and tax rates faced by the rich and corporations were substantially higher. These higher tax rates provided revenue for needed public spending and reduced the incentive for privileged economic actors to rig the rules of the market to tilt more gains their way. We should raise taxes progressively to help finance needed public investments and safety net spending and because progressive taxes reduce the payoff to exercising market power. Yes, this market power should also be confronted directly with legislation and regulation, but we can also tax away the payoff to exercises of market power as a backstop.

Investing publicly to provide necessary goods and services

Health care, high-quality child and elder care, and education are all examples of vital goods and services that are out of reach for too many families. These should be provided by public investments that provide them universally. While the upfront costs of providing these are considerable, the payoff over time to society is huge. Some studies find that investments in early childhood education, for example, are more than 100% self-financing even in narrow public budgeting terms (i.e., the higher taxes paid by more productive and hence higher-income adults resulting from early childhood investments will fully pay for these). High-quality elder care can allow a large expansion in the labor force of adult women, greatly bolstering growth. And health care in countries that rely more on public provision is more affordable and sees slower cost growth than others.

Investing in safe communities

Recent years have seen a growing recognition that the brute force model of policing and incarceration has failed as a mechanism for guaranteeing public safety. A new model needs to be developed, one that rests on investments in health, education, and opportunity for poor neighborhoods. These investments should include pilot programs that invest in community-based organizations that are given primary responsibility for ensuring public order and safety. In many communities around the U.S., community-based organizations already do much of this work, building safe public spaces and trying to intervene to stop violence or crime before it happens. These organizations are forced to do this work on the cheap, but their work is effective and, if financed publicly, can build trust rather than antagonism between communities and those tasked with providing public safety.

Protecting and expanding voting rights

For any of the policies above to be advanced, policies must also be passed that protect and expand voting rights, especially for poor people and poor people of color. Since 2010, there has been a wave of new voter suppression laws in at least 25 states in the country, targeting poor people of color. Pushing back against this voter suppression begins with reinstating the pre-clearance requirements of the Voting Rights Act that were lifted by the 2013 Supreme Court case Shelby County v. Holder; including judicial oversight of those jurisdictions that have passed voter suppression laws since 2010; ensuring automatic registration at the age of 18, same day registration, and early voting in every state; ending felony disenfranchisement; and making Election Day a national holiday.

Moral policy is sound economic policy

There are real costs to maintaining a vastly unequal economy: Every year, we lose $1 trillion to child poverty costs and $2.6 trillion in lost earnings from gender and racial wage gaps; we have lost $1.3 trillion in government revenue by lowering the corporate tax rate in 2017 and $6.4 trillion in endless wars; inaction on climate change may cost close to $3.3 trillion annually; and 250,000 people die from poverty and inequality every year. The cumulative financial costs of the pandemic are estimated to be $16 trillion.

Absent a radical policy change, there is a very good chance that these unnecessary losses will continue, inequality and inequity will worsen, and the U.S. economy will find itself in a recession again before the end of this year. There is no reason this needs to happen, especially if we ensure that those people who are most impacted by this economic crisis (and by those who brought us to this point) are engaged in the political process of electing our policymakers.

According to research by the Poor People’s Campaign with economist Robert Paul Hartley, there are 34 million poor and low-income people who did not vote in 2016. In key battleground states, a small percentage of those voters can meet and even exceed the margins of victory from 2016.

By organizing against the policies that have pushed millions of people out of the political narrative and increasingly out of any economic power, we can begin a path to recovery that will benefit us all. When we lift from the bottom, everybody rises.

I realize that for some, the concept of a preacher writing for an economics blog might seem odd, but the link between what I do—as a pastor, architect of the Moral Monday movement and co-leader of The Poor People’s Campaign—and the research done by EPI is absolutely vital. One of the quickest ways for a movement to lose its integrity is to be loud and wrong. We’ve seen too many movements that have bumper sticker sayings but no stats and no depth. Researchers help to protect the moral integrity of a movement by providing sound analysis of the facts and issues at hand. Armed with this information, we’re able to pull back the cover and force society to see the hurt and the harm of the decisions that people are making.

