Drastic Growth in "Extreme Poverty" in the U.S.

Posted from WSWS.org
written by: Debra Watson

Blog note:  This is a great article with vital research on poverty in America.  Please pass this around to extend our knowledge base and stand up for our rights.  For example, instead of writing a check for their employees, McDonald's now issues pay cards with $1.50 charge for each withdrawal and penalties for non use.  When employees ask for a check, they are refused.  In the good ole' days, it used to be that those who worked at McDonald's were high school students saving up to buy a car.  However, these days nearly 70 percent of their workers are over 20 and a quarter of them are workers with children.  It is not surprising that the report referenced in the article below reflects a substantial increase in poverty levels in America.  

If a worker at McDonald's was paid a living wage of $15.00 per hour, the cost of the burger would go up by .05 cents.  Wouldn't you pay the extra $.05 for a burger knowing that the people behind the counter can survive and not need welfare benefits? The excuses the corporations give for NOT increasing wages does not prove factual.  McDonald's is not the only corporation that pays their workers way under living wages, folks like WalMart, Target and other box stores do the same.  WalMart Superstores costs the American taxpayers 1.7 billion a year in subsidized food stamps, medicare/medicaid, and other welfare programs totaling $5,185 per year per worker.  

I think that it is time to organize a nationwide boycott campaign with all the workers going on strike for a few days.  Don't you?

A report this summer from the National Poverty Center (NPC) reveals that the number of people in the US living on less than $2 a day per person, termed “extreme poverty,” increased by 160 percent from 1996 to mid-2011, rising from 636,000 households to some 1.65 million households. The findings throw light on the terrible plight of children in America. Concentrating on non-elderly households with children, the report found that 4.3 percent of these households were in extreme poverty, with 3.55 million children living in them.

The number of households in extreme poverty in the US began to climb irreversibly after the Clinton administration ended cash welfare for vulnerable families in 1996. Over a dozen years, between 1996 and late 2008, the number and extent of extreme poverty roughly doubled, rising by more than 600,000 households. The increase continued after the recession of 2008, but the pace was now accelerated. Over roughly three years following the financial meltdown, 450,000 more families joined the ranks of the utterly destitute, with a sharp increase in numbers in the first six months of 2011.

The report, published in Social Service Review, was authored by H. Luke Shaefer, University of Michigan, School of Social Work, and Kathryn Edin, Harvard University, Kennedy School of Government. Measuring extreme poverty uncovers a further income stratification among those below the official poverty level. The sharply rising income inequality in the US has created in its wake a new phenomenon: massive numbers of US families that live in daily conditions once relegated the poorest of the poor in the economically underdeveloped world.

It throws light on particular aspects of the growth in inequality in the US that have not been examined in reports from the Census Bureau and other sources that compare income for different quintiles of the population. Some recent research has developed a category called “deep poverty” or a yearly income below half the official poverty line. Both these methods of research have revealed drastically rising inequality and the growth of deep poverty in recent years.

The researchers used the figure of $2 a day per person, the United Nations measure of poverty in developing countries. The official poverty line for a family of three would equate to roughly $17 per person per day averaged over a year. Deep poverty, below half the poverty line, would equate to an average of approximately $8.50 per person per day.

At $2 per person per day, the extreme poverty category examined in this report finds a family with virtually nothing to live on, or roughly 13 percent of what is considered official poverty. Social science researchers have estimated that it requires an income twice the Census Bureau’s official poverty level to actually support a family.

Counting food stamp benefits, now called SNAP, as cash only reduces the number of extremely poor households with children by half. The current food assistance benefit for a family of three tops out at $526. Since it only is available to families with income below 130 percent of the official poverty level, receiving the benefit does not bring any family to a livable income. If counted as the equivalent of cash income, the assistance actually would barely move a family in extreme poverty to deep poverty.

In addition, the SNAP benefit itself is facing serious cuts and even outright elimination for many poor families. In November, a family of three will lose $29 a month when the SNAP per person benefit allotment is cut as the federal government eliminates stimulus measures instituted in the immediate aftermath of recession. Five million people will be entirely cut off from SNAP benefits if limits in eligibility are imposed under plans to cut the program that emerged during discussion of the new Farm Bill this summer.

The number of SNAP households has nearly doubled since 1996, according to the report, indicating the huge rise in need. In 1996, there were an average of 25.5 million recipients per month, and by the end of 2012, this had gone up to 47.5 million. Earlier this year, a new Census Bureau Survey of Income and Program Participation (SIPP) counted a record 49 million people considered poor in America. Still, 1.7 million children are left behind in extreme poverty because they do not get these benefits.

