Opinion: Helping people out of poverty requires a new approach
Despite Indiana’s growing economy and shrinking unemployment, many Hoosiers are stuck in a generations-long cycle of poverty.
In fact, one in three Americans born into the bottom 20% of the income scale are still stuck there as adults. Despite 13 federal agencies running more than 80 federal programs designed to provide food, housing, health care, job training, education, energy assistance and cash to low-income Americans, the rates of people who climb out of poverty have remained roughly the same for generations.
To break the cycle of poverty, we need to change our approach.
First, our programs must encourage and reward work – a critical piece that is currently missing from our maze of programs and welfare benefits. Work is important, not just to increase income or earnings, but to our human dignity, well-being and self-fulfillment.
Recently, a client of Janus Developmental Services in Noblesville shared his story with me. He is developmentally disabled and has a job serving food at Janus’s Capabilities Café. He wants to keep his job, but as a result of a recent, modest increase in his wages, his benefits were reduced putting his ability to live independently in jeopardy. In effect, because he is working and earning money, he has fewer total dollars in his pocket – dollars he uses to pay the rent and other expenses for an apartment he shares with another Janus client.
Many Americans face a similar dilemma, the so-called ‘welfare cliff.’ Imagine the excitement of a new job or a raise, and then the sinking realization that you will actually have less money in your pocket at the end of the month because of the reduction in benefits that results. In some cases, the cliff can eliminate nearly a quarter of a person’s combined income and benefits. That’s a significant cut, especially for people who are already struggling to make ends meet. As a result, many people will turn down work or an increase in wages because it is in the best financial interest of their family.
To eliminate the welfare cliff, States should have more flexibility in designing custom packages of benefits that will make sure work is rewarded, not punished.
Secondly, programs that are tested and proven to help people get out of poverty should receive priority when it comes to federal support. Federal resources are often based on the number of people receiving assistance, rather than the quality of their results, which acts as a disincentive to move people towards self-sufficiency.
Social impact partnerships are a potential solution. They fund social service programs through private investment, rather than taxpayer dollars, until programs can prove they work. If the program achieves the desired results, the investor is repaid, with returns on their initial investment. If the program fails however, the investor foots the bill, rather than the American taxpayer.
Legislation that would use social impact partnerships to improve and expand interventions that work has been introduced by Rep. Todd Young (R-IN09). I am a proud co-sponsor of his bill, H.R. 5170, the Social Impact Partnerships to Pay for Results Act, which passed the House with bipartisan support and is awaiting consideration by the Senate.
Smoothing out the welfare cliff and using innovative tools like social impact partnerships are just a couple of the ideas included in the House Republican “A Better Way” agenda that tackles the big challenges, like poverty, that we’re facing today. Our agenda is available online at better.gop and I look forward to visiting and meeting with more organizations like Janus and people who are finding a better way to fight poverty and create opportunity.