In fact, I believe we find evidence of a relationship between religion, activism, and research that dates back to the prophets of the Bible. The prophets of the Bible were the social activists of their time. I say that because the only time prophets in ancient Israel rose to the fore was when the kings or the politicians and their court chaplains weren’t doing their job.

For example, the prophet Isaiah said to those who were rich, powerful and presumed themselves to be morally superior, “Woe unto those who legislate evil and rob the poor of their rights and make women and children their prey.” Isaiah even went as far as saying that religious activity—worship and prayer—was not a cover for their failure to “loose the band of wickedness.” Wickedness in that text is specific to the issue of not paying people what they deserve and trying to cover it over with a lot of religiosity. He goes on to say that the nation will never be able to repair itself until it ends the wickedness of not paying people what they deserve. Because society’s policies had actually insulated destruction, injustice and inequality could never be resolved without a change of policy.

These statements reflect more than just a difference of opinion concerning the legislation. Rather, such bold and specific statements suggest an analysis of the society which concluded that the legislation was evil in that it was robbing those who were most vulnerable. In other words, Isaiah’s moral authority to criticize policy could be confirmed and validated by research.

Now, let’s consider Jesus, the central figure of the Christian faith, who was also very keen on social policy. The opening line of his first sermon went like this: “The spirit of the Lord is upon me for he hath anointed me to preach good news to the poor.” The researchers would have told Jesus in that day that Rome favored the 1 percent and disregarded the 99 percent. That Rome had distinct classes of people. One group of people were called the humiliadors, the humiliated ones. The others were called the honoristeries, the honored ones. The honored ones controlled politics. They wanted all the tax cuts. They wanted the law to favor them and they expressed their grandeur by flaunting and boasting on their entourages, their dress, and their education.

It was into that world that Jesus comes and says, no, this is wrong. This is not the way it should be. This may be Caesar’s way, but Caesar is an egotistical narcissistic builder who loves to put his name on buildings and, if he could, would put his face on every coin. Caesar is the one who desires military parades to flaunt and boast about his position of authority. Caesar believed he had the authority to grab any woman any time he wanted to. Caesar only wanted people around him who told him what he wanted to hear. Caesar only cared about money. Everything was about money. If it’s unclear, I’m talking about something that happened 2000 years ago.

Into this, Jesus comes and says the spirit of the Lord, which is above Caesar, is focused on the poor. Now, there are three words for poor in Greek. But the one used to describe this moral movement of Jesus is ptchos, which literally means those who have been made poor by exploitive policies. So Jesus had to have some research around in order to say in his first sermon, “I’m calling out the policies and declaring that they are wrong.”

In our contemporary society, researchers protect the integrity of movements in other important ways. When we started the Moral Monday Movement in North Carolina, the first thing we did was create a budget so that we could answer up front the critique that always arises, which is, “that would be a nice moral thing to do, but it’ll raise taxes.” As Joseph Stiglitz, the Nobel Prize winning economist, has said, we have to deal not just with what it costs to fix inequality, but what inequality is costing us. So, for each issue we wanted to raise, we calculated the cost of doing it, and the cost of not doing it.

The research that goes into developing that kind of budget helps us to disarm the obvious critiques of our movement, but also puts us in a position to challenge our critics on the costs of opposing or stifling attempts to find solutions. When we lead public demonstrations, research provides an empirical connection to the anger and legitimate discontent being expressed. Research also provides connections for building unity.

Right now in the Poor People’s Campaign, we are saying that there are five potentially fatal diseases that are impacting this democracy: systemic racism, systemic poverty, ecological devastation, the war economy, and the false distorted moral narrative of religious nationalism that gives cover for the four other social diseases.

What our movement is saying is that we have to have researchers that can connect all five of them and help people to understand that you cannot talk about economic advancement, living wages, and lifting the poor if you don’t deal with the systemic racism, for instance, of voter suppression. You can’t talk about either of those two without talking about ecological devastation, including the fact that the first people who are going to be impacted will be poor people, and those poor people will disproportionately be people of color. We have to have researchers that can help movements and the larger public to understand these connections.

Research and revolutions go hand in hand because you can’t challenge Rome if you are Rome. Revolutionaries have to be re-educated by the research because that’s what helps them think beyond the predominant mindset of the larger society.

