Economist Danziger presents “Public Policy, and the Poor: What Changes Can Obama Make?”

This past Thursday, the Swarthmore economics department invited Sheldon Danziger, noted labor economics and policy scholar, to present a lecture entitled “The Economy, Public Policy, and the Poor: What Changes Can Obama Make?” The talk is part of annual series of lectures given in honor of Frank Pearson, a former economics professor and Swarthmore alumnus who worked for the College for over 40 years.

Keynote speaker Danziger currently teaches at the University of Michigan School of Public Policy and is the director of the National Poverty Center. He has authored and edited several books including the textbook currently used in the Labor and Social Economics honors seminar.

Danziger aptly began his lecture with an appropriate opener by Dickens: “It was the best of times, it was the worst of times” to describe the situation of income inequality. With the rapidly growing unemployment rate likely to hit 10% in the coming years, the nation’s poor have been especially impacted by the current recession. Despite the recent increase in GDP, the current 11% poverty rate may hover “somewhere near 15% in a few years” according to Danziger.

The silver lining? More is being done now, more than ever, to address poverty. The Obama administration’s stimulus package has implemented a large set of changes in the treatment of the poor. Danziger mentions that the change is “being done quickly and overtly”; large quantities (relative to previous funds on combating poverty) are being spent on the poor. Spending on food stamps, for example, has increased by 13.5%. Danziger asserts that the positive effects of this type of policy are two-fold —- increased consumption through food stamps is good for the local grocer and thus the overall GDP, but also plays a role in combating poverty.

The question now is whether these policy changes will become permanent as the economy recovers. Danziger believes that two sides on the issue are already emerging. In one camp, there are those who oppose federal government spending generally, claiming the deepening national deficit as dangerous and inhibitory to growth. On the other side, there are those who support and encourage government spending projects like the stimulus package as a means to end economic inequality.

To understand the origins of the debate, Danziger traced historical policy efforts to combat poverty. He claims that the years immediately after World War II and preceding the oil crisis was “truly a time when a rising tide lifted all boats.” Students, in particular, may be familiar with the government aid programs like the Pell Grants and work-study that was put in place during this time.

In that era, Danziger claims that the poor were often viewed as victims of circumstance and “public policy was introduced and designed to build human capital” or individual sets of skills and knowledge acquired through education and experience. Danziger highlighted one particular quote made by then-President Lyndon B. Johnson, who said that the United States “could not wait for gradual growth of the economy to lift [the poor] above the poverty line.”

This “War Against Poverty” attitude largely disappeared as the introduction of labor-saving technology and the subsequent rise of globalization slowed economic growth and caused rising economic inequality. The effects of the slowing economy were apparent in the slowed spending for non-elderly poor as well as the falling wages for men without or with only high school degrees. Danziger, as a Michigan native, of course mentioned the nonexistent job opportunities in Detroit for males out of high school after car companies moved production outside the United States.

The 1980s did however see the rising educational attainment of women and their increased earnings relative to men. Danziger further pointed out that increased female labor participation helped slow the increase of poverty. Public perception on poverty drastically changed, shifting the onus of circumstance onto the poor themselves.

Danziger explained that the notion that the “poor don’t work” was common and deteriorating economic conditions were ignored. He countered this point with a chart that showed that the wages for a full-time year-round (male) worker did not change significantly over 30+ years of that era.

An additional popular claim was that American society was a meritocracy, with all citizens having an equal opportunity to succeed. Danziger again countered with an expected but nevertheless stunning graph that showed how the probability of achieving a high level of income is strongly dependent on one’s income level at age 25.

Danziger dubbed the 1980s as the era of inequality. Conventional thought on poverty had turned to the poor’s “lack of personal responsibility.” According to Danziger, President Ronald Reagan additionally blamed government attempts rather than economic climate as counterproductive to helping the poor, a notion that is commonplace today.

In terms of the present situation, Danziger predicts that “technology and globalization will continue to limit the prospects for workers without or with only high school degrees, own earnings will become primary income source, and children will increasingly grow up in single-parent families.” His policy proposals to combat widening income inequalities include supplementing low-income earnings and introducing programs that help families balance work and home life.

Danziger has taken particular hope in Obama’s speech on “Changing the Odds for Urban America,” where the then unlikely candidate hoped to “retire the phrase ‘working poor’.” A professor in the audience pointed out that the speech could have been wholly political, a rhetorical answer to John Edwards’ popular platform before the groundbreaking Iowa primaries.

Danziger noted the point but emphasized that the Obama administration had been taking big steps in formulating a new work-centered antipoverty strategy. The vast stimulus package includes tax credits for families with 3 or more children, more unemployment insurance, and expanded childcare programs, all policies that are in line with Danziger’s suggestions.

Questions from the audience largely circled around Obama’s potential to significantly combat poverty. One listener wondered if Obama’s appointment of an urban policy tsar was another direct but subtle attempt to combat poverty. Danziger, however, thought the position a “more narrow post largely focused on community organization efforts.”

Others wondered how the poverty debate was any different from the healthcare debate in terms of shouldering mutual responsibility for the poor. Would the war against poverty suffer the same backlash? Danziger assumed tax increases for poor children would have a much less direct effect on upper-class individuals.

Currently, Vice President Joe Biden is conducting a campaign for “middle class working families” covertly promoting anti-poverty policies. Danziger finds respite in the Obama administration regardless of politics. “It is my belief that poverty is caused by structural factors primarily,” Danziger summed up; “The effects of Obama’s policies remain to be seen, but there is a possibility of significantly better policy for the treatment of the poor.”


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