Either Too Poor or Too Rich

Recently, economists pointed to a small drop in the number of absolutely poor in 2006 census data. Many dispute the finding’s significance. The U.S. government’s calculation of poverty ($20,000 or under a year for a family of four) is considered by many policy analysts as a grossly inadequate measure. The proportion of Americans living in poverty has remained relatively constant in the past decades, ranging from 11 percent to 15 percent (the highest rates of any advanced industrial country). Those who do escape from the ranks of the 37 million who live below the poverty line tend to approach the precarious position of the 57 million near poor (those making between $20,000 and $40,000 for a family of four). Many of these are just one pink slip, one divorce or one major health crisis from falling back below the poverty line.

Katherine Newman, professor of sociology and public affairs at Princeton University, has charted the fate of the near poor for over a decade now in important books such as No Shame in My Game: The Working Poor in the Inner City; Downward Mobility in the Age of Affluence and Chutes and Ladders: Navigating the Low-Wage Labor Market.

By any reckoning, the working poor are quite vulnerable economically. They face substandard day care and a crisis in affordable housing. Many are uninsured or underinsured. They cannot afford tutors or private schools for their children, and in many cases they stagger under dangerously high consumer debt. Many work double-shift jobs to make ends meet. Growing inequality puts a severe squeeze on this second lowest quintile. The top 20 percent of Americans hold 83 percent of the total net wealth of the country; the bottom 80 percent hold only 17 percent. This gap is growing at almost unprecedented rates. The bottom 40 percent of households saw their net worth fall between 1983 and 2001. The share of bachelor’s degree recipients from households earning between $30,000 and $50,000 a year fell from 15 percent of all graduates in 1980 to 11 percent in 2004. Intergenerational mobility in the United States is lower than that found in France, Germany and Canada.

Newman, also a gifted anthropologist, makes the statistically proven vulnerability of the near poor come alive through in-depth interviews with families (mainly African-American and Hispanic) from five neighborhoods in the New York City area. We see how a welfare mother who made the transition to work and escaped the poverty line (by dint of long hours and several jobs) may also jeopardize the mobility chances of her children. Statistics show a mother’s transition to work has negative effects on school achievement of older children (mothers have less time to read to them, interact or supervise homework). Another vignette included is that of an underinsured family experiencing catastrophic illness, which led to their fall from the precarious second lowest quintile back into poverty.

We have been treading water in the way we address poverty. A study by the Federal Reserve Bank in Boston tracked family incomes over a 10-year period. It found that among families in the bottom fifth of the income distribution, slightly more than half remained there after 10 years; a quarter had moved up, but only to the second quintile. Among families who started out in this second quintile, about a quarter dropped to the bottom quintile over the same 10-year period.

Many of the working poor also bear financial burdens for extended family members. Twenty-nine percent care for indigent elderly parents. It can be a nightmare for low-paid factory workers to get time off to take their child to a doctor’s appointment or to treat a sick child at home. The working poor, under strain, have higher divorce and separation rates than the national average.

Newman and her co-author Victor Chen, a journalist, turn in a final chapter to issues of policy reform. Their suggested remedies echo those of most of the people who study poverty in America: from addressing the minimum wage (with an automatic indexing of it to reflect inflation), to health care reform, to educational reform, to policies that support home ownership for the near poor, to reform and regulation of lending practices (one of the families in this study lost its home because of exorbitant sub-prime mortgage rates). Of high priority would be child-care and education reforms. As the authors argue “[W]e must replace this patchwork child-care ‘system’—a term it barely merits—with a comprehensive, public-supported network of day care (for children aged six months to 3 years) and kindergarten (starting at four).” The benefits of such early childhood interventions would outweigh the costs by $32 billion by 2030, if we factor in the expected returns on lifetime earnings and decreased criminal behavior by the young.

I read The Missing Class simultaneously with the 2006 policy paper by Catholic Charities USA, Poverty in America: A Threat to the Common Good. Most of its statistics mirror those of The Missing Class. The policy positions are also quite similar. One advantage of Catholic Charities’ policy paper over this book by Newman and Chen is its ability to mount a clear moral argument for addressing poverty in America (something that, ultimately, diminishes us all). The goal of reducing poverty and near poverty in America will require major structural changes.

Whether the nation has the will to address poverty as a systemic and serious issue remains to be seen. Listening to the voices of the often desperate families in The Missing Class, one has a sober sense that our nation—unlike the Good Samaritan—is passing by those who have been left by the road.