Rich Get Poorer, Poor Disappear

Ever on the lookout for the bright side of hard times, I am tempted to delete "class inequality" from my worry list. Less than a year ago, it was the one of the biggest economic threats on the horizon, with even hard line conservative pundits grousing that wealth was flowing uphill at an alarming rate, leaving the middle class stuck with stagnating incomes while the new super-rich ascended to the heavens in their personal jets. Then the whole top-heavy structure of American capitalism began to totter, and -- poof! -- inequality all but vanished from the public discourse. A financial columnist in the Chicago Sun Times has just announced that the recession is a "great leveler," serving to "democratize[d] the agony," as we all tumble into "the Nouveau Poor..."

The media have been pelting us with heart-wrenching stories about the neo-suffering of the Nouveau Poor, or at least the Formerly Super-rich among them: Foreclosures in Greenwich CT! A collapsing market for cosmetic surgery! Sales of Gulfstream jets declining! Niemen Marcus and Saks Fifth Avenue on the ropes! We read of desperate measures, like having to cut back the personal trainer to two hours a week. Parties have been canceled; dinner guests have been offered, gasp, baked potatoes and chili. The New York Times relates the story of a New Jersey teenager whose parents were forced to cut her $100 a week allowance and private Pilates classes. In one of the most pathetic tales of all, New Yorker Alexandra Penney relates how she lost her life savings to Bernie Madoff and is now faced with having to lay off her three-day- a-week maid, Yolanda. "I wear a classic clean white shirt every day of the week. I have about 40 white shirts. They make me feel fresh and ready to face whatever battles I may be fighting ..." she wrote, but without Yolanda, "How am I going to iron those shirts so I can still feel like a poor civilized person?"

But hard times are no more likely to abolish class inequality than Obama's inauguration is likely to eradicate racism. No one actually knows yet whether inequality has increased or decreased during the last year of recession, but the historical precedents are not promising. The economists I've talked to -- like Biden's top economic advisor, Jared Bernstein -- insist that recessions are particularly unkind to the poor and the middle class. Canadian economist Armine Yalnizyan says, "Income polarization always gets worse during recessions." It makes sense. If the stock market has shrunk your assets of $500 million to a mere $250 million, you may have to pass on a third or fourth vacation home. But if you've just lost an $8 an hour job, you're looking at no home at all.

Alright, I'm a journalist and I understand how the media work. When a millionaire cuts back on his crème fraiche and caviar consumption, you have a touching human interest story. But pitch a story about a laid-off roofer who loses his trailer home and you're likely to get a big editorial yawn. "Poor Get Poorer" is just not an eye-grabbing headline, even when the evidence is overwhelming. Food stamp applications, for example, are rising toward a historic record; calls to one DC-area hunger hotline have jumped 248 percent in the last six months, most of them from people who have never needed food aid before. And for the first time since 1996, there's been a marked upswing in the number of people seeking cash assistance from TANF (Temporary Aid to Needy Families), the exsanguinated version of welfare left by welfare "reform." Too bad for them that TANF is essentially a wage-supplement program based on the assumption that the poor would always be able to find jobs, and that it pays, at most, less than half the federal poverty level.

Why do the sufferings of the poor and the downwardly-mobile class matter more than the tiny deprivations of the rich? Leaving aside all the soft-hearted socialist, Christian-type, arguments, it's because poverty and the squeeze on the middle class are a big part of what got us into this mess in the first place. Only one thing kept the sub-rich spending in the 00s, and hence kept the economy going, and that was debt: credit card debt, home equity loans, car loans, college loans and of course the now famously "toxic" subprime mortgages, which were bundled and sliced into "securities" and marketed to the rich as high-interest investments throughout the world. The gross inequality of American society wasn't just unfair or aesthetically displeasing; it created a perilously unstable situation.

Which is why any serious government attempt to get the economy going again -- and I leave aside the unserious attempts like bank bailouts and other corporate welfare projects -- has to start at the bottom. Obama is promising to generate three million new jobs in "shovel ready" projects, and let's hope they're not all jobs for young men with strong backs. Until those jobs kick in, and in case they leave out the elderly, the single moms and the downsized desk-workers, we're going to need an economic policy centered on the poor: more money for food stamps, for Medicaid, unemployment insurance, and, yes, cash assistance along the lines of what welfare once was, so that when people come tumbling down they don't end up six feet under. For those who think "welfare" sounds too radical, we could just call it a "right to life" program, only one in which the objects of concern have already been born.

If that sounds politically unfeasible, consider this: When Clinton was cutting welfare and food stamps in the 90s, the poor were still an easily marginalized group, subjected to the nastiest sorts of racial and gender stereotyping. They were lazy, promiscuous, addicted, deadbeats, as whole choruses of conservative experts announced. Thanks to the recession, however -- and I knew there had to be a bright side -- the ranks of the poor are swelling every day with failed business owners, office workers, salespeople, and long-time homeowners. Stereotype that! As the poor and the formerly middle class Nouveau Poor become the American majority, they will finally have the clout to get their needs met.

Comments

[Geria]

You can't be serious Barbara. Inequality and class disappear in a wink in America? The rich always pummel us with their propaganda about how "poor" they have become since the crash. They STILL have 90% of the wealth and the story of their sudden impoverishment is another lie. When you have THAT much wealth you can sustain big loses without threatening your country club membership or having to sell the yacht. They still have NO idea what it is like not to have enough money. They STILL will not give up making war on the middle, working and poor classes.

