JACK NOLAND, ECONOMIC DEVELOPMENT DIRECTOR

Your neighborhood post office may be good for more than just mail. As a monumental white paper from the USPS inspector general (IG) argues, by providing financial services in local offices, the postal service can both aid millions of Americans underserved by major financial institutions and help shore up its own insolvencies. This may be one way of helping the USPS remain in business, after the agency posted a $5 billion net loss in the 2013 fiscal year, the seventh consecutive year in the red.

According to the Federal Deposit Insurance Corporation’s (FDIC) National Survey of Unbanked and Underbanked Households, 9.9 million households did not have a bank account, and were thus considered “unbanked.” In addition, 24 million households rely on alternative financial services (AFS), alongside a bank account. These services may include money orders, check cashing, payday loans, and pawn shops, among others. Financial institutions can be essential to personal income security and growth, especially given that an unbanked family may spend roughly ten percent of their income to gain “access to credit or other financial services.”

This gap in access can be seen especially in the District of Columbia, which ranks in the fifth quintile for both unbanked (10.21 to 15.10 percent) and underbanked (22.01 to 31.22 percent) states, significantly above the national average. It is difficult to understate the overall economic problems in a district with a poverty rate of almost 23 percent, adjusted for cost of living expenses. This lack of access to financial services only exacerbates the issues in DC, as those with already diminished incomes in real terms may, due to inflation, have to pay more here for less.

It is also important to note that many minority groups are disproportionately underserved. The IG report finds that “Black (21.4 percent), Hispanic (20.1 percent), and American Indian (14.5 percent) households have the largest proportions of unbanked households.” The current banking system is particularly failing households where Spanish is the only language spoken, 36.9 percent of which are unbanked.

Senator Elizabeth Warren of Massachusetts has come out in favor of the inspector general’s proposal in a Huffington Post piece. “With post offices and postal workers already on the ground, USPS could partner with banks to make a critical difference for millions of Americans who don't have basic banking services because there are almost no banks or bank branches in their neighborhoods,” she writes. The Post Office in its omnipresence is well-suited to provide a number of financial services to these individuals.

The IG report specifically points to payment services, savings incentives, and credit offerings as the primary means through which the post office could operate. A prepaid, reloadable card would enable individuals to load their paycheck without needing a bank account at an institution that may be outside of their neighborhood. This would allow currently underserved people to access ATMs across the country and pay bills as needed, thus integrating those who may currently be marginalized. Also, the postal banking program could incentivize greater savings rates for emergencies or larger purchases, which help to improve credit and security, especially when 50 percent of surveyed households had less than three months’ expenses in savings. Crucially, such a USPS program could improve credit services by offering small loans to the currently underserved, who may lack the requisite checking account for traditional bank credit. This could also help protect people from being forced to use pawn shops, payday loans, or high-interest credit cards to cover unexpected expenses.

Such a program would be good for both those left out by current banking models and the ailing USPS itself. For these households, the average savings could be up to $2000 dollars per year, as the postal service could provide these services at a 90 percent discount. Remarkably, this could lead to $8.9 billion for in revenue for the post office, calculated as a speculative 10 percent of AFS spending diverted to the USPS instead. This could be critical in helping to make the USPS financially solvent, and could allow for increased employment opportunities.

It is unacceptable that over one-third of US households are unbanked or underbanked in the current system. Secure, reliable financial services can empower individuals to increase investment and consumption in the economy, help to improve credit, and can lower eviction and foreclosure rates as people can store and access their money at lower costs. By implementing payment services, savings incentives, and credit opportunities, the United States Postal Service could help provide to those who have been underserved by banks. The USPS is faltering through budget deficits and increasing market incompatibility. Millions of Americans lack the financial services needed for economic stability and growth. Drawing these two groups together could help to eliminate the separate factors bringing them down.

