“Does persistent poverty in America mean that community development is failing?”

Community developers, like others fighting to improve the lives of low and moderate income people, are rightly frustrated at the persistently high rates of poverty in our country. A new book called “Investing in What Works for America’s Communities,” frames the issue in the following manner: “It may seem obvious, but the most important reason why community development needs to evolve is that it is not solving the problem it was set up to fix-namely, reducing the number of people living in poverty. The percentage of Americans living in poverty when the War on Poverty was underway was about 15 percent, and it is about 15 percent today.” 

In fairness to the authors, the book proceeds to give a much more balanced and nuanced explanation of what is and is not working in the field and the reasons for persistent poverty. But this simple statement “seem[s] so obvious” that it is frequently repeated in various ways by countless policy makers, scholars, funders and even practitioners. Indeed, it has become so widely accepted as to reach the level of “conventional wisdom.”   It is often used not just to critique the community development field, but the much larger anti-poverty movement and most if not all government programs designed to address poverty.  And it is a big part of the argument made by advocates for so called “pay for success contracts” and social impact bonds (see my article on this topic for more discussion of those models.)

But is it true?

My first objection to this argument, as I noted in an earlier article I wrote for this blog, is that I don’t think that community development was “set up” to simply to reduce poverty. I certainly agree that poverty reduction is one of our goals but we are just one small part of a much larger effort in that regard. If we expect community development to solve poverty than we are setting ourselves up to fail – even if we are successful at the more limited (yet still important) goals we can actually achieve like improving the quality of life for local residents, providing some economic stability for low income families, helping many of them break out of poverty, increasing resident control over community assets and local development, and simply enabling low income people to live with greater dignity, hope and pride. Those goals are hard enough!

But let’s put that issue aside for a moment. Is it fair to suggest that persistently high poverty rates is evidence that non-profit and government programs are ineffective and need to be redesigned and reinvented? Do we need to adopt “pay for success” contracts so we stop wasting money on supposedly ineffective programs as many now argue?   I think not.  Many nonprofit and government programs may very well need reinvention, but persistent poverty rates is hardly evidence one way or another. In fact, several other factors have a much bigger impact on our high poverty rates – stagnant wages, tax policy, social welfare policy, immigration, labor policy, globalization, institutional racism, growing numbers of single parent households, and even oddities in the way “poverty” is defined by the U.S. government.  For today, I want to focus on two of these other issues because they reveal the danger in this new conventional wisdom.

I believe that immigration promotes economic growth and significantly benefits our economy. That said, it is certainly true that over the past fifty years millions of impoverished people have come to our country (as my grandparents did 100 years ago) seeking opportunity. These immigrants arrive poor and often remain poor for most if not all of their remaining lives. In this respect they add to our poverty rates and contribute to the perception that we are failing.  Yet, according to a recent New York Times article on immigrants, second and third generation immigrants are doing substantially better than their parents and grandparents.

•  “Immigrant Latino households have a median income that trails the national median by $24,000 (or more than 40 percent). Among second-generation Latino households, the gap is only $10,000, according to a recent Pew Research Center report;” and

•   “For decades, the average Latino immigrant has had slightly more than a junior-high school education. An average child of a Latino immigrant today completes high school and attends almost one year of college. A typical grandchild attends more college,” said the article.

This is immensely encouraging. It suggests that it is still possible, indeed still perhaps common, for low income immigrants, with limited education, to come to America and to see their families eventually make their way into the economic mainstream. Perhaps part of the reason the overall poverty rates remain so high is that America continues to attract lower income immigrants to our shores where they can find new opportunities. That’s good for them and good for America, even though it may not be good for our poverty statistics. This is evidence that some of our programs are working – not failing.

A second reason poverty rates remain so high is that we have decided as a society that most of our assistance to the poor should be in the form of providing things rather than cash.  Most assistance now comes in the form of free or subsidized food, shelter, day care and health care. Indeed, health care benefits to the poor have risen dramatically along with the cost of health care nationwide. But these benefits do not factor into the poverty rate, even though they substantially improve the quality of life.  What if the poverty rate did consider these benefits? However, New York City uses a different standard than the federal government, one that takes account of non-cash assistance to the poor, but also reflects the higher cost of living in New York. (The official federal definition of poverty is absurd, but that is another article for another day.)  A recent New York Times article reported that researchers have found that affordable housing subsidies reduce the City’s poverty rate by 6.2 percent.  This is just one example of a government program (one that often involves non-profit agencies) that helps poor people even if it does not reduce the official US poverty rate.  This is evidence that our programs are working – not failing.

I don’t mean to sound naïve or to diminish the extraordinary hardship that poverty continues to bring to millions of families in America. I also am not suggesting that we be complacent about the need for non-profits to continually improve our efforts.  However, I fear that focusing on non-profit performance to the exclusion of other, more significant issues, is a dangerous distraction that will impede progress, not advance it.  One problem is that we may wrongly conclude that effective programs are ineffective because we are using the wrong benchmarks or flawed data (like poverty rates.)  Worse, by perpetuating the myth that social programs are largely ineffective, we provide a political excuse to cut the very programs that we need to help lift people out of poverty.