Brazil’s Difficult Gamble With the Amazon

With most of the world’s largest rainforest located within its borders, Brazil is center stage in global debates and efforts regarding environmental preservation. As an in-depth and visually stimulating NPR photo essay shows Continue reading

The Deteriorating American Middle Class

Citing a recent report from the U.S. Social Security Administration, Michael Snyder at Washington’s Blog finds a host of grim statistics that confirm what most Americans already know: that the financial stability and comfort of middle class life is increasingly elusive.

-38 percent of all American workers made less than $20,000 last year.

-51 percent of all American workers made less than $30,000 last year.

-62 percent of all American workers made less than $40,000 last year.

-71 percent of all American workers made less than $50,000 last year.

That first number is truly staggering.  The federal poverty level for a family of five is $28,410, and yet almost 40 percent of all American workers do not even bring in $20,000 a year.

If you worked a full-time job at $10 an hour all year long with two weeks off, you would make approximately $20,000. This should tell you something about the quality of the jobs that our economy is producing at this point.

Granted, given how much cost of living varies by city or state, a seemingly low salary might afford a middle class existence depending on where one lives (e.g., $50,000 is a lot more money in a place like Little Rock, Arkansas than New York City, New York). Even so, there is no justification for so many workers, across a variety of industries, professions, and areas, making so little — especially with productivity and profits alike continuing to rise. When will the average American get their fair share?

The U.S. Government Programs Keeping Millions Out of Poverty

Americans across the political spectrum are conditioned to believe that the government safety net, broadly called “welfare”, is woefully inefficient. While it is no doubt true that public sector solutions are inadequate in many respects –something both major political wings agree on, albeit for different reasons — as the Economic Policy Institute (EPI) reminds us, these programs are the only thing keeping tens of millions of Americans out of poverty.

More analysis from EPI:

Social Security was by far the most powerful anti-poverty program in the United States last year, keeping 25.9 million people out of poverty. Refundable tax credits, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit, kept 9.8 million people out of poverty. The Supplemental Nutrition Assistance Program (SNAP), aka food stamps, kept 4.7 million people out of poverty, while other targeted programs (such as housing subsidies, unemployment insurance, and school lunch programs) made it possible for millions more to keep their heads above water.

In 2014, 48.4 million people (or 15.3 percent of the U.S. population) were in poverty, as measured by the Supplemental Poverty Measure (SPM)—a more sophisticated approach for measuring economic well-being than the official federal poverty line. However, that number would have been significantly higher were it not for programs like the ones listed above. In the absence of stronger wage growth for low and middle-income workers, these safety-net programs play an increasingly important role in helping struggling families afford their basic needs.

Note the last sentence, which I have bolded for emphasis. The ever-more contentious debate about government expenditure on welfare would be a moot point if the private sector paid workers better and/or provided benefits, thereby precluding the need to turn to state programs. Simply put, most people would not turn to the government if there was more stable and liveable employment available. Until then, these flawed, threatened, and still vital programs are all that millions of Americans have.

Poor People and Fast Food

Among the many ways that poor people are shamed and ostracized in American society is the pervasive myth that they are recklessly indulgent consumers of fast food. But as The Atlantic reports, bad eating habits, and subsequently high rates of obesity, are hardly the purview of low income people.

Back in 2011, a national study by a team at UC Davis concluded that as American salaries grow into the upper echelons of middle income, so does fast-food intake. “Low prices, convenience and free toys target the middle class— especially budget-conscious, hurried parents— very well,” wrote professor J. Paul Leigh, the senior author of the study. He adds that fast food is most popular among the people who are less likely to be obese.

But could that possibly be true? According to a 2013 Gallup study, the fries don’t lie:

“[F]ast food is hardly the province solely of those with lower incomes; in fact, wealthier Americans—those earning $75,000 a year or more—are more likely to eat it at least weekly (51%) than are lower-income groups. Those earning the least actually are the least likely to eat fast food weekly—39% of Americans earning less than $20,000 a year do so.”

