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.

WalMart - Keeping Families in Poverty

3 June 2013

WalMart hires more people in the United States than any other company.  They recruit three times the number of people than the U.S. military does each year.  Yet, the majority of their employees are families with children who live below the poverty line.  WalMart promotes to buy American but most of their goods are manufactured outside of the United States in sweatshops.

Walmart has 1.4 million employees in the U.S. and a total of 2.1 million worldwide. Females make up 70% of Walmart's work force, many of whom are head of households.  The average full time sales associate take home pay is under $15,576 per year. However, most of Walmart's employees are part time with an average take home pay of $250.00 per week or 8.81 per hour.  Walmart's associates earn 28 percent less, on average, than employees at other large retail stores.   In contrast, the average pay for store managers is $50,000 to $170,000 per year.  CEO Mike Duke received $18.7 million in total compensation or he makes more money in one hour than most of his employees make in one year. The Walton family controls over 48% of the stock and together they are worth an excess of $102 billion.

Distribution of Working Poor by Industry
Retail is Green (30%) and Services is purple (39%)
In retail trade, 12% of all workers were poor and 22% lived below 150% of poverty.Walmart's 1.4 million employees help create these numbers.
Department of Labor and Statistics (*more numbers)

 This pay scale places employees with families under the poverty line that qualifies the children for free lunches.  One-third of the employees work under 28 hours and do not qualify for benefits.  The lower paid working families are called the "working poor" and the federal government subsides many of these families and children.

Let's put this in perspective:
Wal-Mart hires 550,000 people each year
They are the largest employeer outside of the Federal Government;  around 2 million employees
America has been declining in wealth and the disparity is getting wider (The wealthiest 20% own 72%; the Poorest 20% only 3%) Apr 2013
More and more people in America are on food stamps than ever before 47.8 million (mar 2013)
More and more American's are making non-sustainable/livable wages
WalMart makes $34, 880 dollars in profit every minute
Low wages cost the taxpayers $900,000 each year for Walmart's low wages at one WalMart Super Center in Wisconson. ( Huffington Post May 2013)
California paid $86 million a year on WalMart employees in benefit programs (health and public assistance to 44,000 employees)
One Store of 200 employees may result in a cost of $420,750 per year - $2,103 per employee for free and reduced lunch programs, Section 8 housing, federal tax credits, Title 1 expenses, federal health care costs, children's health insurance programs (S-CHIP), low income energy assistance. (Democratic Staff of the Committee on Education and Workforce)

Walmart has a high turnover rate; about 70% of the employees leave within the first year.  The reasons they leave is for lack of job recognition and inadequate pay.  Studies show that Walmart promoted fewer women than men and women dominate the lowest paying jobs at Walmart and that men earned $5,200 more for the same jobs as the women. Although, women make up 70% of the workforce, they only occupy less than one third of its store management.

Our government is broke and they try to squeeze as much taxes from the citizens as they can for just about everything.  Yet, the corporations can get away with hiding money offshore, using loopholes that saves them millions if not billions in taxes to the U.S. Closes down the factories with tax incentives to open new production overseas and widening the gap for job creation in the U.S.  The last thing we need is to drain our economy with social programs for people who work and are willing to work full time.

Most of the employees at Walmart are willing to work more hours, but to save money, Walmart's average weekly hours is 28.  But that is not all folks!

Walmart's new Health Plan January 2013
A memo was leaked to the NY Times stating that Walmart workers are "sicker than the national population" and tended to overuse emergency rooms.  The memo made recommendations to reduce health care spending by discouraging unhealthy people from working at Walmart requiring all jobs to involve some physical activity.  To hire more part time workers, to reduce 401K contributions and to put health clinics in Walmart stores.  With these recommendations Walmart could save over $1 billion in health care costs by 2011.  With 1.5 million employees working in the U.S. at Walmart part time not receiving health benefits, then who picks up the tab?

The Benies:
The average wait for full time workers to qualify for benefits is six months, compared to the retail average of 2.6 months.  Walmart recently cut their contributions to the medical savings plan by 50%.  The deductible for their plan is $1,750 before any assistance kicks in.  The monthly premium went up from $2 to $11 dollars per pay check at a $60.00 minimum per month.

A new policy took place in January 2013 as a way to cut costs and shift the cost onto the federal government taking advantage of Obamacare.
Walmart has the right to eliminate health care coverage for workers if their average workweek dips below 30 hours, which happens with regularity and at the direction of the company managers.   The response? "Walmart made a business decision" replied company spokesman David Tovar.  This new policy is a step back in time from the expansion in their health care coverage seven years ago.  The problem is that Walmart is known to not have anyone work over 30 hours a week and they have been doing that for years.

Walmart's network family plan is $322.60 bi-weekly with a $800 annual deductible, $500 health care credit and $4,000 out of pocket medical expenses could cast over $12,000 a year.  The average full time Walmart employee makes $20,000 a year and cannot afford the health benefit.

In the last quarter of 2012 it is reported they made $67,35 billion with a $17.2 billion profit.   This is enough profit to settle the Walmart's infamous employment practices and stop them from robbing America by using our social system and taxes to help keep their employees alive.

*Of those who do not work full-time, about half state that they are working part time because they cannot find full-time work. Thus the working poor face the problem of involuntarily working part time to a greater extent than other workers. Approximately 20% of the working poor are employed involuntarily part-time.  

Although some people believe that the problem of working poverty would be solved by providing full-time year-round work, this does not appear to be true. Most (52%) of the working poor would not b e able to work their way out of poverty even if they held full-time year-round employment because their wages are too low. In addition, of the working poor who would be able to lift themselves out of poverty by working such hours, many are unable to do so because of health problems.

Single female headed families are especially over-represented among the working poor. Among the working poor, 49% live in families headed by a single woman. Of those who live in families headed by a single female, 28% work but live below 150% of the poverty level.

The working poor are less likely to be covered by health insurance by their employers. Only 18% of the working poor are covered by health insurance available through their employer or their union, compared to 55% of all workers. Most likely, the jobs these workers hold are less likely to offer health insurance.

The working poor need higher wages and jobs that offer full-year employment, wage supplements such as the Earned Income Tax Credit and access to services such as health care and child care. 

Department of Labor

In light of the facts listed by the Department of Labor, it does not take a genisus to understand that a company that employees 70% women, pays poverty wages, does not offer viable health options, keeps their employees at a part time level while earning billions in profit each year clearly contributes to America's working poor numbers.  I firmly believe that if Walmart were to increase both wages and hours and offer affordable medical plans, these numbers from the Dept. of Labor would drastically change. 

Most Jobs Don't require a college degree

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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Working Poor and Livable Wage
Did you know that the U.S. Middle Class is Disappearing?
New Face of Hunger
History of the U.S. Dollar and Today's Economical Crisis
American Job Act Summary
Examples of U.S. Financial Corruption

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 new face of hunger 99ERS Middle Class ONE 'face' of the unemployed

Voices of the working poor.

The Faces of the Working Poor

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.