A Serious Approach to Poverty

Poverty has been a perennial problem for Guam. Between the 2000 and the 2010 Guam Censuses, Guam’s individual poverty rate declined slightly form 23% to 22.9%, which is statistically negligible. There is no equally authoritative figures on poverty since that point, but we could examine the enrollment rates in the means-tested Supplemental Nutrition Assistance Program (SNAP) as a proxy, which indicates that between fiscal years 2009 and 2019 the number of individuals enrolled in SNAP rose from 31,511 (19%) to 40,930 (24%), with the numbers in parentheses representing enrollment as a percent of the estimated population according to the U.S. Census International Database. My concern, however, is not with cataloguing poverty on Guam, but developing a serious approach to poverty reduction or elimination.

A commonsense approach that I will take is to look at the income characteristics of the working poor and see what might be done to ensure that an overwhelming majority of working people would no longer be in poverty. I would take as a guide “A profile of the working poor, 2018” by the U.S. Bureau of Labor Statistics. While this may not reflect all of the conditions in Guam, I believe the broad outlines of what should be done in a serious approach to poverty is addressed by the information in the report, regardless of jurisdiction.

Unsurprisingly, persistently unemployed workers are most likely to be in poverty (38.7%), followed by involuntary part-time workers (19.9%, being those who would want to be full time workers but can only find part-time employment), followed by voluntary part-time workers (10.2%), and finally full time workers (3.3%). From this, it is easy to extrapolate that providing employment opportunities to the unemployed or underemployed would reduce poverty.

According to the report, workers had different experience with unemployment based upon whether they experienced one or more labor market problem. The poverty rate is lowest among workers with none of the identified labor market problem and is higher for workers who had one of the identified labor market problems, highest for workers who had more than one of the identified labor market problems, and highest among those who had each of them. For ease of presentation, consider the following chart of labor market problems:

Table 1. Labor Market Problems and Poverty Rate.

Labor Market Problems	Poverty Rate
None	0.7%
Involuntary part-time employment (IPTE) only	1.7%
Unemployment (U) only	5.5%
Low earnings (LE) only	22.9%
IPTE and U	11.8%
IPTE and LE	32.5%
U and LE	36.8%
IPTE, U, and LE	42.7%

As one can see from the chart above, the combination of any of the labor market problems results in a higher poverty incidence than either factor would indicate, by itself. Low earnings, which is defined as earnings of less than $369.59 per week (for 2018), is the one strongest factor in determining one’s poverty status. This cannot completely be divorced from unemployment or having less than desired employment since one can think of earnings as a combination of hours worked multiplied by the hourly wage.

As noted earlier, reducing or eliminating involuntary unemployment would reduce the poverty rate. However, depending on the wage that is offered, that may result in a relatively minor reduction in the poverty rate. In Guam, the current minimum wage is $8.75 per hour. If a worker makes minimum wage for 40 hours a week, they would earn $350 per week, which is still less than the 2018 benchmark for low earnings. If one were to apply an inflation rate of 2%, the benchmark would update to $384.52 per week in 2020. For an individual to earn that much per week in a 40 hour schedule, the hourly wage would have to be $9.62 per hour (as an aside, Guam’s minimum wage will rise to $9.25 by March 2021).

As noted parenthetically above, the minimum wage is getting considerably closer to ensuring that low earnings for full time employment could be a thing of the past (although the minimum wage will have to be updated from time to time to ensure it is able to match the rise in the cost of living).

Another contributor to poverty is the size of a family. In particular, families with related children under 18 have a higher rate of poverty than those without related children under 18. This can be explained by the fact that poverty varies statistically based upon family size. But it should be remembered that while this is a convention, it is based upon the fact that to have an equivalent living standard for a larger family, one must have more resources. In addition, married couple families have the lowest poverty rate followed by families maintained by men, and lastly by families maintained by women. The difference between married couples and families may be partly explained by the higher likelihood that there are multiple earners per family, but that is not necessarily the end of the story. As for the discrepancy between households headed by men or women, it is well known that women generally earn less than men, not only on average, but also adjusting for other relevant factors.

Table 2. Family Structure and Poverty Rate.

Family Structure	W/ children	W/out children
Married couple	8.9%	1.7%
Maintained by men	10.8%	3.5%
Maintained by women	22%	4.2%

It seems clear that if families with children are more likely to be in poverty than families without children, then a serious approach to poverty would seek to ensure that families with children should have more resources. In addition, this differential may also arise because of some of the special challenges workers with children face, like having quality day care available, being able to ensure that their children are taken to and from school, etc.

It may be more controversial, but the well-documented disparities between men and women almost certainly play a role, as one can see by the differential between women-maintained households and men-maintained households which is present both for families with and without children. Two kinds of measures can move in the direction of ensuring more equitable pay for women. First and less directly, one may make it illegal for employers to take adverse actions against employees for discussing their compensation with other employees. Second and more directly, one could strengthen prohibitions against discriminatory compensation or providing for more systematized pay structures in companies by adopting uniform pay schedules. Taking action on both kinds of measures would likely be the most effective approach to seriously addressing pay disparities and ensuring that fewer women-maintained households would find themselves in poverty. I would note that these measures would also address disparities between races. Although there are racial disparities on Guam, the racial categories covered in the report are less relevant, as there are few Hispanic or African Americans on Guam.

This discussion has largely been to provide the broad measures that would be taken in a serious approach to poverty. I would expect that some would criticize this presentation for not discussing the need for education opportunities for those who have lower incomes. Of course this is important, as are other issues. However, I do not subscribe to the idea that one must have a “passport” to “exit” poverty. I believe we should not have poverty for those who are willing and able to work, whatever their age or level of education, and for those who are unable to work through no fault of their own (elderly, disabled, etc.).

I would summarize the policy approaches outlined earlier with regard to establishing a serious approach to policy as follows:

(1) providing employment opportunities to the unemployed or underemployed, such as a Universal Job Guarantee and/or specialized employment programs;

(2) adopting a minimum wage of at least $9.62;

(3) providing additional resources to families with children, whether in cash or by extending additional services such as child day care;

(4) prohibiting employers from taking adverse actions against workers for discussing their compensation with coworkers; and

(5) strengthening prohibitions against discriminatory compensation; and

(6) requiring employers to adopt uniform pay schedules.