Showing posts with label Poverty. Show all posts
Showing posts with label Poverty. Show all posts

January 28, 2014

Work Hard Pay Taxes Die Destitude

From the White House to the Vatican to the business elite in Davos, Switzerland, one issue keeps seizing the agenda: the growing gap between the very wealthy and everyone else.
It's "the defining challenge of our time," says President Barack Obama, who will spotlight the issue in his State of the Union address Tuesday night. A Gallup poll finds two-thirds of Americans are unhappy with the nation's distribution of wealth. Experts say it may be slowing the economy.
Why has the issue suddenly galvanized attention? Here are questions and answers about the wealth gap — what it is and why it matters.
Q. Hasn't there always been a wide gulf between the richest people and the poorest?
A. Yes. What's new is the widening gap between the wealthiest and everyone else. Three decades ago, Americans' income tended to grow at roughly similar rates, no matter how much you made. But since roughly 1980, income has grown most for the top earners. For the poorest 20 percent of families, it's dropped. Incomes for the highest-earning 1 percent of Americans soared 31 percent from 2009 through 2012, after adjusting for inflation, according to data compiled by Emmanuel Saez, an economist at University of California, Berkeley. For the rest of us, it inched up an average of 0.4 percent. In 17 of 22 developed countries, income disparity widened in the past two decades, according to the Organization for Economic Cooperation and Development.
Q. So who are the top 1 percent in income?
A. They're bankers, lawyers, hedge fund managers, founders of successful companies, entertainers, senior managers and others. One trend: Corporate executives, doctors, and farmers made up smaller shares of the top 1 percent in 2005 than in 1979. By contrast, the proportion of the wealthiest who work in the financial and real estate industries has doubled. The top 1 percent earned at least $394,000 in 2012. Through most of the post-World War II era, the top 1 percent earned about 10 percent of all income. By 2007, that figure had jumped to 23.5 percent, the most since 1928. As of 2012, it was 22.5 percent.
Q. How has the middle class fared?
A. Not well. Median household income peaked in 1999 at $56,080, adjusted for inflation. It fell to $51,017 by 2012. The percentage of American households with income within 50 percent of the median — one way of measuring the middle class — fell from 50 percent in 1970 to 42 percent in 2010.
Q. Does it matter if some people are much richer than others?
A. Most economists say some inequality is needed to reward hard work, talent and innovation. But a wealth gap that's too wide is usually unhealthy. It can slow economic growth, in part because richer Americans save more of their income than do others. Pay concentrated at the top is less likely to be spent.
It can also trigger reckless borrowing. Before the 2008 financial crisis, middle class households struggled to keep up their spending even as their pay stagnated. To do so, they piled up debt. Swelling debt helped inflate the housing bubble and ignite the financial crisis. Experts note that the Great Depression and the Great Recession were both preceded by surging income gaps and heedless borrowing by middle class Americans.
Q. Has it become harder for someone born poor to become rich?
A. The evidence is mixed. Countries that have more equal income distributions, such as Sweden and other Scandinavian countries, tend to enjoy more social mobility. But a study released last week found that the United States isn't any less mobile than it was in the 1970s. A child born in the poorest 20 percent of families in 1986 had a 9 percent chance of reaching the top 20 percent as an adult, the study found — roughly the same odds as in 1971.
Other research has shown that the United States isn't as socially mobile as once thought. In a study of 22 countries, economist Miles Corak of the University of Ottawa found that the United States ranked 15th in social mobility. Only Italy and the Britain among wealthy countries ranked lower. By some measures, children in the United States are as likely to inherit their parents' economic status as their height.
Q. So why has income inequality worsened?
