Data on Rising Poverty and Declining Incomes Should Serve as a Call to Action
The U.S. Census released data earlier in the month showing poverty on the rise and incomes declining. That incomes have fallen and poverty is rising might not seem to be such a surprise as we confront the worst economic downturn since the Great Depression.
But here's the scary part. The 3.6% decline in income for the typical household -- the largest decline on record since 1967 -- occurred between 2007 and 2008, before the real hemorrhaging of jobs began. (The 2008 data are simply the most recent available data.) Researchers from the Economic Policy Institute predict that the poverty rate -- which stood at 13.2% in 2008 -- will continue to rise in 2009 and 2010 and that between 2007 and 2010, the average income for the typical household will decline by $4,813.
As EPI points out, the fact that more than 2.6 million people fell into poverty between 2007 and 2008 is only the "tip of the recession iceberg."
Taking a few steps back doesn't make the picture any prettier, but it does explain a few things. During the last business cycle, for the first time on record, while productivity rose, incomes declined. Hurt the worst were working-age households who saw their incomes drop, on average, from $60,804 per year to $58,718. After a decade of weak job growth and wage stagnation, working people have very little to fall back on.
Of course, some groups have less to fall back on than others -- African Americans, Latinos, young people, those in our society who have historically been on the economic margins. Some regions are also hit harder. Los Angeles County, with its vast informal sector and large low-wage labor force, is also in deep trouble, as a LAANE report released today reveals.
Los Angeles County is the capital of the uninsured with more uninsured residents than any county in the nation. One in five of the county's children live in poverty, a rate that is higher than that of the state and nation. In the city of Los Angeles, the rate is even higher, with more than a quarter of the city's children living below the federal poverty line. (It's no wonder our schools are struggling to graduate students.)
A few words about the poverty level, which was $21,200 for a family of four in 2008: Experts widely agree that it is a dismally inadequate and outdated measure of poverty that fails to take into account the rising cost of health insurance, housing, child care and other necessities. It also does not account for regional variation in living cost.
A more realistic measure of economic hardship would be twice the federal poverty level, or $42,400 for a family of four in 2008. By this measure, 96 million U.S. residents are unable to meet their basic needs. That number represents a staggering 32 percent of all Americans. In L.A. County, 37 percent of residents live below this more realistic standard for counting those who are too poor to afford such basic necessities as food, health care and proper housing. Poverty and economic insecurity is not just a problem for a few of us, it affects wide swaths of our society -- and that is especially true in a recession that has walloped people across the income spectrum.
Of course, the statistics and even the right poverty thresholds don't tell the whole story of wasted talent and high anxiety that is caused by an American economy that is in free fall.
Ana Rodriguez has worked at Los Angeles International Airport for over a decade, but even as a full time worker she lives paycheck to paycheck and must take her daughter, who lacks health insurance, to the emergency room for routine care. Even though Rodriguez had basic health insurance, it was inadequate to the task of covering an unexpected surgery which left her $11,000 in debt and has damaged her credit rating.
Heather Norris, a recently minted teacher, and her husband spend their days applying for jobs and are considering moving out of California in order to find work. Like Ana, she lacks health insurance and worries about staying healthy and out of debt.
Tyrell Brent resisted the lure of gangs as grew up in the neighborhood of Watts and Compton where he grew up only to find work at a string low wage jobs that seemed to lead nowhere.
But these stories of struggle and hardship don't paint a full picture either. They leave out the fact that Ana Rodriguez joined with a community coalition to help pass a policy this month that raised her city's living wage ordinance by $3.25 per hour in a way that increases the incentive for employers to provide quality, family health insurance to thousands of airport workers and their spouses and children.
This victory that can be attributed to leadership on the part of ordinary workers, brave and far-sighted elected officials on the L.A. City Council, responsible businesses who testified in favor of the policy, and community members who knew that a recession was no excuse to consign 5,000 workers and their family members to taxpayer-provided insurance -- or no insurance at all.
They leave out the fact Tyrell Brent, who could have become another poverty statistic, is now gainfully employed and participating in a union apprenticeship program thanks in part to L.A.'s local hire policies that link investment in development to providing opportunities for low income residents. Tyrell is employed on a public infrastructure project and is learning to install solar panels, meaning he will ready to be put to work in a new green economy.
And thanks to the lower tuition rates of the state-funded University of California system, Heather Norris, who is 27, graduated with only minor debt and will most certainly be able to bring her energy and talents to the classroom.
It will take more than local policy initiatives and individual tenacity to move our economy forward. But these local solutions do provide important lessons -- that government action can make a difference in people's lives and that expanding opportunity requires organizing, collaboration and, sometimes, a fight. These victories in L.A. have been facilitated by an expanding labor movement, committed community activists, and clergy leaders from all the major faiths.
So what is the solution? How can we fix a broken health system that is responsible for the fact that 46 million people in our county lack health insurance? How can we create good jobs while still being kind to our planet? How can we help the long-term unemployed and also maintain and improve job standards? And, what can we do to ensure that government is there for us during a crisis?
In our podcast series, The Road to a New Economy, LAANE asked some of our region's leading thinkers to reflect on the way forward. Steven Pitts, a labor specialist at U.C. Berkeley, argues that we need to strengthen labor unions that have been pivotal to expanding opportunity. Former California State Senator Sheila Kuehl discusses the need for the public sector to take on its historic role in regulating and stimulating the economy. Shana Lavarreda, a research scientist with the UCLA Center for Health Policy Research, points to impressive local initiatives, but argues that they cannot take the place of reform at the federal level. Manuel Pastor, Professor of Geography and American Studies & Ethnicity at the University of Southern California, offers up a vision of an economy that puts the creation of green jobs at its center.
All these proposals will require good ideas, hard work, and, leadership at the highest levels. But local officials, state legislators, congressmen and the president of the United States "are only going to be able to lead if their followers are also leaders," says Pastor. So in that spirit I urge you to take this opportunity to listen, think -- and to lead.
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