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Memo to Delaware Valley Legislators:
An Anti-Poverty Agenda for the 90's
Ed Schwartz, President
Institute for the Study of Civic Values
May 17, 1993
I. The Public Cost of Poverty
Both census data and annual reports from the County Board of
Assistance indicate that there roughly 60,000 households supporting
200,000 people in Philadelphia live in poverty. That's one in five.
They pay no taxes, but must receive basic City services.
Additionally, they benefit from government spending for welfare,
food stamps, medicaid, public housing, publicly subsidized private
housing, and education. All levels of government combined spend $2
billion annually to keep these 60,000 households alive--at least
half of it from the Commonwealth. The components of this
expenditure are as follows:
Income, Medicaid, Food Stamps $1 Billion
Health and Social Services $400 million
Public Housing (PHA) $150 million
Community Developmen $100 million
Homeless Expenditure $15 million
Education $200 million
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$2 Billion +
Clearly, government programs for the poor account for more state,
federal, and local funds spent in the County of Philadelphia than
any other public activity. $2 billion is almost equivalent to the
entire budget for City services.
Moreover, it is unlikely that the City of Philadelphia will achieve
the broad economic recovery that it is seeking unless it finds a
way to absorb the City's low-income residents in the process. The
result will be the continued flight of the middle-class from the
City, with a steady erosion of both its economy and the overall
quality of life. Convention centers and Avenues of the Arts
notwithstanding, middle-class households will move rather than put
up with the wage tax, crime, homeless men and women panhandling all
over major commercial corridors, and a school system overwhelmed
by the social problems facing many of its students . These
conditions are all symptoms of one basic disease: poverty--and the
inability of the poor to escape it.
The Commonwealth of Pennsylvania pays a high price for poverty in
Philadelphia as well. The $1 billion distributed by the
Philadelphia County Board of Assistance to women on AFDC and men on
general assistance in the form of welfare checks, food stamps, and
medicaid reimbursements are all "contributions" from the taxpayers
of Pennsylvania to the low-income residents of our City. The
ongoing battle between the City and Commonwealth over appropriate
level of support for addressing problems facing child and youth is
another arena which reflects the cost of poverty. The portion of
Commonwealth dollars addressed to meeting the needs of low-income
children in school is an added expense. Not so long ago, the City
persuaded a Republican governor and the legislature that an
infusion of State funds to build a convention center in the City be
an investment that would more than make up its cost in increased
sales tax revenues over the next several years. Surely, an
effective strategy to help welfare and general assistance
recipients become wage earners and taxpayers have an even greater
effect in simultaneously reducing Commonwealth spending on the
poor, while broadening the tax base. If investing in a building can
enhance the economic value of center city to the region, then
investing in people--to borrow a phrase from the Clinton
administration--can increase the value of the entire City to the
Commonwealth as a whole.
Some believe that there is nothing that we can do to fight poverty
today; the poor are beyond help.
I disagree. Perhaps we can't reach everyone right away, but we can
help a sizeable number of people if we apply the same energy and
commitment that was mobilized behind the various economic
development programs of the past fifteen years. Even if we only
helped 25,000 heads of households escape poverty over the next
seven years, that would benefit over 60,000 people. It would have
a staggering impact in increasing tax revenues and reducing the
social problems that absorb so much public money. It is hard to
imagine any other achievement of government in this decade that
would have a more significant impact.
To this end, I want to lay out a basic strategy for reducing
poverty in Philadelphia in the 1990's.
>From there, I'll identify the programs that would have to be either
strengthened or developed to implement this strategy.
On this basis, I will conclude with specific steps that the
Pennsylvania legislature might take to achieve this goal.
II. Reducing Poverty in Philadelphia: Defining the Problem
The basic problem that we must solve is this: the decent jobs that
shape the new economy--the jobs that provide a salary and benefits
sufficient to meet family needs (at least $15,000-$16,000 per year)
require literacy, knowledge, and skills way beyond the educational
level of most low-income residents of the City.
A contributing problem is the lack of adequate transportation from
low-income neighborhoods in the City to the new employment centers
of the region--Fort Washington, Great Valley, King of Prussia,
among others. Suburban executives can drive to center city without
difficulty, but there is no public transportation to the office
campuses where most of the best jobs are. The result? Suburban
employers can't find secretaries and clerical workers, while
Philadelphia residents remain locked out of the job market.
