Prepared for the Charles Stewart Mott Foundation’s “Defining Poverty Reduction Strategies” Project

Poverty rates in the United States have remained stubbornly consistent for the past 35 years, despite significant efforts to reduce them (and some success in lessening child poverty in the 1990s). Developing philanthropic strategies to combat poverty should begin with a clear understanding of the causes behind the problem. This paper begins by tracing economic and social trends that help explain the persistence of poverty, as well as by describing some of the unintended consequences of public policies that have exacerbated the challenges facing poor families. It then discusses four overarching strategies that seek to address one of the most powerful contributors to poverty: stagnant wages for low-income workers, particularly among men, young men, and men of color.

The first two of the four strategies — A New Economic Contract for the Working Poor and Address the Youth and Young Adult Employment Crisis — represent the major recommendations of this paper. The latter two strategies — Criminal Justice Reform and Reentry Programs and Invest in Asset-Building and Credit Reform for the Poor — would provide critical support to the first two strategies. Each overarching strategy in this paper contains several components and highlights a “Signature Project” that would represent a bold investment by the Mott Foundation and the broader philanthropic community.

The long-term stagnation of earnings is one important reason that poverty has remained so impervious to economic growth. Declining earnings played a causal role in the decline in men’s employment and a smaller but still important role in declining marriage rates and rising criminal activity. Public policies haven’t done enough to address these problems, and sometimes they have unintentionally exacerbated them. The Mott Foundation, and the philanthropic sector generally, is in a good position to design, test, and advocate for a new set of policies that tackles the challenges posed by an economy that no longer rewards work at the low end. With sufficient investment, the philanthropic community can lead a national effort to both help workers struggling in low-wage jobs today and prepare today’s children to be ready to succeed in the labor market of tomorrow. The strategies suggested here would draw on the full range of philanthropic tools to learn what works to support low-wage workers and to take those lessons to scale.

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This paper was featured at a forum, "Poverty Reduction Strategies for the Next Decade," on September 29, 2008, sponsored by the Brookings Institution’s Economic Studies program and its Center on Children and Families.