Reality is Likely to be Far Less Rosy

Reality is Likely to be Far Less Rosy

Reality is Likely to be Far Less Rosy

Reality is likely to be less rosy…

Some economists are hoping that inflation has peaked and will tick down in the coming months, after the pace of inflation slowed slightly in April. But Erik Randolph, director of research for the Georgia Center For Opportunity (GCO), warns that the reality is likely to be far less rosy.

“What we saw with the April Consumer Price Index was disinflation. That means the rate of inflation decreased but inflation is still occurring and our purchasing power is declining,” Randolph said. “Meanwhile, wage increases are lagging behind price increases. The vast majority of workers will have lower standardsof living because their budgets will not buy as much as in the recent past. Some workers will get handsome pay raises, but they will be the exception rather than the rule.

Erik - Inflation swells quote

What’s needed?

“The core problem here is that the price level has risen, setting a new floor for costs. The only way to lower the price level, by definition, is to allow for deflation. But our policymakers are afraid of deflation because of the economic schools of thought that they adhere to. What is needed is new economic thinking in Washington, D.C. from economists who are not afraid of deflation but recognize it’s the only way to bring the price level down that benefits the most people. The mess we’re in now are the signs of stagflation, meaning the rising price level may be soon accompanied with slower economic growth and loss of employment. The only way to mitigate that scenario would be to adopt policies to allow for supply-side growth.”

Why Nonprofits Should Care and What to Do

Why Nonprofits Should Care and What to Do

Why Nonprofits Should Care and What to Do

mother and baby
Key Takeaways:
  • Welfare cliffs and marriage penalties are discouraging people from work and forming families.
  • The cliffs and penalties may mean that our clients are locked into poverty for much longer than they would be otherwise and despite our best efforts.
  • GCO has created a platform that allows anyone to see when a particular family can expect to experience benefit cliffs as they earn more money through work. 

Important Link:


If you work in a nonprofit serving the poor, you need to know that the government benefits your clients receive are likely discouraging them from working or forming a family, two things that research shows could lift them out of poverty the fastest. 

This is an especially tough problem for nonprofits, like GCO, that work to get their clients into good-paying jobs and strengthen their family relationships.

What’s going on?

These disincentives to work are often called “welfare cliffs” and the disincentives to family formation are called “marriage penalties.” Essentially, “cliffs” are generated any time a person receiving government benefits gets a raise at work that causes them to lose more in benefits than they will earn in additional income from the raise. These same individuals can face a similar financial penalty IF they decide to marry. In many cases, they will lose more in benefits than their spouse is able to provide in new income to the household.

While you would think (hope?) cliffs and penalties are rare, they are not. Instead, they are baked into the structure of nearly all welfare programs and many of the cliffs are severe. It’s also important to know that welfare recipients don’t face a single cliff or a single penalty, but they face cliffs and penalties at a number of different points as they have additional income from working or through marriage.

Why does it matter?

For nonprofit leaders, the cliffs and penalties may mean that our clients are locked into poverty for much longer than they would be otherwise and despite our best efforts. For workforce development nonprofits, cliffs could be the underlying reason why your clients don’t pick up additional work hours when they are offered or seem less than excited when they are offered a good promotion. In extreme cases, clients may quit jobs that seemed like a perfect fit simply because they panic when they learn they may lose a major benefit – like housing or childcare.

For nonprofits trying to help strengthen family relationships, marriage penalties may be driving behavior that is otherwise inexplicable, like seemingly happy couples refusing to marry or live in the same home. These dynamics can lead to stress for the couples affected and to a sense that a parent (usually the father) has abandoned the family when, if the system would allow it, he would be in the home. In these cases, children pay the biggest price.

What can you do about it?

Fortunately, we have created a platform that allows anyone to see when a particular family can expect to experience benefit cliffs as they earn more money through work. For nonprofits working with these families, you now have a tool (available for 10 states, with two more on the way) that will allow you to help your clients plan for the future. In some cases, knowing when cliffs are likely to happen will allow your clients to seek a larger raise that will help them bypass or leapfrog a cliff. In other cases, maybe the answer is seeking additional training or certifications that will get your client into a different payscale entirely – one that avoids the cliffs.

In the coming weeks, we will be adding a tool that will allow users to see the impact of penalties on couples who decide to marry. We will also be incorporating a solutions tool that will allow anyone to see how reforming our government benefit programs can actually eliminate cliffs and penalties entirely, giving recipients every reason to pursue work and form stable households.

For GCO, it is this last point – reforming the system – that remains the ultimate goal. In the meantime, we are looking for ways to mitigate the harm caused by the welfare system, so that as many people as possible can escape the system and break cycles of poverty now.

The Success Sequence provides an outline of how to reverse the cycle of poverty in our communities. GCO uses this as a framework for much of our work.

Inflation’s Growing Problem: A warning shot for Congress

Inflation’s Growing Problem: A warning shot for Congress

Inflation’s Growing Problem: A warning shot for Congress

poor child in America inflation

The inflation rate in July—as measured by the seasonally-adjusted Consumer Price Index (CPI)—abated somewhat from June’s rate, increasing at 0.5% instead of 0.9%. But don’t cheer too much yet.

This is known by economists as disinflation, not deflation. The rate came down, but prices are still continuing to climb.

Annualized, the monthly inflation rates calculate to 5.8% for July and 11.4% for June. Both rates continue to exceed the Federal Reserve’s target of 2% annual inflation. Of course, as I discussed in this blog, the Fed’s 2% target rate is too high and compromises Congress’s original goal of promoting purchasing power that would benefit everyone.