Finding a way to help low-income residents acquire the skills
needed to succeed in the emerging information and service economy
becomes our primary task. Jobs in construction industry, especially
popular among housing advocates, are too few to make a difference.
Companies that might be induced to locate in inner-city Enterprise
Zones like the American Street Corridor can only provide a portion
of the jobs that we will need to hire this population. The
convention center will help, but bellhop and waitress salaries
aren't going to support families.
There is a general consensus among those who have paid any
attention to this problem at all that the major areas of employment
that will provide the jobs that we are need are as follows:
Hospitals and health care, where nurses and medical technicians can
earn decent wages.
Offices, where competent clerical workers and secretaries can earn
over $20,000 annually.
Manufacturing associated with technology in general and
biotechnology in particular.
When the regional economy was thriving in the 1980's, we generated
over 25,000 new jobs each year, mostly in these fields. The City
itself produced 10,000 new jobs per year for three years--despite
continuing declines in manufacturing. It appears that suburban
employers are still having trouble filling clerical positions--
layoffs among technicians and in middle management have not reduced
the need for secretaries and clerks. The wage tax notwithstanding,
the inadequacy of "workforce" now tops the list of major problems
that businesses in the service sectors and in the high-tech
manufacturing sectors have to face.
Businesspeople who come to this conclusion soon focus their
attention on the schools, in the hope that future graduates will
perform better than their parents. This is all important and
needed, but insufficient. Can we really write off as "lost" two
entire generations of young women and men in their 20's and 30's
because they failed to get the high school education they needed in
the past decade? How can we expect their children to succeed the
families themselves are ill-equipped to provide educational support
in the home and their neighborhoods remain dirty, dilapidated, and
dangerous?
Middle-class residents of all ethnic persuasions haven't needed
high level social science research studies to advise them on how
best to provide for their children. As quickly as possible, they
have moved to areas with decent housing, safe streets, and an
attractive environment. Over 40% of the population of North
Philadelphia left the area from 1970 to 1990--moving to Germantown,
West Oak Lane, and even the suburbs--in order to improve their own
quality of life and to provide greater support for their children.
The point is, simply, that we can't help kids without helping their
parents. Helping their parents means tackling the major problems
facing them simultaneously so that they can gain the foothold to
self-sufficiency that most low-income residents do want.
The primary problem, then, is educational. How can we build a Self-
Sufficiency System that helps low-income residents achieve the
basic levels of competence needed to work in the service economy
jobs that pay enough to meet individual and family needs?
III. Ten Steps in Building an Anti-Poverty Strategy
To build an anti-poverty strategy involves creating genuine job
opportunity for the poor, build neighborhood support systems to
help low-income residents focus on self-improvement, and provide
adequate subsidy to education and training aimed at building
competencies needed in the new economy.
Here are ten steps that we need to take:
To Expand the Pool of Jobs Available to the Poor:
1. Gain commitments from employers throughout the region to hire
graduates from Private Industry Council training programs. The
Private Industry Council is creating its own job development unit
to expand the base of employers that are willing to hire graduates
from PIC funded training programs. We need to support the PIC in
this effort. Every company that receives development assistance
from the City or Commonwealth should be required to make such an
agreement. We should be working with the PIC to secure such
commitments from major private employers as well.
2. Insist that SEPTA, office complex developers, and employers
resume efforts to establish a "reverse commuting" system that
permits area residents public transit access to suburban jobs.
SEPTA made progress in developing bus service from the Fort
Washington train station to suburban employers, but County
representatives on the SEPTA board insisted that the employers pay
for it. When the recession hit, the employers backed out. For the
counties to block public investment in reverse commuting is penny
wise and pound foolish. Surely, the amount that suburban taxpayers
will save in reduced welfare payments will more than offset the
cost of bus service along these routes. An enterprising
cost/benefit analyst should produce a spreadsheet based on these
assumptions, and the reverse commuting discussion should resume.