Now a new study, this time by the Centers for Disease Control and Prevention, weighs in on the matter. While the national survey did show that on a given day, roughly one-third of American children will eat fast food, the breakdown among income levels is pretty even.

Another article in The Washington Post by Roberto Ferdman points out that it is “the poorest kids that tend to get the smallest share of their daily energy intake from Big Macs, Whoppers, Chicken McNuggets, and french fries”. Indeed, well-meaning yet flawed attempts to ban fast-food venues in areas with high rates of obesity and poverty alike have done little to curb the issue — indeed, in the case of South Los Angeles, it sped up the problem.  Continue reading

U.S. Workers Need — and Deserve — a Raise

From the New York Times:

Flat or falling pay is self-reinforcing because it dampens demand and, by extension, economic growth. In the current recovery, median wages have fallen by 3 percent, after adjusting for inflation, while annual economic growth has peaked at around 2.5 percent. At that pace, growth isn’t able to fully repair the damage from the recession that preceded the recovery. The result is a continuation of the pre-recession dynamic where income flows to the top of the economic ladder, while languishing for everyone else …

… In a healthy economy with upward mobility and a thriving middle class, hourly compensation (wages plus benefits) rises in line with labor productivity. But for the vast majority of workers, pay increases have lagged behind productivity in recent decades. Since the early 1970s, median pay has risen by only 8.7 percent, after adjusting for inflation, while productivity has grown by 72 percent. Since 2000, the gap has become even bigger, with pay up only 1.8 percent, despite productivity growth of 22 percent.

Why has worker pay withered? The answer, in large part, is that rising productivity has increasingly boosted corporate profits, executive compensation and shareholder returns rather than worker pay. Chief executives, for example, now make about 300 times more than typical workers, compared with 30 times more in 1980, according to the Economic Policy Institute. Other research shows far greater discrepancies at some companies.

In most companies, there is plenty of money to go around, thanks in no small part to the contributions of hardworking Americans. Isn’t it about time they get their money’s worth? Shouldn’t they, too, get a cut of the profits they helped produce? Or at least a better and more stable working environment?

Labor Day 2015 By the Numbers

As millions of workers enjoyed a well needed day off this past Labor Day, the Economics Policy Institute (EPI) reminds us that about one out of four private sector workers (24 percent to be exact) will not be enjoying pay time off; a similar number (23 percent) get no paid vacation time at all.

While this overall lack of paid holidays and vacation time is quite telling (especially compared to our international peers, who more or less universally mandate paid time off), access to paid time off varies dramatically between workers by their pay. As the chart below shows, only 34 percent of private-sector workers at the bottom of the wage distribution receive paid holidays and only 39 percent receive paid vacation. Among the top 10 percent of workers, meanwhile, 93 percent receive both paid holidays and paid vacation.

The following chart shows just how dramatic this inequity is.

Lack of leisure time is not the only thing beleaguering America’s working class. Another EPI study, published right on time for Labor Day, gives a rundown of how 2015 is looking for laborers. Unsurprisingly, the diagnosis remains grim.

  • Unemployment rates remain too high overall, and far too high for African Americans, Hispanics, and young graduates.
  • Wages have continued their 35-year trend of broad-based stagnation.
  • The buying power of the minimum wage continues to erode each year that policymakers refuse to raise it.
  • Declining collective bargaining is harming workers’ wage prospects.
  • Far too many workers have to contend with unpredictable schedules and no paid leave.

Here are a few more highlights from the EPI paper, which I highly recommend you read in its entirety.  Continue reading

Number of Very Poor Americans Surges Since 1996

The super-rich aren’t the only ones whose ranks (and collective wealth) are growing. To further highlight just how wide the gap of inequality is growing, in less than two decades, the number of Americans living on just two dollars a day has more than doubled. That means 1.5 million households, including 3 million children. As CBS reports, the inherent contradiction of the world’s richest country having so many poor people is no coincidence.

