The Working Poor Americas Invisible Economic Other

Terrance Heath

Earlier this week, I made a case for an investment agenda for America. Now, a report from The Working Poor Families Project has underscored the urgent need for an economic agenda based on investing in the American people and preparing our workforce not just to compete in the new economy, but to pull us out of crisis and into a recovery from which we may start building a new economy. The report’s title, "Great Recession Hit Hard at America’s Working Poor: Nearly 1 in 3 Working Families in United States are Low-Income," (pdf) says it all.


During the great recession, unemployment rates reached their highest levels in more than 25 years, drawing attention to the millions of Americans who lost their jobs during the economic downturn. But there is another—mostly untold—story in the federal employment statistics: more families who have managed to continue working are hard-pressed to stay afloat in the weak economy.

New data from the U.S. Census Bureau show that in 2009, there were more than 10 million low-income working families in the United States.2 Between 2007 and 2009, the share of working families who are low-income—earning less than 200 percent of the official poverty threshold—increased from 28 percent to 30 percent. This now means that nearly 1 in 3 working families in the United States, despite their hard work, are struggling to meet basic needs. The plight of these families now challenges a fundamental assumption that in America, work pays.

Although low-income working families remain mostly invisible to policymakers, these families are comprised of workers who form the backbone of our economy: working the cash registers, keeping our homes and businesses clean, preparing our food, and helping care for our children and elderly relatives. during these grave economic times, policymakers must choose to invest in these low-income workers and their families. Such investments are vital for the United States to maintain a strong, growing economy, and to “reduce the personal, social and economic costs imposed by low wages and poverty” in America.3

The report details how "the backbone of our economy" is weakening due to neglect, as these working families struggle with a recession in which more than half (55%) of the workforce 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." For the working poor — whose numbers grew by nearly a quarter of a million just between 2008 and 2009 — the recession has made tough circumstances even tougher.

  • According to the report, many joined the ranks of the unemployed or dropped out of the workforce, while others saw their incomes drop as businesses cut back due to the recession.

     
  • The men in these families have faired particularly badly, as many worked in the now shrunken manufacturing, construction, and financial sectors. Meanwhile, the percentage of working women with an unemployed husband doubled from 2.4% to 5.4% between 2007 and 2009, meaning that in a growing number of working families women (who earn less, on average, than men) are now the primary breadwinners.

     
  • In an economy where finding a good job with decent wages and benefits requires a college degree (by 2018, 63% of all job openings will require some level of secondary education), nearly a third of working families had at least one parent without a high school diploma. In more than half (52%), neither parent had a high school diploma.

Needless to say, all of the above goes double for racial and ethnic minorities.

The report juxtaposes the above against a picture of growing economic inequality in America.

There is more bad news in these numbers: The richest 20 percent of working families now take home nearly half (47 percent) of all income, and income inequality is increasing each year. In 2009 those at the top of the economic ladder earned 10 times the income of those at the bottom (see Figure 3).11 This represents a 5 percent increase in income inequality since 2007 and an 11 percent increase since 2004 in terms of the share of income received by working families at opposite ends of the U.S. income distribution.

The divide between higher- and lower-income families goes beyond economics. Increasingly, families from different economic strata are also sorted into different neighborhoods, schools and social networks. These families and their children are at risk of becoming isolated from educational and economic opportunities that could provide a path out of poverty.12

The Working Poor Families Project completes the picture of America’s economic crisis, but also underscores all that is wrong with our response to it. The story it tells of America’s working poor is unfolding against the backdrop of a crisis in which state and local governments, which provide the services that keep many of these families this side of economic oblivion, are weakening to the point of collapse. While a recent "60 Minutes" report on state budgets has been (rightly) critiqued for its one-sided, austerity-boosting focus, it got a few things right about the state of state budgets, as Mark Thoma at Economist’s View pointed out.

Here’s what it got right:

  • As correspondent Steve oft put it, “The ‘great recession’ wrecked [states’] economies and shriveled their income.” State revenues are about 12 percent below pre-recession levels, after adjusting for inflation, yet the cost of basic services like education and health care — the two largest areas of state and local spending — is rising.
  • The real pain from states’ current fiscal problems has been visited on the most vulnerable people, from low-income families needing medical care in Arizona to recipients of mental-health assistance in Illinois. That’s because states are required to balance their budgets — they cannot borrow to cover operating expenses. States have responded to the loss of revenues, in part, by cutting health care services and payments to nonprofits that serve the needy.
  • Fiscal year 2012 (which will begin next July 1 in most states) will be the most challenging year yet for state budgets. States have largely drawn down their reserves, revenues are still depressed, and emergency aid from the federal government (hardly the “bailout” CBS suggested, but rather a way to keep more people working and protect a fragile economic recovery) is expiring.

Yet, the response of our government has been to extend tax cuts for the rich, abandon the unemployed, and cut the very programs that were helping states put people to work who would otherwise have just collected benefits.

The working families in this report are the same Americans whose stories Barbara Ehrenreich told in her book, Nickel and Dimed: On (Not) Getting By in America, which always struck me as a kind of economic version of John Howard Griffin’s Black Like Me, in its attempt to "walk a mile in the shoes" of America’s invisible economic "other." Griffin’s ability to return to living in as a white man in racially segregated America of the late 1950s and early 1960s, and Ehrenreich’s ability to return to her comfortable middle-class life drew criticism from those who felt their "escape hatches" of race and class made it impossible for them to understand the reality of the people who continued living under the conditions they could walk ultimately walk away from when they finished their research.

