THE BLOG
03/11/2013 01:25 pm ET Updated May 11, 2013

Congress Should Work to Help the Working Poor by Finding a Solution to End the Sequester

This week made clear that Wall Street has made its comeback. The Dow Jones industrial average pushed past the high it last reached over five years ago, but what about the rest of America, particularly the working poor?

After taking us to the economic brink in 2008, the financial services community is looking at the recession in the rearview mirror. Unfortunately, for main street and middle-class families there continues to be financial uncertainty. Low-income and working-class families are continuing to struggle amid this financial uncertainty to gain sustainable livelihoods in a fragile employment environment. Typically, when the overall economy improves the rest of society improves as well. Just take the labor participation rate, a measurement of the percentage of adults 16 and older who are working, as a sign of the ongoing dilemma. Today, the labor market participation sits at 63.5 percent- -the lowest level in 35 years.

A bright spot for these families is last week's jobs report where we saw the unemployment rate drop from 7.9 percent in January to 7.7 percent and 236,000 jobs created. For low-income and communities of color, the unemployment rate continues to be astronomically high. The unemployment rate for young people (teenagers) is now at 25.1 percent, African Americans at 13.8 percent and Hispanics at 9.6 percent. There are 12 million people still unemployed and millions more underemployed and struggling to make ends meet.

Working poor families are said to represent 32 percent of all working families in America, according to the U.S. Census Bureau, and 37 percent of all children. These families work hard, sometimes working long hours or juggling several part time jobs just to barely make ends meet. The reality is that these families still do not make enough money to take care of their livelihoods - housing, health care, child care, and transportation. For those of us who are doing well we know these families, they provide services in our local shopping malls, gas stations, day care facilities, restaurants, vacation resorts as well as other essential and desirable services. Their low wages not only hurt them and their families, it also hurts the rest of our country too, simply because their limited income prevents them from fully participating in our consumer-based economy.

Amid this delicate economic tightrope, low-income Americans are walking comes Congress' self-imposed sequester, the effects of which are yet to be fully felt. The sequester only adds to the economic uncertainty for these families, particularly for federal, state and local government employees as well as government contractors. The effects of sequestration will ultimately limit services that are critical to those families who are already struggling to make ends meet. While some members on Capitol Hill believe that the sequester will have very little impact on the overall economy, perhaps they should think about telling that to the Defense contract worker or the TSA agent who received that regrettable furlough notice or more devastating that pink slip. What most don't realize in the latest jobs numbers is that though the private sector is adding jobs, government continues to cut them - a total of 10,000 in January alone.

Policymakers claim that poor families are exempt from the harsh impact of sequestration. We hear the refrain like it's a broken record -- the $85 billion in automatic cuts are designed to spare several programs that aid the poorest and most vulnerable Americans, including Medicaid and food stamps. Unfortunately, these cuts still contain billions of dollars in mandatory budget reductions in programs that help the working poor, including housing vouchers, job-training programs, and health services through community health centers and clinics. Case in point is the Women, Infants and Children (WIC) program designed to help nursing mothers and infants and young children that will certainly be whacked as a result of the automatic cuts.

These programs enable the working poor to participate in our consumer economy. Addressing the needs and helping these families move toward self-sufficiency and upward mobility through job training and other programs have long-term economic benefits for our country. Economist Harry Holzer argues that the lack of investment in workforce development for low-income people is a direct cost to the economy; including productivity and direct federal cost to programs that are means tested.

Investing now in meaningful programs while the economy is on the mend, means smaller government in the future when these families have moved from the working class to middle class. Likewise, the difficulties experienced today by working poor families are often transferred into more costly programs and challenges tomorrow. It is in our national economic and societal interest to help build a meaningful future for working class Americans.

Upward mobility for working poor families is essential to the growth and stability of our country's economy. The first step towards this goal is for Congress and the president to lead and negotiate a balanced deal to end this 'sequester' and to increase the minimum wage.

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