The Poverty Census: The poor get poorer & the rich get richer

Posted: September 17, 2010

IN TODAY'S AMERICA, the poor are apparently getting poorer.

Then again, so is the middle class. And just like in the days leading up to the Great Depression, the rich are getting even richer.

Figures released by the Census Bureau yesterday (full story on Page 31) show that poverty is the highest it's been since 1994 - and for working-age people 18 to 65 years old, it's the highest since 1965, when President Johnson declared a war on it (that ended in a stalemate). For millions of low- and middle-income Americans, the economic ladder has gone only down during the recession.

At the same time, the debate over extending the so-called "Bush tax cuts" for the wealthiest Americans has highlighted a rapid and disturbing growth in income inequality over the last three decades. The richest Americans are gobbling up the biggest piece of the country's economic pie that they have had since the 1930s.

Ladders, pies - here's a third metaphor: Increased poverty and the growing gap between rich and poor threatens the American Dream, the widely held belief that, in the United States, anyone can become a "self-made"man or woman. If that were ever true, it isn't anymore.

The Census Bureau says that 14.3 percent of Americans lived in poverty in 2009, up from 13.2 percent in 2008. One in seven Americans - 43.6 million - was poor last year.

In reality, the true number of poor Americans is probably much higher. The government officially counts as poor a family of four with an income below $30,174, but the method for measuring poverty hasn't changed since 1963, and doesn't take into account soaring medical-care costs, transportation and child care. And new figures from the U.S. Department of Housing and Urban Development confirm the growing crisis: HUD reported that the number of families living in homeless shelters had shot up from 139,000 to 170,000 between 2007 and 2009.

No doubt that massive unemployment triggered by the recession has increased poverty, but there is another dynamic at work. Even people with jobs are losing ground. The wealth that has been created over the last 25 years by increased productivity hasn't trickled down at all. Wages either stagnated or declined.

As author Timothy Noah points out, between 1980 and 2005, about 80 percent of the increase in total U.S. income went to the top 1 percent of Americans - that is, those who make more than $380,000 a year. (Noah is examining income inequality in a 10-part series on Slate.com.)

That richest 1 percent account for 24 percent of the nation's total income, the highest share since 1928, right before the Great Depression. That's nearly triple their 9 percent share in the 1970s.

For the first time in generations, Americans can no longer expect that their children will do better than they will. Workers earning the median wage in 2007 are making less, adjusted for inflation, than workers earning the median wage 30 years ago. Whether you believe it or not, a struggling middle class affects everyone. It's the middle class' purchases of goods and services that power the U.S. economy. If the middle class doesn't have the money to spend, the economy will stay where it is: moribund.

FOR DECADES NOW, the plight of the poor has evoked not empathy but contempt from many ordinary Americans, who have identified more with the "haves" than the "have nots."

Apparently, they believed that, with hard work, anyone can strike it rich in America. The opposite is true. But without a reversal of the widening income gap, they simply can't get there from here.

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