National prosperity is more effective than government programs at fighting poverty.
As proof, consider the U.S. Labor Department’s latest job statistics. With tax reform and deregulation making an impact, 600,000 previously discouraged workers sought to rejoin the workforce in June.
Last month, we noted that the number of jobs available outnumbered the number of people seeking jobs for the first time ever. That persuaded many Americans to start looking for work again.
Ironically, the good news caused the unemployment rate to rise from 3.8% in May to 4.0% in June, as the government’s official rate does not include previously discouraged workers until they seek work again.
With that many people returning to the workforce, the stubbornly low labor force participation rate should finally improve from its current 62.7%. While retiring baby boomers will have a negative impact for years to come, a higher participation rate, like economic growth exceeding 3%, is still achievable, regardless of claims to the contrary by the Keynesian experts.
More workers means more tax revenues generated, less money needed for government programs that support the unemployed and lower debt.
Last month, employers created 213,000 new non-farm jobs and wages rose at an annualized rate of 2.7%.
We once noted that the War on Poverty, which created many of the government programs that still exist today, has cost $20.7 trillion (based on 2011 dollars) and yet 15% of Americans continue to live in poverty — the same percentage as when the War on Poverty began.
A strong economy is a far more effective way to fight poverty.