: Restoring Shared Prosperity
In the wake of Hurricane Katrina, the Center for American Progress convened a diverse taskforce of national experts to examine the causes and consequences of poverty in the United States and to devise a plan to reduce poverty and promote greater opportunity for all. The result was a landmark report, released in April 2007, “From Poverty to Prosperity: A National Strategy to Cut Poverty in Half.” The report laid out a series of policy recommendations which if implemented could cut poverty in our nation in half in 10 years.
Hurricane Katrina was the impetus for that report. Yet the taskforce’s findings detailed that the American Dream had been under siege long before the destruction of the hurricane. Our nation experienced steady income growth over the past several decades but the level of prosperity was not widely shared. Between 1947 and 1979 real median family income grew at an annual rate of 2.4 percent, which amounts to a doubling of real income over this period. Since 1979, however, the growth of family income has become increasingly disconnected from the broader growth of U.S. economic output and productivity. While productivity has continued to grow robustly, middle-class families are no longer getting their share of that growth.
This trend coincides with a decline in unionization and fewer jobs offering the kinds of health and retirement benefits that provide families with economic security. The result: Over the past three decades, our middle class grew smaller, income inequality widened, and since 2000 our nation’s poverty rate steadily increased—even during periods of economic growth.
Recognizing these conditions in 2007, the Center’s “Poverty to Prosperity” report outlined a bold policy prescription to achieve the goal of cutting poverty in half in 10 years. Modeling from the Urban Institute found that just three policy reforms would cut poverty by 26 percent:
- Raising the minimum wage to its historic level of half the average wage
- Making the tax code work better for lowincome working families by enhancing the earned income tax credit and child tax credit
- Enabling American workers who meet the necessary eligibility to have child care services
The Half in Ten campaign was launched to enact these and other measures to achieve our goal of cutting poverty in half in 10 years.
We believe our federal government possesses the policy tools to dramatically reduce poverty and grow the middle class. What is lacking is the political will. Our campaign was launched in 2008 with the purpose of mobilizing support for the report’s policy agenda and holding our elected officials and ourselves accountable to an ambitious yet achievable target.
Impact of the Great Recession on poverty in the United States
Just a few months after our first report was released, the Great Recession began in December 2007, and by September 2008 the economy was in free fall. In 2007 when the report was released, the latest poverty figures for 2006 showed that 12.3 percent of the population, or 36.4 million people, lived in poverty. Today the latest figures reveal that 15.1 percent of the population, or 46.2 million people, lived below the federal poverty line in 2010, a 2.8 percentage increase, according to the most recent data in 2010.
The incoming Obama administration and Congress took decisive action to stem the crisis and stabilize the economy, passing the American Recovery and Reinvestment Act of 2009, which at its height created or saved up to 3.6 million jobs, and kept millions of Americans out of poverty. In fact, analysis from the Center on Budget and Policy Priorities shows that just seven targeted provisions in the Recovery Act kept more than 6 million Americans out of poverty in 2009.
In addition, the passage of comprehensive health care reform and financial regulatory reform in 2010 will play an important role in helping low- and moderate-income families by increasing access to health care coverage and expanding protections from predatory lending practices that strip the assets of vulnerable families. Yet the devastation left in the wake of the Great Recession remains dire. Consider the following facts:
- In 2009, the number of families with at least one unemployed member increased to 12 percent, nearly double the 6.3 percent in 2007.
- In 2004, the median net worth of white households was $134,280 compared with $13,450 for black households, but amid the Great Recession at the end of 2009, the median net worth for white households fell 24 percent to $97,860 while plummeting 83 percent to $2,170 for black households.
- In 2010, the real median income fell 2.3 percent to $49,445 and 50 million people went without health care coverage.
- In 2010, 22 percent of America’s children fell into poverty.
Needless to say, our Half in Ten campaign hit serious economic headwinds, though several of our policy recommendations implemented temporarily as part of the Recovery Act showed progress in lifting families out of poverty. In 2010 alone the earned income tax credit lifted 3 million children out of poverty.
Today, however, the time is right for a renewed commitment to reducing poverty, expanding opportunity, and strengthening the middle class. This report presents our new path to prosperity.