This week, the richest business leaders and investors from around the world will gather in Davos, Switzerland, for the annual meeting of the World Economic Forum. In keeping with tradition, a small portion of the agenda will be devoted to global development and the plight of people living at the other end of the global income distribution.

Philanthropy is one way of linking the fortunes of these disparate communities. What if some of the mega-rich could be persuaded to redistribute their wealth to the extreme poor?

This question may feel hackneyed, but it deserves a fresh hearing in light of a dramatic reduction in the global poverty gap over the past several years (Figure 1). The theoretical cost of transfers required to lift all poor people’s income up to the global poverty line of $1.90 a day stood at approximately $80 billion [1] in 2015, down from over $300 billion in 1980. (Values expressed here are in 2015 market dollars.)

Figure 1. Official foreign aid now exceeds the annual cost of closing the poverty gap

Source: Authors’ calculations based on OECD, World Bank

This reduction can be unpacked into two parts. The first is a steep decline in the number of people living below the global poverty line. This is increasingly recognized as one of the defining features of the era. A U.N. goal to halve the poverty rate in the developing world between 1990 and 2015 was nearly achieved twice over. The second and lesser-known factor is the shrinking average distance of the world’s poor from the poverty line. In 1980, the mean daily income of those living below $1.90 was $1.09. In 2012 it was 25 cents higher at $1.34. (Values expressed here in 2011 purchasing power parity dollars.)   

Despite this good news, global poverty still demands attention. Hundreds of millions of people continue to suffer this most acute form of deprivation. In several countries, the prospects for ending poverty over the next generation, in line with a recently endorsed successor U.N. goal, appear challenging at best.

Figure 1 illustrates that in 2006, global aid flows exceeded the cost of the global poverty gap for the first time. This suggests that the elimination of extreme poverty should be possible simply through a more efficient allocation of aid. However, this confuses foreign aid’s goals and functions. The bulk of official foreign aid is used in the provision of public goods, such as physical infrastructure and strengthening institutions. Only 2 percent is directed to social payments and their administration. If the elimination of extreme poverty is to be achieved through targeted transfers, it depends on sources other than foreign aid.

The main source of transfers to the poor is welfare programs run and financed by developing countries themselves. These social safety nets have emerged as an increasingly prominent instrument in the toolkit of developing economy governments. Eighty-three percent of developing economies employ unconditional cash transfer programs, although many are small in scale. Several countries are in the process of building the apparatus for more accurate targeting and authentication through the assembly of beneficiary registries and the rolling out of identity programs. In at least 10 developing countries, social safety nets have succeeded in establishing a social floor by lifting all those people under the poverty line up above the threshold. In the vast majority, however, safety nets are insufficiently targeted or generous for that purpose, reflecting not only resource constraints, but also political choices that can be resistant to change.

A complementary approach is to consider the role of private mechanisms and wealth. NGOs were among the original pioneers of cash transfers in the developing world. More recently, the NGO GiveDirectly has designed a compelling new method of charitable giving that sends money directly to the poor using digital monitoring and payment technology. Its approach has received strong endorsements from independent charity assessors and has been validated by impact evaluations. Yet the scale of its existing donations remains tiny relative to the global poverty gap.

This is where Davos’s global elite could come into play: What difference could a philanthropic donation from the world’s richest people make?

Comparing billionaire wealth with the global poverty gap

To explore this question, we begin by identifying those developing countries that are home to a least one billionaire. (Our analysis is restricted to billionaires by data, not by the potential largesse of the world’s multi-millionaires. We focus our attention on billionaires in the developing world given the traditional focus of philanthropy on domestic causes.) Let’s assume that the richest billionaire in each country agrees to give away half of his or her current wealth among his or her fellow citizens, disbursed evenly over the next 15 years, roughly in accordance with the Giving Pledge promoted by Bill Gates. That money would be used exclusively to finance transfers to poor people based on their current distance from the poverty line. Transfers would be sustained at the same level for the full 15-year period with the aim of providing a modicum of income security that might allow beneficiaries to sustainably escape from poverty by 2030.

Table 1 summarizes the key results. In each of three countries—Colombia, Georgia, and Swaziland—a single individual's act of philanthropy could be sufficient to end extreme poverty with immediate effect. Swaziland is an especially striking case as it is among the world’s poorest countries with 41 percent of its population living under the poverty line. In Brazil, Peru, and the Philippines, poverty could be more than halved, or eliminated altogether if the billionaires could be convinced to match Mark Zuckerberg’s example and increase their donation to 99 percent of their wealth.

Table 1. The potential impact on poverty of individual billionaire giving pledges

Country	Cost per year to close the poverty gap	Wealthiest billionaire	Net worth	Poverty rate pre-transfer	Poverty rate post-transfer
Nigeria	$12,070 m	A. Dangote	$14,700 m	45%	43%
Swaziland	$85 m	N. Kirsh	$3,900 m	41%	0%
Tanzania	$1,645 m	M. Dewji	$1,250 m	40%	39%
Uganda	$1,035 m	S. Ruparelia	$1,100 m	33%	32%
Angola	$1,277 m	I. dos Santos	$3,300 m	28%	25%
S. Africa	$1,068 m	J. Rupert	$7,400 m	18%	14%
Philippines	$648 m	H. Sy	$14,200 m	12%	3%
Nepal	$144 m	B. Chaudhary	$1,300 m	12%	8%
India	$5,839 m	M. Ambani	$21,000 m	12%	10%
Guatemala	$215 m	M. Lopez Estrada	$1,000 m	12%	10%
Venezuela	$870 m	G. Cisneros	$3,600 m	11%	9%
Georgia	$40 m	B. Ivanishvili	$5,200 m	10%	0%
Indonesia	$845 m	R. Budi Hartono	$9,000 m	9%	6%
Colombia	$444 m	L. C. Sarmiento	$13,400 m	7%	0%
Brazil	$1,223 m	J. P. Lemann	$25,000 m	4%	1%
Peru	$95 m	C. Rodriguez-Pastor	$2,100 m	3%	1%
China	$3,072 m	W. Jianlin	$24,200 m	3%	2%

Source: Authors’ calculations based on Forbes, International Monetary Fund, PovcalNet, and the World Bank. Poverty rates post-transfer calculated based on average distance of the poor from the poverty line.  

In other countries—Nigeria, Tanzania, Uganda, and Angola—the potential impact on poverty is only modest. A number of factors account for differences between countries, but two factors that penalize African countries are especially noteworthy. First, the depth of poverty in Africa remains high, with 15 percent of the population living on less than $1.00 a day; and second, Africa has relatively high prices compared to other poor regions, which means more dollars are required to deliver the same amount of welfare.  

For those nations that have more than one billionaire, an alternative scenario is that the country’s club of billionaires makes the pledge together and combines resources to tackle domestic poverty. This would end poverty in China, India, and Indonesia—countries that rank first, second, and fifth globally in terms of the absolute size of their poor populations. The last two columns of Table 2 describe the results.

Table 2. The potential impact on poverty of collective billionaire giving pledges

Country	Cost per year of closing the poverty gap	No. of Billionnaires	Net Worth	Poverty rate pre-transfer	Poverty rate post-transfer
Nigeria	$12,070 m	5	$22,900 m	45%	42%
Swaziland	$85 m	1	$3,900 m	41%	0%
Tanzania	$1,645 m	2	$2,250 m	40%	38%
Uganda	$1,035 m	1	$1,100 m	33%	32%
Angola	$1,277 m	1	$3,300 m	28%	25%
S. Africa	$1,068 m	7	$28,550 m	18%	2%
Philippines	$648 m	11	$51,300 m	12%	0%
Nepal	$144 m	1	$1,300 m	12%	8%
India	$5,839 m	90	$294,250 m	12%	0%
Guatemala	$215 m	1	$1,000 m	12%	10%
Venezuela	$870 m	3	$9,600 m	11%	7%
Georgia	$40 m	1	$5,200 m	10%	0%
Indonesia	$845 m	23	$56,150 m	9%	0%
Colombia	$444 m	3	$18,500 m	7%	0%
Brazil	$1,223 m	54	$181,050 m	4%	0%
Peru	$95 m	6	$8,750 m	3%	0%
China	$3,072 m	213	$564,700 m	3%	0%

Source: Authors’ calculations based on Forbes, IMF, PovcalNet, and the World Bank. Poverty rates post-transfer calculated based on average distance of the poor from the poverty line.

This exercise is of course laden with simplifying assumptions. [2] It is intended to provoke discussion, not to provide definitive figures. Moreover, it is open to debate whether transfers represent the most cost-effective way of sustainably ending poverty, the extent to which transfers ought to be targeted, the efficacy of building private transfer programs alongside public safety nets, and whether cash transfers represent the most appropriate use of billionaires’ philanthropy.  

What is less contestable is that a falling global poverty gap presents an opportunity for more systematic efforts for poverty reduction. This raises the question: How low does the poverty gap have to fall before we explicitly design programs to bring the remaining poor above the poverty line? We would argue that we are already beyond this point, not least in countries that remain a long way from ending poverty. Were a billionaire at Davos to commit to using his or her wealth in this fashion, it could trigger a powerful demonstration effect of innovative solutions—not just for other billionaires, but for countries that are currently at risk of being left behind.

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[1] The cost of the global poverty gap in 2015 is an overestimate compared with the World Bank’s tentative poverty estimate for the same year. This is due to a different treatment of Nigeria. For this exercise, we rely on data from the 2009/10 Harmonized Nigeria Living Standards Survey reported in PovcalNet, despite its well-documented problems, whereas the Bank draws on the 2010/11 General Household Survey.

[2] Simplifying assumptions include: zero administrative costs in identifying the poor, assessing their income, and administering payments with no leakages, or no portion of those costs being borne by billionaires; the efficacy of administering miniscule transfers to those who stand on the margin of the poverty line; and no change in the cost of closing the poverty gap in a country over time, whether due to population growth, an increase or decrease in poverty, or a change in prices relative to the dollar.   