While SNAP-assisted households were doubling, cash welfare was plummeting. The researchers note: “Subsequently, cash assistance caseloads have fallen from 12.3 million recipients per month in 1996 to 4.5 million in December 2011, and only 1.1 million of these beneficiaries are adults. Even during the current period of continued high unemployment, the cash assistance rolls have increased only slightly. ‘Welfare,’ in the form of cash assistance, is a shell of its former self.”

In Clinton’s infamous acceptance speech for the Democratic Party’s nomination for president in 1992, he laid out the plan to end the New Deal-era Aid to Families with Dependent Children (AFDC), which for the previous five-plus decades provided monetary assistance to families with little or no income.
Under the continuing economic crisis, states are accelerating the pace at which families in need are being driven off the welfare rolls. For example, in March 2013, there were 47,460 households in Michigan that received welfare payments, according to the latest Economic Security Bulletin from the Michigan League for Public Policy. They note: “This is the first time since the Family Independence Program was implemented in 1996 that the caseload dropped below 50,000.”

By June 2013, the caseload in Michigan dropped to 43,400 welfare cases, nearly half the number counted in late 2011 when new state measures eliminated exceptions to strict federal and state time limits for welfare. A 60 months’ lifetime limit for welfare was imposed under the Clinton administration in 1996 and was cut to 48 months in Michigan by Democratic governor Jennifer Granholm in 2007.
In fall 2011, the Republican Michigan state legislature eliminated exceptions, such as those that kept people living in high unemployment areas in the state from losing their benefits. There are still more than 400,000 unemployed in Michigan today.

The report also explores long-term unemployment and the increase in extreme poverty. There were 4.8 million workers in the US in 2012 unemployed for more than six months. That year, half the unemployed in Michigan were in this category.

The report’s authors note: “While the Great Recession era has ushered in a prolonged period of high unemployment, its real legacy may prove to be the unprecedented duration of unemployment spells: the average spell was 38.1 weeks as of December 2012.” This has increased the number of people in the US in extreme poverty, struggling to survive on practically nothing.

The researchers also point to the trend to shift already drastically inadequate government-funded income support from the unemployed to those working low-wage, part-time and temporary jobs—most of the new jobs being created in the US. The minimum wage is a poverty wage, still $7.40 an hour, about half what has been computed as a living wage.

The Bad Outlook for the Working Class American Man

MODERN TIMES/ROY EXPORT S.A.S. SCAN COURTESY CINETECA DI BOLOGNA

From:  The National Journal
by: Jonathan Rauch

This is an excellent read, it covers the reality of the American economy today and the truth.  I just had to include it here.  

"The higher you stood on the income ladder, the better you did; the highest-paid 1 percent of earners soared above and away from everyone else, practically occupying an economy of their own. By contrast, the bottom 90 percent of earners—which is to say, almost everyone—saw barely any increase, and much of what they did see came in the boom years of the late 1990s."

If the American economy were an automobile, you would say the transmission is failing. The engine works, but not all wheels are getting power. To put the matter less metaphorically: The economy no longer reliably and consistently transmits productivity gains to workers. The result is that many millions of Americans, in particular less-skilled men, are leaving the workforce, a phenomenon the country has never seen before on the present scale.

Well. That was a mouthful. It certainly bites off more than Washington’s polarized politicians can handle at the moment. In the next few months, they need to worry about the so-called fiscal cliff, the round of automatic tax increases and spending cuts that, if not averted, might start a recession. Plus a politically vexing debt-limit bill, which will need to be passed early in 2013. Plus a recovery that, for many Americans, feels more like a recession. (The median family income fell as much during the first two years of the recovery as it did during the two years of the recession itself, according to the Pew Research Center.) Plus a debt crisis and downturn in Europe. Isn’t that enough?

Sadly, no. The U.S. economy has weakened, and much needs fixing—beyond the fiscal cliff—if it’s to regain its strength. A reelected President Obama and a still-divided Congress face a lengthy To Do list for the economy. We’ve chosen eight entries: innovation, jobs, rising health care costs, entitlement programs,  college-completion rates, infrastructure, housing, and retirement security. None of them will be easy to fix.

But first, let’s consider a nexus of troubling economic trends that seem to be driving and deepening many of the specific problems—and may prove to be the most intractable problem of all. If economic strength means anything, it is that the economy can make almost everyone better off, thereby strengthening the country’s social fabric as well as its balance sheet. Such an economy unites rather than divides us.

