There was reason for hope in 1964 that poverty could be ended or at least shrunk small enough to drown in a bathtub. In 1959, more than 30% of the population in the U. S. received less than 1.25 times the poverty rate: the definition of the poor and near-poor. By 1964, that number, along with other economic data, was looking much better:Unfortunately, many Americans live on the outskirts of hope--some because of their poverty, and some because of their color, and all too many because of both. Our task is to help replace their despair with opportunity.
This administration today, here and now, declares unconditional war on poverty in America. I urge this Congress and all Americans to join with me in that effort.
It will not be a short or easy struggle, no single weapon or strategy will suffice, but we shall not rest until that war is won. The richest Nation on earth can afford to win it. We cannot afford to lose it...
Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.
1964 Economic Data
| Under 1.25 poverty level | 26.3% |
| Unemployment | 5.2% |
| Annual GDP growth | 5.8% |
During the next 9 years, the poverty rate dropped dramatically to half what it was in 1959 due to a combination of the poverty program, increased government transfer payments to those over 65, Medicare, migration from the poor, rural South to the industrialized North, and economic growth interrupted only by a brief, mild recession in 1970-71.
1973 Economic Data
| Under 1.25 poverty level | 15.8% |
| Unemployment | 4.9% |
| Annual GDP growth | 5.8% |
For the Poor Always Ye Have With You
Since 1973, however, there has been no sustained progress in reducing American poverty. The percentage of those below 1.25 times poverty had actually increased from 15.8% in 1973 to 17% by 2007 before the current severe recession began.
In raw numbers, before the Great Recession of 2008-09 even began, there were 50.9 million people living below the 1.25 poverty level.
Government efforts to lift the poor have all but ended. Johnson's "War on Poverty" went into retreat under the Nixon administration. (Nixon actually appointed Donald Rumsfeld as director of the Office of Economic Opportunity.) Reagan further dismantled the social safety net, and even Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act in 1996.
Capitalism, especially the unbridled variety unleased during the 80s, has failed to reduce poverty as well. The long expansion during the Reagan 80s failed to regain the ground lost during the early 80s double-dip recession. The 90s "boom" under Clinton did manage to bring the percentage living in poverty back to the 1973 level, but no lower. And during the tepid economic growth under Bush II, poverty levels actually grew slowly, and deep poverty--those earning less than half the official poverty rate--increased rapidly.
Post-1973 recessions have brought increases of around 4% in the poverty rate. The data suggests that the mild recessions of 1990-91 and 2001-02 brought as large a jump in poverty as the more severe recessions of 1974-75 and 1980-83. It is safe to say that the current recession will bring the 1.25 poverty percentage to a post "War on Poverty" record in excess of 20%.
One Illinois agency predicts that the Great Recession will increase the population living in poverty in that state by 27%. If those numbers hold true nationally, we can expect that more than 60 million Americans will be trying to survive on less than $2,350 per month for a family of four.
This increased focus on credit ratings in the job application process takes place in an environment where there were more than 3 million foreclosures in 2008 and another 2.5 million are expected in 2009.In raw numbers, before the Great Recession of 2008-09 even began, there were 50.9 million people living below the 1.25 poverty level.
Government efforts to lift the poor have all but ended. Johnson's "War on Poverty" went into retreat under the Nixon administration. (Nixon actually appointed Donald Rumsfeld as director of the Office of Economic Opportunity.) Reagan further dismantled the social safety net, and even Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act in 1996.
Capitalism, especially the unbridled variety unleased during the 80s, has failed to reduce poverty as well. The long expansion during the Reagan 80s failed to regain the ground lost during the early 80s double-dip recession. The 90s "boom" under Clinton did manage to bring the percentage living in poverty back to the 1973 level, but no lower. And during the tepid economic growth under Bush II, poverty levels actually grew slowly, and deep poverty--those earning less than half the official poverty rate--increased rapidly.
Post-1973 recessions have brought increases of around 4% in the poverty rate. The data suggests that the mild recessions of 1990-91 and 2001-02 brought as large a jump in poverty as the more severe recessions of 1974-75 and 1980-83. It is safe to say that the current recession will bring the 1.25 poverty percentage to a post "War on Poverty" record in excess of 20%.
One Illinois agency predicts that the Great Recession will increase the population living in poverty in that state by 27%. If those numbers hold true nationally, we can expect that more than 60 million Americans will be trying to survive on less than $2,350 per month for a family of four.
The Merry-Go-Round Economy
As children, we may have been thrilled by riding on a rapidly spinning playground merry-go-round. It's a lot less fun to live in an economy that's driven by neo-liberalism, financialization, globalization and a fraying social safety net to the point that it "spins" out of control, throwing millions of us off into unemployment and poverty.
Imagine this economy for a moment as a merry-go-round, a huge version of the one you used to enjoy during recess in the third grade. In the center stand the wealthy and privileged. While they're spinning like everyone else, the pull of centrifugal force is not as severe on them, and their position at the center remains secure even if the merry-go-round is spinning madly.