      

Cities and suburbs occupy well-defined roles within the discussion of poverty, opportunity, and social welfare policy in metropolitan America. Research exploring issues of poverty typically has focused on central-city neighborhoods, where poverty and joblessness have been most concentrated. As a result, place-based U.S. antipoverty policies focus primarily on ameliorating concentrated poverty in inner-city (and, in some cases, rural) areas. Suburbs, by con­trast, are seen as destinations of opportunity for quality schools, safe neighborhoods, or good jobs.

Several recent trends have begun to upset this familiar urban-suburban narrative about poverty and opportunity in metropolitan America. In 1999, large U.S. cities and their suburbs had roughly equal numbers of poor residents, but by 2008 the number of suburban poor exceeded the poor in central cities by 1.5 million. Although poverty rates remain higher in central cities than in suburbs (18.2 per­cent versus 9.5 percent in 2008), poverty rates have increased at a quicker pace in suburban areas.

Watch video of co-author Scott Allard explaining the report's findings » (video courtesy of the University of Chicago)

This report examines data from the Census Bureau and the Internal Revenue Service (IRS), along with in-depth interviews and a new survey of social services providers in suburban communities surrounding Chicago, IL; Los Angeles, CA; and Washington, D.C. to assess the challenges that rising suburban poverty poses for local safety nets and community-based organizations. It finds that:

Suburban jurisdictions outside of Chicago, Los Angeles, and Washington, D.C. vary sig­nificantly in their levels of poverty, recent poverty trends, and racial/ethnic profiles, both among and within these metro areas. Several suburban counties outside of Chicago experi­enced more than 40 percent increases of poor residents from 2000 to 2008, as did portions of counties in suburban Maryland and northern Virginia. Yet poverty rates declined for subur­ban counties in metropolitan Los Angeles. While several suburban Los Angeles municipalities are majority Hispanic and a handful of Chicago suburbs have sizeable Hispanic populations, many Washington, D.C. suburbs have substantial black and Asian populations as well.

Suburban safety nets rely on relatively few social services organizations, and tend to stretch operations across much larger service delivery areas than their urban counter­parts. Thirty-four percent of nonprofits surveyed reported operating in more than one subur­ban county, and 60 percent offered services in more than one suburban municipality. The size and capacity of the nonprofit social service sector varies widely across suburbs, with 357 poor residents per nonprofit provider in Montgomery County, MD, to 1,627 in Riverside County, CA. Place of residence may greatly affect one’s access to certain types of help.

In the wake of the Great Recession, demand is up significantly for the typical suburban provider, and almost three-quarters (73 percent) of suburban nonprofits are seeing more clients with no previous connection to safety net programs. Needs have changed as well, with nearly 80 percent of suburban nonprofits surveyed seeing families with food needs more often than one year prior, and nearly 60 percent reporting more frequent requests for help with mortgage or rent payments.

Almost half of suburban nonprofits surveyed (47 percent) reported a loss in a key rev­enue source last year, with more funding cuts anticipated in the year to come. Due in large part to this bleak fiscal situation, more than one in five suburban nonprofits has reduced services available since the start of the recession and one in seven has actively cut caseloads. Nearly 30 percent of nonprofits have laid off full-time and part-time staff as a result of lost program grants or to reduce operating costs.

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• Full Report
• Suburban Chicago Factsheet
• Suburban Los Angeles Factsheet
• Suburban Washington, D.C. Factsheet

       

As expected, the latest data from the Census Bureau’s 2009 American Community Survey (ACS) confirm that the worst U.S. economic downturn in decades exacerbated trends set in motion years before, by multiplying the ranks of America’s poor. Between 2007 and 2009, the national poverty rate rose from 13 percent to 14.3 percent, and the number of people below the poverty line jumped by 4.9 million. Yet because the economic impact of the Great Recession was highly uneven across the nation, the map of U.S. poverty shifted in important ways over the past couple of years, with implications for both national and local efforts to alleviate poverty.

An analysis of poverty in the nation’s 100 largest metro areas, based on recently released data from the 2009 American Community Survey, indicates that:

The number of poor people in large metro areas grew by 5.5 million from 1999 to 2009, and more than two-thirds of that growth occurred in suburbs.  By 2009, 1.6 million more poor lived in the suburbs of the nation’s largest metro areas compared to the cities.

Between 2007 and 2009, the poverty rate increased in 57 of the 100 largest metro areas, with the largest increases clustered in the Sun Belt.  Florida metro areas like Bradenton and Lakeland, and California metro areas like Bakersfield, Riverside-San Bernardino-Ontario, and Modesto, each experienced increases in their poverty rates of more than 3.5 percentage points.

Poverty increased by much greater margins in 2009 than 2008, with cities and suburbs experiencing comparable rates of growth in the recession’s second year.  Between 2008 and 2009, cities and suburbs gained 1.2 million poor people, together accounting for about two-thirds of the national increase in the poor population that year.

Several metro areas saw city poverty rates increase by more than 5 percentage points, while many suburban areas experienced increases of 2 to 4 percentage points between 2007 and 2009.  The city of Allentown, PA saw a 10.2 percentage-point increase in its poverty rate, followed by Chattanooga, TN with an increase of 8.0 percentage points.  Sun Belt metro areas were among those with the largest increases in suburban poverty, including Lakeland, FL and Riverside-San Bernardino-Ontario, CA.

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• Appendix A
• Appendix B

       

I want to begin by saying how grateful we were at Brookings to partner with the Federal Reserve System on this concentrated poverty project. We like to think that at Brookings we know a lot about this subject, but it was only through this partnership with the Fed that we were able to ground this understanding in the experiences of the 16 communities across the United States that were the focus of the report’s case studies.

The report demonstrates that in addition to managing the macroeconomy, the Fed also possesses a unique and powerful understanding of the U.S. economy from the ground up, which is absolutely necessary for designing smart policy in turbulent times like these.

I want to also give special thanks to my colleagues David Erickson and Carolina Reid at the San Francisco Fed. They played several roles in this project for me: intellectual partners, co-conspirators, mood lighteners, and Fed sherpas. It can be tough for foreigners like myself to navigate this system, and they lightened my load throughout the project. I also want to thank my Brookings colleague Elizabeth Kneebone, who performed a lot of the data analysis for this project.

I want to argue three points, largely policy points, in my remarks this morning.

First, the current economic climate makes the issue of concentrated poverty, and our response, more relevant, not less.

Second, major near-term investments our country makes to resolve the economic crisis can and should provide meaningful opportunities for the most disadvantaged families and communities.

And third, our longer-run efforts to assist high-poverty areas and their residents must take account of the economic challenges and opportunities that manifest at the regional, metropolitan level.

To begin, let’s review where we were when the Fed and Brookings joined forces on this effort in May 2006.

• The unemployment rate was 4.7 percent, a five-year low.
• Payrolls were expanding every month for the third consecutive year.
• The poverty rate, while still above its low in 2000, was dropping.
• The federal deficit was a relatively manageable 2% of GDP.
• The Dow was above 11,000, and on its way up.
• And the 2008 general election promised a storied matchup between party favorites Hillary Clinton and Rudy Giuliani.

A lot can happen in 30 months!

In the wake of record house-price declines and financial market fallout, the economic outlook today is grim. The unemployment rate is 6.5 percent and rising. One projection suggests that the downturn could eventually increase the ranks of the nation’s poor by anywhere from 7 to 10 million. And amid declining revenues and increased expenditure needs, the U.S. budget deficit is expected to top $1 trillion this year.

In short, the situation for the lowest-income communities and their residents is not encouraging.

And neither is our starting point.

As Paul Jargowsky’s research has shown, the incidence of concentrated poverty in America dropped markedly during the 1990s, after two decades of increase. Some combination of a tight labor market and policy changes to promote work and break up the deepest concentrations of poverty seemed responsible for that decline.

But as Elizabeth and I found in a recent Brookings report, we may have given back much of that progress during the first half of this decade. The population in what we termed “high working poverty” communities rose by 40 percent between 1999 and 2005. This suggests that America’s high-poverty areas may have never really recovered from the modest downturn we experienced at the beginning of the decade.

Now, with all the turmoil in our economy, it would be easy to lose sight of these places and their residents, who even seem to have missed out on the benefits of recent growth.

But if we are to meet the enormous challenges facing our country—economic, social, and environmental—we simply can’t afford to take a blind eye to the continuing problem of concentrated poverty.

As decades of research and this report have shown, concentrated poverty magnifies the problems faced by the poor, and exacts a significant toll on the lives of families in its midst.

This report greatly enhances our understanding of how high-poverty communities of all stripes bear these costs. Moreover, it suggests that the contemporary circumstances of these communities owe not just to long-term market dynamics, but also to policy choices made over several decades’ time—some deliberate in their intent, and some producing unfortunate unintended consequences.

Today we’re at an important inflection point for policy. With the economy souring, we don’t have the luxury of using an “auto-pilot” strategy of macroeconomic growth to reach the most disadvantaged places and their residents. Quite the opposite—just as these communities are often “last in” for economic opportunity during boom times, they seem to be “first out” when things shift into reverse.

But the specific nature of the current crisis also poses added challenges for high-poverty communities.

That is because many of these areas were ground zero for risky subprime lending over the last several years. In many of the case-study communities in the report, half or more of recent home mortgages were high-cost subprime loans.

Now, they are on the front lines of the fallout. Our calculations of HUD data show that census tracts where the poverty rate was at least 40 percent in 2000—the conventional definition behind concentrated poverty—have an estimated foreclosure rate over 9 percent, roughly double the nationwide average.

This poses both an immediate and a long-term threat to what little stability these communities possess.

Over the short term, these areas face problems associated with heightened property neglect, vacancy, and abandonment. Not only can those conditions breed crime and disorder, but also they can accelerate a process of further disinvestment from high-poverty neighborhoods, which are all too familiar with that cycle of decline.

Over the long run, the public sector will work to return foreclosed properties in these neighborhoods to productive use. But there is a danger that we may once again re-concentrate poverty in these neighborhoods if these assets are not managed and deployed strategically.

In sum, recent trends and a perilous road ahead merit a meaningful policy response to the challenges facing areas of concentrated poverty and their residents.

