Dear middle class: Welcome to poverty

With income inequality surging, the middle class is disappearing into the chasm

Topics: AlterNet, Poverty, Middle Class, Income inequality, social safety net,

This article originally appeared on AlterNet.

AlterNetFifty years ago today, LBJ threw down the gauntlet on poverty in his famous State of the Union address of 1964. Fired with passion and buoyed by bipartisan support, his anti-poverty team kicked off new health insurance programs for the old and the poor, increased Social Security, established food stamps and nutritional supplements for low-income pregnant women and infants, and started programs to give more young people a chance to succeed, like Head Start and Job Corps.

Americans have greatly benefited from big-picture economic changes like the minimum wage; investments in worker training and education; civil rights policies; social insurance; and programs like food stamps and Medicaid. As Georgetown University’s Peter Edelman pointed out in theNew York Times, without these programs, research shows that poverty would be nearly double what it is today. According to economist Jared Bernstein, Social Security alone hasreduced the official elderly poverty rate from 44 percent, which it would be without benefits, to 9 percent with them.

Some of our most prominent citizens have enjoyed protection from life’s vagaries through one or another of these measures. President Obama’s family once survived on food stamps. Congressman Paul Ryan was able to pay for school with Social Security survivor benefits when his dad died. A mere generation before, the workhouse or the orphanage might have been their fates.

Yet middle-class Americans are increasingly in danger of learning about poverty firsthand.

Middle-Class Tightrope

The gaps between the rich and poor are the widest they have been in a century, and the middle class is disappearing into the chasm. According to research by economist Emmanuel Saez, the share of income that goes to the top 1 percent has more than doubled since 1964. In the aftermath of the Great Recession, the top 1 percent has sucked up nearly all of the income gains in the first three years of the “recovery” — a stupifying 95 percent. The fluidity of American society used to be taken for granted, but now the U.S. lags behind Europe in measurements of mobility.

Not only is the climb to middle-class stability increasingly steep, the fall into poverty is more likely. The Great Recession brought home an ugly reality: nowadays it only takes one pink slip, foreclosure notice or catastrophic medical bill to push economically secure people into the ranks of the poor — even people with college diplomas and impressive resumes.

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Why is this happening? Not because of some cosmic forces beyond our control, but because of misguided policies put into place by our elected officials and paid for by an increasingly out-of-touch business elite.

Energized by Ronald Reagan’s famous declaration that government is the problem, not the solution, conservatives in recent decades have sought to reduce the government’s vital role in creating opportunity and keeping hard-pressed Americans afloat. Simultaneously, they have unleashed the wild horses of deregulated capitalism, which have trampled working people. Labor unions have been crushed, wages have declined, safety nets have frayed, medical expenses have risen, and millions of Americans are now teetering on the edge of poverty.

It gets harder and harder to work your way out of dire straits. A mom with two kids toiling full-time for minimum wage at a grocery store would make about $15,000 a year, well below the poverty line of $18,498 for a family of three. But just looking at poverty figures doesn’t tell the whole story. A far larger group of Americans — around 100 million — is considered low-income, which would mean about $45,000 in income for a family of four. When you include the low-income category,census data show that the number of economically distressed Americans jumps to 50 percent. Half of us!

Former President Jimmy Carter has said that the American middle-class is beginning to look like those who lived in poverty when he occupied the White House. He attributed this reduced quality of life to the rise in tax breaks for the wealthy, an insufficient minimum wage, and electoral districts drawn to maximize political polarization.

Poverty For All?

New research shows that four out of five U.S. adults will struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives. What’s especially interesting is that the face of poverty is changing. You are still more likely to be poor if you are black or brown, but census data show that race disparities in the poverty rate have significantly narrowed since the 1970s. By the time they turn 60, a whopping 76 percent of whites will experience economic insecurity, defined as a year or more of periodic joblessness, reliance on government assistance like food stamps or income below 150 percent of the poverty line.

You read that correctly. Three out of four white people will get a chance to know economic panic before they reach retirement age.

The thing is, we know how to fix this. We’re not starting from scratch, as we did in the Great Depression. The tests of time have demonstrated that when the government invests in its citizens, society and the economy are rewarded many times over. There are a few signs that the message is getting across. For example, increasing the minimum wage has growing support. But a great deal more is required if we want to avoid a giant — and wholly unnecessary — social experiment in poverty creation. Here are a few suggestions for a new anti-poverty agenda:

  1. Make the rich pay their fair share by ending unfair tax breaks.
  2. Expand Social Security, as Sen. Elizabeth Warren and others have demanded.
  3. Protect people from going hopelessly into debt through medical expenses Obamacare has failed to put a tight lid on potential total medical costs. Eventually, we must join the civilized world with single payer healthcare.
  4. Increase state-supported education. It’s absurd that people have to go into debt just to pay for their educations.
  5. Strengthen regulation so irresponsible companies do not rob ordinary Americans.
  6. Restore the rights of workers, like collective bargaining and protection from wage theft.
  7. Understand that austerity policies do not work, and only exacerbate economic woes.
  8. Aggressively attack unemployment and remember the lesson learned in the Great Depression: when the private sector can’t come up with jobs, the government must fill the breach.
  9. Protect the reproductive rights of women.
  10. Protect civil rights, such as access to voting, in places where such rights are under attack.

As soon as you say the word “poverty,” certain beliefs kick in. On the political right, the word conjures notions of bad choices and personal defects, and sometimes, race. On the left, people think more of hard circumstances and blocked opportunity. Whatever our politics, if we stay on the present course it’s less likely that we will be able to think of poverty as something distant from our lives.

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