Toward the outside of the merry-go-round--those living a paycheck or two from disaster--things are very different. Clinging to the merry-go-round with all one's strength and ability may not be enough to prevent being thrown onto the ground by the forces generated by the rapid spinning.
For those who have already been thrown clear of the merry-go-round--those in poverty, the unemployed, the uninsured, the foreclosed upon--it will be all but impossible to climb back on unless the merry-go-round somehow slows down.
But the American economy merry-go-round has not been slowing down; it's been spinning faster and faster on average since the mid-70s. A shrinking manufacturing base, the decline of labor unions, offshoring of service jobs and the growth of low-wage, no-benefit, part-time and contract work has made an ever larger share of the U. S. workforce completely exposed to economic downturns. Combined with the increasing severity of boom/bust cycles, we now live in a country that can shed 6 million jobs in 18 months with little hope that they will be restored in the forseeable future.
Who is most likely to be thrown off the merry-go-round, and who is already being forced to learn how to survive in wilderness that exists outside the bounds of that merry-go-round? Here are some clues given by the numbers:
Imagine this economy for a moment as a merry-go-round, a huge version of the one you used to enjoy during recess in the third grade. In the center stand the wealthy and privileged. While they're spinning like everyone else, the pull of centrifugal force is not as severe on them, and their position at the center remains secure even if the merry-go-round is spinning madly.Toward the outside of the merry-go-round--those living a paycheck or two from disaster--things are very different. Clinging to the merry-go-round with all one's strength and ability may not be enough to prevent being thrown onto the ground by the forces generated by the rapid spinning.
For those who have already been thrown clear of the merry-go-round--those in poverty, the unemployed, the uninsured, the foreclosed upon--it will be all but impossible to climb back on unless the merry-go-round somehow slows down.
But the American economy merry-go-round has not been slowing down; it's been spinning faster and faster on average since the mid-70s. A shrinking manufacturing base, the decline of labor unions, offshoring of service jobs and the growth of low-wage, no-benefit, part-time and contract work has made an ever larger share of the U. S. workforce completely exposed to economic downturns. Combined with the increasing severity of boom/bust cycles, we now live in a country that can shed 6 million jobs in 18 months with little hope that they will be restored in the forseeable future.
Who is most likely to be thrown off the merry-go-round, and who is already being forced to learn how to survive in wilderness that exists outside the bounds of that merry-go-round? Here are some clues given by the numbers:
- people of color
- older workers
- veterans
- the less well-educated
Outcasts and Castoffs
Not only are people of color, older workers, veterans and the less well-educated being thrown off the American merry-go-round, but changes in the U. S. economic and social systems will make it more difficult than ever to climb back on even if and when the economy quits hemorrhaging jobs.
In the United States, the poor and unemployed are not just poor and unemployed, they are outcasts and castoffs. Lose a job and it won't be long before you miss mortgage, car, credit card and student loan payments. Miss a few payments and your credit score is destroyed. Apply for a job with a bad credit score and you'll be rejected. The Atlantic reports:
In the United States, the poor and unemployed are not just poor and unemployed, they are outcasts and castoffs. Lose a job and it won't be long before you miss mortgage, car, credit card and student loan payments. Miss a few payments and your credit score is destroyed. Apply for a job with a bad credit score and you'll be rejected. The Atlantic reports:
Employers are being pickier about credit backgrounds. Why? Because they can be. As the Bureau of Labor Statistics reported this morning, there are 14.5 million Americans looking for jobs. One way to shrink your applicant pool down from the flood of resumes you received is to check credit behavior...This does have some pretty grim implications for anyone unemployed with poor credit. If credit checks become standard practice for employers, then as long as the pool of the unemployed remains large, so will their selectivity based on credit. Only when the pool of unemployed shrinks will that selectivity also vanish. That means those with poor credit will be unemployed for even longer than those with good credit.
Add homelessness to the cascading disaster of job loss. Lose a job, see your credit rating drop, and the next thing you know, you won't be able to find housing. A 2007 Anaheim, CA survey (PDF) found that 43% of those living in motels rather than permanent housing were doing so because of bad credit history. Put "rent with bad credit" in Google and see how a mini-industry--many seeking to prey on the newly poor--has grown up because of this problem. To make matters even worse, people who find themselves in this situation are unable to obtain what little public assistance is available because they can't prove residency.Those who fall off America's economic merry-go-round are soon confronted by a plethora of Catch-22s that make it almost impossible to find a job, obtain housing or even buy groceries without a car. They must learn how to live outside the merry-go-round like the residents of a tent city located a few miles away from Microsoft headquarters in Washington.
Our "New Normal" Will Only Speed Up the Merry-Go-Round
Talk of recovery is rampant from the halls of Congress to CNBC, but will there soon be an extended period of growth that can shrink poverty and offer those who have been thrown off the merry-go-round a chance to get back on?