This brings me to my second point, which is that near-term policy choices can ameliorate the impacts of the current crisis on areas of concentrated poverty.

In less than 50 days, a new administration will take office in Washington, facing economic challenges of a scale not seen in decades.

The president-elect and his advisors have signaled that they are ready to “do what it takes” to stimulate the economy, create and protect jobs, and catalyze investment in new sectors to spur longer-term growth.

I believe that policies advanced by the new administration and Congress in the first few weeks of the new year, if designed and executed well, could matter greatly for the fortunes of the nation’s high-poverty communities.

First, a comprehensive strategy to deal with the foreclosure crisis is sorely needed. This would feature, first and foremost, a broad plan to forestall the rising tide of mortgages, including many in high-poverty communities, headed for default due to falling home prices, economic dislocation, and poor underwriting.

However, even a sweeping, generous approach will not prevent the inevitable. Especially in high-poverty areas, more loans will fall into foreclosure, more people will lose their homes, and fiscally-strapped local governments will be left to manage the consequences of increasing vacancy and abandonment.

The Neighborhood Stabilization Program enacted by Congress and the Bush administration during the summer of 2008 represents an initial effort to arm state and local leaders with the resources to tackle the neighborhood impacts of rising foreclosures.

But significant deterioration of the economy in the intervening months suggests that the problem may now be of a much larger scale than was originally anticipated. What’s more, many local governments lack the capacity, expertise, and legal authorities to use existing or additional resources strategically.

So the new administration, and HUD in particular, will need to consider a further round of response—using some mix of fiscal, regulatory, capacity-building, and bully pulpit powers—to help cash-strapped local governments mitigate the impacts of foreclosure on their most vulnerable communities.

Second, there seems to be wide agreement that the economic recovery package should include a series of measures that inject money into the economy right away.

So the package will provide immediate assistance to families, communities, and governments hit hard by the downturn, in the likely form of extended unemployment and increased food stamp benefits, increased state and local aid, and low- to middle-income tax cuts, spending designed to make a real economic impact in the next several months.

A couple of details here are of real consequence to communities of concentrated poverty.

• Income tax cuts included in the package should be refundable, like the Earned Income Tax Credit, or EITC. Boosting the EITC, for instance, would provide additional help to workers most likely to be hit hard by the downturn, and target resources to families most likely to spend the additional cash immediately. As the report shows, at least 30 percent, and as many as 60 percent, of families in the case-study communities today benefit from the EITC.
• Unemployment insurance benefits should be extended, but also modernized. As the case studies showed, work among residents of high-poverty communities is often seasonal or part-time, even in a good economy. As a result, many laid-off workers from poor areas in several states may not qualify for benefits due to outmoded eligibility rules. Therefore, in addition to extending weeks of eligibility for UI, Congress and the new administration might also consider providing incentives to states to expand the pool of workers who could benefit from the program during the downturn.

Third, infrastructure will clearly figure prominently among the spending priorities in the recovery package.

Yet there is a significant risk that focusing dollars primarily on projects that states deem “shovel-ready,” as has been discussed, will repeat mistakes of the past. It would primarily subsidize road-building at the metropolitan fringe, and do little to enhance long-run economic growth, or provide better opportunities for low-income people and the places they live.

Infrastructure investments of the magnitude under consideration must not only create jobs, but also promote inclusive and sustainable growth. That means setting strict criteria for federal investment, including a real assessment of costs and benefits that considers economic, environmental, and social impacts. As the report shows, poor infrastructure often acts as a barrier to the economic integration of high-poverty communities into their larger municipal and regional areas.

To that end, we should also consider providing direct support for large, cash-strapped municipal governments that they could use to modernize and preserve roads, bridges, transit, water, sewer, and perhaps even broadband infrastructure. At the same time, we should hold them and grantees at all other levels of government accountable for connecting younger, disadvantaged workers and communities to the jobs that result.

In short, what happens in the first several weeks of the new year here in Washington could, if structured properly, provide meaningful support and opportunity for low-income areas and their residents. At a minimum, this might avert the sort of backsliding these communities suffered during the much milder recession we experienced earlier this decade.

So that brings me to my third and final point, which is that, over the longer term, we must advance policies that actively link the fortunes of poor communities to those of their regional neighbors. As you probably heard or read, our division at Brookings is named the “Metropolitan Policy Program.”

Our mission is to provide decision makers with cutting-edge research and policy ideas for improving the health and prosperity of cities and metropolitan areas.

You might ask, why metropolitan? After all, this is not a term that most Americans use, think about, or even recognize, even though 85 percent of us live in metropolitan areas. A friend of the program once told us that it sounded like a combination of “metrosexual” and “cosmopolitan.” Not exactly what we were going for.

More specifically, what relevance does “metropolitan” have for addressing the challenges of concentrated poverty?

Well, the report points to skills and employability problems that hold back residents of high-poverty communities. If the route to improving the lives of families affected by concentrated poverty runs in part through the labor market, then we must devise strategies and solutions that respect and respond to the geography of that market—which is metropolitan.

The report also points to housing problems, of various stripes, that segregate the poor in these communities and make their daily lives more difficult. Housing markets, too, are metropolitan—and housing dynamics in the wealthiest parts of each metro are inextricably linked to those in the poorest parts.

The fact is, our national economy—and that of most industrialized nations—is largely the aggregate of its individual metropolitan economies. In the United States, the 100 largest metro areas account for 12 percent of our land mass, hold 65 percent of our residents, and generate three-quarters of our Gross Domestic Product. They possess even greater shares of our innovative businesses, our most knowledgeable workers, the critical infrastructure that connects us to the global economy, and the quality places that attract, retain, and enhance the productivity of workers and firms.

And as the report shows, regions—both metropolitan and non-metropolitan—each retain distinctive clusters that shape their individual contributions to the national economic pie. Photonics in Rochester. Hospitality and tourism in Atlantic City and Miami. Manufacturing in Albany, Georgia. Agriculture and business services in Central California. These clusters do not possess equal strength or equal potential, but they define the starting point for thinking about the regional economic future of these areas, and economic opportunities for their residents.

Not only are the assets of our economy fundamentally metropolitan… increasingly, our challenges are, too. In 2006, we found that for the first time, more than half of the poor in metropolitan America lived in suburbs, not cities. While poor suburban families don’t yet concentrate at the levels seen in the communities in this report, they are trending in this direction. Between 1999 and 2005, the number of suburban tax filers living in “moderate” working poverty communities rose by nearly 50 percent.

So what does recognition of our metropolitan reality imply for longer-run policies to help the poorest communities and their residents?

Bruce has argued elsewhere that our nation must embrace a new, unified framework for addressing the needs of poor neighborhoods and their residents. He has termed this, Creating Neighborhoods of Choice and Connection. Neighborhoods of choice are communities in which lower-income people can both find a place to start, and as their incomes rise, a place to stay. They are also communities to which people of higher incomes can move, for their distinctiveness, amenities, or location. This requires an acceptance of economic integration as a goal of housing and neighborhood policy.

Neighborhoods of connection are communities that link families to opportunity, wherever in the metropolis that opportunity might be located. This requires a much more profound commitment to the “educational offer” in these communities and the larger areas of which they are a part. It also requires a pragmatic vision of the “geography of opportunity” with regard to jobs, housing, and other choices.

If we take this vision seriously, then our interventions must operate within, and relate to, the metro geography of our economy. This means viewing the conditions and prospects of poor areas through the lens of the broader economic regions of which they are a part, and explicitly gearing policy in that direction.

A simple example relates to the geography of work. In the Springfield, Massachusetts metro area, roughly 30 percent of the region’s jobs still cluster in the neighborhoods close to downtown, including Old Hill and Six Corners. In the Miami metro area, by contrast, only 9 percent of the region’s jobs lie close to its downtown, implying transportation needs of a quite different scale for Little Haiti’s residents. In response, we should empower metropolitan transportation planners to address the unique nature of these spatial divides, and measure their performance on creating inclusive systems that overcome them.

This metro lens applies to workforce development as well. Labor market intermediaries are some of the most promising mechanisms for bridging the information and skills divide between poor communities and regional economic opportunity. One of the highest performers, the Wisconsin Regional Training Partnership, works in the home region of one of our case-study communities, Milwaukee. If workforce policies and funding at all levels of government were to emphasize employer partnerships, provide greater flexibility, and reward performance, we could grow more capable institutions like these that serve the needs of low-income communities and regional firms alike.

A metro perspective can apply to school reform as well. We have called for a new focus at the Department of Education on supporting proven, successful educational entrepreneurs—charter management organizations like KIPP, human capital providers like Teach for America, student support organizations like College Summit. The demand for these entrepreneurial solutions extends well beyond the highest-poverty neighborhoods. Federal education policy should consider investing in these entrepreneurs at the metropolitan scale, to aggregate a critical mass of those organizations, serve a significant percentage of the area’s children, and drive positive changes in the entire public education environment.

Finally, our housing policies must embrace metro-wide economic diversity, which is a hallmark of neighborhoods of choice and connection.

This means expanding housing opportunities for middle-income families in deprived neighborhoods. We simply cannot continue to cluster low-income housing in already low-income areas, perpetuating the sort of economic segregation evident in so many of the case-study communities, and thereby consign another generation to a childhood amid concentrated poverty. Likewise, we must guard against the possibility that the current foreclosure crisis leads to a re-concentration of poor households in neighborhoods that were just beginning to achieve greater economic diversity.

But this is a two-way street. It also means creating more high-quality housing opportunities for low-income families in growing suburban job centers. Requiring or providing incentives to metropolitan areas to engage in regional housing planning, alongside regional transportation planning, may be a necessary first step. Those plans could also apply a more rational screen to the development choices that have fueled sprawl, and thereby added to the social and economic isolation of the lowest-income communities.

Let me end where I began.

This is both an auspicious and a challenging moment at which to wrestle with the problem of concentrated poverty in America.

Auspicious in that we are approaching the dawn of a new government in Washington that has signaled concern for our nation’s low-income residents and communities, recognition that metropolitan economies are the engines of our prosperity, and a pragmatic commitment to doing what works.

