Do Funds Flowing to Schools and Local Governments Go to Poor People?

If I were creating a system designed to put more resources in the hands of poor people, would I (a) give money to poor people in the form of EITC benefits or direct wage subsidies or would I (b) hire large numbers of public workers? It’s not obvious that (b) is a smarter strategy than (a).

Moreover, let’s say that (b) involves reducing student-teacher ratios far below the levels that prevailed 40 years ago without improving the quality of outcomes. This would mean we’d have 3.3 million teachers rather than 2.3 million teachers, all of whom would be compensated at a somewhat lower level than in the higher class size equilibrium. And let’s say that we live in a world in which talented college-educated workers have options beyond teaching. It seems that the smaller class size equilibrium could lead to dilution of the teacher talent pool, as Rick Hess has argued. Let’s also assume that poor children rely more heavily on the public schools to gain skills, including noncognitive skills. This is hardly a stretch, as we’ve seen that summer learning loss is much greater for kids from poor families and we have good evidence to suggest that more affluent kids are exposed to large vocabularies and more enriching extracurricular activities than poor kids. 

So again: is it obvious that what’s good for public sector workers — salaries that are tied to tenure and credentials rather than real-world performance, more hiring, near-total job security — is good for poor people?

I’d suggest that a really good strategy for helping poor people is to increase economic growth and to use direct wage subsidies to boost incomes. Now, increasing economic growth is hard, and there is a lot of debate about what is the best way to do it. I tend to think of overall economic growth as a function of what happens at the level of firms. When we see lots of growing new firms, we’re going to get economic growth. One way to help firms grow might be to do things like simplify, pare back, or even eliminate corporate income taxes, and finding other, less economically harmful ways to raise revenue. This is not the only strategy at our disposal. Another thing we could do is really improve the way our schools work by, for example, allowing really good teachers to take on more students and reward them by paying them more for doing so, as Hess and Olivia Meeks have proposed. That is a really long-term strategy that will take a while to pay off, but in the meantime it might help reduce a public spending burden that can be a real drag on the growth of firms.

If I were an advocate of public sector workers, I would make every effort to obfuscate the fact that helping poor people and helping public sector workers aren’t the same thing. But they’re not. And conservatives need to do a better job of making that clear. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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