Not according to the best informed, most frank observers. They speak instead of a "new normal" of slow growth and high unemployment, and that means high, probably increasing levels of poverty.
Mohamed El-Erian is the CEO of PIMCO, the manager of the world's largest bond fund with over $750 billion under management. He projects:
What about the government? With a Democratic Congress and White House, there is surely hope for the poor?
Not likely. While SCHIP was aimed toward poor and near-poor children, the rest of the legislative agenda has been understandably aimed at trying to slow down the whirling merry-go-round so that even greater numbers of middle class Americans are not thrown into poverty. Some of the stablization efforts have even been harmful to the poor. "Cash for Clunkers" not only raised prices for low-end used cars, the only kind of vehicles affordable for those with little cash and no credit, but has increased the cost of used parts for the older vehicles already owned by the poor. Health insurance mandates will only add another burden unless accompanied by adequate subsidies. And the hundreds of billions of Treasury money and trillions of Federal Reserve dollars that flowed to the banks have done nothing for those in poverty. If anything, we have viewed that largesse as the death of the last hope that government would be able to come to our rescue even if it was so inclined.
State and local governments? They will not even be able to maintain the paltry level of services they have provided in the post-Reagan, post-"welfare reform" era. California is a harbinger of things to come.
We live in a nation that brags about its wealth but has failed to eliminate poverty for more than 1/6 of its citizens. Now the future looks even worse as a financial crisis spawned by the wealthiest, most powerful members of our society "trickles down" both to augment the numbers of impoverished and increase their misery. Bankrupted state and local governments are powerless to help, and the federal government is fully occupied just trying to keep things from getting worse for those still clinging to the middle class.
The message to the poor: You're On You're Own. YOYO.
For those of us who find ourselves among that 20+%, there is only one option left:
We're On Our Own. WOOO.
In the second of this series, we'll explain how poor Americans, both the newly poor and those who have all too much experience with poverty, can band together to make their lives better.
Next in the series: Changing YOYO Into WOOO.
Not according to the best informed, most frank observers. They speak instead of a "new normal" of slow growth and high unemployment, and that means high, probably increasing levels of poverty.
Mohamed El-Erian is the CEO of PIMCO, the manager of the world's largest bond fund with over $750 billion under management. He projects:
Needless to say, many of us entered the discussions with priors and biases. After all, recent months have been dominated by unprecedented volatility in factors that have conventionally anchored market relationships. Indeed, some of you have already heard us argue that the world is traveling on a bumpy road to a new destination – or what PIMCO has labeled the “new normal....” This reflects a growing realization that some of the recent abrupt changes to markets, households, institutions, and government policies are unlikely to be reversed in the next few years. Global growth will be subdued for a while and unemployment high.If El-Erian and other experts are right, the impoverished, the unemployed and the credit-damaged can expect little help from economic growth. The data suggest that it takes economic growth in excess of 4% and unemployment at or below 5% to have a positive impact on poverty rates. Such numbers are nowhere on the horizon. Instead, slow growth will mean further increases in poverty not only from job losses but also from wage and benefit cuts for those who keep their jobs.
What about the government? With a Democratic Congress and White House, there is surely hope for the poor?
Not likely. While SCHIP was aimed toward poor and near-poor children, the rest of the legislative agenda has been understandably aimed at trying to slow down the whirling merry-go-round so that even greater numbers of middle class Americans are not thrown into poverty. Some of the stablization efforts have even been harmful to the poor. "Cash for Clunkers" not only raised prices for low-end used cars, the only kind of vehicles affordable for those with little cash and no credit, but has increased the cost of used parts for the older vehicles already owned by the poor. Health insurance mandates will only add another burden unless accompanied by adequate subsidies. And the hundreds of billions of Treasury money and trillions of Federal Reserve dollars that flowed to the banks have done nothing for those in poverty. If anything, we have viewed that largesse as the death of the last hope that government would be able to come to our rescue even if it was so inclined.
State and local governments? They will not even be able to maintain the paltry level of services they have provided in the post-Reagan, post-"welfare reform" era. California is a harbinger of things to come.
We live in a nation that brags about its wealth but has failed to eliminate poverty for more than 1/6 of its citizens. Now the future looks even worse as a financial crisis spawned by the wealthiest, most powerful members of our society "trickles down" both to augment the numbers of impoverished and increase their misery. Bankrupted state and local governments are powerless to help, and the federal government is fully occupied just trying to keep things from getting worse for those still clinging to the middle class.
The message to the poor: You're On You're Own. YOYO.
For those of us who find ourselves among that 20+%, there is only one option left:
We're On Our Own. WOOO.
In the second of this series, we'll explain how poor Americans, both the newly poor and those who have all too much experience with poverty, can band together to make their lives better.
Next in the series: Changing YOYO Into WOOO.
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