REMEDY TO POVERTY
REMEDY TO POVERTY
Abstract
Economic growth is typically recognized as the effective tool in eradicating of poverty. Unfortunately, many countries enjoy their national prosperity with no improvement in citizen's living standard. The purpose of this study is to investigate the new tool aimed at reducing poverty through log-linear model and to estimate the impact of exogenous macroeconomic shock occurred in every sector on poverty through SAM multiplier. The result reveals that poverty is not sensitive to economic growth changes while it is definitely elastic to economic development. Growth is no longer an effective tool. Additionally, Latin America needs to export the commodities from meat, heavy manufacturing, and textile sector to help getting people out of poverty.
REMEDY TO POVERTY
Poverty is a global phenomenon which affects continents,
nations, and people differently. It afflicts people in various depth and levels
at different times and phases of existence. There is no nation that is
absolutely free from poverty. The main difference is the intensity and prevalence of this malaise. Nations in sub-Saharan Africa, South Asia and Latin
America are currently with the highest level of poverty and consequently with
the lowest level of socio-economic development, violence, and unrest and
generally unacceptable low standard of living.
Poverty has made Nigeria to attain an unenviable status as
one of the poorest countries in the world, such that no government (no matter
the level), organization, community, clan or family can survive effectively
without introducing one kind of poverty reduction strategy or the other. This
problem is essentially not that of programme and strategies so adapted in
poverty reduction efforts. Nigeria has not been known to lack in such efforts; yet she is still ranked among
the world’s 25 poorest nations (World Bank, 2002;
http://article.sapub.org/10.5923.j.economics.201202 02.02.html_br). Political
instability and absence of good governance witnessed by Nigeria over time
subjected the various poverty alleviation initiatives to fickleness. As a new
regime comes on board, it signals a death knell to the past policies
irrespective of the successes recorded. Indeed, there is no gain saying the
fact that the formulation and implementation of poverty alleviation programmes
are part of the important processes of democratic governance in modern
nation-state with a desire for socio-economic development and crave the
provision of the most needed dividends of democratic governance towards
enhancing poverty reduction and national security. Nigeria is a state known to
have formulated, articulated policies aimed at providing solutions to her
numerous problem and development challenges.
In fact, the fate of many policy programmes have been that
of poor, callous, haphazard implementation and abandonment majorly as a result
of perennial political instability as well as bad governance.
The Top 10 Solutions to Cut Poverty and Grow the Middle Class
The
Census Bureau released its annual income, poverty, and health insurance report
yesterday, revealing that four years into the economic recovery, there has been
some progress in the poverty rate as it fell from 15 percent in 2012 to
14.5 percent in 2013, but there was no statistically significant
improvement in the number of Americans living in poverty. Furthermore,
low- and middle-income workers have seen little to no income growth over
the past decade, as the gains from economic growth have gone largely to the
wealthiest Americans.
With
flat incomes and inequality stuck at historically high levels, one might assume
that chronic economic insecurity and an off-kilter economy are the new normal
and that nothing can be done to fix it. But there is nothing normal or
inevitable about elevated poverty levels and stagnant incomes. They are the
direct result of policy choices that put wealth and income into the hands of a
few at the expense of growing a strong middle class.
The
good news is that different policy choices can bring different outcomes. When
the government invests in jobs and policies to increase workers’ wages and
families’ economic security, children and families see improved outcomes in
both the short and long term.
Here
are 10 steps Congress can take to cut poverty, boost economic security, and
expand the middle class.
1. Create jobs
The
best pathway out of poverty is a well-paying job. To get back to prerecession
employment levels, we must create 5.6 million new jobs. At the
current pace, however, we will not get there until July 2018. To
kick-start job growth, the federal government should invest in job-creation
strategies such as rebuilding our infrastructure; developing renewable energy
sources; renovating abandoned housing; and making other common-sense
investments that create jobs, revitalize neighborhoods, and boost our national
economy. We should also build on proven models of subsidized employment to
help the long-term unemployed and other disadvantaged workers re-enter the
labor force.