[micmac]

Great read! I feel the same way.

[SammyD]

I think "right to life" is already taken. what you describe is trickle up poverty which you will soon learn. The money is going elsewhere.

[eddoreandarisia]

As always Barbara, your very erudite comments are so welcome. One wonders, however, if our diseased economic system is far worse a disorder than we have come to believe, if not for the simple fact that no one seems to be discussing the perhaps necessary abandonment of it's existing version of capitalism. Is anyone talking or writing about this? Is there such dread that one will automatically be labeled a communist, or even an enemy combatant? I wonder how much we can expect our economic system to be truly fairer and lose it's systemic inequality if we don't find a way to ask the hard questions and pose some really radical solutions. Who's got the nerve to do it?

[Samalabear]

I wonder. Under Bush you would be labeled for sure. Under this administration, I don't know. There is going to have to be new thinking, and the point taken about the rich paying more taxes -- at the very least this must be done. The problem, of course, is the rich are so incredibly spoiled and once they take the hue and cry over giving back will be deafening. How long in this last go-round -- since Reagan?

[peterg76]

The poor have been getting poorer for a long time. They have simply stopped believing politicians who tell them otherwise. And the rich have only been getting poorer because the ultra-rich have been getting richer.

[RandomMandarin]

Well, it's like a guy I work with says he learned from his parents:
"You have to tax the hell out of the very rich, because if you don't, they end up owning everything."

Turns out that's true.

[Lorifromky]

This country has not valued work for a long time. The rich found a way to get even richer by manipulating data on a computer. It is like trading paper money or securities written in disappearing ink. The financial sector CEOs and the rich people they serve decided to take a page from Leonna Helmsley, but instead of saying only poor people pay taxes, they think only poor people work. We seen the results.

[sudra]

"For those who think "welfare" sounds too radical, we could just call it a "right to life" program, only one in which the objects of concern have already been born."

LOL! Barbara E's my hero.

[susumar]

P.S., Barbara - thanks for calling out Alexandra Penney on her shameful blogs. She reminds me of Ann Coulter - they are both ridiculous people.

[susumar]

Just about everyone we know who is over fifty has been laid off and unable to get new jobs and I don't foresee much change in this situation anytime soon. I don't see how Obama is going to create jobs for these people. I never understand all of those articles that say people are going to have to work longer than they thought before retiring - maybe until they're 70! Hell, so many of us would love to work until we are 70. I always want to know what types of jobs these people have where they can "choose" to retire at 70 or even older. Unfortunately, age discrimination lawsuits are very difficult to win and, needless to say, very expensive to pursue. Companies are smart enough to lay off a few "younger" people concurrently with those over 50 so as not to get sued. Sadly, I don't see the country being able to legislate us out of age discrimination. I think the younger generation needs to plan on working for themselves.

[fleaba]

I am glad to see this post. This is so true.

[Gidster]

I'm 45, and I have been looking for work for 10 months! I have been told that my credentials do not meet employers looking for my skill set criteria.........

[nezumi]

NIce phrasing, rejection evolved into yet another linguistic fizzle. Never heard that one.

[Jazzman323]

Yes, I look forward to an America where everyone makes the same income, and that is supplied by the government. Glad to see the demise of rich people. They annoyed me. Welcome Obama.

[micmac]

Communism is not cool.

[Gidster]

Communism and Socialism look good on paper, equality for all, but they do not account for greed, corruption and ambition. That is what destroyed Soviet Russia, that is what caused millions of deaths under Pol Pot.....

Capitalism is just as poor a model, cut throat and profit hungry, bonuses if you fire enough people to eek out a .001% addition to your dividend payout. It too did not account for rampant greed and corruption in the very agencies meant to regulate commerce.

[kyeshinka]

Nothing Barbara Ehrenreich says makes me feel good because she's right. The American Dream is a myth, every word of it. My friends, all of whom have advanced degrees and work in kitchens for $7.50 an hour and use candles to light the house, know this too. Hard work doesn't get you ahead anymore. I know, I worked on hog farms and factories for 20 years and have nothing to show for it. Believe me, hard work puts you farther behind if it's the wrong kind of work. How to get ahead in America? Sell your virginity on e-bay or marry an oil exec. Some dream.

[melpol]

Politicians speak about freedom for the individual and the evils of big government. But in reality politicians speak with a forked tongue because hookers and druggies are now being jailed. Decriminalization of prostitution and illegal drugs would lead to more freedom and the need for less law enforcement and government.Unfortunately voters feel no sympathy for struggling druggies and hookers as they try to escape the long arm of the law.

[Balancement]

After over three years of being out of work--and watching what little retirement money I have dwindle, I figure I have about a year, being frugal, before I'm completely broke and homeless. I probably won't make it to the point where any of the new economic plans come to fruition--and even if I should, my age (which has been part of the problem in finding new work--everything I've interviewed for has gone to a younger, less qualified candidate) will probably keep me out of any newly-created jobs. For those of you who might survive to be a part of the new era, please remember that older people *do* have a lot to offer and they can do it well, and gratefully. Be good to them--help them make their life worthwhile.

[aznurse]

Well, someone is at the Jackson/Barret car sale this week spending hundreds of thousands on classic cars. Their idea of poor and mine are quite different.