The unconditional War on Poverty, declared by President Johnson in 1964, responded to the poverty of over 38 million Americans. It followed difficult economic conditions and a national poverty rate of 23 percent. Since then the welfare system created to fight poverty has grown dramatically. From 1965 to 2000, government assistance programs for the poor cost American taxpayers $8.29 trillion, which decreased the poverty rate to only about 13 percent in 40 years. This dismal performance has led Americans to question the sensibility of pouring endless tax dollars into government welfare programs.
In an analysis of state poverty rates from 1990-2000, Matthew Ladner of the Goldwater Institute found that the 10 states with the highest per capita state spending experienced an increase of 7.3 percent of overall poverty rates. The 10 states with the lowest spending witnessed an overall decline in poverty by 11.2 percent.
Ladner concluded his report with a prescription of reduced taxes and state spending, as this combination would attract both people and businesses, which in turn would enhance the growth of the private sector. The resulting growth in jobs, therefore, becomes a powerful and effective antipoverty program. However complex the causes of poverty, a thriving economic environment will increase opportunities for both skilled and unskilled labor.
This is not the first diagnostic report confirming the futility of maintaining a gigantic welfare system, yet politicians choose repeatedly to dismiss it. The persistence of poverty for the last 43 years, in spite of high government intervention and spending, has generated many studies. But because the evidence is compiled by social scientists who generally dont translate their knowledge into a useful product for decision makers, lobbyists arguments play a decisive role in the policymaking process.
Evidence-based policymaking wants to bridge this gap between policy makers and social scientists. The concept of evidence-based policy (EBP), promoted by the U.K. since 1997, is being taken seriously by policy specialists today throughout the world. Using evidence to inform policy has recently gained political prominence. Its emphasis on rational decision-making has propelled policy research organizations in this country to explore the possibilities of involving scientific research in government policymaking.
The journey of EBP started originally in the medical policy sphere. In the field of medicine, public policies based on scientifically-rigorous evidence have produced substantial advances in health. By contrast, in most areas of social policy, including education, poverty reduction and labor, government programs are often implemented with little regard for evidence of positive outcomes.
The Coalition for Evidence-Based Policy, a non-profit, non-partisan organization, promotes government policymaking based on rigorous evidence of program effectiveness. It has conducted scientific studies using the randomized controlled trial method. According to them, government assistance programs for low-income Americans contain very few interventions shown in scientific studies to be effective in reducing poverty.
One program that did show a positive effect on poverty reduction is Portlands JOBS Training program. This projects main focus was to move welfare recipients into high-quality, stable jobs through short-term job search and training activities. It increased the employment rate and the annual earnings per person by 25 percent. It also saved government money by lowering welfare payments per person by 21 percent. This program distinguished itself from other Welfare to Work programs because of its personalized approach and close partnership with local organizations.
Programs like this can be useful only when there are enough entry-level jobs available. This takes us back to Ladners point that a favorable environment for business is essential for creating jobs. Since the government cannot create jobs directly, its role should be focused on helping to generate an atmosphere in which the true American entrepreneurial spirit can thrive.
A constructive first step taken by the Portland City Council recently was the reduction of the Portland Business Income Tax. The Council has realized that anything that takes money out of the private sector slows job creation and income growth. However much the state spends on assistance programs for the poor, the ultimate way out of poverty is through employment, which cannot occur without a strong private sector.
Sreya Sarkar of Portland is director of the Wheels to Wealth Project at Cascade Policy Institute, Oregons premier public policy research center. Sreya can be reached at firstname.lastname@example.org.