[Comment] Solve Poverty, Give Them Cash

from Voice of San Diego

Recent reports from the U.S. Census office have shown slight decreases in the number of people in poverty. Yet, as both the Center for Policy Initiatives and the San Diego Institute stated in uncharacteristically harmonious responses, establishing the poverty level at $20,614 for a family of four in San Diego is absurd, given the high cost of living. San Diego residents are mired in the challenges of poverty at earnings one-and-a-half times that amount. Poverty in San Diego is a much more common fact of life than national statistics would indicate.

This issue is further complicated by the “Silent Epidemic” of high school dropouts so prevalent in our poorest communities. Another issue perpetrated by poverty is the inability of those in it to view training programs as a viable option to escape it.

At the San Diego Workforce Partnership, we see this often. Many skilled workers must accept the first available low-paying job they are offered. They are often over-qualified for these positions but feel the need to pass on training that would propel them into higher paying jobs in fast-growing industry clusters, such as nursing, lab work, radiology, or numerous other potential occupations. Poverty drives an “earn first, train someday -- maybe” mentality and keeps the poor in dire economic straits. One statement made by both the dropouts, and the under-employed is that it is better to be earning some money than “wasting time” in training. A solution to this dilemma might be calling to us from across the border in Mexico, other parts of Latin American and the Caribbean.

Recently, the World Bank started implementing a social program called Conditional Cash Transfers in Mexico, Honduras, Nicaragua, Brazil and Jamaica. Families are given cash when they make their children go to school, obtain employment training, or keep health appointments. According to the World Bank researchers, the results have been exceptional.

The idea is hardly new.

Newt Gingrich, former Speaker of the House and speaker at the San Diego Workforce Partnership’s 2005 Workforce Summit, has advocated “some modest economic reward for learning math and science -- say matching the earnings youth could earn working twenty hours a week at a McDonald’s. The signal,” he said, “would be immediate and dramatic.”

Mayor Michael Bloomberg in New York is trying this concept. Using funds from private foundations, he is planning to give money to families who send their children to school, attend regular health check-ups, and participate in employment and training programs. In a pilot program, he is targeting 2,550 families in poverty for these financial incentives, with the goal of lifting them out of poverty.

Policy advocates say that if you reward people’s behavior with cash incentives, you are much more likely to see them make good choices. Some argue that no one should be rewarded for doing what they should be doing. However, governments do this all the time, providing subsidies and tax incentives for research and development; industries, such as agriculture; and specific types of investments. Governments do this with families by providing tax credits for using solar power or hybrid cars.

Of course, any program developed should be tailored to meet the economic needs of the community for which it is started. Rourke L. O’Brien of the New America Foundation argued recently in The New York Times that Mayor Bloomberg’s program should take the following precautions:

Don’t create a new bureaucracy to distribute the grants, thus depleting resources.

Teach people financial skills so they are not taken advantage of by loan sharks or usury “pay day” lenders; perhaps create direct deposits with federally insured neighborhood banks.

Don’t give so much money that it jeopardizes participants’ eligibility for affordable housing or food stamps, or -- better -- secure the proper waivers with the federal and state management agencies.

Ensure that the services you are rewarding participation in exist: Incentives for health care visits or job training that are not available in the community are useless.

Provide further incentives for investing the money in such activities as earning a nursing license or starting a day-care program.

O’Brien claimed that families who invested their incentive money were able to raise their standard of living by 24 percent over six years.

How can we start a program like this in San Diego? First, foundations and intermediaries like the Workforce Partnership should meet with Mayor Jerry Sanders to talk about replicating the New York pilot program. San Diego has long been a home of innovation. The time is right to recognize the poverty in our county and employ new strategies and new incentives to enable people to obtain education and training that lifts them out of poverty into productive, meaningful work. The ripple effect of such an effort would be more students educated in math and science, fewer drop-outs, more people training for higher-wage careers, and a real dent in the percentage of people in poverty rather than a statistical fantasy.

-- CHUCK FLACKS