In
addition, the extension of federal unemployment insurance would have
created 200,000 new jobs in 2014, according to the Congressional
Budget Office. Indeed, every $1 in benefits that flows to jobless workers
yields more than $1.50 in economic activity. Unfortunately, Congress
failed to extend federal unemployment insurance at the end of 2013,
leaving 1.3 million Americans and their families without this vital
economic lifeline.
2. Raise the minimum wage
In
the late 1960s, a full-time worker earning the minimum wage could lift a family
of three out of poverty. Had the minimum wage back then been indexed to
inflation, it would be $10.86 per hour today, compared to the current
federal minimum wage of $7.25 per hour. Raising the minimum wage to $10.10 per
hour and indexing it to inflation—as President Barack Obama and
several members of Congress have called for—would lift more
than 4 million Americans out of poverty. Nearly one in five children
would see their parent get a raise. Recent action taken by cities and
states—such as Seattle, Washington; California; Connecticut; and New Jersey—shows that
boosting the minimum wage reduces poverty and increases wages.
3. Increase the Earned Income Tax Credit for childless workers
One
of our nation’s most effective anti-poverty tools, the Earned Income Tax
Credit, or EITC, helped more than 6.5 million Americans—including 3.3
million children—avoid poverty in 2012. It’s also an investment that pays
long-term dividends. Children who receive the EITC are more likely to
graduate high school and to have higher earnings in adulthood. Yet childless
workers largely miss out on the benefit, as the maximum EITC for these workers
is less than one-tenth that awarded to workers with two children.
President
Obama and policymakers across the political spectrum have called for boosting
the EITC in order to right this wrong. Importantly, this policy change should
be combined with a hike in the minimum wage; one is not a substitute
for the other.
4. Support pay equity
With
female full-time workers earning just 78 cents for every $1 earned by
men, action must be taken to ensure equal pay for equal work. Closing
the gender wage gap would cut poverty in half for working women and their
families and add nearly half a trillion dollars to the nation’s gross
domestic product. Passing the Paycheck Fairness Act to hold employers
accountable for discriminatory salary practices would be a key first step.
5. Provide paid leave and paid sick days
The
United States is the only developed country in the world without paid
family and medical leave and paid sick days, making it very difficult for
millions of American families to balance work and family without having to
sacrifice needed income. Paid leave is an important anti-poverty policy,
as having a child is one of the leading causes of economic hardship.
Additionally, nearly 4 in 10 private-sector workers—and 7 in 10
low-wage workers—do not have a single paid sick day, putting them in the
impossible position of having to forgo needed income, or even their job, in
order to care for a sick child. The Family and Medical Insurance Leave Act,
or FAMILY Act, would provide paid leave protection to workers who need to
take time off due to their own illness, the illness of a family member, or the
birth of a child. And the Healthy Families Act would enable workers
to earn up to seven job-protected sick days per year.
6. Establish work schedules that work
Low-wage
and hourly jobs increasingly come with unpredictable and constantly
shifting work schedules, which means workers struggle even more to balance
erratic work hours with caring for their families. Ever-changing work schedules
make accessing child care even more difficult than it already is and
leave workers uncertain about their monthly income. Furthermore, things many of
us take for granted—such as scheduling a doctor’s appointment or a
parent-teacher conference at school—become herculean tasks. The Schedules
That Work Act would require two weeks’ advance notice of worker schedules,
which would allow employees to request needed schedule changes. It would also
protect them from retaliation for making such requests—and provide guaranteed
pay for cancelled or shortened shifts. These are all important first steps to
make balancing work and family possible.
7. Invest in affordable, high-quality child care and early education
The
lack of affordable, high-quality child care serves as a major barrier to
reaching the middle class. In fact, one year of child care for an infant
costs more than one year of tuition at most states’ four-year public
colleges. On average, poor families who pay out of pocket for child care
spend one-third of their incomes just to be able to work.
Furthermore, federal child care assistance reaches only one in six eligible
children.
Boosting
investments in Head Start and the Child Care and Development
Block Grant, as well as passing the Strong Start for America’s Children
Act—which would invest in preschool, high-quality child care for infants and
toddlers, and home-visiting services for pregnant women and mothers with
infants—will help more struggling families obtain the child care they need in
order to work and improve the future economic mobility of America’s
children.