Challenging in that making progress against concentrated poverty, and improving opportunity for those in its midst, is a tall order when the macroeconomy isn’t cooperating.

But the current economic climate is not an excuse to avoid this problem; rather, it’s an imperative to act, strategically and purposefully.

That means doing the big near-term things the right way, so that low-income communities and their residents do not bear an excessive brunt of the downturn, and so that they participate meaningfully in our eventual economic recovery.

And it means getting the long-term vision right, so that policy advances sustainable, metro-led solutions that connect poor neighborhoods and poor families to opportunity in the wider economy around them.

The Federal Reserve System has tremendous, well-earned credibility for understanding and advancing dialogue around the future of our nation’s economic regions. I look forward to continuing to work with the Fed to increase public understanding of concentrated poverty, and to make tackling it a crucial element of strategies to promote regional and national prosperity.

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One of Cleveland's neighborhoods made the Washington scene earlier this month.

Alas, it wasn't up for a multibillion-dollar bailout.

Instead, the Central neighborhood and 15 other communities across the United States were the centerpiece of a new report published by the Federal Reserve System and the Brookings Institution.

These communities share a simple, disappointing characteristic. In 2000 - the peak of the last economic boom - at least 40 percent of their residents lived below the federal poverty line. That was about three times the national average.

No American needs to look very far to find places like these. Concentrated poverty affects manufacturing cities like Cleveland, and Albany, Ga.; immigrant gateways like Miami, Fla., and Fresno, Calif.; and rural areas like eastern Kentucky and northern Montana. About 4 million poor Americans live in these areas of extremely high poverty.

How did this happen? Policy decisions made decades ago - like clustering thousands of the Cleveland region's public housing units in the Central neighborhood - helped shape their trajectory. So too did economic changes, like the long-run loss of decent-paying manufacturing jobs, or - in rural areas - mining and agricultural jobs.

By allowing poverty to concentrate in these places, we've magnified the problems their poor residents face. For instance, many low-income children in these communities start school not yet "ready to learn." On top of that, though, they attend schools burdened with lots of other poor kids who face similar challenges, and deal with higher levels of neighborhood crime that affect their mental health and educational performance.

The challenges of concentrated poverty extend to many other areas: low adult work-force skills and employment, poor-quality housing and a lack of investment by mainstream businesses.

And that's in a good economy. Today, Central - and thousands of other high-poverty communities like it across the nation - faces even more significant challenges as the United States enters what may be its worst recession in decades.

So what should Washington do for these places and their residents in the face of such difficult circumstances?

First, we must not lose sight of them in the economic turmoil. That's especially true because the roots of this crisis, in the subprime mortgage market, grew in many very poor neighborhoods like Central. As a result, home foreclosure rates in high-poverty communities are more than double the national average.

To stabilize these hard-hit communities, Washington must adopt new measures to prevent foreclosure and provide additional resources and guidance for state and local governments to help them cope with the rising numbers of vacant properties.

Second, a forthcoming economic stimulus package from Washington that could amount to half a trillion dollars or more should not bypass these neighborhoods and their residents.

That implies the need for immediate federal aid to sustain basic public services in states like Ohio, where the deficit for this year already tops $1 billion. It also suggests providing direct assistance to struggling workers and their families, through enhanced unemployment benefits and tax credits.

At the same time, the infrastructure dollars in the package - which could amount to more than $100 billion - must be spent strategically. States should not be permitted to go on expanding highway capacity at the metropolitan fringe, to the detriment of poor communities near the urban core. Cities like Cleveland, and metropolitan organizations like the Northeast Ohio Areawide Coordinating Agency, should get their fair share of new transportation funds. And funds should be set aside for training programs that provide low-income residents with a pathway to decent jobs.

Third, we have to rethink neighborhood policy over the longer term.

For too long, government has funded housing, schools and economic development in these communities as though they were islands unto themselves.

That's not how the real economy works. These neighborhoods are part of larger regional labor and housing markets. Decisions made across the Cleveland region, such as where firms locate new jobs, or where families buy homes and send their kids to school, ultimately dictate whether neighborhoods like Central can become real neighborhoods of choice and better connected to economic opportunity.

Public policy must leverage that real economy for the benefit of lower-income residents, by building on smart regional strategies like the Fund for Our Economic Future and WIRE-Net in Northeast Ohio. It should diversify housing in poor communities, but also encourage affordable housing development in wealthier parts of metropolitan areas.

Cleveland's Central neighborhood, like other high-poverty communities across the United States, faces a tough road ahead. Short-term opportunities, and long-term strategies, are needed to help its next generation of residents overcome the challenges of concentrated poverty.

      

Since December 2007, working families and communities across the country have faced an increasingly difficult economic reality. Growing unemployment and cutbacks in work hours and wages have made it harder and harder for people to make ends meet.

So the census numbers released in September really just confirmed what many Americans have already been feeling during this “Great Recession.” U.S. poverty is once again on the rise. In the first year of the downturn alone, the poor population grew by 2.6 million people to reach a total of 39.8 million, or 13.2 percent of the population.

But that’s not the whole story. The national lens obscures an important fact: place matters. Yes, 2008 brought a significant uptick in poverty, but whether or not your community was a part of this trend has a lot to do with where you live and what kind of jobs are located there.

Certain regions of the country have disproportionately borne the brunt of this recession. Areas hit hardest by the collapse of the housing market and those metro areas that depend on auto manufacturing have experienced the deepest downturns, while regions concentrated in more recession-proof industries – like educational and medical institutions or government – have fared better.

The 2008 poverty numbers reflect this varied experience. Out of the 100 largest metros areas, a little more than one in five saw a significant change in its poverty rate between 2007 and 2008, most of them increases (see map). Not surprisingly, many of these metro areas are located in California and Florida. The early timing of the burst of the housing bubble put these Sun Belt metro areas on the leading edge of what is sure to be a more widespread upward trend in poverty, reflecting a recession that deepened and spread in 2009. In contrast, metro areas like El Paso and Houston actually experienced a decline in poverty rates from 2007 to 2008, reflecting the later onset and milder effects of the downturn in much of Texas.

Although they represent regional economies, metro areas are themselves collections of cities and suburbs that do not necessarily experience poverty or respond to economic shocks uniformly.

Cities remain poorer places overall. In 2008, city residents in the 100 largest metro areas were almost twice as likely as their suburban counterparts to live in poverty—18.3 percent versus 9.5 percent. However, over the first year of the downturn, suburbs actually added more than twice as many poor people (578,000) as cities (218,000). Sun Belt suburbs – like those in the Florida metros of Lakeland, Palm Bay, Tampa, and Miami – led the list for increased poverty. These numbers reflect the fact that the suburbs are home to more people than their primary cities, but they also reflect the growing economic diversity of America’s suburbs.

In fact, an important shift has taken place in the geography of metropolitan poverty over the course of this decade. Between 2000 and 2008, the suburban poor population grew almost five times as fast as the city poor population, so that suburbs are now home to almost 1.9 million more poor people than their primary cities.

Brookings’ recent study on the “Landscape of Recession” within the country’s largest metro areas suggests that the current downturn will further accelerate the suburbanization of poverty.

More so than in the last recession, suburbs are bearing the brunt of this downturn alongside cities. City and suburban unemployment rates increased by nearly equal degrees and in May 2009 were separated by less than a percentage point—9.6 and 8.7 percent, respectively. And rather than concentrating in the older suburbs that surround cities, problems have spread to lower-density “exurbs” and “emerging suburbs” at the metropolitan fringe. These types of suburban communities showed the greatest spikes in their unemployed populations, with an increase of roughly 77 percent.

Clearly, city and suburban residents alike are experiencing increased economic stress, and the coming months and years will test the adequacy and availability of local safety net and emergency services. Here again, place makes a difference.

Case in point: as poverty increased in 2008, more families turned to food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP) to help make ends meet. Just as the poor population grew faster in the suburbs, so did SNAP receipt. And yet participation in the program remains much higher in urban counties (8.9 million recipients) than suburban counties (5.3 million recipients). This disparity raises questions about whether families in suburban communities know how to connect to safety net services like food stamps, and how accessible these services are in these communities.

Understanding the shifting local geography of poverty is a critical first step in effectively addressing its alleviation. In our largest metropolitan areas, safety net services and social service providers traditionally have been concentrated in central city neighborhoods. As the geography of metropolitan poverty continues to change, policymakers and service providers must ask whether or not the growing suburban poor population has access to the same kinds of services and programs that can help families weather downturns in the economic cycle or connect to opportunities to work their way out of poverty.

The Great Recession is only likely to exacerbate gaps between available services and growing need, as government programs and nonprofit providers struggle to do more with less. Knowing where the need is, and where it is growing fastest, can help regions more effectively align existing social services and programs to respond to the new map of metropolitan poverty.

Editor's Note: This article originally appeared in the online forum Spotlight on Poverty and Opportunity on October 19, 2009.

      

Martha Ross spoke to the Advisory Board of the Community Foundation for Prince George’s County, describing research on the suburbanization of poverty both nationally and in the Washington region.

Despite perceptions that economic distress is primarily a central city phenomenon, suburbs are home to increasing numbers of low-income families. She highlighted the need to strengthen the social service infrastructure in suburban areas.

Full Presentation on Poverty in the Washington-Area Suburbs » (PDF)

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As the first decade of the 2000s drew to a close, the two downturns that bookended the period, combined with slow job growth between, clearly took their toll on the nation’s less fortunate residents.

Over a ten-year span, the country saw the poor population grow by 12.3 million, driving the total number of Americans in poverty to a historic high of 46.2 million. By the end of the decade, over 15 percent of the nation’s population lived below the federal poverty line—$22,314 for a family of four in 2010—though these increases did not occur evenly throughout the country.

An analysis of data on neighborhood poverty from the 2005–09 American Community Surveys and Census 2000 reveals that:

After declining in the 1990s, the population in extreme-poverty neighborhoods—where at least 40 percent of individuals live below the poverty line—rose by one-third from 2000 to 2005–09. By the end of the period, 10.5 percent of poor people nationwide lived in such neighborhoods, up from 9.1 percent in 2000, but still well below the 14.1 percent rate in 1990.

