On Facebook I recently reposted this image, which started an interesting discussion:
The discussion went as follows:
I wanted to continue that line of thought after reading several news stories about government figures regarding the poverty rate, but since I am so long-winded, I wrote something too big for Facebook to handle. So here it is:
My Two Cents Worth on Poverty, The American Dream, and Income Disparity in America
September 16, 2014
The figures showing a decline in the poverty rate in 2014 are misleading.
September economic numbers say that the poverty rate declined in America for the first time almost a decade. ('U.S. poverty rate drops for first time since 2006,' http://money.cnn.com/2014/09/16/news/economy/median-income-poverty-rate-down-census/index.html) The problem is that the poverty rate is still over 14%, and how can that be a good thing?
Plus, it is not the level of poverty at the lowest strata of society that defines the economic health of a society, but the economic growth rate of the majority of Americans that provides the engine of the economy with go-power. ('A Rare Drop in the U.S. Poverty Rate Doesn't Deliver Much Good News,' http://www.businessweek.com/articles/2014-09-16/u-dot-s-dot-poverty-rate-at-14-dot-5-percent-in-2013-drops-without-much-good-news)
The second story states that "[T]he total number of U.S. residents in poverty remained roughly unchanged last year, at 45.3 million." Exactly how is that a good thing?
The key paragraph of that story bears repeating:
'The data for 2013 portray persistent inequalities in U.S. poverty and income. [My emphasis. -Ed.] Median income for full-time, year-round, female workers was 78 percent of that earned by male counterparts. The poverty rates for Hispanic and black Americans (23.5 percent and 27.2 percent, respectively) were more than double that of non-Hispanic whites (9.6). “Over the last 40 years, since 1973, income at the 10th percentile was not statistically different, while income at the 90th percentile increased by 37 percent,” Census Division Chief Victoria Velkoff told reporters. The cutoff point for the 10th percentile in household income last year was $12,401; for the 90th percentile, it was $150,000.'
The biggest problem we have is that those living in poverty are stuck there, wages in general are continuing a decline that began in the 1970s, and the American Dream of upward mobility not just for the poor but for the working classes into the middle classes, and middle classes into something resembling the working rich, seems to be either dying or dead. This is reflected in the gap between rich and poor expanding to the benefit of the rich, instead of it being expanded by the inclusion of more Americans from lower economic classes, thereby also making room for economic classes below those an opportunity to climb the ladder, as well.
Just to run some more numbers, the last line of the first story states that 'The poverty threshold for two adults and two children in the U.S. is $23,624.'
$23,624 for two adults, assuming they are working 40 hours a week (which for minimum wage workers is unlikely), is a minimum wage of $5.68/hour. This means that if two adults living together each had a full-time job paying the the existing minimum wage, which is as of this writing $7.25/hour, they'd be making more than the poverty threshold, meaning that they would not quality for State or Federal welfare assistance. However, at minimum wage two adults even with full-time jobs can barely, or even cannot at all afford the cost of living in many places in America today,
A recent Pew poll suggested that as much as 56 percent of average American voters reported that their wages were not keeping up with the cost of living, while a majority of higher income Americans said that their income was either staying with or exceeding the cost of living (see Alaska Dispatch News story: 'States struggle to balance budgets as rich-poor gap widens." http://www.adn.com/article/20140915/income-inequality-states-struggle-balance-budgets-rich-poor-gap-widens).
This merely reinforces the data showing that the rich are getting richer, and everyone else are going nowhere.
Another example of the same comes from a Washington Post columnist (writing for the Deseret News): 'The roughed-up American,' http://www.deseretnews.com/article/865611018/The-roughed-up-American.html. He says that:
We have a peculiar prosperity. The economy is escaping the confines of the Great Recession; auto sales now exceed 16 million annually, the highest since 2006. But people don't feel reassured. They've lost confidence in the future. Americans feel roughed up by the economy, and their fears aren't fading quickly.
He goes on to say that the 'true middle-class squeeze' is that:
People's expectations about their living standards were set in the early 2000s, while their incomes and assets are stuck at levels 15 to 20 years earlier ... Having been roughed up, they face years of catch-up to get to where they once were. They feel poorer because they are poorer. They feel less secure because they are less secure.