“Most of us would say we would have trouble understanding how families in the county as rich as ours could live on so little,” said author Kathryn Edin, who spoke on a conference call to discuss the book, which she wrote with Luke Shaefer. Edin is the Bloomberg Distinguished Professor of Sociology at Johns Hopkins University. “These families, contrary to what many would expect, are workers, and their slide into poverty is a failure of the labor market and our safety net, as well as their own personal circumstances.”

To be sure, the labor market has been rocky for many Americans, not just the poorest. But changes in how employers deal with their low-wage workers have hit many of these poor Americans especially hard, such as the rise of on-call scheduling, which leaves some parents scrambling for hours and dealing with unpredictable pay.

Retailers such as Walmart (WMT) and fast-food companies increasingly are using sophisticated scheduling software that allows them to tinker with work schedules at the last minute, depending on their stores’ needs. That reduces costs for the employer, but it can make life difficult for employees, especially those with children and dependents.

“Time and time again, we would constantly see people’s hours cut from week to week,” said Shaefer, associate professor of social work at University of Michigan. “Someone might have 30 hours one week, down to 15 the next and down to 5 after that. We saw people who would remain employed but were down to zero hours. This was incredibly common in this population.”

Other workforce problems include abuses such as wage theft and unhealthy workplaces, which lead to health problems and missed work, he noted.

And while the private sector, by its own actions, fails to prove why people shouldn’t turn to the government for help, it has also done a good job in rallying people against the policies that would help compensate their own ruthless approach to business.

These families have also been hurt by the welfare reform of the 1990s, when America’s social safety net was overhauled to create Temporary Assistance for Needy Families (TANF), which is geared toward providing temporary monetary aid to poor families with children.

But TANF isn’t working, Shaefer and Edin said. Since the program was created in 1996 to replace a 60-year-old welfare system, the number of families living on less than $2 a day has more than doubled. In 2012, only one-quarter of poor families received TANF benefits, down from more than two-thirds in 1996, according to the Center on Budget and Policy Priorities. According to “$2.00 a Day,” the welfare program reached more than 14.2 million Americans in 1994, but by 2014 only 3.8 million Americans were aided by TANF.

The authors’ research — which included data analysis and interviews with ultrapoor families in four regions — found that many families weren’t even aware of TANF. “One person said, ‘They aren’t just giving it out anymore,'” Shaefer said. “In fact, in Appalachia it has, in some ways, disappeared. We asked, ‘Have you thought about applying for TANF?’ and they said, ‘What’s that?'”

Aside from a lack of knowledge about the program, poor Americans often put off applying for aid because of social stigma and other hurdles, such as requirements to attend orientation meetings, make employment plans and register for employment services.

Perhaps even more disquieting than the growing legions of the poor — which is again occurring during the simultaneous concentration of vast wealth in the upper echelons of society — is how these people get by day to day.

They tend to rely on a few strategies, including selling their own plasma for $30 a pop and selling scrap metal. Some families also sell their food stamp benefits for cash, which is illegal and which Edin said is “very unusual.”

Some women barter for goods and services using sex. Private charities provided very little assistance. Dealing in drugs wasn’t common, Edin said, perhaps because the researchers were interviewing families, which might be less likely to engage in drug use given the presence of children.

“In no cases did [these strategies] raise people out of poverty,” Edin said. “$60 would be the maximum per week” for earnings through these methods. “There was no case where someone was living high off the hog from this informal economy.”

There is not much else to say. It should be patently obvious that a society with as much capital and resources as our own should not have the developed world’s second highest rate of child poverty. This is a resounding political and moral failure, on the part of both business leaders and public officials (though certainly many Americans bear no small amount of guilt for often favoring the shaming and deprivation of the poor — even when it includes themselves). The culture problems at the heart of this tragedy merit a whole other post.

