Saturday, February 1, 2014

Losing the War on Poverty

This January marked the 50th anniversary of the War on Poverty started by President Lyndon Baines Johnson.  Of course this had led to discussions among pundits and politicians as to whether this program really did much to eliminate poverty.  There are those who say that we had poverty back then and we still do now – perhaps even more.  So does this mean that its critics were right in that this was just another well-meaning government program that failed because it is just another thing that government just doesn’t do well? 

It’s hard to make such a generalization because life in the United States back in 1964 was so much different than it is now. 

It cannot be denied that the best way to stay out of poverty is a steady job that pays a living wage.  Back then at least for most of us, opportunities for these were ample if not abundant.  There was a choice of perhaps a manufacturing job for those who preferred a job working with their hands and for those who went to college, an opportunity to perhaps reach for the upper classes.  But while the college graduate could command a better salary, the blue collar workers were by and large also members of the middle class.  Do a good job and keep your nose clean and you could expect to not only make a living wage (often because of a union to negotiate on your behalf) but also have secure employment until you retire and get your company pension. 

Poverty existed, but much of it was suffered by minorities who didn’t get the same educational and job opportunities as others (remember it was the Civil Rights Act of 1964 that actually allowed blacks to share the same public facilities with whites where there was segregation). Ample job opportunities existed – it was just that some were shut out of them.  The only way to address this was for the government to get involved to try and promote equal opportunity for everybody to enter the middle class.  But regrettably, minority unemployment is still significantly higher than for others. 

The above scenario of 1964 has changed radically since then.  Blue collar manufacturing jobs have disappeared offshore to be replaced by low-paying service jobs.  While some have returned, many of them do not pay a living wage, especially with unions being stripped of much of their negotiating power.  Investing in a college degree nowadays is just as likely to result in a large college loan to pay off with no real professional job prospects. The dream of working for one company for life is now a fantasy with workers being dumped on a whim. And company pensions have gone the way of the dinosaur. 

So while poverty can have a number of different social causes, it is my view that the main driver of poverty today in the US is the severe and persisting lack of jobs that pay a living wage.   

At the present time, there are still about 3 job seekers for every job opening in the US as detailed in this link.
The Job Openings and Labor Turnover Survey (JOLTS) data released this morning [11/22/2013] by the Bureau of Labor Statistics showed that there were 3.9 million job openings for 11.3 million job seekers in September—meaning that for every job opening there were 2.9 people looking for work.  

While the job seekers ratio has been decreasing from a high of 6.7-to-1 during the Great Recession, today’s ratio of 2.9-to-1 matches the highest the ratio ever got in the early 2000s downturn In a labor market with strong job opportunities, the ratio would be close to 1-to-1, as it was in December 2000.

The JOLTS data are also a reminder that the current elevated unemployment rate has little to do with a skills shortage or mismatch, as unemployed workers dramatically outnumber job openings in all industries.

“In no industry does the number of job openings even come close to the number of people looking for work,” writes Gould. “This demonstrates that the main problem in the labor market is a broad-based lack of demand for workers—not, as is often claimed, available workers lacking the skills needed for the sectors with job openings.”
When the problem of long term unemployment and its possible leading into poverty is viewed this way, a lot of the prevailing “wisdom” on the subject turns out to be little more than hot air.  e.g. If we cut unemployment benefits, everybody will then go out and get a job.  If we can only retrain workers, they can then all get jobs.  If we could only reinvent ourselves, we can all get jobs. blah, blah , blah.  Moreover, the article points out that a decline in the number of job seekers because of people giving up in this weak labor market makes even these statistics look better than they actually are.  

In addition, there are conservative commentators such as David Brooks who for example in this op-ed column decry that the main cause of poverty and low social mobility is the fraying of the social fabric in America.  Surely there is something to this.  But few things can fray the social fabric of society better than poverty.  I believe the argument that poverty being a driver of much of our social dysfunction is a more persuasive one. 