Occupational Licensing is an important issue for the American economy, and it surfaced in the national political debate through Paul Ryan’s  “discussion draft” plan, “Expanding Opportunity in America”. The draft plan addresses social mobility, poverty, and reforms to America’s welfare state and the criminal justice system.

What is Occupational Licensing?

Occupational Licenses are state and local level regulations that establish a barrier in the practice of a specific trade, or prevents a tradesperson competing with other fields outside their licensed trade (the latter is common in the medical field), normally with the de jure intention of protecting the public. Many fields have mandates for licensed professionals, and the number has been growing rapidly. In the 1950s, only 70 occupations, including 5% of workers, were licensed. By 2008, an average of over 800 occupations, accounting for 29% of all workers, were licensed by each state with one state licensing over 1,100 professions, according to a 2003 report by the Council of State Governments.

This doesn't mean licensing is a new phenomena. Economists Morris Kleiner and Alan Krueger find that the concept has existed at least since Adam Smith in the 18th century. Licensing has also been a theme in health care economics. In 1963, Nobel Laureate Kenneth Arrow discussed barriers to entry for doctors, such as expensive education and licensing requirements. At the time, I thought it would be too dangerous to lower the requirements for medical professionals to work in their field, but the data seem to be against me. Nurses can provide the same quality of care, with some patients actually reporting higher satisfaction than with a doctor, while charging 15% less for their services. Overall it is estimated that regulations on non-physicians in the medical field alone costs US consumers over $100 billion a year.

Certification is a similar process to licensing; however, gaining certification is not a prerequisite for opening a business. For example, you would not be able to open a hair and nail salon in a state that requires a license to operate, but in another state you could decide for yourself if you think that it would benefit your business to get certified to practice your trade. Rand Paul, after disagreeing with the certification board for Ophthalmology, founded his own certification board, the National Board of Ophthalmology in 1999. Somewhat comically, Paul was certified by the NBO with himself as the organization's president, while his wife served as vice-president, and his father-in-law served as secretary before that body was dissolved in 2011.

What did Paul Ryan have to say about Occupational Licensing?

Paul Ryan’s report does not cover the topic in depth, but his report concludes,

Matthew Yglesias of Vox.com notes that Ryan does not propose a remedy to end this problem, but he rather implores state and local governments to take action themselves. Yglesias briefly floats the idea of federal incentives for local governments to lower their license requirements for workers, but does not expand upon this idea. Still, even liberal pundits like NY Mag’s Jonathan Chait have lauded Ryan for discussing this issue at all in his overall plan to tackle economic mobility.

Why is Occupational Licensing growing so quickly?

Why are licensed and certified trades reaching towards 38% of the US workforce, while the number sits at 13% in the United Kingdom? A leading reason is a process that economists and political scientists refer to as “rent seeking”. Incumbent business owners and tradespeople seek to make it more difficult for competitors, especially those of lower income, to challenge them. They lobby their government to pass regulations to require licensing for new businesses to enter an existing market, with the stated goal of public health and safety. Kleiner and Krueger found that licensing laws increase the wages of current workers by 18%, creating a strong incentive for incumbent businesses and workers to lobby against more competitive practices. Meanwhile the increase in prices for goods and services are paid for by consumers. The increase is disproportionately borne by low income communities, as prices rise and firms focus on serving higher income clientele. 

In another study, the pair of economists found an interesting correlation between a decrease in private sector unionization and professional licensing in the economy.

As union membership declines, workers seeking higher wages may be turning to government protectionism. The study finds that unions have a tendency to lift the lowest wages and restrain the highest wages; however, licensing has exacerbated--not relieved--the income inequality of the past decades as higher wages go towards a select few.

Generally, licensing laws have been passed in the nominal interest of protecting the public, yet requiring florists, hairbraiders, interior designers, tour guides, and dozens of other industries to have government licenses to operate has no rational basis and has been ruled unconstitutional in case after case. Many other cases of licensing policy have been the subject of ridicule in the Economist and the New York Times. 