What are your reactions and thoughts?

The Cheapest and Most Sensible Solution to Homelessness

You guessed it (I think): giving homeless people housing. It sounds so deceptively obvious, even a bit humorous, yet it remains a relatively novel concept in the long fight against chronic homelessness. As I discussed in a previous post, a few cities have been experimenting with giving chronically homeless populations permanent housing; these initiatives have been met with great success, both ethical and economic (not only do people get the shelter they need, but cities and states save money on homelessness-related policing, incarceration, and emergency hospitalization).

Back in May, the Central Florida Commission on Homelessness, which looked at three counties in the state, found the annual cost of giving homeless people a residence and a dedicated caseworker was $10,000 per person — about one-third less than the $31,000 currently spent every year per homeless person (again, on policing, jailing, etc.). Similar recent studies found large financial savings in Charlotte and Southeastern Colorado by just providing housing. Continue reading

U.S. Government Rules Against Bans of Homeless People Sleeping Outside

Boise, Idaho is one of a multitude of cities across the United States that prohibits homeless people from sleeping or camping in public spaces. Following a lawsuit against the city brought by the National Law Center on Homelessness & Poverty (NLCHP), the U.S. Department of Justice weighed in with a statement of interest that could greatly impact local policy towards homeless people well beyond Boise.

The crux of the DOJ argument is that these bans violate the Eighth Amendment’s protections against cruel and unusual punishment. The reasoning is as follows:

When adequate shelter space exists, individuals have a choice about whether or not to sleep in public. However, when adequate shelter space does not exist, there is no meaningful distinction between the status of being homeless and the conduct of sleeping in public. Sleeping is a life-sustaining activity—i.e., it must occur at some time in some place. If a person literally has nowhere else to go, then enforcement of the anti-camping ordinance against that person criminalizes her for being homeless.

According to the New York Timesthis is the first time in twenty years that the Justice Department has gotten involved in this “still-unsettled” area of law. In doing so, the federal government is basically warning cities across the nation to treat homelessness more humanely. Either lift the bans, or ensure that there is adequate shelter space and housing so that homeless people do not have to sleep outside in the first place. Continue reading

The Return of the American Slum

From The Atlantic comes yet another sobering confirmation of America’s economic and social decline. As rising inequality, government austerity, and declining employment continue apace, poverty is naturally rising, becoming more concentrated and self-perpetuating than ever.

The number of people living in high-poverty areas—defined as census tracts where 40 percent or more of families have income levels below the federal poverty threshold—nearly doubled between 2000 and 2013, to 13.8 million from 7.2 million, according to a new analysis of census data by Paul Jargowsky, a public-policy professor at Rutgers University-Camden and a fellow at The Century Foundation. That’s the highest number of Americans living in high-poverty neighborhoods ever recorded.

The development is worrying, especially since the number of people living in high-poverty areas fell 25 percent, to 7.2 million from 9.6 million, between 1990 and 2000. Back then, concentrated poverty was declining in part because the economy was booming. The Earned Income Tax Credit boosted the take-home pay for many poor families. (Studies have shown the EITC also creates a feeling of social inclusion and citizenship among low-income earners.) The unemployment rate fell as low as 3.8 percent, and the first minimum wage increases in a decade made it easier for families to get by. Programs to disassemble housing projects in big cities such as Chicago and Detroit eradicated some of the most concentrated poverty in the country, Jargowsky told me.

As newly middle-class minorities moved to inner suburbs, though, the mostly white residents of those suburbs moved further away, buying up the McMansions that were being built at a rapid pace. This acceleration of white flight was especially problematic in Rust Belt towns that didn’t experience the economic boom of the mid-2000s. They were watching manufacturing and jobs move overseas.

Another reason for this growing problem are ineffective, if not counterproductive, policies at both the state and federal level.  Continue reading