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A recent editorial in The Day - "Make affordable housing a priority," Feb. 23 - called on the towns of southeastern Connecticut to step up to the plate and increase their stock of affordable housing, an important goal that would allow more people to have a decent place to live. But we should also be looking for ways for people to lift themselves out of poverty altogether.
The American people stand behind this. The Center on American Progress has published a study that found that two-thirds of Americans polled strongly believe that poverty is primarily the result of a failed economy, rather than the result of personal decisions or lack of effort. A whopping 85 percent believe that the government has a responsibility to combat poverty. A large majority, from both political parties, supported cutting poverty in half in 10 years.
But how? Start with a living wage. Raising the minimum wage to $10.10 could lift 900,000 families out of poverty and increase the incomes of 16.5 million low-wage workers. Southeastern Connecticut's own congressman, Joe Courtney, along with the other six members of our congressional and Senate delegation, have co-sponsored federal minimum wage bills in both the House and Senate.
What else? Make low-income tax breaks permanent, like those for the wealthy and the middle class. The Earned Income Tax Credit (EITC) and the Child Tax Credit lift more people out of poverty than any other program except Social Security and, according to a Michigan State University study, test scores, high school graduation rates, and college attendance rates go up for families getting the EITC. However, important improvements made to those credits in 2009 will expire unless Congress makes them permanent.
What else? Eliminate the "cliff effect." This is what happens when a small wage increase pushes a family above the threshold of eligibility for, say, food stamps or heating assistance and the loss of benefits leaves them with a lower net income than before the raise. We should revise programs to reduce benefits gradually as income increases, eliminating this so-called "cliff effect" and incentivizing people to work.
What else? Provide opportunities for saving, the most effective way to end living from paycheck to paycheck. According to The Pew Charitable Trusts, 71 percent of low-income, but high-saving families move out of the bottom quartile within one generation. Saving creates a new relationship to money and the future. This is important because, according to the Corporation for Enterprise Development, 30 percent of Connecticut families suffer from "asset poverty," insufficient assets to weather a job loss or medical emergency, and the number one cause of people falling into poverty is an unexpected illness, with the resulting loss of income. Building savings is an essential buffer to prevent going over the brink.
A proven way to motivate saving is the Financial Security Credit, currently in the House Ways and Means Committee. This is a way for low-income taxpayers to put some or all of their EITC into a matched savings program, similar to a 401k. In $aveUSA, a four-city test, 70 percent continued to save after the first year. This should be part of any tax reform passed by Congress.
The Great Recession showed that no one is immune to financial catastrophe. Helping people climb out of poverty is not only the right thing to do, but it will also generate more value in the economy than the programs will cost. And that will make winners of us all.
Bill Baker is volunteer for the Connecticut Chapter of RESULTS (www.results.org), a global organization that works to build the public and political will to reduce poverty. He lives in Stamford