For example, most people don’t realize that voter suppression in this moment is more of a white issue than a black issue. The research shows that the states that have participated in racialized voter suppression are among the poorest states in the nation. So the people that get elected through racialized voter suppression pass policies that hurt mostly white people because they are still the majority of the population in those states. We’re losing too often on these issues because we work in silos with black folk on one end fighting against voter suppression and then white folk on the other end fighting neo-liberalism. We work in silos because we’ve been conditioned to think they are separate issues when in fact they’re all connected.

People are ready for a grown-up, researched movement that can handle dealing with race and poverty, and ecological devastation, and the war economy all in the same space, and can use that kind of power and research to build out a long-term strategy. That is what it takes to register people for the movement who vote. So, where do we start?

I believe it starts with changing the South. We do that by building the coalitions of white and black and brown and Latino and Asian and poor folk in the South to raise up this movement and to vote. That’s what it’s going to take to shift the political calculus in this country. For eleven years I’ve been saying we’re in the midst of the birthing pains of a Third Reconstruction. But we cannot wait until election season to do the work. It has to be done year round and every year.

I want to give you some numbers to consider—178, 26, 31 percent, 100 million, 40 million. Now, why those numbers? If you calculate the number of electoral votes available from the 13 former Confederate states from Virginia to Texas, you come up with 178 electoral votes. Which means, any candidate that gives away the 178 electoral votes in those 13 states, puts their opponent in the position of only needing 92 electoral votes from the other 37 states.

The 13 former Confederate states, which only have about 36 percent of this country’s population, decide 178 electoral votes, 26 United States Senate seats and 35 percent of the seats in the United States House of Representatives. That means all it takes to win control of both houses of Congress is 25 Senate seats and 16 percent of U.S. House of Representatives seats available from the other 37 states.

100 million is the number of people that didn’t vote in the 2016 election. 40 million is the number of poor and low-wealth people in this country. The majority of them are in the South and are the key to the transformation of our politics.

All of the close elections we witnessed in the 2018 midterms are a sign that we are right at the tipping point. If there’s ever been a time that we ought to go south and shift the political calculus in this nation for the next 20 to 40 years and beyond, it is in fact right now. Don’t believe the talking heads who haven’t done the research, or just don’t want the public to know that if you registered 30 percent of unregistered black voters in the South and connected with progressive whites and Latinos you could flip about five Southern states right now: Virginia, North Carolina, Florida, Georgia, and Mississippi. Perhaps Texas and maybe even South Carolina. That’s what the research says, even though it’s not what the talking heads are saying.

A movement connected to the right researchers can do this, must do this and has to do this. This is our movement and our moment. I believe with everything inside of me that if you give us the data, the research and the analysis we need to create budgets that put “ordinary” people first, we will change this nation.

Although the share of workers earning poverty wages has declined over the past three decades, there are still large racial and ethnic differences in the shares of workers being paid at adequate wage levels. As shown in the first figure below, workers of color are far more likely to be paid poverty-level wages than white workers. In 2017, 8.6 percent of white workers were paid poverty wages—i.e., hourly wages that would leave them below the federal poverty guideline for their family size if they are the sole earner in the family, even if they work full-time, year-round. In contrast, 19.2 percent—nearly one in five—Hispanic workers were paid poverty wages, and 14.3 percent—roughly one in seven—black workers were paid poverty wages. Asian or Pacific Islander workers also had higher poverty-wage rates than white workers, at 10.9 percent.

Figure A

Among workers of all races and ethnicities, the shares being paid poverty wages have declined from highs reached in either the mid-1980s or the mid-1990s. However, the share of black workers earning poverty wages in 2017 (14.3 percent) was still slightly above where it was in 2006 (14.1 percent.) Black workers are the only group for whom the share receiving poverty wages is not at its lowest level on record.

Notably, racial gaps have been remarkably consistent—if not gotten worse—over time. The share of black workers earning poverty-level wages has consistently been 1.5 times that of white workers for the entirety of the series. The ratio of the Hispanic poverty-wage rate to the white poverty-wage rate has actually grown since the 1980s. In 1986, the share of Hispanic workers earning poverty-level wages was 1.8 times that of white workers; in 2017, it was 2.2 times the share of white workers.

