For this week's Common Good Forum, CACG chairman Fred Rotondaro analyzes the underlying causes of poverty in the United States and the false myths that color Representative Paul Ryan's newest approach to tackling one of our nation's biggest moral scandals.
It is a myth, comforting to some Americans that poverty is all about motivation and personal responsibility. It is a myth deeply rooted in Calvinistic ideas about human worthiness or, more precisely, its lack. This myth allows those who have succeeded in the material measurements of life to congratulate themselves on their grit and intelligence. It allows politicians and policy makers to concentrate on side issues relating to poverty without ever confronting the public policies of the last three decades plus which have intensified poverty and inequality and reduced American social and economic mobility below that found in the majority of other industrialized nations.
There are 45.6 million Americans living below the poverty rate, which is defined as $23,850 for a family of four. In addition to those in poverty, there are some 90 to 100 million Americans living just above the poverty line. These could, of course, find themselves below the official poverty line in the twinkling of an eye if they lost a job or had a major uninsured illness.
A majority of the American poor have little hope of leading even semi-secure lives without help from the rest of us. Of the 34 major industrialized nations, America has the second highest number of children under18 years of age living in poverty. Only Romania has a worse record than our 22 percentage rate of children living poverty. That percentage equals over 16 million children in poverty, a shocking number. Surely, no one can blame these children for their lack of grit and intelligence.
Other large groups of Americans in poverty are seniors, of whom 3.9 million live in poverty, and those with disabilities, another 4.3 million. Single mothers with children are another significant group among the poor. Not all American in poverty are unemployed. Some 10.6 million Americans work at least 27 hours a week and still are in poverty.
Why? The answer is quite simply that the wages of American workers have fallen dramatically behind payments to executives and obscenely large returns on capital investments. These phenomenon have been thoroughly documented in Thomas Pikkety 's new book Capital. Worker productivity has gone up some 85 percent in three decades, yet wages have risen only 11 percent, and this figure has likely fallen in the last few years. Meanwhile, executive salaries have gone up 270 percent from 1979 to 2006, according to Jacob Hacker and Paul Pierson in their book Winner Take All Politics.
We return again to the myth which polls show is believed by over two-thirds of all Americans. Is poverty all about motivation, education, the ability to adjust to global technology? Many claim this, as if it was self-evident, but scholars such as Pierson, Hacker, Larry Bartels in Unequal Democracy and Pulitzer Prize winner Hedrick Smith all present solid evidence this is not the case. These and other writers show that poverty, inequality, and declining mobility are in many cases
the direct result of policy decisions that favor corporate America over the needs of the American people. These decisions fall in many areas
For example, tax policy decisions have consistently helped the rich and corporations for more than thirty years. The effective tax rate for corporations used to be 36 percent; today it is 12 percent. How many of us forget multi-millionaire Mitt Romney talking about the takers, the 47 percent of Americans who receive some form of government assistance, while he was less chatty about his own tax rate at under 14 percent?
Trade policy is another area where corporate interests have prevailed as jobs have been moved overseas even as the corporations doing this have received preferred tax status. The roots of the crisis off unaccompanied children from Central America fleeing to the U.S. are found in the effects of twenty years of NAFTA and the crushing effect those trade policies have had on the economies of Honduras, El Salvador and Guatemala.
And, of course, corporate America has managed to dramatically diminish the power of labor unions which have been the major advocate for working Americans throughout the twentieth century. Few things have harmed working class Americans more than the diminished role of labor unions in the economy.
Another major factor is that corporations since the late 1970s have consolidated their economic power to assume significant control of the Republican Party and substantial power in the Democratic Party. The result of this political power has been analyzed by scholars at Princeton and Northwestern universities, who examined some 2000 pieces of Congressional legislation from 1982 to 2002 in an attempt to determine whose interests prevailed. The study concluded that lower and middle income Americans had virtually no power to influence legislation. It was the oligarchy, not democratic America, that got its way. Since the time period of that study, the Supreme Court has given even more power to the American oligarchy in such decisions as Citizens United.
New York Times economics correspondent Eduardo Porter noted recently that "these rulings have allowed a rush of private money into political campaigns...underscoring...how plutocracies could purchase the policies it wants to maintain its privilege locking in inequality forever."
The combined result of these and related actions have been dramatic. American politicians, led by House Speaker John Boehner and House Budget Chairman Paul Ryan reject raising the minimum wage from $7.25 an hour to $10.10 an hour, claiming against all evidence that such an increase would cost jobs. Economists such as Mike Konczal of the Roosevelt Institute argues raising the minimum wage would lift 4 .6 million people out of poverty.
Representative Ryan presents a plan to combat poverty based largely on myths about poverty and the claims that American mobility is alive and well. He either does not know or chooses to deny--which is worse-- that American mobility lags behind most other industrialized countries and that American median income, when adjusted for inflation, has dropped from $56,000 to to $51,000 in the last dozen years.
In the upcoming weeks, Catholics in Alliance will consider the issue of poverty from a variety of angles. As the country approaches the midterm elections, we will analyze many issues from the perspective of the common good, but for a Catholic, the issue of poverty deserves, even demands, a central focus. We thank Congressman Ryan for engaging the debate, and we intend to take him up on his offer to think critically about this issue. Here at CACG, we have been thinking critically about the poor since our beginning.