What Progressives could learn from Libertarians about Licensing

While politicians and commentators from the left, right, and center have now begun to challenge these embedded barriers, Libertarians were the first in leading the charge. Thanks to a vigorous distrust of government regulations, a disdain for crony capitalism, and discouragement of barriers to commerce, Libertarians have been leaders on the issue of licensing. Their party platform on poverty and welfare states, “...[O]ccupational licensing laws are particularly damaging to the type of small businesses that may help people work their way out of poverty.”

The Institute for Justice (IJ), a Libertarian law firm, has led the charge on this issue, publicizing and challenging laws that it finds excessive in the free exercise of business. IJ has been instrumental in arguing for court decisions that struck down tour guide regulations in Washington, DC as unconstitutional under the First Amendment. The Fifth Circuit Court struck down regulations requiring that only funeral directors can make caskets in Louisiana, and a federal court ended a requirement that stylists need 2,000 hours of training to braid hair in Utah. 

The Institute for Justice hopes to string these cases together to craft a national right to economic liberty. Although it might sound a little too much like the gospel of Ayn Rand for some, Progressives should support the creation of such a right, so long as it is balanced by the public interest on issues such as public health, the environment, and labor rights. Such a right to economic liberty, if applied regardless of class or influence, could help restrain rent seeking by corporations and reduce the power of money in politics, both of which are necessary if one wants to move towards a more progressive government that serves the best interests of its constituents.

The divergence between Liberal and Libertarians emerges when debating which trades the government should license. Libertarians are skeptical of most, if not all licensing, which is quite understandable considering the government’s track record, where it has over-regulated these trades beyond the point at which the public receives any  benefit.

I would suggest that two questions be asked to determine whether an occupation should require a license or certification. First, does the occupation have a direct impact on public health, the environment, or public safety? Second, does the occupation pose a significant hazard to the health and safety of the worker employed?

When a trade does warrant certification or licensing, states and local governments should seek to implement those policies in a way that balances a competitive market with regulations that are in the best interests of the public, not a politically influential few.

MIHIR KHUBCHANDANI
ECONOMIC DEVELOPMENT CENTER

At a conference at the Brookings Institute in February 2014, Shared Societies were defined as communities that strive to establish political and economic inclusion in all countries, so that the highest potential of each individual, regardless of their personal background, can be utilized in order to help nations develop.

Currently, in many developing nations, certain regions or groups of people are neglected when it comes to crafting and implementing policy. This results in social, political and economic inequality, with some groups benefitting from policies as others are left behind. As a result, there is a social capital deficit which may hinder many countries’ progress.

Policymakers the world over face the difficult question of how best to include communities and ensure that minority groups are not negatively impacted by policies that are constructed from a national utilitarian perspective. An example of successfully maneuvering this obstacle comes from the Indian Ocean island nation of Mauritius during the period of Cassam Uteem from 1992-2002.

In a speech to the Institute for Democracy and Electoral Assistance, Uteem explained his administration’s policy of working to subsidize all regions of the country. This strays off traditional development policies which focus solely on subsidizing and developing industrial and urban areas. These traditional policies often result in regions remaining underdeveloped or lagging behind in growth. By uniformly subsidizing industrial and rural regions, Uteem aimed for policies to include those living in remote areas as well as in towns in a move towards universal inclusion of all communities, with the hope that the entire country could progress as a whole.

A second policy Uteem implemented was progressive education reform. Uteem’s administration worked to ensure that education was provided for free, ensuring greater accessibility of a uniform curriculum to all communities in the nation. The reformed curriculum is secular and designed to unite students around Mauritius’ history, thus improving collusion amongst communities.

Adult literacy rates in Mauritius have increased by nearly 10% since the time the reforms were enacted, as more people gained access to schooling. This increased literacy rate shows progress and development in Mauritius resulting directly from more inclusive policies.