Figure B

Because a person’s applicable poverty guideline is determined by their family size, groups with larger average families will have higher average poverty guidelines—meaning that the share earning poverty-level wages could be higher simply from larger average family sizes. It is true that Hispanic workers tend to have larger families, on average, than workers of other races or ethnicities; however, the differences are not large enough to be driving Hispanic workers’ significantly larger poverty-wage rates. The second figure shows that Hispanic workers have an average family size of 3.2 people, while white workers’ average family size is 2.8 people. (Single childless adult workers have a family size of one.) In other words, the average family size of Hispanic workers is 14.5 percent larger than the average white worker, yet they are 123 percent more likely than white workers to be paid a poverty-level wage. Moreover, the growth in the ratio of the Hispanic poverty-wage rate to the white poverty-wage rate also cannot be attributed to changes in average family sizes, as the average Hispanic worker family size has shrunk more since 1986 than the average white worker family size has.

We can also calculate what the Hispanic poverty-wage rate would be if Hispanic workers had similar family sizes to white workers. Reweighting the 2017 data shows that if Hispanic workers had the same family structure as white workers, their poverty-wage rate would fall to 14.3 percent—still 5.7 percentage points higher than white workers.

Finally, it is worth noting that in 1986, the average black worker had a slightly larger family than the average white worker; yet by the mid-1990s, that was no longer true. As of 2017, black workers had the smallest average family size at 2.7 people—meaning that the significantly higher rates at which black workers are paid poverty-level wages relative to white or Asian workers is entirely the result of low wages, not larger average families. Indeed, reweighting the 2017 data shows that if black workers had the same average family size as white workers, their poverty-wage rate would actually rise to 14.8 percent.

Over the past 30 years, large shares of U.S. workers have had jobs that have paid wages so low that, even with full-time, year-round employment, their earnings would still fall below federal poverty guideline for their family size. Figure A shows the share of workers overall, and the shares of men and women workers, who have been paid poverty-level wages since 1986—the first year for which Census microdata allow for this calculation. A poverty-level wage is an hourly wage that would leave a full-time, full-year worker below the federal poverty guideline for their family size if they are the sole earner in the family. In 1986, 17.3 percent of workers overall (more than one in six U.S. workers) were paid poverty wages, including nearly one in four (23.2 percent of) women workers. By 2017, the share of all workers earning poverty wages had fallen to 11.4 percent. This is a significant decline from the 1995 peak of 17.6 percent, yet it still means that more than one in nine workers are being paid too little to escape poverty for their family size.

Figure A

Since 1986, the largest declines in the share of workers earning poverty wages have occurred in periods when the labor market has been relatively tight, with low unemployment and jobs available for those that can work—such as from 1998 to 2001, and, more recently, from 2015 to 2017. From 2015 to 2017, the U.S. also had uncharacteristically low inflation, which made it easier for even tepid nominal wage growth to result in higher inflation-adjusted wages and thus fewer workers earning poverty wages.

Much of the overall decline has also been driven by a decrease in the share of women earning poverty wages. As women workers have grown as a share of the workforce, the relatively large improvement in their poverty-wage rate has had a growing impact on the overall poverty-wage rate. Indeed, the share of men earning poverty wages has been relatively flat. As recently as 2014, the share of men earning poverty wages was as high as it was back in 1986.

Any agenda to fight poverty should include labor market policies targeting each of the three factors affecting families’ incomes: jobs, hours, and wages. Higher minimum wages would boost hourly pay, especially for workers in low-income families; fair workweek policies would help to increase and stabilize workers’ hours; and monetary policy that prioritizes full employment, combined with a program of public job creation that targets areas of persistent high unemployment, would make jobs available to many more people.

Figure A

The fall in the inflation-adjusted minimum wage over the last five decades has made poverty rates substantially worse, particularly for people of color. As Figure B shows, more than one out of five nonelderly black and Hispanic people lived in poverty in 2016, or about 18.3 million people. While poverty has a variety of causes, one important contribution is low wages.