8. Expand Medicaid
Since
it was signed into law in 2010, the Affordable Care Act has expanded access to
high-quality, affordable health coverage for millions of Americans. However, 23
states continue to refuse to expand their Medicaid programs to cover
adults up to 138 percent of the federal poverty level—making the lives of many
families on the brink much harder. Expanding Medicaid would mean more than
just access to health care—it would free up limited household income for other
basic needs such as paying rent and putting food on the table. Having health coverage is also an important buffer against the economic consequences of illness and injury; unpaid medical bills are the leading cause of bankruptcy. Studies link Medicaid coverage not only to improved health,improved access to health care services, and lower mortality rates, but also to reduced financial strain.
9. Reform the criminal justice
system and enact policies that support successful re-entry
The
United States incarcerates more of its citizens than any other country in the
world. Today, more than 1.5 million Americans are behind bars in state and
federal prisons, a figure that has increased fivefold since 1980. The
impact on communities of color is particularly staggering: One in four African
American children who grew up during this era of mass incarceration have had a
parent incarcerated.
Mass
incarceration is a key driver of poverty. When a parent is incarcerated, his or
her family must find a way to make ends meet without a necessary source of
income Additionally, even a minor criminal record comes with significant
collateral consequences that can serve as lifelong barriers to climbing out of
poverty. For example, people with criminal records face substantial barriers to
employment, housing, education, public assistance, and building good
credit. More than 90 percent of employers now use background checks
in hiring, and even an arrest without a conviction can prevent an individual
from getting a job. The “one strike and you’re out” policy used by public
housing authorities makes it difficult if not impossible for individuals with
even decades-old criminal records to obtain housing, which can stand in the way
of family reunification. Furthermore, a lifetime ban—for individuals with
felony drug convictions—on receiving certain types of public assistance
persists in more than half of U.S. states, making subsistence even more
difficult for individuals seeking to regain their footing, and their families.
In
addition to common-sense sentencing reform to ensure that we no longer fill our
nation’s prisons with nonviolent, low-level offenders, policymakers should
explore alternatives to incarceration, such as diversion programs for
individuals with mental health and substance abuse challenges. We must also
remove barriers to employment, housing, education, and public assistance. A
decades-old criminal record should not consign an individual to a life of
poverty.
10. Do no harm
The
across-the-board spending cuts known as sequestration—which took effect in
2013—slashed funding for programs and services that provide vital support to
low-income families. Sequestration cost the U.S. economy as many as 1.6
million jobs between mid-2013 and 2014. Some relief was provided
this January, when Congress passed the Consolidated Appropriations Act of
2014, but many important tools to help low-income individuals and families pave
a path to the middle class—such as adult and youth education and training
programs, child welfare, and community development programs—were on a downward
funding trend even before sequestration took effect.
As
Congress considers a continuing resolution to fund the federal government past
October 1 and avoid another government shutdown, it should reject further cuts
to programs and services such as the Special Supplemental Nutrition Program for
Women, Infants, and Children, or WIC, which provides vital nutrition assistance
to pregnant women and mothers with new babies. Thereafter, Congress should make
permanent the important improvements made to the EITC and the Child
Tax Credit as part of the American Recovery and Reinvestment Act of 2009, which
are set to expire in 2017. And it should avoid additional cuts to vital
programs such as the Supplemental Nutrition Assistance Program, or SNAP,
formerly known as food stamps, which suffered two rounds of deep cuts in 2013 and 2014.
Conclusion
It
is possible for America to dramatically cut poverty. Between 1959 and 1973, a
strong economy, investments in family economic security, and new civil rights
protections helped cut the U.S. poverty rate in half. Investments in nutrition
assistance have improved educational attainment, earnings, and income among the young girls who were some of the food stamp program’s first recipients.Expansions of public health insurance have lowered infant mortality rates and reduced the incidence of low birth rates. In more recent history, states that raised the minimum wage have illustrated the important role that policy
plays in combating wage stagnation.
Solomon N. Udofia
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