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A fascinating conference took place on Tuesday on the topic of poverty in the haredi (ultra-Orthodox) community. The main presentation was by Daniel Gottlieb of the Bank of Israel, who for years has served as the Bank's "point man" on the poverty issue, and Yehudah Eliraz. Together, they recently completed a major study on this topic.
One of the most important aspects of the conference was the focus on one particular manifestation of the poverty problem in Israel. While there is a tendency to study "the poverty problem," in fact there are a variety of reasons why household income can be quite low (the official definition of poverty), and the consequences, as well as the remedies, can be vastly divergent. The study was a serious effort to examine the topic of low income specifically within the Israeli haredi community.
There is no question that the problem is acute. The poverty rate in this community is more than double that of Israel as a whole. All agree that the main source of the problem is the low work force participation of the haredi men (labor force participation of women in this community is close to the national average) and the low earning power of those who do work. But that begs the question of the reason for this pattern of behavior and the way to break out of it. The need for a solution is particularly acute given the large birth rate in this community, meaning that their representation in the next generation can be expected to be much higher than it is now.
To simplify a bit, two main approaches were presented. Gottlieb and Eliraz focused on the proximate cause: The fact that few haredi men have the kind of professional education or training which would enable them to make reasonable incomes. This community tends to shun academia, which is the source of the most valuable training. Few government programs are directed at training this population, and the programs that have been tried have not been well synchronized with the needs of the Israeli labor market. An additional factor is the haredi school system, which produces a high level of academic acumen and work ethic, but a low level of the skills most in demand in the world of work.
Thus, their recommendations were mostly in the area of education such as finding acceptable ways of supplementing the traditional education with more English and math; considering modifications in accreditation to enable haredi students to get a professional education without being compelled to study subjects abhorrent to their world view; and investing more in appropriate training programs.
The most eloquent respondent to the study was Professor Momi Dahan, one of Israel's leading authorities on poverty and income distribution. Dahan's recommendation was most direct: Loosen the draft requirements. The implicit diagnosis of the problem was much simpler than that of Gottlieb and Eliraz - the law in Israel allows haredi men a draft exemption only if they don't work or study a trade. Yet, this community on the whole shuns army service. Thus, the law de facto forbids the men to work or study a trade for a period of years - in fact, exactly the most critical years for obtaining training and work experience.
And that's not the end. Many jobs, including positions those with no evident connection to military valor, are available only to applicants who have completed army or national service. Is it any surprise that the men don't work and don't acquire skills?
Dahan also pointed out that to some extent haredi poverty is "voluntary," in the sense that there is a conscious choice to devote time to study rather than work. If the usual paradigm views poverty as a twist of fate (thus the presence of social insurance to insure against this "accident"), in the haredi community poverty is a unique combination of choice and compulsion.
While both approaches capture part of the reality of haredi poverty in Israel, I think that Dahan's approach is closer to the mark as an explanation of how we got where we are. I see no inherent connection between a haredi education system and poor earning power; witness New York City, where ultra-Orthodox Jews have a dominant position in some of the most competitive areas of retail business (including photo equipment, electronics, and jewelry). Members of this community also have a respectable and growing presence in the professions. Yet, I know of no special government programs dedicated to helping the haredi Jews of New York overcome the "handicap" of their lifestyle or education system.
Economics is all about incentives, and Momi Dahan's approach reminds us of their power. When you take an entire community of young men and create a system which makes it practically illegal for them to study a trade or go to work during their most critical formative working years, it's hardly surprising that they end up with low work force participation and low earning power.
This column is not the place to discuss the larger question of the ethics of the draft or of draft exemptions. But for the narrow issue of haredi poverty, I think that 90% of the problem and 60% of the solution is the draft. If draft reforms are implemented giving young haredi men the freedom to work and study without changing their lifestyle, labor force participation and professional qualifications will immediately begin to improve. (The educational reforms suggested by Gottlieb and Eliraz would still be a valuable adjunct in facilitating labor force success.) Conversely, if draft reform lags, I doubt that tweaking the educational system can have much of an effect.
The writer is research director at the Business Ethics Center of Jerusalem (www.besr.org), an independent institute in The Jerusalem College of Technology. He also is a rabbi.
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