Economic Opportunity: Defining Issues of Our Time•
(Photo: President Obama announcing his “Promise Zones” initiative to address poverty and stalled economic mobility on Jan. 9, 2014. Source: Official White House Photo by Chuck Kennedy)
Economic opportunity is the defining issue of our time. This sentiment was voiced again and again in a series of recent speeches that began in December with President Obama’s urgent call to address stalled social mobility and rising income inequality. Leading Democratic and Republican leaders of the House and Senate have since spoken out on these issues, ensuring that these themes will remain front and center this year.
We applaud this renewed focus on expanding opportunity and upward mobility, particularly as the country reflects on the mixed legacy of the 50-year-old War on Poverty. Our coalition firmly believes that a key to ending stagnating wages and stalled upward mobility is to invest in our young adults. We must ensure they have the support and skills they need to succeed in the 21st century economy.
Progress depends on a commitment to bipartisan solutions. Recent speeches and comments by President Obama and Florida Senator Marco Rubio show some common themes, but also reveal sharply divergent approaches on how to jumpstart the American Dream. (Congressman Paul Ryan of Wisconsin also spoke recently about the War on Poverty. Read our recap on his speech here.)
What they agree on:
- The American Dream is at risk. Stagnating upward mobility is a pressing national issue that must be addressed.
- A key to reinvigorating the economy is more robust, relevant job skills training.
- Government has a role in diminishing poverty and expanding opportunity, but cannot be the only sector with a leading role in this effort.
- Corporate tax code must be simplified; regulations must be streamlined.
Where they disagree:
President Obama identified the combined trends of stalled upward mobility and growing income inequality as “the defining challenge of our time.” He suggested the failure of “trickle down economics” favored by President Ronald Regan had weakened America’s foundation, resulting “in an economy that’s become profoundly unequal and families that are more insecure.”
This toxic combination is creating a widening “opportunity gap” for America’s children and youth, President Obama said.
He proposes a series of government actions to bridge this gap, some of which, such as universal health care, are strenuously opposed by Republicans. Others, such as removing regulations that stifle business growth and expanding pre-K, are also embraced by many Republican leaders.
Perhaps the proposal that has received the most fire from is President Obama’s proposal to raise the minimum wage to $10.10 per hour, claiming it will lift millions above the federal poverty line.
This month, the President announced a community-based initiative to partner with government local organizations and businesses to create “Promise Zones” in hard-hit neighborhoods. The zones are inspired by Opportunity Nation Coalition Partner the Harlem Children’s Zone. This anti-poverty model is located in 100-block section of the historically poor New York City neighborhood and offers free cradle-to-career programs to support its residents.
President Obama said his initiative would create jobs, expand educational opportunities, increase affordable housing and make neighborhoods safer.
“We will help them succeed, not with a handout, but as partners with them, every step of the way,” he said.
The first five zones are challenged neighborhoods in these cities and regions:
1. San Antonio, Texas: Focus on job training, expanded pre-K and public safety.
2. Los Angeles, California: Investments in affordable housing, career and technical education and new transportation links including rapid bus and bike lanes
3. Philadelphia, Pennsylvania: Jobs focus on skills training and adult education; loans for small businesses. Building a supermarket with healthy food and a partnership with Drexel University to improve schools.
4. Southeastern Kentucky: Strategies include leadership and entrepreneur training in specific industries, particularly for youth; expanding technical education programs with Eastern Kentucky University.
5. Choctaw Nation of Oklahoma: Work with several higher education partners to improve workforce training; improving water and sewer infrastructure; diversify economy including the development of women-owned businesses.
Sen. Rubio is critical of the role of government, calling the War on Poverty an abject failure of “big government.” He disagrees with the President that growing income inequality is also a major problem, arguing instead that the American free enterprise system expands wealth and opportunity broadly. The breakdown of the traditional family and the rise in the number of unmarried mothers have a far more negative impact on society and the economy than does a widening gap between rich and poor, Sen. Rubio argues.
Senator Rubio questions if the Democratic proposal to increase the minimum wage will actually lift Americans from poverty.
“Raising the minimum wage may poll well, but having a job that pays $10 an hour is not the American Dream,” Sen. Rubio said. “And our current government programs offer at best an only partial solution. They help people deal with poverty, but they do not help them escape it.”
Sen. Rubio proposed two approaches he says would expand opportunity. One is to replace the Earned Income Tax Credit – a supplement to the incomes of working families – with a “federal wage enhancement” that would also benefit single workers. Under this proposal, it would be added to paychecks instead of being paid in a lump sum at tax time.
His call to dismantle the federal programs associated with the War on Poverty and hand the reins over to individual states in the form of flexible block grants is not new – other Republican politicians have long made similar suggestions. Sen. Rubio argues this will enable states to have more flexibility and control over job training programs and other initiatives intended to spur economic vitality.
Yet he cites several examples of innovation throughout the country that are already underway, evidence that reinforces the importance of social safety-net programs to millions of everyday Americans. The Senator also acknowledges that the federal government will continue to play a sizeable role in such assistance programs.
Opportunity Nation will continue to closely monitor the evolving debate on social mobility, and how we can ensure the next generation has access to the American Dream. The jury is out among some policymakers about how rising income inequality and stalled mobility are linked. What is clear is the toxic combination of stalled mobility and increased inequality must end if the next generation is to have their fair shot at getting ahead.