3 ideas to fight global and US poverty are gaining traction

3 ideas to fight global and US poverty are gaining traction
Source: AP
Source: AP

Feeling bummed out about the new study showing growing income inequality in the United States — with half the country going without a raise since 1980?

Buck up.

Here are three big wins this week for those fighting on behalf of the economically underprivileged.

Portland, Oregon, will tax companies with overpaid CEOs to support the homeless.

On Wednesday, the city council of Portland, Oregon, passed a new measure aimed at stemming income inequality: taxing disproportionately well-compensated CEOs, the Portland Business Journal reported. 

According to the Guardian, it's the first measure of its kind, and would basically add a surcharge of 10% to a company's corporate tax if the firm has a CEO-to-worker pay ratio above 100.

In other words, if a CEO makes more than 100 times the median worker pay at the business — a figure the Securities Exchange Commission requires all publicly traded companies to disclose — then the firm has to pay an extra tax. 

The money raised will go to support the city's homeless, although it's unclear if Portland's Mayor-elect Ted Wheeler will support the measure, as current Mayor Charlie Hales does.

As many as 540 public companies operations in Portland will be subject to the tax, meaning that the law could raise as much as $2.5 million a year.

Researchers showed giving low-income people cash might just work.

One of the most efficient ways to help alleviate poverty is, perhaps unsurprisingly, just giving broke people straight cash. 

That idea has long met resistance — from both the right and left — because of concerns that low-income people will then be more likely to buy alcohol, cigarettes and other so-called "temptation goods," as opposed to education and self-improvement. 

Opponents have long argued if you give money to the poor, they'll spend it on booze. Not the case.
Source: 
Shutterstock /Ajayptp

Turns out, the opposite is actually true. 

That's according to new research from economists at Stanford University and the World Bank looking at 30 studies of unconditional cash transfers in Latin America, Africa, and Asia.

Economists found that unconditional grants of cash made people less likely — not more likely — to spend their money on so-called "temptation goods" than people who did not receive money.

There's a few theories as to why this happens: One, is that cash grants make the prospect of self-improvement seem less futile, which creates an incentive to cut back on the sauce if it means having more money to send your kids to school.

Another theory is that grants usually go to women, which increases their economic power in the household, leading to more money getting spent on the family.

A group of think tanks and benefactors just donated $10 million to study universal basic income. 

One idea that's increasingly getting traction as a way to fight rising income inequality is the idea of a universal basic income.

The notion is that everyone in a given country gets enough money each year in the form of a stipend to cover their basic expenses: Over the summer, for example, a proposal to institute a universal basic income in Switzerland of roughly $2,555 a month actually garnered enough signatures to prompt a referendum — although the measure was eventually rejected.

Despite that setback, the idea is still gaining traction across Europe. Both Finland and the Netherlands have pilot programs set to kick off in 2017.

But support for a UBI is not just popular in Europe. 

On Thursday, a group of think tanks and benefactors launched the Economic Security Project, which will dole out $10 million in grants over two years to experiments studying how to implement a universal basic income in the U.S.

Now — hopeful news for poverty-fighters aside — there's still plenty of work to be done.

Just because there's evidence that giving cash grants to low-income people is a good idea, doesn't mean governments will actually start doing it any time soon.

And only time will tell if Portland's CEO measure will be successful — and if the city's incoming mayor will support it.

How much do you trust the information in this article?

James Dennin

James is a staff writer covering money and millennials. Send your tips and your money problems to jdennin@mic.com.

MORE FROM

Should you buy a foreclosure? Consider these key factors first.

Real estate-owned properties — those in foreclosure — can sell for 20% below market value. But proceed with caution, as many require extensive repairs that add to their total cost.

7 unconscious mistakes that make you waste money on food

Save money by becoming more self aware; stop sabotaging your food budget, and get back on track.

7 slick moves to save big bucks on back-to-school costs

Planning to spend hundreds on back-to-school costs? Follow these simple tips and tricks to keep more money in your pocket.

The most underrated way to make money feel worth more, according to science

The way you're spending your money is all wrong: This one big change will make you feel richer.

5 simple steps to find the best job for your personality

Standard career advice doesn't always show you how to find your dream job — especially if you are not sure what would fit you best. Here's how to figure out what career you'll love most.

Sick of being "on call" nights and weekends? How to start saying no to your boss.

How to fight back if your boss makes you stay late, constantly check email, answer phone calls on weekends or perform other tasks that are destroying your work-life balance.

Should you buy a foreclosure? Consider these key factors first.

Real estate-owned properties — those in foreclosure — can sell for 20% below market value. But proceed with caution, as many require extensive repairs that add to their total cost.

7 unconscious mistakes that make you waste money on food

Save money by becoming more self aware; stop sabotaging your food budget, and get back on track.

7 slick moves to save big bucks on back-to-school costs

Planning to spend hundreds on back-to-school costs? Follow these simple tips and tricks to keep more money in your pocket.

The most underrated way to make money feel worth more, according to science

The way you're spending your money is all wrong: This one big change will make you feel richer.

5 simple steps to find the best job for your personality

Standard career advice doesn't always show you how to find your dream job — especially if you are not sure what would fit you best. Here's how to figure out what career you'll love most.

Sick of being "on call" nights and weekends? How to start saying no to your boss.

How to fight back if your boss makes you stay late, constantly check email, answer phone calls on weekends or perform other tasks that are destroying your work-life balance.