Prices are Ratcheting Upwards

When the CPI inflation rate is viewed by its increase from the same month of the prior year, the trend is not good. 

Although the increase over the prior year held steady for July, prices were also increasing last year. That is, prices are still 5.3% higher than a year ago when prices were also increasing. The problem is compounding, and prices are ratcheting upwards.

Inflation not a problem?

Perhaps not surprisingly but definitely unfortunately, the Fed’s economists appear to have been caught off guard. When Fed Chairman Jerome Powell testified before Congress last month, he admitted as much as inflation has spiked higher than they anticipated. However, he still maintained that the inflation is based on temporary factors that will abate with time.

Mr. Powell’s comments may have been just for the inflation rate, and he may be overly optimistic. In the meantime, we must brace ourselves for an increase in the price level. 

To think that the price level may come down is probably unrealistic. That has not happened ever since we gave the Fed the responsibility to maintain purchasing power in 1946 that was dumbed down in 1978 to the weaker goal of “reasonable price stability.” Of course, this policy change happened during the complete failure of federal policymakers in both the Fed and Congress when the nation was suffering from double-digit inflation combined with stagnant economic growth.

Why does promoting purchasing power matter? 

Inflation hurts practically everyone. If your wages do not keep up, your purchasing power is eroding. 

This is truest for those in poverty, low-income families, and low-skilled labor. They will slip further behind, making income disparity worse and possibly causing Congress and state governments to spend more on safety-net programs that will only fuel inflation higher when Congress funds the increases with even more debt.

Businesses—who need predictability to make good entrepreneurial decisions—generally will also suffer, slowing down economic activity. 

Workers will have a harder time keeping up with rising prices and will demand higher wages, only fueling inflation further.  

More Cautious Approach to Government Spending is Needed

A likely major cause of the climbing price level is all the governmental debt-based spending to address the pandemic. Further debt-based spending will not ameliorate the problem but exacerbate it. 

Congress needs to exercise more restraint and caution now as it considers the expansive spending bills that appear likely to pass. It is very likely that they are setting up the nation for unpleasant economic times, hurting the poorest among us the worst. The growth in the Consumer Price Index is an omen for Congress to take a step back and trim those bills.


Guaranteed Income Subsidizes Poverty And Trivializes Those In Need

Guaranteed Income Subsidizes Poverty And Trivializes Those In Need

Guaranteed Income Subsidizes Poverty And Trivializes Those In Need


We need to have a frank discussion about how we view our fellow man and what we want for ourselves, our families, and our neighbors.

At the forefront of this discussion are policies that seem to want to help people. Policies that are labeled “anti-poverty” or expand social services indeed have good intent. However, I suggest these policies often are pandering and dismissive of the value of the person we hope to help. 

For instance, Los Angeles recently set out to become the largest U.S. city to institute a guaranteed income for the poor. On its face, this sounds like a way to help those in need find help. But as we dive deeper we begin to see that we are subsidizing rather than alleviating poverty. It reeks of the idea that we would simply pay off the poor and want nothing substantive for them.

“I just don’t think anyone making the rules knows what we are going through.”


Understanding how poverty is perceived by those in it, so that we can better understand how to address it.


We must realize that these actions cause us to look at our neighbor as a purely numerical transaction— a phrase often used to push against the ideas of capitalism, but one resoundingly relevant when we discuss these guaranteed incomes. The idea is that a person who is homeless or without work deserves to only be given a small living wage to simply survive. 

And survive on what? The quality of housing affordable on such services is usually in dangerous areas or ill-suited for long-term living. The quality of food affordable often leads to obesity or unhealthy lifestyles. Yes, they survive but we have afforded them no dignity or purpose in life.

The bottom line is the utter lack of compassion or humanity in this response. The idea that we view fellow humans as so incomplete that we ask nothing of them. This mentality simply says, “You can give us nothing so we will expect nothing of you.”

As a society, we have sold this idea as moral or righteous, but we sell short the potential of the people we hope to serve. We have robbed them of being fulfilled and feeling successful.

I am in no way saying that people hold no value unless they have a job. But what I am saying is that everyone has something to contribute and a way to bring value to those around them. More importantly, we desire to contribute and find self-worth in doing so.


We at the Georgia Center for Opportunity refer to this as “human flourishing.” We seek to help ensure that everyone has access to it, no matter the circumstances of their birth. In doing so, we understand that flourishing will look different for each person. That is a beautiful thing.

Recently a famous YouTuber, Mark Rober, shared the story of his autistic son. Mark’s son will likely never hold a job or be able to do the same things 99% of people will but he still desires to contribute and bring value to those around him. So yes we will need to adapt our understanding of success and human flourishing, but I would challenge us to consider that merely existing is not flourishing. And expecting that you will not flourish shows a severe lack of compassion and empathy.

Compassion requires that we would want more for people. Not merely enough material possession to be appeased but to truly desire for human flourishing.

On the opposite end of flourishing is merely surviving with no hope or want for more. Hopelessness occurs when we expect nothing from someone.

This is why we must look at policies that do more than simply address a felt need. We must build systems that restore and promote dignity and purpose. They must not trivialize human value to a monetary transaction. Instead, they must instill hope, purpose, and an expectation of human flourishing.


Each dollar you give is doubled and goes to support efforts to expand opportunities throughout Georgia.