The great jobless economic recovery

In May 2016 the American unemployment rate was 4.7% and the consumer price index rose by 0.2%, building on an increase noted in April. This would be cause for celebration if one overlooks another number, the proportion of Americans participating in the labor force, which stands at 62.6%. According to The Economic Policy Institute’s flagship publication, “The State of Working America,” this country’s low- and middle-income families have suffered a lost decade, in which the median family income was 6% lower in 2010 compared with 2000. Despite a 22% increase in productivity, typical wage-earners made about the same amount per hour as in 2000. While the bottom 60% suffered a decline in wealth, almost three-quarters of the wealth went to the top 5% between 1983–2010. In fact, if one looks back over a span of more than a decade, productivity grew 69% and wages grew just 7%.
Once upon a time, if you went to college, worked hard and paid your dues you were virtually guaranteed the American Dream. There was an inextricable link between hard work, economic growth and falling poverty. Today that is no longer true. Over 46 million Americans live in poverty, according to 2010 statistics. More than half of them were African-American or Hispanic. Nearly half of black children under the age of 6 years old lived in poverty compared to 14.5% of white children. Digging deeper into the numbers, 44.3% of poor people are in deep poverty (living on half or less of the official poverty line; this deep-poverty threshold stood at $11,057 in 2010 for a family of four). This number could in fact be higher, since experts think that the official estimates understate the number of actual people living in poverty. In their book, “$2.00 a Day: Living on Almost Nothing in America,” Kathryn Edin and Luke Shaefer, noted that nearly 1.5 million Americans lived on $2 a day, including about 3 million children.
Changing racial compositions, code words for immigration or instability in some political quarters, account for only a 0.9 percentage-point increase in poverty rates, according to the Economic Policy Institute study spanning the 1979–2007 period. The most significant contributor, income inequality, contributed 5.5 percentage points to increased poverty rates. The Pew Research Center’s recent analysis on the shrinking middle class builds on this theme, while a brief from the UC Berkeley Labor Center fills in the details on declining manufacturing wages and the proliferation of temporary staffing agencies in this document: Producing Poverty: The Public Cost of Low-Wage Production Jobs in Manufacturing. When a day’s wages can no longer feed your family, the default action is to rely on government programs such as Medicaid and food stamps, to survive.

In addition, the 2009 median age of an American was 36.8 years old, with researchers agreeing that the country is becoming a nation of older people. In an evolving job market, where sought-after skills in green energy and engineering may be the prerogative of a select group of highly-educated younger people and, yes, immigrants, room will have to be found at the table for these older Americans. This means foregoing the piece-meal block grant approach, dreaming of transforming everyone into entrepeneurs and facilitating a long overdue inter-generational conversation on what it would take to match existing skills to available/new jobs and ultimately steer the economic ship back into clear waters of progress.

So the systemic economic issues plus or minus security/nationalism/radicalism/jihadism/-fill in any other -ism are here to stay and will not disappear through rhetoric alone. Is anyone listening?

Revisiting food stamps

April 15, tax day in the USA, has come and gone. The government’s coffers are filled with dollars that will be divided into paying off the federal debt and spending devoted to mandatory and discretionary needs of Americans. According to the National Priorities Project, more than half of the 2015 discretionary spending is proposed to go to the military. Of the $2.6 trillion earmarked for mandatory spending, 50% is proposed to go to social security, unemployment, and labor and 39% is likely to be devoted to Medicare and health. Last year, about 11% of the federal budget went to non-health-related safety net assistance to individuals and families that have endured hard times. This category of individuals is likely to include minimum-wage employees and long-term unemployed people. Many of them may survive with the aid of food stamps, a topic I touched upon in a 2013 post in the Norwalk Patch. Although, the numbers below are out of date, the message of needing to address core societal issues in order to improve the economy remains the same:

Photo essays and YouTube videos paint portraits of the human condition and its endless possibilities. Bill Brandt’s visual exploration of landscape and literature enhance our understanding of life in Britain in the previous century. Akram Zaatari’s archiving of black-and-white photos and use of social media inform us of the lives of ordinary citizens in North Africa, the Middle East, and Arabic communities around the world. We view the world through their eyes and begin to appreciate the complexities of historical events and different societies. Similarly, Apple’s latest video promoting its mhealth tools opens our eyes to the possibilities of assisting communities worldwide.

Unfortunately, many Americans will not see or benefit from the gifts of these innovators. The ‘generational or situational poor’ continue to scrape by in the richest country in the world. Many American kids are also poor and therefore unlikely to have the energy to read, learn computing or become part of the information revolution that is capturing our imaginations today. They are simply going hungry or, if the long lines at fast food chains are any indication, consuming cheap food with knock-on health effects like obesity. According to the Child Trends report for 2013, 34 children out of a hypothetical class of 100 high school graduates are likely to be overweight and 22 are living in poverty (10 in deep poverty). If poor children are lucky enough to have parents or parental figures, these individuals are possibly unemployed, working in low-paying jobs, or receiving some form of government assistance. Families who have fallen on hard times depend on food stamps to make ends meet. This means that approximately   13 million US children and many more adults will have to find ways of making the $31.50 per week  (according to the Lowell Sun) they may receive from Supplemental Nutritional Assistance Program (SNAP or food stamps) stretch into nutritious meals that can fuel their bodies and energize their minds.

Congress has now voted to cut the SNAP budget by roughly $4.1 billion.  Regardless of one’s political point of view, the sad truth is that the 2008 economic crisis caused a dramatic increase in hunger in the United States. Add to this the fact that at least 40% of food is wasted annually (at a yearly disposal cost of $1 billion), and one begins to see the dilemma facing the poor and the charities that must now step in to fill the void left by the government. While Congress continues to debate the depth of the SNAP program cuts, one cannot help but wonder if there are alternative solutions? Could shoring up the program combined with targeted assistance to budding entrepreneurs in poorer neighborhoods provide “a way out” for some people? In her book, The Blue Sweater: Bridging the Gap between Rich and Poor in an Interconnected World, Jacqueline Novogratz, CEO of the Acumen Fund, illustrates the success of Acumen’s model of philanthropic investing in making people self-sufficient. Successful replication of this model or similar options in the US may revive the spirits of those who have fallen on hard times.