A plan for urban recovery

8/5/2016, 7 p.m.
As the general election season begins in earnest, the National Urban League has a message for the next president: Invest …
Marc H. Morial

Marc H. Morial

As the general election season begins in earnest, the National Urban League has a message for the next president: Invest in America.

When Europe found itself in physical and economic ruin after World War II, the United States invested $13 billion — $130 billion in today’s dollars — through the European Recovery Program, more commonly known as the Marshall Plan, after Secretary of State George Marshall.  

Since 2006, the United States has spent nearly $50 billion rebuilding Afghanistan through the Afghanistan Infrastructure Rehabilitation Program.

The Troubled Asset Relief Program (TARP), signed into law by President George W. Bush in 2008, infused the nation’s faltering financial institutions with investments of more than $400 billion. The United States’ collections under TARP and affiliated relief efforts, actually have exceeded total disbursements by more than $12 billion.

Whether we call it “recovery,” “rehabilitation” or “relief,” it’s time for America to demonstrate that our commitment to our own struggling urban families and communities is as powerful and compelling as it was for Europe, or for Afghanistan or for Wall Street.

The National Urban League proposes a sweeping and decisive solution to the nation’s persistent social and economic disparities — the Main Street Marshall Plan: From Poverty to Shared Prosperity.

In many ways, the country’s recovery from the Great Recession is well underway. But the recovery essentially has bypassed struggling communities of color. Black Americans remain twice as likely as white people to be unemployed. Since 1976, the black unemployment rate has consistently remained about twice that of the rate for white people across time and at every level of education. The household income gap remains at about 60 cents for every dollar. Black Americans are only slightly less likely today to live in poverty than they were 40 years ago.

The Main Street Marshall Plan is a bold and strategic investment of $1 trillion over the next five years in America’s urban communities, including:

• Universal early childhood education: Studies show people who were in preschool programs are more likely to graduate from high school, to own homes and have longer marriages. They are less likely to repeat grades, need special education or get into future trouble with the law. Furthermore, financially, the return on investment in early childhood education is estimated at 12 percent, after inflation.

• A federal living wage indexed to inflation: Not only would an increase in the minimum wage lift hundreds of thousands of Americans out of poverty and shrink the nation’s dangerously wide income gap, it would inject billions into the economy. According to a Chicago Federal Reserve Bank study, every dollar increase for a minimum wage worker results in $2,800 in new consumer spending by his or her household over the following year.

• An urban infrastructure fund to finance schools, community centers, libraries, water systems and urban transportation: Every dollar spent on infrastructure increases in economic growth between $1.50 and $2. An analysis by the Economic Policy Institute estimated that a $250 billion annual investment boosts the GDP by $400 billion and overall employment by 3 million net new jobs by the end of the first year.

• A new Main Street small- and micro-business financing plan with emphasis on businesses owned by women and people of color: Small businesses accounted for 60 percent of net new jobs since the end of the Great Recession and lead large firms in new technology and patent creation. According to an SBA report, small businesses produced 16 times more patents per employee than large firms.

• Expansion of summer youth employment programs, housing vouchers and workforce tax credits: Youths who participate in summer jobs programs do better academically and are far less likely to get in trouble with the law. Housing vouchers lift millions out of poverty, reduce health care costs and stimulate the economy. Tax credits invested in low-income communities result in new jobs and greater access to public facilities, goods and services such as manufacturing, food, retail, housing, health, technology, energy, education and childcare.

• A new homeownership tax credit for middle- and low-income homebuyers: Higher rates of homeownership, particularly in low-income communities, are linked to improved children’s educational achievement, greater financially stability, improved civic participation, better health outcomes and reduced neighborhood crime rates.

• Expansion of the Earned Income Tax Credit: The EITC lifted 6.2 million people — including 3.2 million children — out of poverty overall in 2013. When the income gains from the increase in employment the EITC generates are taken into account, the EITC’s impact in reducing poverty is even more significant.

• Workforce training programs administered through community-based organizations and targeted to areas of high unemployment: According to the Brookings Institute, employment focused training programs, often developed in cooperation and collaboration with employer or industry partners, have been tremendously successful, producing returns for workers that far exceed the social cost of the programs.

• A doubling of the Pell Grant program to make college more affordable, increasing the maximum grant from $5,775 to $11,550: As Sen. Claiborne Pell, the chief sponsor of the program, said, “Any student with the talent, desire and drive should be able to pursue higher education.” More than 60 million students from poor and working-class backgrounds have received the economic lifeline they need to earn a college degree.

• Expansion of financial literacy and homebuyer education and counseling: According to the Department of Housing and Urban Development, nearly 70 percent of homeowners who participated in foreclosure prevention counseling obtained a mortgage remedy to retain their home, and 56 percent cured their defaults and became current on their mortgages. Of those who participated in pre-purchase counseling, 35 percent became homeowners within 18 months.

• Increased access to affordable broadband and mobile technology for working and low-income Americans: Access to technology is associated with higher unemployment rates, greater economic growth, better health care and education and greater civic participation.

The original Marshall Plan brought about the most dramatic increase in economic growth in European history. Poverty and starvation seemed to disappear overnight. Though the plan officially ended in 1953, the unprecedented economic growth it sparked continued for two decades. By contrast, the economies of the Soviet Union and Eastern Bloc nations, which declined American aid, faltered in the post-war era.

Today, our economy and infrastructure have been shattered, not by bombs and tanks, but by corporate malfeasance and governmental indifference.

Under President Obama, the nation has made great strides in stabilizing the economy. In eight years, the nation has gone from losing hundreds of thousands of jobs per month to 73 straight months of job growth. During President Obama’s term, the private sector has added 14.4 million new jobs. The Economic Recovery and Reinvestment Act is widely credited with protecting the nation from a second Great Depression.

Much more remains to be done, however. The benefits of the recovery have not reached our most troubled communities. We cannot continue to rely on policies that have proved ineffective in communities of high unemployment and low income. We must focus our resources and efforts on the neighborhoods where they are most desperately needed.

The writer is president of the National Urban League.