Concentrated poverty nearly doubled in Midwestern metro areas from 2000 to 2005–09, and rose by one-third in Southern metro areas. The Great Lakes metro areas of Toledo, Youngstown, Detroit, and Dayton ranked among those experiencing the largest increases in concentrated poverty rates, while the South was home to metro areas posting both some of the largest increases (El Paso, Baton Rouge, and Jackson) and decreases (McAllen, Virginia Beach, and Charleston). At the same time, concentrated poverty declined in Western metro areas, a trend which may have reversed in the wake of the late 2000s housing crisis.

The population in extreme-poverty neighborhoods rose more than twice as fast in suburbs as in cities from 2000 to 2005–09. The same is true of poor residents in extreme-poverty tracts, who increased by 41 percent in suburbs, compared to 17 percent in cities. However, poor people in cities remain more than four times as likely to live in concentrated poverty as their suburban counterparts.

The shift of concentrated poverty to the Midwest and South in the 2000s altered the average demographic profile of extreme-poverty neighborhoods. Compared to 2000, residents of extreme-poverty neighborhoods in 2005–09 were more likely to be white, native-born, high school or college graduates, homeowners, and not receiving public assistance. However, black residents continued to comprise the largest share of the population in these neighborhoods (45 percent), and over two-thirds of residents had a high school diploma or less.

The recession-induced rise in poverty in the late 2000s likely further increased the concentration of poor individuals into neighborhoods of extreme poverty. While the concentrated poverty rate in large metro areas grew by half a percentage point between 2000 and 2005–09, estimates suggest the concentrated poverty rate rose by 3.5 percentage points in 2010 alone, to reach 15.1 percent. Some of the steepest estimated increases compared to 2005–09 occurred in Sun Belt metro areas like Cape Coral, Fresno, Modesto, and Palm Bay, and in Midwestern places like Indianapolis, Grand Rapids, and Akron.

These trends suggest the strong economy of the late 1990s did not permanently resolve the challenge of concentrated poverty. The slower economic growth of the 2000s, followed by the worst downturn in decades, led to increases in neighborhoods of extreme poverty once again throughout the nation, particularly in suburban and small metropolitan communities and in the Midwest. Policies that foster balanced and sustainable economic growth at the regional level, and that forge connections between growing clusters of low-income neighborhoods and regional economic opportunity, will be key to longer-term progress against concentrated disadvantage.

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Gentrification – the migration of wealthier people into poorer neighborhoods – is a contentious issue in most American cities. Many fear that even if gentrification helps a city in broad terms, for instance by improving the tax base, it will be bad news for low-income residents who are hit by rising rents or even displacement. But this received wisdom is only partially true.

The Problem of Concentrated Poverty

A recent study published by City Observatory, an urban policy think-tank, and written by economist and former Brookings scholar Joseph Cortright with Dillon Mahmoudi , challenges this prevailing pessimism.  Examining population and income changes between 1970 and 2010 in the largest cities, they find that the poverty concentration, rather than gentrification, is the real problem for the urban poor.  

Cortright and Mahmoudi examine more than 16,000 census tracts[1] – small, relatively stable, statistical subdivisions (smaller than the zip code), of a city – within ten miles of the central business districts of the 51 largest cities. Their key findings are:

1. High-poverty neighborhoods tripled between 1970 and 2010: The number of census tracts considered “high-poverty” rose from around 1,100 in 1970 to 3,100 in 2010. Surprisingly, of these newly-impoverished areas, more than half were healthy neighborhoods in 1970, before descending into “high-poverty” status by 2010. Our Brookings colleague Elizabeth Kneebone has documented similar patterns in the concentration of poverty around large cities.
2. Poverty is persistent: Two-thirds of the census tracts defined as “high-poverty” in 1970 (with greater than 30% of residents living below the poverty line), were still “high-poverty” areas in 2010. And another one-quarter of neighborhoods escaped “high-poverty” but remained poorer than the national average (about 15% of population below FPL )
3. Few high-poverty neighborhoods escape poverty: Only about 9 percent of the census tracts that were “high-poverty” in 1970 rebounded to levels of poverty below the national average in 2010.

The Damage of Concentrated Poverty

Being poor is obviously bad, but being poor in a really poor neighborhood is even worse. The work of urban sociologists like Harvard’s Robert J. Sampson and New York University’s Patrick Sharkey  highlights how persistent, concentrated neighborhood disadvantage has damaging effects on children that continue throughout a lifetime, often stifling upward mobility across generations.  When a community experiences uniform and deep poverty, with most streets characterized by dilapidated housing, failing schools, teenage pregnancy and heavy unemployment, it appears to create a culture of despair that can permanently blight a young person’s future.

Gentrification: Potentially Benign Disruption

So what has been the impact of gentrification in the few places where it has occurred? There is some evidence, crisply summarized in a recent article by John Buntin in Slate, that it might not be all bad news in terms of poverty. A degree of gentrification can begin to break up the homogenous poverty of neighborhoods in ways that can be good for all residents. New wealthier residents may demand improvements in schools and crime control. Retail offerings and services may improve for all residents – and bring new jobs, too. Gentrifiers can change neighborhoods in ways that begin to counteract the effects of uniform, persistent poverty.  On the other hand, gentrification can hurt low-income households by disrupting the social fabric of neighborhoods and potentially “pricing out” families. It depends on how it’s done. We’ll turn to that tomorrow. 

       

Poverty is heavily concentrated in a growing number of urban neighborhoods, which as we argued yesterday, is bad news for social mobility. By breaking up semi-permanent poverty patterns, a degree of gentrification can bring in new resources, energy and opportunities.

Gentrification and poverty: A contested relationship

As we noted yesterday, work by Cortright and Mahmoudi suggests that almost 10% of high-poverty neighborhoods escaped the poverty trap between 1970 and 2010—especially in Chicago, New York, and Washington D.C. Is this good or bad news for the residents of these formerly very poor neighborhoods?

Researchers disagree: the standard fear, supported by a considerable body of qualitative research, is that low-income families will be priced out and displaced out of improving neighborhoods. But there is growing evidence in the economics literature that casts doubt on prevailing views about the risks of displacement. These neighborhoods may become mixed neighborhoods rather than switching from homogenously poor to homogenously wealthy. This could be good news for the poor households who are now living in non-poor areas.

Gentrification: It depends how you do it

Whether gentrification benefits the poor depends in part on the nature of the process. Gentrification is not all the same. Gentrification can mean “walled-up” and gated communities for the wealthy and it can sometimes create damaging disruptions in the tenuous social fabric of neighborhoods, such that there are few beneficial spillover effects of from gentrification.

So while many neighborhoods previously mired in poverty may experience positive impacts from gentrification, others may be directly hurt by it. According to an extensive literature review by the Urban Institute, the impact of living in mixed-income communities for low-income families varies quite widely. Low-income families tend to benefit from improvements in neighborhood services, but the effects on their education and economic outcomes are unclear.   

Some cities, such as Washington DC, have started using their regulatory powers to require developers to preserve or expand modest-income housing alongside higher-priced housing. It is too early to assess the impact of these programs so, but such “smart” gentrification policies may be a good strategy to turn around chronically poor neighborhoods in ways that benefit the original population.

One advantage of the migration of wealthier people into depressed neighborhoods is the restoration and use of dilapidated buildings, which can have positive spillover effects throughout the community. But there are other ways to achieve this, including investments in charter or community schools and other community institutions that then become “hubs” for a range of medical and other services, as well as improved education.

Gentrification certainly comes with attendant dangers for low-income families, which policy makers should be on guard against. But it comes with potential benefits too, so we should be careful about simply “protecting” neighborhoods from the process.  Policies and regulations that insulate impoverished neighborhoods from gentrification could end up condemning these communities to yet another generation of deep poverty and segregation. 

       

       

Amid anger and protests in Baltimore following the death of 25-year-old Freddie Gray from a spinal injury sustained after being arrested by police, much of the discussion has focused on the poverty-ridden neighborhood in which Gray grew up (Sandtown-Winchester, on the city’s west side). Conversation has centered around the economic disadvantages that Gray, his peers, and so many young adults are facing in certain neighborhoods throughout Baltimore and in other U.S. metro areas.

Metropolitan Policy Program Fellow Jennifer Vey spoke yesterday with CNN’s Maggie Lake on the poverty and economic inequality prevalent in Baltimore—particularly in impoverished neighborhoods like that of Gray’s and throughout the country.

In the interview, Vey says that, “it’s important to look at the events of the last few days in Baltimore against a backdrop of poverty, of entrenched joblessness, of social disconnectedness that’s prevalent in many Baltimore neighborhoods…but that isn’t unique to Baltimore, and I think that’s a really important point here, that we really need to put these issues in a much broader national context.

“I think what this really indicates is we’ve been operating under an economic model for quite some time that clearly isn’t working for large numbers of people in this country.”

Vey also discusses how we can work to break the cycle:

“What we’re really focused on at Brookings is trying to understand how cities and metropolitan areas can really be trying to grow the types of advanced industries that create good jobs, that create more jobs, and also focusing on how then, people can connect back to that economy. What can we do to make sure that more people are participating in that economic growth as it happens?”

She goes on to say that investment in education, workforce programs, and infrastructure are all key in incorporating everyone into a prosperous economy.

To learn more about poverty in Baltimore, read this piece by Karl Alexander.

       

       

Editor’s Note: An interactive feature, highlighting the key findings from this report, can be found here.

Over a billion people worldwide live on less than $1.25 a day. But that number is falling. This has given credence to the idea that extreme poverty can be eliminated in a generation. A new study by Brookings researchers examines the prospects for ending extreme poverty by 2030 and the factors that will determine progress toward this goal. Below are some of the key findings:

1. We are at a unique point in history where there are more people in the world living right around the $1.25 mark than at any other income level. This implies that equitable growth in the developing world will result in more movement of people across the poverty line than across any other level.

2. Sustaining the trend rate of global poverty reduction requires that each year a new set of individuals is primed to cross the international poverty line. This will become increasingly difficult as some of the poorest of the poor struggle to make enough progress to approach the $1.25 threshold over the next twenty years.

