PEP, Oct-Nov 2010: Poverty and unemployment persist

Public Employee Press

The World of Work
Poverty and unemployment persist

By GREGORY N. HEIRES

The Great Recession may be over - officially - but tens of millions of Americans are still feeling its pain.

Almost 44 million people - one American in every seven and one child in five - now live in poverty, with income below the government poverty line of $22,000 for a family of four, according to 2009 U.S. Census data.

This is the highest since the Census Bureau began tracking poverty 51 years ago, and 19 million people live in "extreme poverty," with less than $11,000 a year for a family of four.

The recession ended officially in June 2009 when overall economic activity stopped falling, said the academic economists of the National Bureau of Economic Research. But they admit this standard doesn't reflect the true state of the economy.

"There's no question we're in bad times," said NBER's Robert Hall, a Stanford University economics professor.

Indeed, the 2009 census data deliver a bleak picture of the economic legacy of the Republican Bush administration:

The number of people without medical insurance hit 50.7 million in 2009, an increase of 4.4 million.

More than 50 million people get Medicaid, up 17 percent since the recession began, and over 40 million rely on Food Stamps, double the number before the recession.

Another 4.4 million people joined the welfare rolls, an 18 percent increase.

The lost decade

For ordinary Americans, 2000 to 2010 was a lost decade. New employment failed to keep up with population growth and the elimination of 7.3 million jobs from December 2007 to June 2009.

Economists say it will take years to cut unemployment - 9.6 percent in August - to the prerecession 5 percent.

The Obama stimulus created as many as 3.3 million jobs, according to the nonpartisan Congressional Budget Office - still short of replacing the jobs destroyed in the recession.

The Republicans recently blocked legislation to create jobs for 250,000 low-wage workers, highlighting the unfavorable political climate for addressing the employment crisis.

On Oct. 8, the Labor Dept. reported that private businesses created only 64,000 new jobs in September while the public sector wiped out 159,000 jobs and laid off 83,000 state and local government workers.

"Another 300,000 jobs would have been lost if the Republicans had succeeded in blocking President Obama's $26 billion plan to protect jobs and services," said Gerald W. McEntee, the president of AFSCME, DC 37's parent union.

Inequality grows

Over the last three decades, the American economy has suffered what New York Times economist Paul Krugman calls the "Great Divergence" - a vast widening of the income gap between rich and poor - reversing the post-World War II trend toward greater equality and social mobility.

At the beginning of the last decade, the middle fifth of Americans earned an average of $52,547, but this fell to $49,534 in the recession as over half of all pretax income went to the top fifth.

Economic inequality in the United States is now the worst in the industrialized world, similar to the traditionally huge gap between the haves and havenots of Latin America. Today, the richest 1 percent of Americans gets 24 percent of the country's income. In 1913, their share was 18 percent.

Is there any good news? The Census Bureau says increases in Social Security payments made the elderly the only demographic group whose income rose during the recession.

While Social Security has lived up to its promise of lifting seniors out of poverty, the economic collapse has created a new impoverished underclass - children. And if conservatives succeed in gutting Social Security, the country's most successful program, millions of baby boomers may no longer be able to retire in dignity with secure incomes.