The antithesis of Mauritius’ success can be seen elsewhere in Asia, in the transitional government of Myanmar. The Economist explains that Myanmar’s government is attempting to carry out a census. However, in a country home to a diverse set of races, the census only presents ethnic-Burman options and neglects the wide range of minority groups that make up 40% of the country’s population. 

This method raises suspicion that the government will use the census to make minority groups politically weaker. A census is the most basic means used by a government to allocate its limited resources. Therefore, such an improper census-taking method will reflect on development policies that inevitably neglect the needs of minority groups. At the same time, the census has already sparked ethnic conflicts in the western states. These conflicts have driven many to refugee camps and seriously hindered development. 

Other developing countries face similar issues to Myanmar—a crisis of community inclusion in policy that leads to uneven development patterns. These development patterns often create a deeply entrenched inequality. 

The idea of shared societies is to allow all communities in the country to play a part in developing the nation, which more evenly disperses the benefits of growth. This builds the future growth potential of the country, as all resources are geared towards progress. Over time, such societies are thus able to sustain long-term development that is all-inclusive and empowering to all communities across the nation.

I sat down with a man named Jeff* in front of the CVS on 21st street, bringing him the ham sandwich he had asked me for. He’s been sitting in front of the CVS for nearly half his life. Jeff is a man facing schizophrenia and drug addiction, and has been chronically homeless for twenty years. He’s also one of the warmest, friendliest people I’ve met. 

When we think about what homelessness looks like in a community, we often envision the same people sitting in the same places. But chronic homelessness, when an adult has been homeless for over one year or has experienced four episodes of homelessness in the past three years, is estimated to affect 18% of the homeless population. This means that 82% of those who lose their homes manage to transition back out of homelessness. The chronically homeless are some of the most vulnerable, and are almost universally disabled, usually mentally. 

Jeff is unemployed. He hasn’t been able to hold a steady job since his onset of schizophrenia when he was my age, 21. But he does still have a strong sense of pride. He told me about an organization in DC called Green Door which provides support services for people with mental illness. He goes every day, and does art workshops, life skills trainings, group therapy, and sees a case worker. Through Green Door, Jeff has found friends, emotional support, and recently, housing assistance. 

Public housing assistance has traditionally asked for guarantees from its recipients: Do you have a steady income? Do you have good credit? Are you clean from any substances? Only then can you expect to be put on the long list of people waiting for subsidized housing. This often leaves those that find themselves unable to fend off addiction or without the tools to keep a job chronically homeless – like Jeff. 

Pathways to Housing created a model which shows that it’s actually cheaper to give the chronically homeless housing for free than to rack up costs by having government pay for shelters, prisons, emergency rooms, or psychiatric wards. Called the Housing First approach, the paradigm believes that it is not only unreasonable to be expected to have a steady job, good credit, and clean record while homeless; it is nearly impossible. That’s why so many who become chronically homeless stay that way. 

In Massachusetts, a program called Home and Healthy for Good is a Housing First initiative, which has placed 723 people who were chronically homeless in apartments and has reduced the cost of a person before and after giving them free housing by $9,372 annually. 

DC’s Housing First initiative has been operating through Pathways to Housing since 2004, and claims to have ended homelessness and supported recovery for 600 individuals. Not only does their program get people off the streets who otherwise would be considered ineligible, but they keep them off the streets with an 85-90% retention rate.  

The paradigm shift to free housing for those least eligible may be a difficult transition for those who don’t see housing as a basic human right. But the numbers show that providing our most vulnerable populations with basic housing is a preventative measure that actually saves taxpayers thousands of dollars in remedial and emergency services. 

People who are chronically homeless and mentally ill or otherwise disabled tend to cycle between emergency rooms, shelters, jail, and psychiatric hospitals. Homeless tend to need high-cost medical care, and stay in emergency rooms for several days longer, because they lack access to preventative care much of the time. Although chronically homeless account for 10% of shelter inhabitants, they use over 50% of shelters’ resources. And those who are arrested, often mentally ill, have nowhere to go afterward and are found back on the streets.