Today’s economy, by that standard, is struggling. Its ability to deliver rising living standards across the income spectrum is in decline, and perhaps also in question. “This is a fundamental problem,” says Robert J. Shapiro, the chairman of Sonecom, an economic consultancy in Washington. “This is America’s largest economic challenge. People can no longer depend on rising wages and salaries when the economy expands.”

As other articles in this issue suggest, a number of policy responses are on the agenda already, such as creating jobs, helping more students finish college, and reducing wage-denuding health care inflation. Others, such as reforming the federal disability program, have yet to attract much notice. In truth, however, the extent of Washington’s ability to repair the economy’s gearbox is an open question, because the problem is complex. It implicates not just one slipped gear but many: disruptions in long-established connections between productivity and earnings, between labor and capital, between top earners and everyone else, between men and work, between men and marriage. Together, they are bringing the economy to a place where a large and growing group of people—indeed, whole communities—are isolated from work, marriage, and higher education. That place might look like today’s America, only with a larger welfare state. But it might just as easily bring social unrest and class resentment of a magnitude the country hasn’t known before.

SLIPPING GEARS

Begin with Chart 1. It shows one of the most basic of all economic relationships, that between productivity and hourly compensation. Productivity measures the value of the output (brake pads, stock transactions) a worker produces in, say, a day; compensation is a measure of earnings that includes the value of benefits such as health insurance. The chart also shows compensation for all U.S. workers and specifically for workers in production and nonsupervisory jobs—blue-collar and clerical jobs, for example.

For decades, productivity and compensation rose in tandem. Their bond was the basis of the social compact between the economy and the public: If you work harder and better, you and your family will be better off. But in the past few decades, and especially during the past 10 years or so, the lines have diverged. This is slippage No. 1: Productivity is rising handsomely, but compensation of workers isn’t keeping up.

More...

WalMart Stirs Concern over Workers Compensation System

By: Becca Aaronson
9 April 2012

When Walmart, one of Texas’ largest private employers, dropped out of the state’s workers’ compensation system in March, it was a heavy blow to advocates of the system who have watched more large companies offer private — and in many cases, less generous — injury benefits.

Texas is the only state in the country that allows employers of any size to decline to carry state-regulated workers’ compensation coverage. Businesses administer their own injury benefit programs, reaping big cost savings in exchange for exposing themselves to heightened liability risks. Target, for example, began administering its own injury care policy in 2005.

Fifteen percent of Texas businesses with more than 500 employees do not carry state workers’ compensation coverage, according to a 2010 survey conducted by the Texas Department of Insurance.

Daniel Morales, a spokesman for Walmart, said the company is “sort of late to the game” of switching to its own program. The new policy gives the company “an opportunity to provide better care for our associates while also better managing our costs,” he said.

Opponents of large companies forgoing the state system, like Rick Levy, a lobbyist for the AFL-CIO, say the practice poses a “real threat” to the workers’ compensation system. He said it puts competitive pressure on companies that remain in the system to find similar cost-savings in their budgets.

“You end up punishing the folks that are trying to do the right thing by making their life more difficult as this other option becomes more prevalent,” he said.

But Bill Minick, president of PartnerSource, which has designed injury benefit policies for dozens of Fortune 500 companies, including Walmart, said these private plans restore the balance between adequate benefits and employee accountability. Many of them require employees to report injuries in a timely manner, visit pre-approved physicians and follow medical advice, he said.

Terry Frakes, senior vice president of public affairs at Texas Mutual, the largest provider of workers’ compensation coverage in Texas, said he believes the benefits for injured employees are not as good under the private plans.

For example, Walmart’s in-house plan caps total medical coverage at $300,000 for individual injuries, compared with lifetime coverage for the injury under state workers’ compensation. The Walmart plan provides 90 percent of lost wages for injured employees for up to 120 weeks, compared with 70 percent of lost wages for up to 401 weeks under the state system. That is a maximum of $140,350 under workers' compensation and $54,000 under Walmart’s policy for employees who earn $500 a week.

But Frakes said mandating that all employers carry state workers’ compensation, as the AFL-CIO has proposed, would not lower premium rates and could endanger some businesses.

“If they were forced into the decision, they would have to make the decision, can they afford to buy a policy or do they go out of business?” he asked.

Steve Bent, the executive director of the Texas Association of Responsible Nonsubscribers, which advocates for private injury benefit systems said with rising workers’ compensation rates possibly motivating more companies to opt out, insurance companies could be pressured to keep premium rates low.

* This story did not originally say that figures used for maximum payments through workers' compensation and Walmart's policy were based on employees who earn $500 a week.

