Many years ago, I read a book by Edmund Phelps called Rewarding Work. In it, Phelps proposed a transformation of the U.S. approach to anti-poverty programs: essentially, he sought to establish wage subsidies designed to make “on-the-books” employment more attractive for less-skilled workers. His thesis was that this would be a far better way to facilitate upward mobility among the very poor than traditional social transfers, and that despite its considerable expense, it would save money over time as labor force participation led to a decrease in crime and other social maladies. I found Phelps’ argument so compelling that it became part of the basis for the writing that eventually led to the book I co-authored with Ross Douthat, Grand New Party.
I read Phelps as an undergraduate, but I read William Julius Wilson’s When Work Disappears earlier on — it had generated a great deal of public interest when it was first published, as it advanced the then-controversial thesis that “worklessness” in high-poverty neighborhoods exacerbated social isolation, family dissolution, and much else. And so Wilson called for a WPA-style public employment program that would pay a wage less than the federal minimum wage, to encourage the transition to other forms of employment. Not surprisingly, this idea was bitterly opposed by public employees. Yet like Phelps, Wilson was attuned to the social and cultural benefits of creating an on-ramp to inclusion in the broader economy. The two approaches were different in important ways, and thus subject to different criticisms. Phelps was accused of letting low-wage employers “off-the-hook” by subsidizing low-wage job creation in the private sector rather than simply imposing a higher statutory minimum wage. Wilson, meanwhile, was implicitly confident that a more centralized public sector approach was the right way to proceed, perhaps because it would tend to limit the potential for abuse or gaming of the system.
I was thinking about this old debate as I read Peter Cove’s call for a new approach to anti-poverty efforts, which resembles the work of Phelps and Wilson in spirit:
My nearly 50 years in the fight against poverty have led me to a radical proposal that could do much to lessen poverty while also saving the nation trillions of dollars: End all welfare and poverty programs — except the Earned Income Tax Credit, which incentivizes work — and use the money saved to create jobs, by the millions, for the disadvantaged.
The first attempt would be to find private-sector work through wage subsidies to employers. If this is not possible, a job in the public sector would be temporarily created. These jobs would involve public works, such as repairing infrastructure around the U.S.
Ideally, 11 million such jobs would be created, bringing workforce levels and unemployment back to normal levels.
Along these lines, President Franklin D. Roosevelt’s programs created more than 11 million jobs in 8 years. America’s population has since doubled. Through receiving a paycheck for work, millions more Americans would be paying taxes, not taking.
Poverty solved. Unnecessary dependence eliminated. Billions saved.
Though Cove’s proposal is most likely a political non-starter — liberals won’t like the idea of replacing existing programs, conservative won’t like the idea of spending the money as they won’t believe that existing programs will be replaced — I’d like to see a more detailed version of the proposal designed to address potential objections, e.g., what kind of infrastructure work does Cove have in mind and how would it be supervised? This is an agenda worth pursuing, even if it is currently impracticable.