BTW, the author of this article has created some interesting charts showing the projected incomes and wealths of median and 'solid middle class' families, and he explains them quite clearly:
The left-hand column shows the income of the median family, the one exactly in the middle of all families. The second column shows the income of a group I call "the solid middle class." If the population is divided into fifths, they're the second fifth from the top: poorer than the richest 20 percent of Americans but richer than the other 60 percent. Though comfortable, they're not awash in money.
It is a short and insightful article, and well worth a read!
My two cents worth here are that:
1 Cent) Discussions and debate about such things as the minimum wage, or the poverty level, or levels of employment, or such politically-charged economic policies as 'trickle-down' economics or taxing the rich aren't ever going to solve anything. They, and other things like them, are simply symptoms of a much larger problem: that governments, even as large and powerful as the government of the United States of America, cannot get a handle on how to manage both the incomes and the wealth of their citizens.
That is to say, any government that cannot manage its tax codes, its paying for government expenses (including welfare programs), and its taking care of their citizenry - especially those living in poverty - is facing eventual ruin and collapse if they cannot manage the flow of both the incomes and the wealth of its citizens. This is because if the rich keep getting richer while the poor keep getting poorer, and there are no economic classes in-between and no opportunity for there to be such classes in-between, and there is no opportunity for upward mobility from one class to the next, history tells us that that is a recipe for eventual economic collapse.
There is a point beyond which continuing growth only for the very wealthy is no longer sustainable (see Guardian news story 'Widening gap between US rich and poor is unsustainable, says study. Harvard study says situation unlikely to improve soon,' http://www.theguardian.com/world/2014/sep/08/widening-gap-us-rich-poor-unsustainable-pay-harvard-workers?CMP=fb_us). The problem is that if there is no mechanism below that economic class that is sustaining a society, if the power of the rich collapses there will be no infrastructure in place that will prevent that collapse from destroying a country's economy and eventually the country itself.
2 Cents) That raises a bigger problem of how does any government manage the incomes and wealth of rich people and corporations who can move their wealth around the world to avoid taxation? Even if some governments banded together and agreed to some sort of unifying taxation system, there will always be others outside that system that will provide safe havens for the rich for the benefit of those countries and the ruling parties of those countries, at everyone else's expense. Besides, history shows us that in cases where it has been tried (with highly centralized governments and closed economies), that has not only failed but such economies have been miserable disasters!
I myself am torn on the issue, and have been for years. On the one hand, I think that if you can strike it rich you ought to be able to enjoy the fruits of your labors and be able to pass the majority of your wealth on to your legitimate heirs without some busy-body outside force punishing you for success and taking your kids' inheritance away from them in abhorrent taxes. On the other hand, if there must be taxation to subsidize welfare programs for the needy (which undoubtedly is needed!), then it is foolish to overtax those who make an income and cannot afford higher tax rates, and undertax those who make fortunes and can afford higher tax rates!
What to do? I admit that I am not smart enough to know. I just wish that know-it-alls who run for public office would admit it when they don't know, and not be sell-outs to patrons with agendas that don't include supporting the societies that they depend upon to make their fortunes. It's the age-old problem, isn't it?
In the meantime, I guess that fixating on the symptoms of the problem aren't going to help. Just so long as we don't forget that this is a problem that needs to be dealt with, and let corrupt officials and selfish 1%-ers get away with ruling the world, and over all of the rest of us ....
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I later added this to the story:
Here is more reinforcement of the argument that the problem is really one about our society not addressing the issue of poverty in the first place.
American paychecks fall to 1995 levels as poverty continues to sweep US, new census report shows
The Guardian > Money > US Money Blog
http://www.theguardian.com/money/us-money-blog/2014/sep/16/us-census-bureau-stagnant-report-figures
My Two Cents' Worth:
1 Cent) Child poverty rates in America are comparable to that in India? Shameful!
2 Cents) The reaction to that by the conservative think tank The Heritage Foundation? Even more shameful!