3. The period from 1990 to 2030 resembles a relay race in which responsibility for leading the charge on global poverty reduction passes between China, India and sub-Saharan Africa. China has driven progress over the last twenty years, but with its poverty rate now down in the single digits, the baton is being passed to India. India has the capacity to deliver sustained progress on global poverty reduction over the next decade based on modest assumptions of equitable growth. Once India’s poverty is largely exhausted, it will be up to sub-Saharan Africa to run the final relay leg and bring the baton home. This poses a significant challenge as most of Africa’s poor people start a long way behind the poverty line.

4. As global poverty approaches zero, it becomes increasingly concentrated in countries where the record of and prospects for poverty reduction are weakest. Today, a third of the world’s poor live in fragile states but this share could rise to half in 2018 and nearly two-thirds in 2030.

5. The World Bank has recently set a goal to reduce extreme poverty around the world to under 3 percent by 2030. It is unlikely that this goal can be achieved by stronger than expected growth across the developing world, or greater income equality within each developing country, alone. Both factors are needed simultaneously.

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In the United States, the official poverty rate for 2012 stood at 15 percent based on the national poverty line which is equivalent to around $16 per person per day. Of the 46.5 million Americans living in poverty, 20.4 million live under half the poverty line. This begs the question of just how poor America’s poorest people are.

Poverty, in one form or other, exists in every country. But the most acute, absolute manifestations of poverty are assumed to be limited to the developing world. This is reflected in the fact that rich countries tend to set higher poverty lines than poor countries, and that global poverty estimates have traditionally excluded industrialized countries and their populations altogether.

An important study on U.S. poverty by Luke Shaefer and Kathryn Edin gently challenges this assumption. Using an alternative dataset from the one employed for the official U.S. poverty measure, Shaefer and Edin show that millions of Americans live on less than $2 a day—a threshold commonly used to measure poverty in the developing world. Depending on the exact definitions used, they find that up to 5 percent of American households with children are shown to fall under this parsimonious poverty line.

Methodologies for measuring poverty differ wildly both within and across countries, so comparisons and their interpretation demand extreme care.

These numbers are intended to shock—and they succeed. The United States is known for having higher inequality and a less generous social safety net than many affluent countries in Europe, but the acute deprivations that flow from this are less understood. A crude comparison of Shaefer and Edin’s estimates with the World Bank’s official $2 a day poverty estimates for developing economies would place the United States level with or behind a large set of countries, including Russia (0.1 percent), the West Bank and Gaza (0.3 percent), Jordan (1.6 percent), Albania (1.7 percent), urban Argentina (1.9 percent), urban China (3.5 percent), and Thailand (4.1 percent). Many of these countries are recipients of American foreign aid. However, methodologies for measuring poverty differ wildly both within and across countries, so such comparisons and their interpretation demand extreme care.

This brief is organized into two parts. In the first part, we examine the welfare of America’s poorest people using a variety of different data sources and definitions. These generate estimates of the number of Americans living under $2 a day that range from 12 million all the way down to zero. This wide spectrum reflects not only a lack of agreement on how poverty can most reliably be measured, but the particular ways in which poverty is, and isn’t, manifested in the U.S.. In the second part, we reexamine America’s $2 a day poverty in the context of global poverty. We begin by identifying the source and definition of poverty that most faithfully replicates the World Bank’s official poverty measure for the developing world to allow a fairer comparison between the U.S. and developing nations. We then compare the characteristics of poverty in the U.S. and the developing world to provide a more complete picture of the nature of poverty in these different settings. Finally, we explain why comparisons of poverty in the U.S. and the developing world, despite their limitations and pitfalls, are likely to become more common.

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On July 30-31, 2004, more than 40 preeminent international leaders from the public, private, and non-profit sectors came together at the Aspen Institute to discuss "America's Role in the Fight Against Global Poverty" and to set out a forward-looking strategy for the United States.

Co-hosted by Richard C. Blum of Blum Capital Partners LP, the Brookings Institution's Poverty and Global Economy Initiative, the Aspen Institute, and Realizing Rights: The Ethical Globalization Initiative, the group's aim was to explore the dilemma of global poverty from different perspectives, to disaggregate the seemingly intractable problem into more manageable challenges, and to identify key elements of an effective U.S. policy agenda.

With roundtable participants hailing from around the world and representing diverse experiences and approaches, the dialogue was as multifaceted as the challenge of poverty itself. Rather than simply summarize conference proceedings, this essay attempts to weave together the thoughtful exchanges, impassioned calls to action, fresh insights, and innovative ideas that characterized the discussion, and to set the stage for ongoing collaboration in the struggle for human dignity.

Helping to define the issues, share and encourage what works, and build the intellectual framework for such an enterprise will be the guiding mission of the Richard C. Blum Roundtable in the years ahead.


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From August 3 to 6, 2005, fifty preeminent international leaders from the public, private, and nonprofit sectors came together at the Aspen Institute for a roundtable, "The Private Sector in the Fight against Global Poverty."

The roundtable was hosted by Richard C. Blum of Blum Capital Partners and Strobe Talbott and Lael Brainard of the Brookings Institution, with the active support of honorary cochairs Walter Isaacson of the Aspen Institute and Mary Robinson of Realizing Rights: The Ethical Globalization Initiative. By highlighting the power of the market to help achieve social and economic progress in the world's poorest nations, the roundtable's organizers hoped to galvanize the private, public, and nonprofit sectors to move beyond argument and analysis to action. Put simply, as Brookings president Strobe Talbott explained, the roundtable's work was "brainstorming with a purpose."

With experts hailing from around the world and representing diverse sectors and approaches, the dialogue was as multilayered as the challenge of poverty itself. Rather than summarize the conference proceedings, this essay weaves together the thoughtful observations, fresh insights, and innovative ideas that characterized the discussion. A companion volume, Transforming the Development Landscape: The Role of the Private Sector, contains papers by conference participants, providing in-depth analysis of each conference topic.

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In a world where borders matter less and where seemingly faraway threats can become immediate problems, the fight against poverty is no longer a matter of just doing the right thing – it is a matter of doing the smart thing to ensure security at home and abroad. As seen across the globe, by exhausting institutions, depleting resources, weakening leaders and crushing hope, extreme poverty fuels instability that often leads to armed conflict and can be a breeding ground for terrorists. The reverse is also true: insecurity stemming from conflict and demographic and environmental challenges makes it harder for leaders, institutions and other stakeholders to address poverty. Simply put, poverty is both a cause of insecurity and a product of it.

To explore this tangled web, in August 2006 the Brookings Blum roundtable discussed the challenges and possible solutions with a diverse group of leaders, including policymakers, business executives and academics, and developed recommendations for change.

2006 Brookings Blum Roundtable: Related Materials
	Read the roundtable report - Ending Poverty, Promoting Peace: The Quest for Global Security »  View related conference book »  Download the participant list » (PDF)  Download the scene setter » (PDF)

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2006 Brookings Blum Roundtable Agenda:

1. Global Poverty, Conflict and Insecurity

• Susan Rice, The Brookings Institution, "Global Poverty, Weak States and Insecurity"
• Edward Miguel, University of California, Berkeley, "Global Poverty, Conflict and Insecurity"

2. Operating in Insecure Environments

• Jane Nelson, Harvard University, "Operating in Insecure Environments"

3. Keynote Address: "Achieving Peace in an Inequitable World"

• James D. Wolfensohn, Chairman of Citigroup International Advisory Board and Former President of the World Bank

4. The Role of Leadership in Overcoming Poverty & Security in Africa
   Chaired by: Mary Robinson, Realizing Rights: The Ethical Globalization Initiative

• Robert Rotberg, Harvard University, "The Role of Leadership in Overcoming Poverty & Insecurity in Africa"

Leadership Presentations:

• Mohammed Ibrahim, Chairman, Celtel International
• John Kachamila, Former Minister, Mozambique
• Ketumile Masire, Former President of Botswana

5. Resource and Environmental Insecurity

• Colin Kahl, University of Minnesota, "Demography, Environment and Civil Strife"
• Anthony Nyong, University of Jos, Nigeria, "Resource and Environmental Security"

6. Keynote Address

• Kemal Dervis, Administrator, United Nations Development Programme

7. Youth and Conflict

• Henrik Urdal, The International Peace Research Institute, "The Demographics of Political Violence: Youth Bulges, Insecurity and Conflict"
• Marc Sommers, Tufts University, "Embracing The Margins: Working with Youth Amidst War and Insecurity"
• Jane Nelson, Harvard University, "Operating in Insecure Environments: The Youth Demographic"

8. Transformational Diplomacy and the Route to Security

• Jennifer Windsor, Freedom House, "Breaking the Poverty-Insecurity Nexus: Is Democracy the Answer?"

Presentations:

• Philip Zelikow, United States Department of State
• Madeleine Albright, 64th Secretary of State
• Mary K. Bush, Chairman, HELP Commission
• Lael Brainard, The Global Economy and Development Program, The Brookings Institution

       

It is estimated that there are 95 mobile phone subscriptions per 100 inhabitants worldwide, and this boom has not been lost on the developing world, where the number of mobile users has also grown at rocket speed. In fact, in recent years the information communication technology (ICT) revolution has provided opportunities leading to “death of distance,” allowing many obstacles to better livelihoods, especially for those in remote regions, to disappear. Remarkably, though, the huge proportion of poverty-stricken populations in so many of those same regions persists.

How might, then, we think differently on the relationship between these two ideas? Can and how might ICTs act as an engine for eradicating poverty and improving the quality of life in terms of better livelihoods, strong education outcomes, and quality health? Do today's communication technologies hold such potential?

In particular, the mobile phone’s accessibility and use creates and provides us with an unprecedented volume of data on social interactions, mobility, and more. So, we ask: Can this data help us better understand, characterize, and alleviate poverty?

Mapping call data records, mobility, and economic activity

The first step towards alleviating poverty is to generate poverty maps. Currently, poverty maps are created using nationally representative household surveys, which require manpower and time. Such maps are generated at a coarse regional resolution and continue to lag for countries in sub-Saharan Africa compared to the rest of the world.