A. There's no simple answer. Globalization has created "superstars" and concentrated pay among corporate executives, Wall Street traders, popular entertainers and other financial elite. At the same time, factory workers now compete with 3 billion people in China, India, eastern Europe and elsewhere who weren't working for multinational corporations 20 years ago. Many now make products for Apple, Intel, General Motors and others at low wages. This has depressed middle-class pay. And pay has risen much faster for college graduates than for high-school graduates. These trends have contributed to a "hollowed out" labor market, with more jobs at the higher and lower ends of the pay scale and fewer in the middle.
Social factors contribute, too. Single-parent families are more likely to be poor than other families and less likely to ascend the income ladder. Finally, men and women with college degrees and high pay are more likely to marry each other and amplify income gaps.
Q. Does wealth distribution follow a similar pattern?
A. It's even more pronounced. A Pew Research Center study found that the wealthiest 7 percent of households grew 28 percent richer from 2009 through 2011. For the bottom 93 percent, collective wealth fell 4 percent. That's largely because wealthy households own far more stocks and other financial assets than others. By contrast, whatever wealth middle-class Americans have is mainly in their home equity.
Since the Great Recession ended, stock-market averages have soared, setting records in 2013. Home values, though, remain far below their peaks reached in 2006. That divergence has benefited the richest and left others struggling.
Q. Where do the 1 percent live?
A. Investor Warren Buffett famously lives in Omaha, Neb. Les Wexner, whose fashion empire includes Victoria's Secret, is an Ohioan. But the wealthy mainly cluster around the largest cities. Of the 515 U.S. billionaires, 96 live around New York City, according to the intelligence firm Wealth-X. Los Angeles is home to 22, Chicago 21, San Francisco 20, Houston 14. Millionaires are more widely dispersed. Maryland has the highest concentration. Of all its households, 7.7 percent have $1 million or more in financial assets. New Jersey, Connecticut, Hawaii and Alaska have the next-highest concentrations, according to a report from Phoenix Marketing International.
Q. Has the Obama administration made progress in narrowing the wealth gap?
A. No. By most measures, it's worsened in the past seven years. President Barack Obama managed last year to restore higher tax rates on incomes above $398,350. And he's pushed other steps that might narrow the gap slightly, such as a higher minimum wage. But congressional Republicans have resisted most such measures.
Q. Is everyone concerned about the wealth gap?
A. Some conservative economists question much of the data. They note, for example, that Saez’s figures don’t include government benefits, such as Social Security or food stamps, or employer payments for health insurance, that benefit the less-than-rich. Yet the Congressional Budget Office did include government benefits and the effect of taxes in its own study and still found a sizable gap: For the top 1 percent, income jumped 275 percent, adjusted for inflation, from 1979 to 2007. For the middle 60 percent of Americans, it grew less than 40 percent.
Q. So what do experts say is the best way to shrink the wealth gap?
A. Most ideas break down along political lines. Liberal economists tend to support a higher minimum wage, greater access to pre-school and college education and more spending on roads, bridges and other infrastructure to help generate good-paying jobs. Most favor higher taxes on the wealthy to pay for such programs.
Conservatives tend to back tax cuts, government deregulation and other steps they say will accelerate hiring and growth and raise living standards for everyone. They tend to focus on the need to advance income mobility.
In a speech this month, Florida Republican Sen. Marco Rubio acknowledged the enormous pay disparity between a fast food company's cashier and its CEO.
"The problem we face is not simply the gap in pay between them, but rather that too many of those cashiers are stuck in the same job for years on end," Rubio said.
— By Associated Press Economic Writers Christopher S. Rugaber and Josh Boak. AP Business Writers Paul Wiseman in Washington and Bernard Condon in New York contributed to this report.
Pic and Edit by adamfoxie*blog

