Friday, March 11, 2011

Rising Poverty Affecting American Children & Families

The Census Bureau reports that 44 million Americans were living below the poverty line in 2009, or one in seven people — a rather remarkable statistic.

The one-in-seven figure perfectly matches the one-in-seven Americans currently receiving food stamps.

In other words, those 44 million Americans living in poverty accounted for 14.3 percent of the population — the highest level since 1994 — up from 13.2 percent in 2008.

According to the Census report, three million additional American families were only kept above the poverty line by unemployment insurance.

The government's U-6 unemployment number reveals that 15.9 percent of workers were unemployed or under-employed in February. The U-6 figure includes part-time workers seeking full-time work, as well as those who have gotten discouraged and stopped looking, but still want to work.

However, according to the work of economist John Williams at Shadow Government Statistics ("Analysis behind and beyond government economic reporting"), the real U-6 number is actually 22.1 percent. But that figure is too dire, so the government chooses to under-report it.

The unemployment crisis has taken a brutal toll on millions of American families. Nearly 14 million people have lost their jobs, which has led to an increase in homeless families.

There were a million foreclosures in the US last year and another million are expected this year. As a result, millions of children are being affected.

On Sunday night, 60 MInutes profiled the growing problem of homelessness among American children. The report was rather stunning.

The government considers a family of four to be impoverished if they take in less than $22,000 a year. Based on that standard, and government projections of unemployment, it is estimated that the poverty rate for kids in this country will soon hit 25 percent. Those children would be the largest American generation to be raised in hard times since the Great Depression.

Nationwide, 14 million children were in poverty before the Great Recession. Now, the US Census tells us its 16 million — up two million in two years. That is the fastest fall for the middle class since the government started counting 51 years ago.

When you consider just how loose the government's definition of poverty is ($22K for a family if four?), it's not difficult to imagine that millions more Americans are actually living in poverty, but not counted. The government tries to cover up the problem so the ugly truth isn't so obvious.

But you can't gloss over the fact that about half of all Americans are being left behind, as you'll see in a moment.

Though the nation's rampant unemployment is a significant part of the problem, even those who still have their jobs are regressing.

At just $49,777, the median family income was 5 percent lower in 2009 than it was in 1999. You could call it the 'lost decade'. What this means is that the median income is now less than a thousand bucks per week.

For a family trying to pay for housing, medical insurance, food and utilities in a large metropolitan area, that sum doesn't go far. Last year, the average health insurance cost for a family of four was $13,375, according to the Kaiser Family Foundation and the Health Research & Educational Trust.

Consequently, millions of Americans can no longer meet their most basic needs. According to Medicare/Medicaid Services annual report, 1 in 7 Americans did not have health coverage in 2009. However, a report by the Kaiser Family Foundation says that three-quarters of the 50 million uninsured in US are actually employed.

It's part of an ongoing pattern that is now four decades in the making.

According to Lawrence R. Mishel and David M. Frankel (The State of Working America), in 1973 the median male weekly wage was $486. Corrected for inflation, that is $2,361 in 2009 dollars, or $122,795 annually.

However, in its report entitled "Usual Weekly Earnings of Wage and Salary Workers: Second Quarter 2009", the Bureau of Labor Statistics reported that the median male weekly wage is now $815, or $42,380 annually.

So, there's been a nearly two-thirds reduction in male wages since 1973. Cheap and easy credit had previously concealed the ramifications of this collapse in real wages. That reality can no longer be hidden.

The sad fact is that a substantial portion of Americans are quite poor, while millions more are only part of the middle class by the slimmest of margins.

According to an analysis of wage data by Pulitzer Prize Winner David Cay Johnston, 33% of US workers make less than $15,000 annually. Roughly half of American workers make less than $500 per week, which is less than $26,000 annually. And 76% make less than $50,000 annually.

This supports the contention that the middle class is vanishing.

Before reading on, stop and consider those numbers for a moment.

Half of Americans make less than $26,000 per year. Remember, our government's definition of poverty for a family of four is $22,000. Naturally, in most of those families, both parents are likely working. But it's easy to imagine that roughly half of our fellow citizens are struggling to meet their most basic needs every single day.

This does not support the notions of equality or equal opportunity generally associated with the US. Perhaps we imagine this sort of inequality taking place in other nations, but not here.

However, the 30-nation Organization for Economic Cooperation and Development (OECD) released a report on income distribution and poverty in October 2008. The report highlighted global gaps between rich and poor. Guess what great industrialized nation had the fourth highest inequality in incomes, followed by Mexico, Turkey and Portugal?

Disturbingly, it was the US.

The report stated, "Rich households in America have been leaving both middle and poorer income groups behind. This has happened in many countries, but nowhere has this trend been so stark as in the United States."

So the wealth has not been getting spread around, as some contend; it's been going in one direction — up.

Yet the problem has grown even worse since then.

According to Federal Reserve Chairman Ben Bernanke, the US has now the biggest income disparity gap of any industrialized country in the world and this is "creating two societies."

In 2009, the top 20 percent of American earners — those making more than $100,000 annually — received 49.4 percent of all income generated in the country, compared with the 3.4 percent earned by those below the poverty line, according to data from the U.S. Census Bureau.

More stunning, the top 1 percent of Americans is now taking home almost a quarter of all income. In 1976, it was less than 9 percent.

According to economist Edward N. Wolff of New York University (2010), the financial wealth (total net worth minus the value of one's home) of the top 1% of households accounts for 42.7% of all privately held wealth in the US.

Again, stop and consider that for a moment.

Though we're told that the recession ended in 2009, some things are still getting worse — income disparity, wealth disparity and child poverty among them. Millions of American families are bearing these burdens.

As the 60 Minutes report noted, in Seminole County, Florida, 1,000 school students have recently lost their homes. That's just one county, in one state.

"Our numbers go up every day. Between five and 15 new homeless students a day," said Beth Davalos, who runs the Seminole County programs for homeless kids.

"When I first started this program eight years ago, homelessness lasted maybe two, three months," said Davalos. "But now with it lasting three, six months, a year or two years, this is when children are developing who they are and their foundation is broken."

Like the kids who came out of the Great Depression, this generation is being shaped by homelessness and hunger.

And for millions of families, the American dream isn't just slipping away; it's already been snuffed out.

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