As call data records (CDRs) allow a view of the communication and mobility patterns of people at an unprecedented scale, we show how this data can be used to create much more detailed poverty maps efficiently and at a finer spatial resolution. Such maps will facilitate improved diagnosis of poverty and will assist public policy planners in initiating appropriate interventions, specifically at the decentralized level, to eradicate human poverty and ensure a higher quality of life.

How can we get such high resolution poverty maps from CDR data?

In order to create these detailed poverty maps, we first define the virtual network of a country as a “who-calls-whom” network. This signifies the macro-level view of connections or social ties between people, dissemination of information or knowledge, or dispersal of services. As calls are placed for a variety of reasons, including request for resources, information dissemination, personal etc., CDRs provide an interesting way to construct a virtual network for Senegal.

We start by quantifying the accessibility of mobile connectivity in Senegal, both spatially and across the population, using the CDR data. This quantification measures the amount of communication across various regions in Senegal. The result is a virtual network for Senegal, which is depicted in Figure 1. The circles in the map correspond to regional capitals, and the edges correspond to volume of mobile communication between them. Thicker edges mean higher volume of communication. Bigger circles mean heavier incoming and outgoing communication for that region.

Figure 1: Virtual network for Senegal with MPI as an overlay

Source: Author’s rendering of the virtual network of Senegal based on the dataset of CDRs provided as a part of D4D Senegal Challenge 2015

Figure 1 also shows the regional poverty index[1] as an overlay. A high poverty index corresponds to very poor regions, which are shown lighter green on the map. It is evident that regions with plenty of strong edges have lower poverty, while most poor regions appear isolated. 

Now, how can we give a more detailed look at the distribution of poverty? Using the virtual network, we extract quantitative metrics indicating the centrality of each region in Senegal. We then calculate centrality measures of all the arrondissements[2] within a region. We then correlate these regional centrality measures with the poverty index to build a regression model. Using the regression model, we predict the poverty index for each arrondissement.

Figure 2 shows the poverty map generated by our model for Senegal at an arrondissement level. It is interesting to see finer disaggregation of poverty to identify pockets of arrondissement, which are most in need of sustained growth. The poorer arrondissements are shown lighter green in color with high values for the poverty index.

Figure 2: Predicted poverty map at the arrondissement level for Senegal with MPI as an overlay

Source: Author’s rendering of the virtual network of Senegal based on the dataset of CDRs provided as a part of D4D Senegal Challenge 2015.

What is next for call data records and other Big Data in relation to eradicating poverty and improving the human development?

This investigation is only the beginning. Since poverty is a complex phenomenon, poverty maps showcasing multiple perspectives, such as ours, provide policymakers with better insights for effective responses for poverty eradication. As noted above, these maps can be used for decomposing information on deprivation of health, education, and living standards—the main indicators of human development index.

Even more particularly, we believe that this Big Data and our models can generate disaggregated poverty maps for Senegal based on gender, the urban/rural gap, or ethnic/social divisions. Such poverty maps will assist in policy planning for inclusive and sustained growth of all sections of society. Our methodology is generic and can be used to study other socio-economic indicators of the society.

Like many uses of Big Data, our model is in its nascent stages. Currently, we are working towards testing our methodology at the ground level in Senegal, so that it can be further updated based on the needs of the people and developmental interventions can be planned. The pilot project will help to "replicate" our methodology in other underdeveloped countries.

In the forthcoming post-2015 development agenda intergovernmental negotiations, the United Nations would like to ensure the “measurability, achievability of the targets” along with identification of 'technically rigorous indicators' for development. It is in this context that Big Data can be extremely helpful in tackling extreme poverty.

Note: This examination was part of the "Data for Development Senegal" Challenge, which focused on how to use Big Data for grass-root development. We took part in the Data Challenge, which was held in conjunction with NetMob 2015 at MIT from April 7-10, 2015. Our team received the National Statistics prize for our project titled, "Virtual Network and Poverty Analysis in Senegal.” This blog reflects the views of the authors only and does not reflect the views of the Africa Growth Initiative.

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[1] As a measure of poverty, we have used the Multidimensional Poverty Index (MPI), which is a composite of 10 indicators across the three areas: education (years of schooling, school enrollment), health (malnutrition, child mortality), and living conditions.

[2] Senegal is divided into 14 administrative regions, which are further divided into 123 arrondissements.

      

Nearly a week after the death of 18 year-old Michael Brown in Ferguson, Mo., protests continue in the 21,000-person suburban community on St. Louis’ north side and around the nation.

Amid the social media and news coverage of the community’s response to the police shooting of the unarmed teenager, a picture of Ferguson and its history has emerged.

The New York Times and others have described the deep-seated racial tensions and inequalities that have long plagued the St. Louis region, as well as the dramatic demographic transformation of Ferguson from a largely white suburban enclave (it was 85 percent white as recently as 1980) to a predominantly black community (it was 67 percent black by 2008-2012).

But Ferguson has also been home to dramatic economic changes in recent years. The city’s unemployment rate rose from roughly 7 percent in 2000 to over 13 percent in 2010-12. For those residents who were employed, inflation-adjusted average earnings fell by one-third. The number of households using federal Housing Choice Vouchers climbed from roughly 300 in 2000 to more than 800 by the end of the decade.

Amid these changes, poverty skyrocketed. Between 2000 and 2010-2012, Ferguson’s poor population doubled. By the end of that period, roughly one in four residents lived below the federal poverty line ($23,492 for a family of four in 2012), and 44 percent fell below twice that level.

These changes affected neighborhoods throughout Ferguson. At the start of the 2000s, the five census tracts that fall within Ferguson’s border registered poverty rates ranging between 4 and 16 percent. However, by 2008-2012 almost all of Ferguson’s neighborhoods had poverty rates at or above the 20 percent threshold at which the negative effects of concentrated poverty begin to emerge. (One Ferguson tract had a poverty rate of 13.1 percent in 2008-2012, while the remaining tracts fell between 19.8 and 33.3 percent.)

Census Tract-Level Poverty Rates in St. Louis County, 2000

Census Tract-Level Poverty Rates in St. Louis County, 2008-2012

As dramatic as the growth in economic disadvantage has been in this community, Ferguson is not alone.

Within the nation’s 100 largest metro areas, the number of suburban neighborhoods where more than 20 percent of residents live below the federal poverty line more than doubled between 2000 and 2008-2012. Almost every major metro area saw suburban poverty not only grow during the 2000s but also become more concentrated in high-poverty neighborhoods. By 2008-2012, 38 percent of poor residents in the suburbs lived in neighborhoods with poverty rates of 20 percent or higher. For poor black residents in those communities, the figure was 53 percent.

Like Ferguson, many of these changing suburban communities are home to out-of-step power structures, where the leadership class, including the police force, does not reflect the rapid demographic changes that have reshaped these places.

Suburban areas with growing poverty are also frequently characterized by many small, fragmented municipalities; Ferguson is just one of 91 jurisdictions in St. Louis County. This often translates into inadequate resources and capacity to respond to growing needs and can complicate efforts to connect residents with economic opportunities that offer a path out of poverty.

And as concentrated poverty climbs in communities like Ferguson, they find themselves especially ill-equipped to deal with impacts such as poorer education and health outcomes, and higher crime rates. In an article for Salon, Brittney Cooper writes about the outpouring of anger from the community, “Violence is the effect, not the cause of the concentrated poverty that locks that many poor people up together with no conceivable way out and no productive way to channel their rage at having an existence that is adjacent to the American dream.” 

None of this means that there are 1,000 Fergusons-in-waiting, but it should underscore the fact that there are a growing number of communities across the country facing similar, if quieter, deep challenges every day.

A previous version of this post misstated the Ferguson unemployment rate in 2000. It has since been corrected.

       

Extreme poverty around the world has decreased from around 2 billion people in 1990 living under $2 per day to 700 million today. Further, nine out of 10 children are now enrolled in primary schools, an increase over the last 15 years. Progress in both areas since 2000 has been part of the United Nations Millennium Development Goals, which set targets for reducing extreme poverty in eight areas, and which were the guiding principles for global development from 2000 to 2015. Today, the global community, through the UN, has adopted 17 Sustainable Development Goals to continue these poverty reduction efforts. 

In this new episode of Intersections podcast, host Adrianna Pita engages Brookings scholars Laurence Chandy and Rebecca Winthrop in a discussion of how digital technologies can be harnessed to bring poverty reduction and education to the most marginalized populations.

Listen:

Chandy, a fellow in the Global Economy and Development program at Brookings, says that the trends in getting people digitally connected "are progressing at such speed that they’re starting to reach some of the poorest people in the world. Digital technology is changing what it means to be poor because it’s bringing poor people out of the margins.”

Winthrop, a senior fellow and director of the Center for Universal Education at Brookings, says that "I think [education] access is crucial. And I do think that’s almost the first wave because without it we could work on all the ed tech—fabulous apps, great language translated content—but if you do not have the access it’s not going to reach the most marginalized."

Listen to this episode above; subscribe on iTunes; and find more episodes on our website.

Chandy was a guest on the Brookings Cafeteria Podcast in 2013; Winthrop has been a guest on the Cafeteria a few times to discuss global education topics, including: access plus education; investing in girls' education; and getting millions learning in the developing world.

       

       

2016 ushered in the revamped UN Sustainable Development Goals (SDGs), which built on the Millennium Development Goals (MDGs), adopted in 2000. Poverty eradication is the number one developmental goal of both the MDGs and SDGs.

Over the past two decades, global efforts have been successful as the number of people living in poverty declined by more than half, from more than 1.9 billion in 1990 to 836 million in 2015. Despite such progress, the Arab world continues to lag in its efforts to combat poverty.

In fact, according to the UNDP, between 2010 and 2012, the percentage of the population in the region making less than $1.25 a day increased (PDF) from 4.1 percent to 7.4 percent. Previously, countries in the region had made progress in reducing poverty, but high levels of political unrest had reversed many of these improvements.