Texas Tribune
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Did You Know the U.S. Middle Class is Disappearing. These stats prove it.

The stats are a little outdated and today the numbers are higher as stated in my article, The Working Poor. However, the story is still the same and this is a good video with short clips to get the reality across to what is really going on in America.

The Working Poor and Livable Wage

Susan Brannon

28 December 2011

The required Federal Minimum wage keeps the average American family of four living in poverty. According to the Working Poor Families Project study, as of in December 2010 Nearly one in every three American families is classified as the working poor, that is 45 million people including 22 million children.  These are the people who can barely make it from month to month, they are two income providers and blue collar workers.  The wages and hours are decreasing and the monthly bills keep going up.

The Bureau of Labor Statistics defines the working poor as " people who has spent 27 weeks in the past year either working or looking for work whose income is below the poverty level. "

When the minimum wage was first introduced nationally in 1938,it was considered "a livable wage" for an American family of four. but the reality compared to the inflation rate is that the sustainable "value" has been going down.The problem is that the required minimum wage amount is not high enough compared to the real monetary value has kept the American people living below the poverty level since 1938.

One would think that the set minimum wage would be a number to keep people above water and enough to put food on the table, but this has not been the case. For example, in 1968 the minimum wage was $1.60 per hour but in real value compared to inflation it should have been $10.04 per hour to survive. From 1996 to 2006 the minimum wage remained at $4.25 per hour for 10 years without any adjustments. This was a time period of good economic times, yet inflation continued to rise and family's were quickly discovering that they needed two jobs per household in order to maintain their standard of living.

The current minimum wage is $7.25 per hour but in real value terms, it should be $10.39 per hour in order to obtain a livable wage. If inflation does not rise sharply in 2012, $10.39 per hour with a 40 hour work week, should be enough to pay the rent, food, gas and utilities, but not much more.  Of course this also depends on the cost of living in your city and state.

The situation gets a bit more complicated considering our current economical problems. Simply comparing the real value vs minimum wage is not enough to get the real picture on the situation with the working poor in America.  Corporations and small businesses are feeling the pinch of the faltering economy and in order to reduce their costs, they increase the amount of workers and reduce the work hours for each worker. This process reduces the business cost of providing benefits to the workers.  They must maintain a profit in order to remain in business.  The result is that the average blue collar worker has found themselves working 20 hours a week without benefits and must another job to make the difference.  Many working poor families are now holding four part-time jobs to make their monthly payments. According to the Working Poor Families Project:

• More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the recession began in December 2007.

• Income inequality continued to grow with the richest 20 percent of working families taking home 47 percent of all income and earning 10 times that of low-income working families.

In most states part-time employees generally have limited or no company benefits, such as health benefits, vacation and sick time, paid holidays, and unemployment compensation. Part time employees are not protected under the Fair Labor Standards Act (FLSA) in turn, more and more workers are surviving without medical insurance, paid holidays and sick leave.

I thought I would include here some more statistics that show what the working poor are now facing:

• As 2007 began, only 26 million Americans were on food stamps, but now 42 million Americans are on food stamps and that number keeps rising every single month. (Wall Street Journal) 
• Since 2001, over 42,000 U.S. factories have closed down for good. (The American Dream) 
• In 2009, total wages, median wages, and average wages all declined in the United States. (Tax.com) 
• Half of all American workers now earn $505 or less per week. (Tax.com)
• In 1976, the top 1 percent of earners in the United States took in 8.9 percent of all income.  By 2007, that number had risen to 23.5 percent. (New York Times) 
• Since the year 2000, we have lost 10% of our middle class jobs.  In the year 2000 there were about 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs.  Meanwhile, our population is getting larger. (Zerohege)

As of October 2011, 46 million people in America are receiving food stamps and 50.7 million people do not have medical insurance. Now many families need to pay for their own medical insurance and doctor bills and many times with a very high deductible. This makes the total picture a bit different than before because the real "livable wage" should be calculated including the cost of medical, retirement and sick time because of the lost benefits for the blue collar worker.  I figure the real livable wage should be at least be double the amount that is calculated by recent studies from the given $10.39 per hour to $20.80 per hour.  If a blue collar part time worker can receive $20.80 per hour, then he/she should be able to pay the bills and pay for their medical care and save towards retirement.

If you are a member of the working poor, I wish that I had better news for you but as it looks things are not going to get any better and millions of Americans will be joining you soon.

Working class working for less

http://www.youtube.com/watch?v=Vifvs6SyJ4o
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