Housing First has been shown to reduce the cost of shelters, emergency rooms, jail and psychiatric hospitals by combining supportive housing services. For example, a study of homeless people in New York City with mental illness found that by providing permanent housing, use of emergency shelters decreased by 60%, plus additional decreases in public medical, mental health, city jails and state prison services. 

Through public-private partnerships such as the DC Housing Authority and Pathways DC, Housing First programs can offer vouchers to chronically homeless for living spaces across the city. A partnership between DC Veterans Services and Pathways DC has moved 50 veterans with serious disabilities and mental illnesses into permanent supportive housing, according to their 2012 annual report. Continuing partnerships like these is reducing the amount of resources spent on shelters, emergency medical services, and arrests.
                                              
A segment of a short documentary called @home shows not only the financial impact these programs can have, but the emotional and physical effects as well. With housing, those who used to be chronically homeless are better able to care for themselves and work toward fully integrating themselves back into their community.

Through housing assistance at Green Door, Jeff was set to move into a community house two days after I spoke with him. He will continue to receive support there, and he hopes to one day be able to live fully independently. By supporting programs that help our most vulnerable, we help our communities thrive while easing the burden of the tax-paying middle class.

*Name has been changed for confidentiality.

It has been a long winter. The falling snow makes for a lovely view from the windows of GW’s warm, well-appointed residence halls. For D.C.’s homeless, however, winter means hardship even beyond the everyday struggle of destitution. By last count, the city has 6,859 people living without homes, an incomparably tragic facet of life in D.C. today. In truth, these numbers miss the entirety of D.C.’s housing problem, which goes much deeper.

This is a city that has seemingly been stuck in dichotomy – being the seat of the federal government and a major metropolis, white and nonwhite, rich and poor. It has been difficult for the community and government to bridge the gap between these two sides of D.C. There is a serious poverty problem here, and its effects are both rooted, and most manifest in the lack of affordable housing across the district.

There are over 70,000 names on the waiting list for D.C. Housing Authority (DCHA) assistance, and as of April 2013, that number has been capped. This aid can come in the form of public housing or through the Section 8 Housing Choice Voucher Program, with which low-income individuals receive rent assistance to live in private buildings. Thus far, these programs have largely failed D.C. residents because there are still so many without homes for themselves and their families.

Market solutions are political infeasible at best, and economically impossible at worst. At long last, D.C.’s minimum wage is set to rise to $11.50 per hour by 2016, up from $8.25. This is a victory for lower-, and middle-class workers around the district, but unfortunately, it will do little to help curb housing costs that have continued to rise. For a family of four to afford a two-bedroom apartment at the market-rate, they need to earn a whooping $27.15 per hour. For single-parent households, or those where only one can work, this may be an impossible proposition. The district cannot rely on minimum wage increases alone to mitigate this problem. Systemic changes must be made to the amount and quality of housing in the District.

Stagnant incomes have made soaring residential prices more expensive across the district in real terms, something made all the worse by the diminished market for affordable housing. According to this report, the percentage of low-cost units has been halved in a decade, from almost 50 percent in 2000 to “just 24 percent of total rental units in 2010,” a “decline of 51 percent” of low-cost apartments in general. Minimum wage increases may help to alleviate income stagnation, but housing remains untouched by such changes.

The poor are becoming poorer, while being simultaneously priced out of an ever-costlier market. In 2010, “the typical low-income rental household spent 69 percent of income on housing,” or more than double the 30 percent that the U.S. Department of Housing and Urban Development sets as the “standard measure of affordability.”

