Editor’s Note #107 Sep/Oct 1999

Moving Out of Poverty

We’ve had the longest sustained period of economic growth in decades. Unemployment is the lowest it’s been since World War II. The number of people receiving “welfare” is about half […]

We’ve had the longest sustained period of economic growth in decades. Unemployment is the lowest it’s been since World War II. The number of people receiving “welfare” is about half what it was a few short years ago.

And yet, according to the U.S. Census Bureau, in 1998 nearly one in three U.S. workers had jobs that pay at or below the federal poverty level. The Department of Health and Human Services informs us that 44 million U.S. citizens lack medical insurance, and a major study by the National Low Income Housing Coalition shows us there is no place in America where a full time, minimum-wage worker can afford to rent a decent apartment.

Clearly, providing affordable housing for America’s low-income people, and, as HUD Assistant Secretary Cardell Cooper says in an interview, for America’s “no-income” people, has to be a national priority. HUD must once again be in the business of providing permanently affordable housing units for those the market cannot or will not serve. As Cooper says, there is enough room for all players to participate in affordable housing construction. But until Congress allows HUD to return to the housing production business, the housing ladder – which conservatives fondly point to as an incentive for the poor to move out of poverty – will be missing its lower rungs.

But housing is only part of the equation. When in so many cities a full-time worker must earn two, three, or four times the minimum wage to afford a decent apartment along with food, clothing, and healthcare, wages have to be considered.

On a national level, we have to increase the minimum wage. In Making Work Pay: The Impact of the 1996-97 Minimum Wage Increase, Jared Bernstein and John Schmitt of the Economic Policy Institute show that such increases do not hurt job growth or the economy, but do help move people out of poverty. We must also expand the earned income tax credit, making sure every eligible worker benefits from it and more states develop similar tax credit programs.

Training Entrepreneurs

But moving out of poverty is no simple task. Given the increasing number of low-paying service jobs, there is a growing movement to train people to become entrepreneurs. Working with poor women in New York City’s South Bronx, Urban Horizons a multi-service center operated by the Women’s Housing and Economic Development Corporation, provides a range of training, from basic skills to business management.

Urban Horizons is part of a growing trend of entrepreneurship training among both local and national organizations. Such home-grown enterprises will, the thinking goes, not only provide an avenue out of poverty for the entrepreneur but will also create jobs in the neighborhoods that need them most.

But many of these programs lack an important component, argues Michael Shuman. While they teach the skills needed to build a business, they spend little or no effort teaching prospective entrepreneurs how to build a community. In Shuman’s view, community ownership, or at the very least an assessment of community “needs” when deciding on the type of business to start, should help spread the prosperity derived from successful new enterprises.

Nonprofit Entrepreneurs

Not only are individuals being encouraged to start businesses of their own, so are nonprofit organizations. But the complexities of starting and running a business are inherently greater for a nonprofit with a social mission that requires a mix of skills and resources not easily transferable to business development. Sometimes a little help is needed. That help can come in the form of corporate executive and officer loan programs that provide senior management on a short-term, project specific basis. We profile one such program.

New Opportunities

Over the past few years, the electric power industry has been undergoing deregulation, providing yet another opportunity – selling electricity – for nonprofits interested in starting a business that can benefit low-income households. The Pennsylvania Low Income Housing Coalition did just that. Their experience shows that while the profit PALIHC had hoped to earn was not as great or as easy to get as they had anticipated, it did provide new opportunities for advocacy and important savings to their low-income constituencies.


  • Community Entrepreneurship

    September 1, 1999

    A remarkable left-right consensus has emerged that one of the most promising ways to address poverty these days is through minority business development. Politicians, policymakers, philanthropists, academics, corporate heads, and […]

  • Cardell Cooper

    September 1, 1999

    On August 11, 1999, HUD Assistant Secretary for Community Planning and Development and former mayor of East Orange, New Jersey, Cardell Cooper returned home for a few hours, joining U.S. […]

  • Community Power

    September 1, 1999

    Community Power has taken on a whole new meaning at the Pennsylvania Low Income Housing Coalition (PALIHC), the state’s largest affordable housing advocacy organization. Community Power is PALIHC’s wholly-owned, for-profit […]