The poverty rate in the US would be 15 percent higher if not for the War on Poverty and government anti-poverty programs since 1967.
It has been 50 years since America launched the War on Poverty. The Economic Opportunity Act and legislation to outlaw racial discrimination were the centerpieces of President Lyndon B. Johnson’s vision to create a Great Society.
Today, rather than a war on poverty, we seem to have a war on the poor. Wealth inequality is growing. State support for education is withering. Social safety-net programs are under attack in Congress. Many Americans believe that if people are poor, it’s their own fault. The only “solution” for poverty that many people advocate is allowing companies to create jobs offering wages too low to support a family.
Although it is now widely—and inaccurately—portrayed as a costly welfare program, the War on Poverty was not a failure. If not for government anti-poverty programs since 1967, the nation’s poverty rate would have been 15 percentage points higher in 2012, according to a study published recently by the National Bureau of Economic Research.
For the many Americans committed to fighting economic injustice, the War on Poverty offers some valuable lessons. It showed what can work—and what is still working. It can even work in some of America’s poorest places, such as the Appalachian Mountains of Eastern Kentucky where Johnson traveled in 1964 to launch his “war” from the front porch of a poor laborer’s cabin.
As a young adult, Robert Shaffer accompanied his father to the March on Washington for Jobs and Freedom in 1963 and was inspired to action by Martin Luther King Jr.’s “I Have A Dream” speech. Shaffer went home to New Jersey and started organizing poor people to push for economic justice.
His work soon attracted the attention of the new Office of Economic Opportunity (the OEO). But Shaffer wanted to work on the front lines, not in some Washington cubicle. He had read Harry M. Caudill’s 1962 book, Night Comes to the Cumberlands, which chronicled the poverty, economic injustice, and “desperation of the spirit” in an Eastern Kentucky controlled by coal companies and absentee landowners. Shaffer told federal officials, “I’ll take the job if you’ll send me to Kentucky.”
The Economic Opportunity Act required the “maximum feasible participation of the poor” in decisions about the use of federal development money. But many state and local politicians and business leaders in Kentucky saw that kind of power-sharing as a threat, and they ignored the requirement. In one example, the federal government took back a major grant from the eight-county Cumberland Valley Community Action Agency because it refused to give poor people a voice. The OEO sent Shaffer to Kentucky as a special technical assistant to reorganize the agency so funding could be restored.
“Those who lost control of the grant funds resented the new agencies,” said Shaffer, now 84 and living in Berea, Ky. “Those people weren’t used to somebody else having money to work with that they didn’t control. Sometimes it was a pretty hostile environment.”
Later, with federal money and diverse local leadership, Cumberland Valley and other community-action agencies in Kentucky achieved notable successes. They leveraged social services to create businesses, taught job skills to poor people, and created small construction firms and manufacturing companies owned by their workers. Among those companies’ products: handmade crafts, upholstered furniture for Sears Roebuck & Co., and high-end dresses for Laura Ashley, Inc.
“Before long, products being produced in some of the poorest counties in the nation were being sold in fine stores in New York City, Dallas, Chicago,” Shaffer said. Unfortunately, many of those companies later went under after free-trade agreements sent manufacturing jobs overseas to low-wage countries.
“There’s a difference between welfare and economic opportunity,” Shaffer said. “And, to me, that’s the exciting thing about what we experienced here. We were using social services for economic development and ownership.”
Shaffer worked closely with Hollis West, one of most successful community action agency leaders in Eastern Kentucky. He was also one of the most controversial because of his confrontations with the bosses who controlled the poor mountain counties. At their behest, Gov. Louie B. Nunn tried to get West fired.
“These programs helped get a generation of families jobs,” said West, now 83 and living in Lexington, Ky. “We just had to find ways to get all sides working together.”
Their experiences showed them anti-poverty programs work best when poor people are involved in policy decisions. “You’re never going to change the culture of Appalachia until you have a legitimate organization of the poor and their allies,” Shaffer said. “The majority of the people in the mountains are just as capable as anyone else if they have the same education and economic opportunities as anyone else.”
