Closing the Opportunity Gap

With all due respect to the President’s tax initiative, there were two other developments on the economic news front last week that are important, too. Certainly, they were startling, and worrisome.

One was that the number of homeless people—largely families or single women—lodging nightly in New York City’s homeless shelter system has risen above 25,000, the most in more than a decade.

City officials attributed the increase, which includes a ten-percent jump in just the last year, to several factors. Among them are sharply rising costs for housing and a decline in subsidized housing.

Nor is New York City’s situation unique. A recent survey of 25 cities by the U.S. Conference of Mayors found that the number of families applying for help because of homelessness had increased by seventeen percent.

Officials in New York and other cities are trying to mobilize more resources to cope with the problem, but advocates for the homeless are pessimistic these efforts alone will be sufficient.

One, Steven Banks, told the New York Times that the situation “is a window into what’s happening in the economy overall.”

“Whereas the debate for the last few years has been about work programs (for the poor),” Banks continued in a chilling comment, “what we’re now seeing is that work isn’t enough to keep people out of the shelter system.”

Professor Dennis Culhane, of the University of Pennsylvania, pointed out that because of the long-term demand during the past two decades for urban housing by single, affluent adults, “homelessness went from a problem afflicting a few thousand skid-row denizens, to a commonplace way station for millions of America’s poor.”

The second important economic story that caught my eye was that tax revenues in as many as fifteen states have suffered sharp declines in just the last month or so, leading them to cut their budgets for the first time in a decade.

All of the affected states depend on sales and manufacturing taxes: the shortfalls in those revenues are another sign that the economy is slowing down.

If you put these two economic developments together, one of the things it means is that at the very time the poorest of the working poor are facing the most desperate situation imaginable, state governments are having to consider cutting social-service programs.

Of course, many of those at the bottom of the wage ladder are African-American.

On the one hand, their very presence there had become in recent years one sign of the historic economic progress African Americans charted during the latter half of the 1990s.

That was when the black unemployment rate declined steadily into single digits (today it stands at 7.6 percent) largely because the economy’s growth opened up millions of low-wage service jobs—and young, poor black men and women flocked to them.

Now, they, along with their fellow Americans among the working-poor, face a dire situation.

The predicament of Americans who work and who want to work but remain desperately poor underscores the point that huge gaps persist in the circumstances of African Americans and other Americans. Those gaps add up to what I call the “opportunity gap;” and my colleagues and I will speak more about this gap and the “opportunity agenda” we’ve put together to reduce it in coming columns.

But for now these two stories make clear that the “poverty gap” and the “employment gap” remain daunting for millions of Americans—even when they have jobs and are trying to lead productive lives.

It’s axiomatic – or at least it should be — that people who work for a living shouldn’t be poor. Although welfare reform has propelled former recipients into the workforce, many fulltime breadwinners earn so little that they stay stuck below the poverty line. Nationwide, roughly 6.3 percent of workers live below the poverty line. Yet the ratio for black workers is nearly twice that at 11.7 percent.

President Bush and Congress should shrink the poverty gap by increasing the minimum wage to at least $6.15 an hour. (Adjusted for inflation, it’s still below the high water mark of the equivalent of $7.67 set in 1968.) Let’s make work pay, instead of making workers pay. Diehard opponents say increasing the minimum wage will destroy jobs and stoke inflation, but there’s no credible evidence to substantiate that claim.

And, as part of any tax reduction package, the president should press Congress to further liberalize the Earned Income Tax Credit, so that low-wage workers have more disposable income that lifts their families above the poverty line. The income ceiling should be raised and taper off more gradually. Also, families with more than two children should be entitled to a credit for each youngster, just as well-heeled families can deduct the interest on home mortgages no matter how much their home cost.

The National Urban League’s “opportunity agenda” is an American agenda. It’s designed to level the playing field and equalize the economic vital statistics of our community—the United States of America. These two stories identifying the economic gap that is yawning wider prove that our agenda needs to be acted upon—now.

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