There have been several attempts at reform thus far. In 2008, the District implemented the Inclusionary Zoning Affordable Housing Program, which stipulates that new residential developments of at least 10 units, or renovations with a 50 percent increase in size, must now include 8 to 10 percent of units priced at low- or moderate- income rates. In accordance with these standards, to build its Square 75 development, GW has agreed to renovate three derelict townhouses on F Street. This will produce a total of 7,209 square feet of affordable housing for those earning 80% of average mean income (AMI), priced at a maximum of 35% of household income at that level. Citywide, the program has struggled, with the first unit not rented until July 2013. More IZ developments are expected, but Councilmember Kenyan McDuffie (D-Ward 5) proposes that the affordable unit threshold be set at 20-30%, a figure echoed in a 2012 report from the Coalition for Smarter Growth.

The Housing Production Trust Fund (HPTF), through which D.C. provides grants for affordable housing development, serves as the District’s main means of expanding residential options for lower-income people. In his “State of the District” speech, Mayor Gray pointed to a $187 million investment into the HPTF and the goal of building 10,000 affordable units by 2020 as examples of current reform efforts.

These investments could be further augmented as the Mayor, McDuffie, and Council Chair Mendelson have declared that 50 percent of future budget surpluses would be allocated to the HPTF. While financial details and mandated reserves may push this allotment back, at the very least, it shows the city’s commitment to affordable housing growth.

ONE DC, an community-based activist organization seeking to promote the needs of low-income and minority residents, argues that these changes are not enough. The current allotment would only fund 2 percent of the needed affordable units for people earning less than 30 percent of the District’s AMI. Empower DC, another important local group, has also worked extensively on mobilizing and informing residents of their housing rights to create collective change from within the community itself.

Overall, D.C. must make affordable housing a key part of any long-term plan for growth, through dependable, increased funding. While the investments in the HPTF are important, the program’s financial allotment is primarily based on deed recordation and transfer taxes, and can fluctuate based on economic circumstances. Funding must be made more secure to ensure that development will not simply bottom-out during downturns, when affordable housing is needed most.

The District must also focus on the maintenance and renovation of existing structures to prevent displacement and nurture existing communities. Vacant properties owned by the city should be considered primarily for affordable housing developments, before they can be auctioned to developers. Inclusionary Zoning and mixed-income developments should also be encouraged, especially as a means of ­­developing neighborhoods with better socioeconomic integration, to help bridge the disparities in wealth and poverty that have come to characterize D.C.

Finally, home ownership should be made a priority through increased funding for the Home Purchase Assistance Program, especially as “the number of low-value homes has fallen by 72 percent” from 2000 to 2010. Helping D.C. residents to buy houses will aid in creating lasting, multigenerational communities and spur institutional development in neighborhoods across the city. This is key, according to the Coalition for Nonprofit Housing and Economic Development, which also points to the Local Rent Supplement Program and the Permanent Supportive Housing Program as vital means of assisting those with very low incomes and the chronically homeless. Several groups with varying incomes across the city need a stronger commitment to affordable housing, which illustrates exactly how widespread this issue has become.

The lack of affordable housing in D.C. is not a problem that will go away overnight. The District needs to focus on developing and preserving housing for low- and moderate-income residents to make lasting and worthwhile inroads toward bottom-up economic growth and an overall reduction in poverty. Snapping this city out of its perpetual winter will require bringing all of its residents out of the cold. Safe and secure housing is key to the success of communities, and D.C. must strive to provide for all of its citizens.

This year’s 50th Anniversary of the War on Poverty has led to a national discussion on how to revamp public policy to better help the most vulnerable. Faced with a messaging crisis, a rise in suburban poverty, and polls showing wide concern among the American public about rising wealth inequality, Republicans have appeared ready this year to propose overhauls of education, tax, and regulatory systems in the name of boosting social mobility. 

These recent developments have shown that the Right may be starting to again recognize that individual effort is not only what determines economic success—institutional forces, whether public or private, play an important role in determining one’s position on the economic ladder. And as such, government should be involved to help make sure that all have a chance at moving up.