What the Working Poor Families Project report really drives home is that the distance between America’s invisible economic "other" and those of who think we are still comfortably middle class isn’t all that great. We don’t have to go "undercover" or even go to the library to find them. We just have to open our eyes. As the report states, the people whose story it details are not invisible. They’re not even hard to find. We see them just about every day as they are "working the cash registers, keeping our homes and businesses clean, preparing our food, and helping care for our children and elderly relatives. during these grave economic times."

If the unemployed have been vilified by our policymakers, the working poor have been ignored. But they haven’t fared any better. Neither will many of us who think we are comfortably middle class now, when we join the numbers as the economic crisis grinds on, and our politicians declare that "tough times call for tough decisions," only to make decisions that are ultimately toughest on those already having the toughest time.

In my previous post, I suggested that the plight of the 99ers would become the plight of more Americans, unless our government turns away from austerity and takes up an investment agenda, as the Working Poor Families report says in its conclusion.

The United States requires a sustained commitment from federal and state governments to ensure that hard-working families have a viable opportunity to achieve economic advancement and security. Such a commitment must be followed with specific policy actions at both levels of government.

At this critical time, policymakers must give priority to investing public resources and enacting public policies that are directed at:

  • Expanding the number of low-skilled adults who enroll in education and skills development programs and successfully obtain postsecondary credentials valued in the labor market.
  • Improving wages, benefits and supports for low-income working families and stimulating the creation of significantly more good jobs.
  • Regularly assessing the challenges faced by america’s working families and the adequacy and success of government policies that facilitate their drive for economic advancement and security.

The entire nation has an important stake in ensuring that all working families succeed and that public investments are used effectively to increase the success of low-income working families. moreover, the demands of the global economy make it imperative that policymakers at all levels of government commit to addressing this challenge. low-income working families want nothing more than other americans: the opportunity to achieve economic security and to contribute to the country’s overall prosperity and well-being. We must act now to renew america’s promise that work pays.

It may have been easy enough for Ehrenreich to return to her world of middle-class economic security, and for Griffin to return to being a white man in 1960′s America. But both at least had the courage to step outside of their own realities, and try to put themselves in the shoes of people each could have safely dismissed as "other" — not like them, "less than," inferior or otherwise inherently flawed — and were changed upon learning that "those people" were not all that different from them, their reality was no less "real," and they weren’t entirely to blame for their circumstances

It’s an experience that layers complexity upon what was previously simple or "common sense," and threatens certainty — like the certainty of racial identity or economic status — with uncertainty, and throws our most basic assumptions into question. It can be a transformational moment for an individual. On a large enough scale, it can launch entire movements.

As Al Vivian, CEO of Basic Diversity wrote a year ago, "Privilege can be a dangerous thing. It releases you from the task of thinking about things that others must." Though many progressives — past and present — are privileged by the status quo, progressive movements sought change that meant a lost of privilege or a change in status for the individuals engaged in these movements. The choice comes down one of justice over the preservation of personal privilege; or rather, justice over "Just us."

To do less is to let injustice stand. Letting injustice stand unchallenged is not an option. That’s a major difference between the progressivism Rosenberg describes, and what I call "complacent conservatism." Last year, a Pew Research survey found that conservatives were "happier" than liberals, but that "happiness" bore a close resemblance to complacency.

The authors argue that a conservative belief acts as a psychological buffer in a world of increasing inequality. The idea is that conservatives tend to rationalize inequality as the result of a fair process in a meritocracy, whereas liberals tend to see inequality as inherently unjust.

Being happy is a cinch, if you can rationalize inequities as right and just. Then, no matter how bad things are for someone else, you can be assured that things are as they ought to be.

On the other hand, someone more progressive, and lacking rationalizations for injustice and inequality might question why they exist and why they persist — and keep questioning, even as the answers become more challenging — rather than simply accepting that they exist and that they persist because they ought to.

Derbyshire’s brand of conservatism, for example, says "the poor shall always be with us," in order to justify not only not bothering to anything about poverty (or unemployment, or hunger, etc.), but to questioning the roots of inequality. (Though he easily concedes that at least one progressive movement — the abolitionist movement — got something right.)

It’s a conservatism that is willing to let some injustices stand. Some people will always be poor, so why try save them all? Some people will always be racist and there will always be some degree of discrimination, so why keep strengthening or expanding civil rights legislation? Derbyshire’s conservatism says "Stop!" or "No further!" to movements addressing injustices that it sees as inevitable and un-fixable. Better to let them stand than endanger the status quo with futile efforts to correct them.

More Americans who see themselves as "safely" middle class or "secure" in their economic status need to understand that the unemployed and the working poor whose circumstances are detailed in The Working Poor Families Project are not "Them," and that the difference between "Us" and "Them" — during a recession in which policymakers are apparently content to do nothing, while more and more Americans fall over an economic cliff  — the difference between "Us" and "Them" is little more than illusion. Most of "Us" are one or two steps away from being "Them." That many of us don’t know it, or don’t want to, could just seal our fate.

Our political leadership is now calling for "shared sacrifice," while ignoring or failing to recognize that thus far "sacrifice" has been far from shared in this economic crisis. Even the "austerity" they sell as a solution to the economic crisis is one sided. Anyone who tries to sell "austerity" with one hand and distribute tax cuts to the rich with the other has to know as much. Austerity isn’t about "shared sacrifice," it’s about the hopes and futures of millions of Americans being sacrificed, for the sake of a status quo founded on preserving inequality.

One-sided sacrifice is the "Austerity for thee, but not for me," message of that says to middle- and working-class Americans — including the working poor — "You’re on your own."

What America needs is an investment agenda founded in the understanding that "We’re all in this together." I just hope it doesn’t take millions more Americans joining the ranks of the working poor, the long-term unemployed, or the poverty-stricken before the country realizes it.

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