3. Develop a clear projection of job growth and turnover in each of
the five economic sectors most likely to provide adequate
employment for the poor--office and clerical; health care;
hospitality; high-tech manufacturing; and upscale retail. It is
fashionable for both liberals defending welfare and conservatives
who insist upon putting recipients into forced work programs to
argue that there are not enough "good" jobs to permit a sizeable
number of recipients to enter the workforce. Some of these are the
same people who in other connections will paint a rosy picture of
the regional economy over the next decade. We need to translate the
benefits of economic growth into the job market so that the entire
community can understand its implications. Such aggregate figures
can be used to give hope to low-income residents who are seeking
work.
To Strengthen the Adult Education and Training Systems:
4. Expand support for adult literacy throughout Philadelphia. Adult
literacy programs, involving volunteer tutors working with low-
income residents of Philadelphia neighborhoods, have become a
useful entry level program for churches, civic groups, and social
agencies to enter the self-sufficiency system. The Mayor's
Commission on Literacy estimates that 250,000 Philadelphia
residents are below labor market standards of literacy. Only 25,000
are now served in a given year. Obviously, we need to expand the
number of teachers and students here.
5. Expand support long-range community/based programs aimed at
educating low-income residents of Philadelphia. Programs like the
Community Womens' Education Project. the Germantown Womens'
Education Program, and the Womens' Program of the Lutheran
Settlement are help hundreds of low-income residents each year
receive basic education as well as the skills needed in today's
labor market. Neither the Department of Education nor the Private
Industry Council has found a way to support more than a small
portion of the budgets of these organizations. Yet private
foundations throughout the country have recognized them as the
among the exemplary projects in this field. There is something
fundamentally wrong with a situation where groups that are doing
the most effective work with hard-to-reach low-income residents of
Philadelphia cannot receive public support to do it.
6. Strengthen connections between GED Programs, Basic Education,
and local colleges like Community College. Everyone can't attend
four year colleges, but to compete in the office economy and in the
high-tech manufacturing sectors, some college will be necessary.
Research nationally has shown that welfare recipients who manage to
succeed in at least a community college are the most likely to
succeed in the workforce. We need to strengthen connections between
the adult literacy programs and the admissions offices of area
college and universities.
7. Expand support for programs like the Step-Up Program at
Community College, aimed at giving AFDC students child care,
transportation, and counselling they need to plan their courses
effectively and to enter the labor market. The Institute for the
Study of Civic Values made a small contribution here by persuading
the PIC to support an Alternative Work Experience Program that
placed Step-Up students as interns for four months as interns in
non-profit groups to gain work experience. The program benefitted
the students, the organizations, and Community College. More
initiatives like this need to be developed.
To Strengthen Neighborhood Outreach of Training and Education Programs:
8. Support the "New Directions" Program in the County Board of
Assistance in its efforts to make job opportunities known and
accessible to low-income residents of Philadelphia. The "New
Directions" program is a genuine innovation in Pennsylvania for
which the Casey administration deserves credit. It has linked the
Department of Welfare and the Department of Labor and Industry in
a way that makes job opportunities known to recipients. We need to
give visibility and support to this program in every neighborhood.
9. Work to make self-sufficiency a priority for neighborhood
organizations. Neighborhood groups and block captains sponsor
clean-ups, neighborhood crime prevention programs, youth programs,
and housing rehabilitation. We should help such groups add self-
sufficiency to their agendas. At the least, they could make
information from the New Directions Program available to residents
of their communities.
10. Insist that the Philadelphia Housing Authority develop a strong
self-sufficiency program. For all the discussion of how we deal
with the buildings owned and operated by PHA, we have focused
little attention on how we might help the people who live in them.
Seeing public housing developments as opportunity centers, where
families support each other in gaining basic literacy and skills
for themselves and their children would do more to improve the
confidence and competence of low-income residents of Philadelphia
than any of the physical development plans under consideration will
ever be able to accomplish by themselves.
The result of these ten initiatives would be to expand number of
employers willing to hire low-income residents--as we try to do
with the Phila-A-Job Program in the summer; nurture adult education
as a major dimension of our neighborhood and public housing
development programs; and build links between the neighborhood
programs and the job markets through community-based training
centers and community college.