But Rep. Paul Ryan (R-WI)’s recent comments have shown that the Party has not strayed away from their confining ideology—one that that blames worker initiative for systemic social problems:

The racial undertones of this statement are clear, similar to the “welfare queen” narrative during the Reagan era and the “47%” comments of the 2012 election. As many commentators have rightly pointed out, the phrase “inner city” is often used as coded language to shield racist comments by “color-blind” whites about the black urban poor.  The “cultural values” of poor rural Southern white men, who also suffer from widespread joblessness, are not questioned the same way as this different “class” of poor. The allegation that African Americans lack a strong work ethic consistent with national “American” values of personal responsibility has existed long before the Jim Crow era.

Just as striking is that Ryan’s comments ignore the many structural economic challenges that have been dramatically changing American cities for decades. While having only 7% of the total U.S. workforce, low-income urban neighborhoods have nearly one-quarter of American poverty. And while Ryan is right that there have often been generations of families without stable and well-paying jobs, the reasons for this massive structural unemployment are more complex than a lack of hard work by the poor. Larger political and economic shifts continue to affect employment in U.S. cities. 

The Decline of Manufacturing
Globalization, technical progress, and offshoring since the 1970s have dramatically transformed once-thriving cities across the country. Cities are still copying with the effects of deindustrialization and the shift to a posindustrial economy, which left many communities without widespread sources of family-supporting jobs. 

Between 1980 and 2009, the United States lost 7.1 million manufacturing jobs, more than 61% of which were originally in the metropolitan areas. In my hometown of Milwaukee, just to the north of Ryan’s District, the loss of anchor corporations like American Motors, A.O. Smith, Schlitz, and Pabst led to massive unemployment and declines in incomes, affecting the African American community the hardest. There has not been a resurgence of employment to replace the many jobs lost; only 44.7% of working-age men of color in Milwaukee were employed in 2010. This story is far too common in many urban communities across the country.

Suburbanization of Employment and Transit Barriers
With urban areas in distress, many who had the means to leave chose to. Those that couldn’t were force to stay. “White flight” to suburban areas intensified after jobs disappeared. Many Rust Belt cities saw their populations decline by nearly half, extracting tax revenue, home values, human capital, and further destabilizing these urban economies. Housing discrimination and financial barriers prevented many black families from moving out of poor neighborhoods.

With less wealth and growth in cities, many industries also left to the suburbs. Today, 72 percent of employment is located more than five miles from central urban business districts, creating “spatial mismatches” with many urban workers disconnected from suburban labor markets. With 10% of urban households without access to a vehicle, public transit is a necessity to connecting residents to these new jobs outside city limits. But current transit services are often inadequate, with only 17.3% of suburban jobs accessible by public transit in less than 90 minutes. Continued service cuts and fare increases, which have affected 79% of transit agencies since 2011, have severely hurt efforts to help urban workers find family-supporting employment.

Workforce Readiness and Education Challenges
As globalization increases competition between U.S. and international workers, pressure has been put on public education and workforce development systems to maintain American comparative advantage. These new challenges have not been met with the amount of investment needed to fit the need. In 2013, 39% of large American firms report having trouble filling positions because of not having enough qualified candidates.
                                                              
Longtime unequal education funding disparities between poor urban and wealthy suburban areas, perpetuated by funding mechanisms based on local property taxes, continue to exist. 31% of all American students are heavily concentrated in 1.5% of urban schools which receive only 89% of the average national per pupil revenue. Higher class sizes, more frequent teacher turnover rates, fewer support services, less college readiness programs, and less funding for extracurricular activities are far too common in urban public schools. Because many poor breadwinners have multiple part-time jobs, there also tends to be less parental involvement in city schools, shown to have a strong correlation to student achievement.

