Cover
story
Americas invisible poor
By Arthur Jones
NCR Staff
In 1964 the United States
government, at the urging of President Lyndon B. Johnson, declared an
unconditional war on poverty.
Thirty-two years later, in 1996, the Clinton administration and
the U.S. Congress in the eyes of many antipoverty activists
declared war on the poor.
Johnsons decision to combat poverty and his ability to
persuade Congress to go along with him was in major part based on a personal
concern for the poor and in minor measure a continuation of the legacy of
President John F. Kennedy.
Kennedys attitude toward the poor in America had been
greatly influenced by social critic Michael Harringtons 1962 book, The
Other America: Poverty in the United States, a landmark work that drew the
nations attention to the extent of poverty throughout the country.
By contrast, Clintons decision to accede to a conservative
Congress anti-welfare, antipoor initiative was electoral politics, a move
to appeal to centrist and right-of-center voters.
If, as the critics put it, a war is being waged against poor
people, the weapon Clinton and Congress employ is The Personal Responsibility
and Work Opportunity Reconciliation Act of 1996, billed as the means to
end welfare as we know it.
The description is proving to be correct: Welfare rolls are down,
and the number of poor disconnected from any filament of the now-tattered
social safety net is beginning to climb. Overall, how fares America?
Spring 1999 figures show the U.S. economy is bounding along as
merrily as in 1998. Inflation is low; unemployment is at the lowest level in 29
years; mortgage rates are down, and house sales are up. Some ordinary
Americans, who 10 or 15 years ago took a chance and started sticking their
money into the right stocks and mutual funds, now are worrying about capital
gains and tax offsets. The Dow index has risen past the 10,000 mark and
continues to set records almost daily.
The top 1 percent of America is becoming wealthier, and to protect
their corporate asset wealth, they pay their retainers highly. The
Childrens Defense Fund, in its 1998 State of Americas Children
report, found that in 1960 the average CEO corporate executive officer
made 41 times the average workers wage. In 1998, top CEOs averaged
$7.8 million annually, 185 times as much as the average worker. In the past
decade, states the Childrens Defense Fund, while the nations
poorest fifth of families have lost $587 each in purchasing power, the richest
5 percent added $29,533.
Adds the defense fund, Six years of economic expansion with
low inflation and a soaring stock market has not filtered down to the 36.5
million poor people. In addition, the number of extremely poor people,
those whose incomes are less than 50 percent of the poverty level, has
increased.
Federal Reserve Board chairman Alan Greenspan explains the reality
behind the appearances.
Wealth at top
The typical view, said Greenspan in a speech given at Jackson
Hole, Wyo., last September, is that the booming market has benefited
individuals further down in the wealth distribution. Certainly, while in
the 1990s those households are more likely to own stocks and mutual funds than
a decade or two ago, the stock market rise did not lead to a rise in the share
of stocks and mutual fund assets owned by the bottom 90 percent but suggests a
further increase in the concentration of net worth [at the top].
How does the rising stock market concentrate assets? Both through
wealthy investors rising with the tide and through corporate managers and
owner-entrepreneurs cashing in on their stock options.
Financial writer Allan Sloan notes that spring is also proxy
statement time when multibillionaires like Michael Dell of Dell Computer (who
owns $16.4 billion in Dell stock) and Ted Turner ($7.6 billion in Time Warner
stock), can exercise their options. That means they can buy more of their stock
very cheaply as a perk for being successful or canny. If they sell some of that
cheaply acquired stock while the market is high, they can buy other assets,
thus converting paper holdings in their own corporations into concentrated
wealth. And those new options, now turned into stock, are bought up by other
wealthy investors, mutual funds and the like.
In the Other America to borrow Harringtons title
almost 37 million Americans, 15 percent of the population, live below
the poverty line. According to a just-released two-year study by Network, the
Catholic social justice lobby (see story below), many of the poor, directed
toward the welfare-to-work conveyer belt, are not finding jobs and are losing
benefits. Consequently, states Network, at least 1 million children lack
basic necessities.
And while some welfare recipients have received adequate training
and found decent jobs, the number of them still employed six and 12 months
later is not encouraging. Even welfare recipients who get jobs may not be
better off than before. In Michigan, one of the organizations cooperating in
the Network study, Groundwork for a Just World, finds severe hardship among
those welfare recipients who have graduated to work.
Our findings, said Groundworks Beverly McDonald,
is that people are cycling on and off work, are making less than $7 an
hour, with only 25 percent having health coverage on the job and 60 percent
with no benefits whatsoever, not even sick time.
For those who made it to jobs, many, she said, are working
nonstandard hours. Theyre leaving their children with friends and
relatives and relocating their children in the middle of the night.
Even where the state provides child care support, it is very
hard to get when you work nonstandard, fluctuating hours, McDonald said,
and theres a huge lag between when you had to pay for the care and
when you got reimbursed for it weeks later.
States proclaim reduced case loads
All that state governments care about, said Groundworks
Beverly McDonald, is proclaiming reduced welfare case loads. Few state
governments track what happens to those who slip off welfare or the
welfare-to-work conveyer belt, she said. How does Greenspan see the jobs
situation?
In the speech last September, he said a rising demand for skilled
workers who can effectively harness new technologies has been
outpacing supply and driving up their wages.
He mentioned that earnings inequality occurs within groups
of workers with similar skills, but made no mention of the gross
inequalities between mens and womens pay for similar jobs
(NCR, March 5).
Greenspan also looked at wealth distribution and consumption
distribution. Inequality in household wealth, he said, was higher in 1989 than
in 1963 but hasnt changed much in a decade though that masks
the apparent rise in the share of wealth held by the wealthiest families. The
distribution of wealth, he said, more fundamentally than earnings
or income, measures the ability of households to consume.
Writing on Americans in poverty 37 years ago, Harrington, referred
to those maimed in body and spirit, existing at levels beneath those
necessary for human decency, and said that they were becoming
invisible.
The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996, by pretending that lower welfare rolls equate with fewer people in
poverty, has provided Americans with an additional curtain to shield from them
the sight and condition of the poor.
National Catholic Reporter, April 30,
1999
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