January 8, 2014

86% of Americans Want The Government to Fight Poverty

Food Bank For NYC
People eat dinner at a soup kitchen run by the Food Bank For New York City. The food bank distributes dry, canned and fresh food to needy residents and works with community based member programs to provide some 400,000 free meals per day throughout New York City. Need increased in November when 47 million low-income people nationwide saw their food stamps cut as the federal SNAP program expired. (John Moore / Getty ImagesDecember 11, 2013)

Fifty years after President Lyndon Johnson announced a “War on Poverty,” a majority of Americans believe that persistent economic hardship is the result of a broken economy, not of personal or government failures. They broadly agree that the government has a responsibility to use its resources to fight poverty, and should pursue a target of reducing it by half over the next decade.
Those are the conclusions of a public opinion survey published Tuesday by the Center for American Progress. The report assessed perceptions of poverty in general, as well as opinions of the War on Poverty in retrospect and of policy proposals on the table now. As lawmakers move to cut benefits and refuse to consider serious investments in the economy, in education and in healthcare, the survey is another reminder that those are precisely the investments people want the government to make.
News of falling unemployment, a rising stock market and an end to the recession hasn’t shaken the public’s perception that a vast proportion of Americans can’t meet their basic needs. In fact, Americans see poverty as being far more widely spread than the government does. Asked what percentage of their fellow Americans were living in poverty, the average guess was 39 percent—a sharp rise from the official estimate of 15 percent. Poverty is also a common personal experience, with more than half of respondents reporting that they knew someone who was poor.
When it comes to equality of opportunity, a majority of Americans don’t believe that poor Americans face a level playing field. And when forced to choose between core arguments about the roots of American poverty—that it stems from a flawed economic system, or from personal failings—nearly two-thirds agreed with the structural argument.
At the heart of opposition to safety net programs is the idea that poor Americans are undeserving of assistance, and that they are poor because they are lazy. It turns out that very few Americans polled by CAP support this core principle. Nearly 80 percent agreed that “most people living in poverty are decent people who are working hard to make ends meet in a difficult economy,” including 66 percent of white conservatives and libertarians. The poll showed nearly equal agreement across race and party lines on the point that a shortage of jobs with good wages is the primary reason for poverty in America, and that the poor receive unfair criticism.
Still, the welfare-queen archetype endures: even while agreeing that laziness is not the cause of poverty, a majority of respondents said that poor Americans abuse government programs. And yet people appear to believe they’re worthwhile anyway. Several progressive policy proposals, including expansions of the safety net, received at least 80 percent total support: financial assistance for childcare, an expansion of nutrition assistance, universal pre-K, more publically funded scholarships, and increasing the minimum wage.
Similarly, more Americans reported a negative association with the term “War on Poverty” than positive, but the perception shifted after the programs made possible by President Johnson’s war were sketched out for them. Then, a whopping 86 percent agreed that the government should use its resources to fight poverty, and 61 percent said the War on Poverty has made at least some positive difference.
We’re sure to hear much this week about the disappointments of Johnson’s war, but that’s simply a convenient means of condemning any new investments in the economy, in education and in the safety net. As The Washington Post reported Tuesday, Republicans including Senators Paul Ryan and Marco Rubio, who will speak separately on the subject on Wednesday, are struggling to put forward specific policies to back up their claims to care about the millions of Americans in economic distress. We’re likely to hear about school choice, “economic freedom zones,” and tax breaks for “job creators.” If some Republicans are distancing themselves from the old argument that personal failings cause poverty, it’s to assert that government failure is responsible instead.
 But privatization is not a new policy, and it’s had countless failures of its own. When it comes to critical tests of their commitment to struggling Americans, Republicans fail again and again. Their refusal to back the expansion of Medicaid and an extension of unemployment benefits are pressing examples. Certainly Americans are concerned about the failings of government, but there are plenty of indications that such frustrations are more about what the government is not doing now than what it did fifty years ago. Even among Democrats, much of the economy talk remains focused the middle class, and lawmakers are loath to embrace any serious spending. But as the CAP poll suggests, many Americans have the appetite for an anti-poverty agenda driven by government investment. That lawmakers, both national and local, found the courage to fight for it could be the story of the year.

August 26, 2012

Who Can We Blame For America’s Poverty Problem?

 Therre is more than one type of unemployed person.   

How about:

The ones that can't work when there aren't jobs

David Frum
When the U.S. adopted welfare reform in the 1990s, it did so on the following assumption:
Some kind of work is available to virtually everybody who wants it.
Maybe the work is poorly paid. Fine. Take the job anyway, and the government will top up your wages with an Earned Income Tax Credit.
By the late 1990s, we were discovering the limits of welfare reform. Because of substance abuse, mental health issues, disability, and cognitive impairments, some people were not going to participate in even the tightest labor market since the mid-1960s.
What to do about this hard core of unemployables? Should the government intervene more directly in their lives? Might churches and religious groups do better? If so, could and should government support them?
The poverty problem of the 2010s looks like the poverty problem of the 1930s.
These were the poverty policy debates of a dozen years ago. Today, poverty is no longer a problem reserved only for the hardcore.
The collapse of the American job market has pushed the poverty rate to the highest level since 1993 — back before welfare reform was even enacted. The poverty rate touched bottom in the year 2000 at 11.3 percent. It has now surpassed 15.1 percent. More than 46 million Americans now count as poor, including more than one in four black Americans and more than one in four Hispanics.
This recessionary surge in poverty is driven by one old-fashioned fact: Joblessness.
These new poor may be less educated, less skilled, less motivated, less who-knows-what than the non-poor. But the fact remains: So long as the U.S. economy functioned more or less normally, they were able to hold their lives together enough to emerge from poverty. When the economy failed, so did they.
You sometimes hear it said that all an American needs to do to avoid poverty is (a) finish high school, (b) refrain from having a child before marriage, and (c) get a job.
That's a valid description, but it's not very useful advice during the worst jobs crisis since World War II. How are they supposed to get that job in the first place?
There was a time when the challenge of persistent poverty could be usefully separated from the larger problems of the economy. I miss that time! But the poverty problem of the 2010s looks again like the poverty problem of the 1930s: A problem not inherent in the personal qualities of the poor themselves, but in the same failings of economic management that have battered almost all Americans except for a very fortunate few.

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