The Great Recession hit urban education systems hard. Two-thirds of state governments are providing less per-student funding for K-12 education in 2014 than 2008. Federal funding for the Title I program, which targets high-poverty school districts, was cut by 12% in 2011. While increased funding is not the only solution to help our urban education systems perform against global rivals, public disinvestment from our schools is leaving urban workers behind.  

Stop Blaming Economic Forces on the Poor
This is just a glimpse of the many systemic challenges facing American cities. Ryan’s position that blames the marginalized for their own poverty ignores far too many factors that have been preventing renewed prosperity in cities for decades. 

If Republicans want to propose real solutions to modernize the War on Poverty, the first step will be to change their tendency to criticize, instead of empower, the vulnerable. Blaming individuals for systemic challenges is not only misguided, but removes policymakers’ responsibility to act. Democrats, too, need to evaluate federal programs with an open-mind and to start working with the other side of the aisle to help create family-supporting jobs in our neighborhoods. Solutions, not finger-pointing, are what is needed to help alleviate poverty in our challenged cities. Americans deserve better.

MIHIR KHUBCHANDANI, DEFENSE AND DIPLOMACY CENTER 

When one typically thinks of insurance, it is seen as a costly investment, rarely seen as a program to help alleviate poverty in developing nations. However, this is exactly what microinsurance programs aim to do: offer accessible insurance with low monthly fees to help improve the lives of the poor. The potential benefits of widespread microinsurance programs are a good way of giving developing nations a bigger leg up.

Microinsurance, called a “barefoot hedge-fund” by Abhijit Bannerjee, works in a very similar way to traditional insurance. A customer purchases insurance and pays a premium on a monthly or periodic basis. The amount collected is stored in a “pool” by the insurance company, to be used when a customer makes a claim. The key difference in microinsurance is that the premium is much lower than in standard insurance policies. 

For instance, the lowest premium charged by the South African microinsurance organization AllLife is just $15 per month, a New York Times article explains. Such microinsurance programs are able to reach those who would not be able to afford traditional insurance. 

Microinsurance covers those who are generally seen as more vulnerable due to poorer living conditions and the high risk environment in which they live and work. The average customer targeted by microinsurance is a low-income farmer, who is able to produce just enough every week to provide food, shelter, and basic necessities. Droughts, plagues, or diseases can create shocks to farm yields, leading the farmer without enough income to support his or her family.  

If a farmer were to have insurance, the reclaimable payment would be enough to sustain a family in the event of a short-term shock. Microinsurance helps smooth out the risks faced by these poor entrepreneurs. 

As a result, microinsurance removes the cost attributed with a poor yield and allows the buyer to take more risks such as allowing subsistence farmers to send their children to school rather than having to work on the land or allowing those farmers to widen the variety of crops they grow and sell different products, potentially helping them earn higher profits.

This program extends beyond crop protection, also providing medical coverage to those in need. In developing nations where living conditions are poor, the typical low-income earner is not able to afford even basic medical care. In a similar way to traditional medical insurance, microinsurance programs allow patients to be reimbursed on some part of their healthcare expenses, enabling more people to obtain the professional medical services they need, rather than treating themselves in often inefficient or even dangerous manners. 

Implementation of microinsurance programs can be spurred by subsidies and grants to insurance providers, either by domestic governments or by foreign aid from governments and non-profit agencies. Such grants will allow insurance providers to lower the premiums charged, and will also enable them to reach in to more remote areas, ensuring many more can benefit from these programs. 

Still a relatively new concept, microinsurers are still looking to find the equilibrium between charging low premiums and accumulating sufficient funds to cover clients when needed. Further, a lack of financial literacy among typical microinsurance beneficiaries may also mean that customers will be slow to purchase coverage. 

Microinsurance programs offer great potential in helping nations develop. They enable clients to take risks in crop production, provide healthcare at a basic level to those who often need it most, and have enough lifestyle flexibility to send their own children to school. Microinsurance requires relatively small effort and comes at a low cost, making it a highly sustainable means of meeting many development goals in the coming years.