Of course, one of the inevitable results of a lack of jobs is the unrelenting downward pressure on wages. So even if one can find a job, it is no guarantee that it will pay enough to avoid poverty.  The concept of a living wage for the so-called working poor is one that has been discussed by some.  The reader is invited to check out one of my previous postings A Living Wage for Americans for my thoughts on the subject.  

But for now, the pertinent question for Americans to answer is whether someone who works a 40 hour workweek deserves to live above the poverty line.  Sadly, there are all too many who believe the answer is not necessarily.  The argument goes that someone who does what is considered unskilled labor doesn’t deserve to be paid a living wage.  If they want a living wage, so the argument goes, they should go to school or get the training to acquire the skills to demand a larger paycheck.  This argument made perfect sense when there were an adequate number of jobs to be had, but makes less sense when there are job shortages in just about every field as noted above. 

But even if these people were able to move up to a better job in this scenario, what about the jobs they left behind?  Somebody still has to do these jobs!  For whatever the skills are of the management of say, a fast food restaurant to deserve their higher pay, without the so-called unskilled labor provided by the burger flippers, the counter workers, and even the people who clean the rest rooms, the company would be unable to make a dime!  When viewed in this light, don’t these workers at least deserve the dignity of a wage that takes them out of poverty? 

There is no question that poverty is becoming an ever increasing problem in the US, even with the economy said to be recovering.  We have increasing numbers of people needing food stamps to live on and many of the food banks are having trouble keeping up with the demand of hungry people. What is even more disturbing is that there are those in the middle class who are only a lost job, a divorce, or a healthcare catastrophe from falling into the depths of poverty themselves.  And although poverty has traditionally been associated with urban and rural dwellers, poverty rates are now surging in America's suburbs.
For example, poverty is up by almost 16 percent in the suburbs of Pittsburgh.  Up more than 27 percent in the suburbs of Providence.  Nearly 79 percent outside Seattle.  And in the suburbs of Austin, Texas, the number of poor has swelled almost 143 percent.  More poor people now live in America’s suburbs than in cities or in rural areas.
But America with its culture of individualism all too often pays lip service to those in need.  Instead of an attitude that we are all in this together, there is the attitude that you are on your own.  How else can one explain that there are so many who are not only against a living wage for the working poor but even a paltry raise in the minimum wage?  Or the campaign by some to cut safety net benefits like food stamps. 

But surely we can take care of the needs of our veterans who served honorably in Afghanistan and Iraq and to make sure that they can return to this country and successfully integrate into the workforce. Right? But for all of the times we say that we “salute their service”, news like this says all too often that we are giving them little more than the one-finger salute.  
It is the shame of America. The Department of Veteran Affairs reports that 48,000 veterans who served in Afghanistan and Iraq since 2001 are either homeless or in a special program to keep them off the streets.
We are the richest country on Earth that has the resources to eventually win the war on poverty – or at the very least, win some major battles against it.  Our economy generates an incredible amount of wealth – but little or none of it goes to those at the bottom who need it the most.  As long as our economy is unable to produce enough jobs that pay a living wage for everybody who wants to work, we will continue to lose the War on Poverty.  A prosperous economy for all simply cannot exist when there is stubbornly high unemployment.  Past experience has shown that government spending to stimulate the economy for things like needed infrastructure improvements have been much more successful in creating jobs than austerity measures that have resulted in Great Depression levels of unemployment in parts of Europe.
President Obama in his recent State of the Union address did note the need for infrastructure spending and also noted that nobody should work a 40 hour week and live in poverty.  So he then advocated a minimum wage increase to $10.10 per hour.  What is disheartening is that he is unlikely to get any support whatsoever for this from Republicans.  And even if he did, $10.10 per hour is hardly enough to raise anyone out of poverty.
An adequate number of jobs that pay a living wage is the only way to have a fighting chance to truly win the War Against Poverty nowadays. We have the means to do it.  All we need is enough people to really care!