Poverty and conflict: A direct correlation

The persistence of conflict in Syria, Iraq, and Yemen remains one of the main drivers of poverty regionally. In Syria, after five years of civil war it is estimated that 80 percent of the population lives in poverty, and life expectancy has been cut by 20 years.

Almost a decade after the US-led invasion in 2003, poverty rates are on the rise in Iraq with statistics from the World Bank showing that 28 percent of Iraqi families live under the poverty line. The mass displacement from the Islamic State of Iraq and the Levant (ISIL) controlled areas, the decline in global oil prices and higher unemployment rates has meant that despite its oil wealth, the Iraqi government has failed miserably in addressing the poverty rate in the country.

Yemen's poverty rate has increased from 42 percent of the population in 2009, to an even more alarming 54.5 percent in 2012.

Despite an initial wave of optimism after the 2011 Arab uprisings, countries in North Africa continue to face economic challenges that have seen poverty rates increase in many areas.

In Egypt, the Arab world's most populous country, five years of political upheaval have taken a toll on the economy. Increased unemployment, lower tourist arrivals, dwindling foreign currency reserves, and a weaker Egyptian pound has meant that 26 percent of Egypt's 90 million people live under the poverty line.

Despite a relatively successful and ongoing political transition in Tunisia, one in every six Tunisians lives below the poverty line as well. Tunisia is one of the highest contributors of ISIL fighters per capita, and Tunisian leaders continue to make a direct correlation between poverty and terrorism.

In the Palestinian territories, a lack of employment opportunities due to restrictions imposed by the Israeli occupation continues to drive rising levels of poverty (PDF). Nearly two years after the war in Gaza, reconstruction efforts have slowed to a crawl. Such efforts promised employment for thousands of Palestinians; however, the slow trickle of foreign donations and a deficiency of construction materials indicate that the situation will not improve any time soon.

Although the outlook for the West Bank appears less grim than in Gaza, high levels of poverty persist as many Palestinians hold jobs that pay a meager wage. This shortage of suitable employment forces many Palestinians to seek employment from companies operating in settlements on occupied Palestinian territory.

Even with some Palestinians performing these jobs out of necessity, per capita income in the West Bank continues to decline. In Gaza, the situation is even worse with per capita income 31 percent lower than in 1994.

One step forward, two steps back

The SDGs provide an ambitious blue print for global development that includes a focus on education, the environment, women's rights, sustainable water, and many other critical areas. While all of these issues are of importance to the region, it will become increasingly problematic to progress these goals without a renewed emphasis on poverty eradication.

Countries currently in conflict pose the greatest challenge to poverty eradication efforts, as participants in these conflicts have pushed aside humanitarian concerns in the quest for victory. The international community should make preparations for post-war reconstruction in Syria and Yemen, while also remaining wary of incomplete political settlements that raise the prospect for the resumption of hostilities in the future.

Even though in Palestine it is unlikely that the Israeli occupation will end anytime soon, however Fatah and Hamas should work toward a reconciliation to improve the system of governance in the territories. This will provide Palestinians with a united front to tackle the challenges posed by the occupation and ease the suffering felt in both Gaza and the West Bank.

Arab countries must recognise that absolute poverty is only one dimension of the problem and that redistributive policies can only go as far to address the issue. The uprisings have shown that Arab youth not only protested against economic inequality, but also against marginalisation and political disenfranchisement. Any renewed push for more economic opportunities must also provide Arab youth with a chance to shape their future.

Lower oil prices will likely affect the level of aid wealthier Gulf Cooperation Council countries give to poorer countries in the region. Nonetheless, such aid should not simply dry up. The Saudi-led coalition has destroyed a large portion of the Yemeni infrastructure, so the Kingdom and members of its coalition should bear a large part of the reconstruction effort.

Arab governments should understand that poverty also has a security and stability dimension. The 2011 uprisings have shown that Arab societies have the ability to challenge incompetent governance and corruption.

Food security remains a huge challenge for a region that imports much of its key food staples. Should poverty and food security issues not be addressed, any future protest wave may constitute a "revolution of the hungry", that is likely to be more violent than the protest wave of 2011.

This article originally appeared in Al Jazeera English.

      

       

       

       

       

Year after year, federal spending on poverty programs has been going up, but we still see more and more people who have no margin to guard against unexpected expenses or job loss. At the same time, for different reasons, Americans who are not impoverished have seen their wealth decline sharply. Expert Ron Haskins, co-director of the Center on Children and Families, says the problems are growing deeper, despite increased federal spending on programs to assist the poor. Haskins says everyone must sacrifice, but also says, that people in general, who finish high school, get a job, and get married and delay having children until age 21 are better off.

Video

• Solutions to Poverty's Rise in America

      

Executive Summary

Large-scale antipoverty programs have achieved significant and positive results in many developing countries around the world in the past decade. This paper explores the challenges of “scaling up” small-scale antipoverty programs—taken here to mean the processes by which successful efforts to raise the incomes of the poorest citizens in developing counties are expanded in coverage over time and across geography. In particular, I advocate supplementing approaches that highlight resource and program constraints with an expanded focus on the political dynamics involved in expanding pro-poor policies. Thus, greater emphasis should be placed on understanding the political factors that limit the expansion and survivability of antipoverty programs. A broader view along these lines highlights the bargaining strength of beneficiaries, the need to secure public support, the potential for political misuse of antipoverty programs, and how institutional fragilities affect their sustainability. Antipoverty programs can be effectively scaled up if attention is paid to addressing these political and institutional challenges. An agenda for future research is also identified.

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ABSTRACT—

The International Fund for Agricultural Development (IFAD) has for many years stressed innovation, knowledge and scaling up as essential ingredients of its strategy to combat rural poverty in developing countries. This institutional review of IFAD’s approach to scaling up is the fi rst of its kind: A team of development experts were funded by a small grant from IFAD to assess IFAD’s track record in scaling up successful interventions, its operational policies and processes, instruments, resources and incentives, and to provide recommendations to management for how to turn IFAD into a scaling-up institution. Beyond IFAD, this institutional scaling up review is a pilot exercise that can serve as an example for other development institutions.

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BPEA co-editor Justin Wolfers describes new research that found: people dropped out of the labor force before the recession started; there are better ways to forecast unemployment; homebuyer expectations helped inflate the bubble; the U.S. is not actually as politically polarized as most people think; central banks’ recent experiments with capital controls haven’t delivered results; and the U.S. is making inroads fighting poverty.

Video

• U.S. Not Actually as Politically Polarized as Most Think
• Poverty Has Fallen Much More than Previously Thought
• New Unemployment Model Can Outperform Forecasters
• Perceptions Matter: Homebuyer Expectations Helped Inflate Bubble
• Central Banks’ Recent Experiments with Capital Controls Haven’t Delivered Results

      

       

       

SUMMARY:
With the U.S. poverty rate stuck at around 15 percent for years, it’s clear that something needs to change, and candidates need to focus on three pillars of economic advancement-- education, work, family -- to increase economic mobility, according to Brookings Senior Fellow Isabel Sawhill and Senior Research Assistant Edward Rodrigue.

“Economic success requires people’s initiative, but it also requires us, as a society, to untangle the web of disadvantages that make following the sequence difficult for some Americans. There are no silver bullets. Government cannot do this alone. But government has a role to play in motivating individuals and facilitating their climb up the economic ladder,” they write.

The pillar of work is the most urgent, they assert, with every candidate needing to have concrete jobs proposals. Closing the jobs gap (the difference in work rates between lower and higher income households) has a huge effect on the number of people in poverty, even if the new workers hold low-wage jobs. Work connects people to mainstream institutions, helps them learn new skills, provides structure to their lives, and provides a sense of self-sufficiency and self-respect, while at the aggregate level, it is one of the most important engines of economic growth. Specifically, the authors advocate for making work pay (EITC), a second-earner deduction, childcare assistance and paid leave, and transitional job programs. On the education front, they suggest investment in children at all stages of life: home visiting, early childhood education, new efforts in the primary grades, new kinds of high schools, and fresh policies aimed at helping students from poor families attend and graduate from post-secondary institutions. And for the third prong, stable families, Sawhill and Rodrique suggest changing social norms around the importance of responsible, two-person parenthood, as well as making the most effective forms of birth control (IUDs and implants) more widely available at no cost to women.

“Many of our proposals would not only improve the life prospects of less advantaged children; they would pay for themselves in higher taxes and less social spending. The candidates may have their own blend of responses, but we need to hear less rhetoric and more substantive proposals from all of them,” they conclude.

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We can be sure that the 2016 presidential candidates, whoever they are, will be in favor of promoting opportunity and cutting poverty. The question is: how? In our contribution to a new volume published today, “Campaign 2016: Eight big issues the presidential candidates should address,” we show that people who clear three hurdles—graduating high school, working full-time, and delaying parenthood until they in a stable, two-parent family—are very much more likely to climb to middle class than fall into poverty:

But what specific policies would help people achieve these three benchmarks of success?  Our paper contains a number of ideas that candidates might want to adopt. Here are a few examples: 

1. To improve high school graduation rates, expand “Small Schools of Choice,” a program in New York City, which replaced large, existing schools with more numerous, smaller schools that had a theme or focus (like STEM or the arts). The program increased graduation rates by about 10 percentage points and also led to higher college enrollment with no increase in costs.

2. To support work, make the Child and Dependent Care Tax Credit (CDCTC) refundable and cap it at $100,000 in household income. Because the credit is currently non-refundable, low-income families receive little or no benefit, while those with incomes above $100,000 receive generous tax deductions. This proposal would make the program more equitable and facilitate low-income parents’ labor force participation, at no additional cost.

3. To strengthen families, make the most effective forms of birth control (IUDs and implants) more widely available at no cost to women, along with good counselling and a choice of all FDA-approved methods. Programs that have done this in selected cities and states have reduced unplanned pregnancies, saved money, and given women better ability to delay parenthood until they and their partners are ready to be parents. Delayed childbearing reduces poverty rates and leads to better prospects for the children in these families.

These are just a few examples of good ideas, based on the evidence, of what a candidate might want to propose and implement if elected. Additional ideas and analysis will be found in our longer paper on this topic.