Since 1975, the number of people living below the poverty line in the United States has been steadily rising, according to statistics from the US Census Bureau. And while the percentage of our population living in poverty hit a low in 2000 of 11.3 percent (about equal to the low seen in the early 1970s), it has been rising fairly steadily ever since.
In 2014, the poverty rate was 15 percent, which means 50 million people in our country were living in poverty.
The statistics on children living in poverty are more gruesome. In 2012, child poverty in the United States hit a staggering 24.2 percent, according to a UNICEF report.
Between 2008 and 2012, when 1.8 million more children fell into poverty in our country, Norway, Australia, Chile, Finland, and Poland reduced child poverty by about 30 percent.
Given these alarming trends for Americans, it’s not surprising that more students at our Blum Center on Developing Economies are taking their four-month field studies on poverty inside the United States, not abroad. (More than 800 students have completed these summer studies. They have been a requirement in the multidisciplinary Global Poverty & Practice minor we organized at the University of California at Berkeley in 2006.)
Is poverty increasing in our country because of an increasing inequality of wealth and income? And if so, is it really a problem?
These are the two core questions Bob Reich explores with students at the University of California at Berkeley who flock to his Wealth and Poverty lectures. They are the most popular on campus, filling the seven-hundred seat Wheeler Auditorium to overflowing. Bob’s answer to both questions: a resounding yes.
A strong middle class is vital for a stable, growing economy and engaging citizens in our democracy, but you won’t have a strong middle class if the equality of income and wealth continues to deteriorate.
Bob covers three key themes in his lectures:
Unequal distribution of wealth and income
Between the 1970s and 2012, the US economy as measured per capita grew approximately 150 percent, yet median wages declined. We are now at the point that while the United States has one of the world’s most robust economies, it also has the most unequal distribution of wealth and income.
Most income benefits generated by the recovery since the Great Recession are felt only by those at the very top. The richest four hundred individuals in America have more wealth than the bottom 150 million.
Average pay difference: typical worker, top 1 percent
During the 1970s, the typical male worker earned approximately $48,300, and someone fortunate enough to be in the top 1 percent took home around $393,000. By 2010, that typical male worker’s income had plunged by approximately $14,000 (adjusted for inflation) to $33,700 a year, but that average person in the top 1 percent of earners was making close to $1.1 million.
Three adjustments helped the middle class postpone the decline in household purchasing power: Women entered the work force in droves, adding a second family income; most people worked longer hours, sometimes adding a second or even a third job; and many families increased their debt, often by refinancing their home mortgages. Inevitably, as we all know, that mortgage bubble burst.
Equal opportunity as inalienable right
With US economic output doubling in this period, and median income (adjusted for inflation) falling by approximately 30 percent, how can anyone say that economic growth alone is the solution to poverty?
Simply adding jobs is not the answer. Individuals on the poorest rungs of the social ladder find themselves working not one but sometimes two or three jobs just to make ends meet. Even in most large cities in the US, income inequality widened between 2007 and 2014.
A college degree is more valuable than ever in terms of potential lifetime income, yet it’s likely that new college graduates will spend some years in jobs for which they’re overqualified. Nongrads are being pushed into ever more menial work, if they can get work at all—a major reason their pay is dropping.
The extremes of income inequality are so great that they now threaten our society’s foundation of equal opportunity for the pursuit of happiness as an inalienable right.
Leave a Reply