Are things really that bad?
In a recent Minnesota Spokesman Recorder column discussing how the federal poverty rate is measured, I cited a 2013 study by the Oregon Center for Public Policy regarding the application of its Family Budget Calculator to determine the “basic level of economic security” for families. This alternative instrument designed to more accurately measure poverty suggests that 44 percent of Americans, nearly 140 million people, currently experience economic insecurity. In essence, this means that close to one-half of all Americans are living in or on the edge of poverty.
The research findings of the Oregon Center for Public Policy are further bolstered by a 2013 report from Wider Opportunities for Women (WOW) and the Massachusetts Institute of Technology’s (MIT) Living Wage Calculator. The WOW report demonstrates that a minimum hourly wage of more than $14, nearly twice the current federal minimum wage, would be required for all single-person households in American to achieve economic security.
MIT’s Living Wage Calculator, which analyzes the economic conditions of every U.S. county, notes that a living wage for a one-parent, one-child household in Ramsey County is more than $20. Furthermore, in order to achieve economic security for a one-parent, two-child home in Ramsey County, a wage of more than $26 is required.
In spite of this data, a representative of the Pew Charitable Trust recently painted a different picture of the American economy during “A Minnesota Without Poverty” workshop in June. In assessing economic mobility and the “health and status of the American Dream,” the Pew Charitable Trust’s Erin Currier stated, “We’ve seen some surprising data. On the one hand, Americans are doing great. They’re making more money than their parents did; the economy’s gotten better over the last generation in absolute dollar terms, a pretty rosy picture.”
In fairness to Currier, she further commented that people of color are less likely to achieve economic mobility and that Americans are currently less upwardly mobile than Canadian citizens and many western Europeans.
With that said, I find myself utterly struggling with her contention that “American’s are doing great.” Who exactly is she referring to with this statement? Over the past several months, numerous media outlets, research institutes, and financial analysts have reported on the financial recovery in the United States, citing the notable growth of America’s Gross Domestic Product (GDP), shrinking unemployment levels, wealth creation, and impressive stock market performance.
However, author Marko Bucik, a financial consultant for the World Bank in Washington, D.C., contends that these measures are misleading and “too abstract to trace more profound social and economic realities and are thus, well, slightly irrelevant to judge whether a real recovery is taking place.” Related to unemployment in the U.S., Bucik observes that the reduction in unemployment from nine percent in 2009 to a little more than seven percent presently fails to account for the tens of thousands who have exhausted their unemployment benefits or left the job market altogether.
Nor does the unemployment rate reflect the thousands more who have been forced to settle for part-time employment or jobs with significantly lower wages. In reality, argues Bucik, the true measure of unemployment in American is likely more than twice the official rate. He further points out that the use of SNAP (Supplemental Nutrition Assistance Program) has nearly doubled in the last four years as close to 50 million Americans receive food stamps today.
So perhaps Currie and others are correct when they highlight the growth of America’s GDP, record stock market gains, and escalating accumulation of wealth. Nonetheless, as a myriad of financial experts will tell you, these gains have largely been just for the few.
Lest we forget, the Oregon Center for Public Policy and others are talking about Americans already living in poverty or who are in danger of joining the ranks of the poor. Neither the GDP nor what transpires on Wall Street is of any real relevance to poor Americans, or for that matter an increasing number of middle-class Americans.
Although America may be sitting on more wealth than has ever existed before, very few are invited to the table. According to Oxfam International, the richest one percent of Americans accumulated more than 95 percent of all wealth generated since 2009, right on the heels of the 2007-2008 economic crisis.
Still, in spite of this enormous wealth, Dr. Peter Edelman, author of So Rich, So Poor, reports that the average American’s wages are at their lowest point since 1964. So for a rather miniscule fraction of Americans, things have never been better. But for at least half, and likely many more Americans, things are really this bad.
Clarence Hightower is executive director of Community Action Partnership of Ramsey & Washington Counties. He welcomes reader responses to 450 Syndicate Street, St. Paul, MN 55104.