Figure B

Some states have minimum wages higher than the federal minimum. In 2016, the average state and federal minimum wage was $8.28 per hour. But had the effective value of the federal minimum wage not fallen since 1968, the average state and federal minimum wage would be $9.70 today.

The most comprehensive assessment of the effect of the minimum wage on family incomes finds that every 10.0 percent increase in the inflation-adjusted minimum wage reduces black and Hispanic poverty rates by about 10.9 percent. Had the federal minimum wage been raised to keep up with inflation since the Poor People’s Campaign began in 1968, black and Hispanic poverty rates would be 18.2 percent lower, and nearly 3.3 million African Americans and Hispanics would no longer be in poverty.

Based on this estimated historical series of the SPM, the overall poverty rate in fact declined 5.6 percentage points between 1970 and 2014. Among children, the rate fell 7.6 percentage points and poverty rates among children of color were cut by almost half.

However, even the official poverty rate, which neglects important safety net programs in its calculation, shows a large reduction in poverty among black and Hispanic children. The first chart illustrates those demographic trends since 1976, when data was first available for consistently defined race and ethnic groups. Over the period shown, the poverty rates for black and Hispanic children declined 9.8 and 3.6 percentage points, respectively.

What is puzzling about these trends is the fact that the overall child poverty rate increased 2.0 percentage points between 1976 and 2016. The poverty rate for white children increased 1.0 percentage point over the same period of time, but still remained much lower than the rates for black and Hispanic children.

As we noted above, the rise in the official child poverty rate is often invoked as proof that spending on anti-poverty programs is counterproductive. The more interesting and accurate interpretation of this rise, however, is that racial inequality has had a growing effect on national economic well-being as people of color become a larger share of the population.

Figure A

The second chart reveals the demographic shift behind these seemingly contradictory patterns. In 1976, just over half of children in poverty were black or Hispanic. By 2016, black and Hispanic children represented about 63 percent of children in poverty. So, the overall child poverty rate increased over this time largely because black and Hispanic children—whose poverty rates (both official and supplemental) actually fell, but were still much higher than those of white children—make up a larger share of poor children.

Figure B

Contrary to what opponents would like the public to believe, War on Poverty programs like welfare and food stamps—now Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program, respectively—as well as the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), did not create more poverty. In fact, a previous snapshot suggests that compared to peer countries with much lower post-tax, post-transfer poverty rates, the United States doesn’t spend enough on anti-poverty programs. The consequences of making ill-informed decisions about anti-poverty programs based on inaccurate or incomplete information are especially serious for children of color. Unfortunately, racism has often been used as a tool to turn public sentiment against anti-poverty programs instead of constructively using these programs to reduce racial inequality. If we are serious about moving toward a future with less poverty, we must strengthen the social safety net and constructively remedy racial inequality.

This graph shows how the generosity of a country’s expenditures on public assistance is related to the child poverty rate after accounting for those expenditures. Specifically, we plot social expenditures minus pensions as a share of gross domestic product (GDP) for the United States and select Organisation for Economic Co-operation and Development (OECD) countries against each country’s post-tax, post-transfer child poverty rate in 2014. We subtract pensions from social expenditures because they are a relatively large social expenditure in some countries, but do not directly benefit most children. While social expenditures alone don’t determine a country’s poverty rate—unemployment, wages, inequality, and the overall strength and stability of the economy are the biggest determinants—there is a clear relationship.

The data show that on average, the relative child poverty rate tends to be lower in countries that choose to invest more of their national income in programs that alleviate poverty and material hardship. For example, Denmark and Finland are among the nations with the most generous social expenditures (each spending close to one-fifth of their GDP) and the lowest post-tax post-transfer, child poverty rates (both below 4 percent). The United States, in contrast, is much less likely than peer countries to step in where markets and labor policy fail in order to lift their most disadvantaged citizens out of poverty. In 2014, the United States had the second highest post-tax, post-transfer child poverty rate (20.2 percent) among the developed OECD countries included in the graph and spent the third lowest share of GDP on social programs (12.0 percent), after Slovenia (11.3 percent) and Slovakia (11.7 percent).