Johnson’s passion for ending poverty was not shared by his successor, Richard Nixon. By the early 1970s, the Nixon Administration had killed or neutered many War on Poverty programs.
Shaffer said he and other special technical assistants from around the country were called back to Washington in 1971. The OEO was then headed by Donald Rumsfeld, who, as Secretary of Defense three decades later, would oversee the war in Iraq. “They said, ‘You’ve been doing a wonderful job, you’ve accomplished a lot of good things … but we cannot expand the program so we’re going to terminate it,’” Shaffer said.
But one organization that Shaffer and West were instrumental in creating in 1968 survived. Originally called Job Start, it is now Kentucky Highlands Investment Corp., based in London, Ky. It grew under the leadership of Thomas Miller, who moved Kentucky Highlands into the venture capital business in 1972. The mission has expanded even more under Jerry Rickett, the director since 1989. Kentucky Highlands says it has helped create more than 18,000 jobs in the region since 1968 by providing more than $275 million in public and private financing to more than 625 businesses. The result: $2.1 billion in wages and salaries and $400 million in tax revenues.
“You’ve got to have a job if you want to overcome poverty,” Rickett said. “That’s what this company has always been about.”
The coal industry, which for more than a century created an almost colonial economy in the mountains, has been cutting jobs for three decades. Decades of state government efforts to attract large corporate employers from outside the region have resulted in few jobs that pay more than minimum wage. It has largely been a top-down effort.
But Kentucky Highlands focuses on home-grown entrepreneurship: training people who have the aptitude and helping them get capital to start and grow businesses. The capital comes from government grants and loans, private foundations, and, increasingly, banks and other private investors.
Kentucky Highlands also partners with dozens of other organizations on projects. A recent focus has been building about 25 energy-efficient houses a year for low- and moderate-income families and helping with a state initiative to expand broadband infrastructure so people can take advantage of information-economy jobs. Kentucky ranks 46th nationally in broadband coverage with 23 percent of the state’s residents, primarily in Eastern Kentucky’s mountains, having no online access.
After leaving Kentucky highlands in 1981, Miller went on to work in economic and community development in San Francisco, Tennessee, New York, and Africa. But when it came time to retire, he moved to Berea, where he continues to advocate for more effective Appalachian development strategies. Kentucky Highlands is doing the right things, he said, but it will never be big enough.
In the 1990s, the Clinton-era Empowerment Zone program brought Eastern Kentucky $40 million in tax breaks and loans, some of which still fund a $13 million revolving loan fund that Kentucky Highlands says has leveraged $120 million in private investment.
Miller thinks a new, massive infusion of investment capital is needed, an Eastern Kentucky Venture Fund of at least $250 million organized by successful business leaders from across Kentucky. The region also needs more trained entrepreneurs who know how to use that money to grow and diversify the economy.
“There are no silver bullets,” Miller said. “It’s probably a 50-year strategy, at best, and the first 10 years aren’t going to be pretty. But we know that this investment strategy works in Eastern Kentucky, that betting on the people here is the thing to do.”
Like other parts of the Central Appalachian coalfields, Eastern Kentucky remains one of America’s poorest places, with high unemployment, drug abuse, and other social problems that grow out of joblessness. But substantial progress has been made—in living conditions, educational attainment, health care, and infrastructure. And what set that progress in motion was the War on Poverty.
“Dad worked in the coal mines and did other jobs. He was a very hard worker, but he didn’t have an education,” said Darlene Sharp, 61, who was a teenager with six brothers and sisters when the War on Poverty came to Knox County. Her father managed buildings that housed the new educational programs, and her mother got a job at one of the factories West helped create. “A lot of people worked there,” she said. “I’m sure that every one of them was people who had no employment before. Without the programs, there weren’t very many jobs. It helped them be able to take care of their families and meet needs. I know it helped my family.”
At its core, the War on Poverty was not about a handout, but a hand up. It was about creating economic opportunity and giving poor people the skills and support they needed to take advantage of it. And it was about giving poor people a voice in decisions affecting their lives. A half-century ago, Americans made a commitment to fight a war on poverty, and we could do it again. Creating a society that is more fair, just, and prosperous for everyone is a fight worth winning.