Ultimately, the Private Industry Council should be able to report
on how many AFDC recipients found employment each year--along with
an estimate of the savings to the taxpayers that were achieved as
a result.
IV. What Can the Legislature Do?
Implementing this ten-point Self-Sufficiency agenda will depend
primarily upon State and City administrative agencies involved in
economic development, neighborhood development, and education and
training. Given the precise responsibilities of the Commonwealth of
Pennsylvania, the greatest contribution that the legislature could
make here would be in the area of employment and training. The
following are the most important:
1. The Legislature should insure that the Commonwealth of
Pennsylvania appropriates the maximum level of funds need to secure
federal matching dollars for basic education and training under the
JOBS Program. Had the Commonwealth followed this policy in the
current fiscal year, a $9 million investment of State funds would
have yielded $13.2 million more in federal support. It is unclear
whether the full level of matching funds for the federal JOBS
program is included in the Governor's budget for FY 94. If it is
not, then the legislature should raise the budget to the requisite
amount. How can we blame welfare recipients for not seeking
employment when we sacrifice federal dollars that might help them
do it?
2. The larger share of federal dollars under the JOBS program
should be allocated to the Department of Education to expand the
budget for adult literacy and to the Department of Community
Affairs for neighborhood-based programs encouraging welfare
recipients to seek employment. The Department of Labor and Industry
and the Department of Welfare have undermined the benefit of their
own joint initiatives by insisting that federal "welfare-to-work"
programs be applied primarily to training programs that can be
completed in one year at an average level of subsidy o $4,500 per
trainee. The federal requirement surrounding these funds is that
they encourage welfare recipients to spend at least 20 hours a week
improving employment skills or seeking employment. There is no
federal requirement that a job be found within a single year. Since
the both the Welfare Department and Labor and Industry seem unable
to support the long-range educational process needed to help hard-
to-reach welfare recipients become self-sufficient, the legislature
should allocate JOBS funds to Commonwealth agencies that can move
in this direction.
3. The legislature should insist that the Pa. Department of Welfare
and the Department of Labor and Industry loosen the current
time/subsidy levels imposed upon training providers operating under
their auspices. As a practical matter, how can we expect an AFDC
recipient to overcome all social and educational obstacles to a job
in a year on a subsidy of $4,500, when middle-class parents spend
$25,000 per year to send their sons and daughters to elite
colleges? As a matter of public policy, what sense does it make to
invest between $35,000 and $100,000 to rehabilitate houses and
apartments for the poor, but to refuse to invest more than $4,500
a year to train a low-income residents for a job? If the
legislature accomplished nothing else this session, forcing the
Commonwealth to loosen these requirements as they related to the
federally funded JOBS program would be a major step forward.
4. The legislature should insist that SEPTA and the counties
develop a reverse commuting strategy as part of its efforts to
expand mass transit in the region.
5. The legislature should support the Governor's Enterprise Zone
Proposals as a sensible investment in bringing jobs to inner-city
neighborhoods.
V. Conclusion
I have made four basic points here:
First, that the cost of poverty to the public sector and the region
as a whole is staggering. Reducing poverty would the most
significant step that we could take in this decade to reduce the
overall cost of government.
Second, to reduce poverty, we need to close the gap between the job
skills required in the new economy and the current levels of
literacy and education achieved by most low-income residents of the
City.
Third, it is possible to build a Self-Sufficiency System in the
region by encouraging employers to hire graduates of job training
programs, create Neighborhood Self-Sufficiency Systems to provide
greater access of the poor to basic literacy and job training, and
establish strong links between community-based education, colleges,
and jobs.
Fourth, the legislature could make a significant contribution in
this area by appropriating the level of matching funds from the
Commonwealth needed to general adequate support under the JOBS
program from the federal government; by allocating federal JOBS
funds to the Department of Education and the Department of
Community Affairs, to insure support for the variety of educational
programs that low-income residents need; by pushing the welfare
department to expand its $4,500 subsidy limit for job trainees to
at least $9,000 per year for up to two years; and to push SEPTA to
make reverse community between inner city Philadelphia and the
suburban job centers a priority.
These are basic elements of an Anti-Poverty Agenda for the 90's
that could work. The time to adopt and implement such an agenda is
long overdue.
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