Figure A

The United States has the economic means to do much more to reduce child poverty. The 1968 Poor People’s Campaign was about calling attention to the injustice of poverty and the fact that U.S. policymakers had not done more to invest in real and lasting solutions. 50 years later, this sad reality remains.

Unfortunately, nominal wage growth for private-sector workers found in the monthly jobs report’s payroll survey offers only a limited view on wage growth in the economy today. One of the major benefits of a full employment economy is that wage growth isn’t simply strong for workers at the top of the wage distribution or for workers with more educational attainment, but that it allows low-wage workers to make gains as well. To get finer-grained estimates of what’s happening to wage growth for particular groups of workers, we have to turn to the Current Population Survey Outgoing Rotation Group (ORG). The ORG is a household-based survey, not an employer-based one like the payroll survey, which each month provides widely reported estimates of job growth and wage growth for private-sector workers. This is important because this means the ORG can not only ask questions of wages, but also make comparisons of wages across the wage distribution. Adding to that information gleaned from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) allows for comparisons about incomes, notably information on poverty rates.

Over the last couple of weeks, EPI has been highlighting some important statistics in commemoration of the 50th anniversary of the Poor People’s Campaign. We’ve pointed out the changes in the poverty rate over the last 50 years, where gains have been made, particularly among the elderly, and where disparities remain. We also discussed how poverty reduction can be improved with a stronger safety net and a better labor market. The truth is that full employment that makes more hours available to lower-wage workers and broad-based wage growth are key tools in the fight against poverty, and many people who live below the poverty line rely on a stronger economy to make ends meet.

Given that many poor people work and that labor earnings account for an increasing share of income for families in the bottom fifth of the income distribution, it’s no surprise that wages at the bottom and the poverty rate are inversely related. The figure below shows wages at the 10th percentile (i.e., the worker who earns more than only 10 percent of workers) from 1979 to 2016, compared with the share of people in poverty over the same time period. Over the majority of this period, as 10th percentile wages increased, poverty decreased, and as wages fell, the poverty rate rose.

Figure A

It is clear that high-pressure labor markets where unemployment remains very low for a long time contribute greatly to living standards growth for low and moderate-income families. When we’ve seen more hours available and stronger wage growth as in the high-pressure labor markets of the late 1990s, we’ve also seem large reductions in poverty. The Great Recession led to a sharp increase in the poverty rate, which has just recently begun to fall as the labor market has tightened, with the corresponding rise in the 10th percentile wage.

In this period of commemoration of the Poor People’s Campaign, it’s important to note that enough jobs as well as jobs with enough hours and high enough wages can take people out of poverty. On Friday, we should continue to look for stronger wage growth as a sign of a tightening economy, where workers continue to come in off the sidelines and eventually see that lessened slack translate into better bargaining power to bid up their wages.

Today, we are taking a closer look at those who fall below the official poverty line. While in our last post, we focused on the elderly, who saw great improvements in poverty reduction over the last 50 years, and children, the age group with the highest poverty rates today, here we look specifically at adults 18–64 years old. The share of these non-elderly adults in poverty rose from 9.0 percent in 1968 to 11.6 percent in 2016.

The figure below shows non-elderly adults in poverty segmented into various labor status categories. The top bar shows that 39 percent of those living below the poverty line between the ages of 18 and 64 in 2016 were not working because they are retired, going to school, or disabled. Clearly, an inadequate safety net is failing many who may be unable to work.

The bottom bar shows us that, among those working-age individuals who are otherwise employable, 63 percent are working and 45.5 percent are working full time. An additional 37.2 percent are not working, but this share includes 1.6 million people living below the poverty line who are actively seeking a job. The data make it clear that millions of people who are active participants in the labor market are unable to make ends meet, either due to insufficient hours or low wages.

Too often, it is assumed that poverty persists in the United States because those living below the poverty line simply refuse to work. In fact, a significant share of these individuals work and work full time, which means policies that boost employment and wages can be an important tool for reducing poverty. This does not eliminate, however, the need for a stronger safety net in this country to ensure that all people, regardless of whether they are enrolled in school, disabled, serve as full-time caregivers, or any other reason, are not vulnerable to falling into poverty. A serious fight against poverty requires both a more generous safety net and a better-functioning labor market.