While the United States has experienced economic growth, the benefits of this growth have not been distributed equitably. Inequality, which was already high, has increased even further. According to the U.S. Census Bureau, a record 46.2 million people were living below the poverty line last year, a poverty rate of 16 percent. The poverty rate for children was even higher — 21.9 percent. Children are the future of the country. We do a poor job of investing in them. Poverty is an economic, social, political and moral problem.
The central focus of poverty reduction must be employment. The International Labor Organization states, “Nothing is more fundamental to poverty reduction than employment.” It then argues for “decent employment” — work that offers people a good income, security, flexibility, protection and a voice on the job. Employment is not only the key source of income. It also enhances other dimensions of well-being. Reducing poverty through employment requires three major thrusts: Generate employment, increase employability, and make labor markets more efficient.
Free-market advocates often assume that economic growth will automatically lead to job creation that in turn will lead to poverty reduction. The problem is that the trickle-down effects of general economic growth are too little, too slow and too uneven.
There is a need to target programs at poverty reduction rather than just wait for the general growth effect to kick in. Though the private sector is primarily responsible for job creation, government and civil society can and should facilitate this process. There is a need to emphasize jobs suited to the poor, which are often in labor-intensive, low-skill sectors of the economy. There is evidence that small- and medium-sized enterprises are the major employment creators and, therefore, hold an important key to employment and poverty reduction.
The second thrust works on the supply side of the labor market by increasing the employability of the poor. It is necessary to increase educational opportunities for the poor, though education alone will not solve unemployment. There is often a mismatch between the curricula adopted by schools and the requirements of the marketplace. There is a need for job training or vocational training, especially for the poor.
Young people are among the country’s greatest assets; youth unemployment is a tremendous waste of opportunity. While the unemployment rate in the U.S. is under 8 percent, the rate of unemployment among young people under 25 is about 16 percent. Research has shown that unemployed youths suffer a permanent decrease in their lifetime earning profiles. How well poor youths make the transition from school to work, from childhood to adult life, can determine both their, their family’s and, collectively, their community’s chances of escaping poverty. There is a need for special youth employment programs.
All three sectors of society — private business, government and civil society — must play a role in reducing poverty by increasing employment opportunities for the poor.
