Poverty in America

 

American Poverty          Gerry OShea

According to the March 2022 Oxfam America report, about one-third of American workers live below the poverty line —approximately fifty-two million people, and just short of 90% of employees with annual remuneration of less than $31,200 live in similarly dire monetary circumstances.

The same research asserts that people of color are disproportionately affected by low wages. 27 percent of white workers earn less than $15 an hour compared with 46 percent of Latinx and 47 percent of Black workers.

The federal minimum wage of $7.25 an hour has not been raised in fifteen years and is now worth less in inflation-adjusted terms than at any time since 1956. No place in the country can offer an adequate standard of living on such a meager salary.

Women also are doing poorly, with 40% of females hovering below the hourly fifteen-dollar mark compared to males, who show in the results at 25%.

Ideological opposition to any mandated minimum wage is still part of some right-wing rhetoric. They want a laissez-faire ethos where the boss is the sole determinant of wage rates. Although many studies have shown that local businesses prosper after employee salary increases, some employers warn that minimum wage improvements will drive them out of business.

How can one understand such sad statistics in America at a time of expanding national productivity and wealth? Millionaires and even more so billionaires never had it so good. They are impressed by their power and are determined to hold on to the privileges that their bulging bank accounts bring to themselves and their families.

In examining the reasons for the huge inequalities in American life, we should look at the post-World War Two generation, when workers made major strides in improving salaries and benefits. Social Security payments in old age became part of a new culture of hope.

Until the early 1970s, trade unions were powerful, ensuring employees benefited from burgeoning company profits. Their power was especially evident in the salaries and pensions won for public employees such as policemen, firemen and teachers.

Improvements in pay and working conditions extended to non-unionized workers because their companies had to consider what organized “shops” were paying.

Influenced by the many family traumas during the Second World War, a sense of community and common purpose pervaded the nation. Christians, led by the hierarchy of the Catholic Church, endorsed the principle that public policies should be guided by considerations of actions that promote the common good.

The curriculum in the best universities, led by Harvard Business School, taught that business leaders and their companies should stress the importance of a social conscience – a philosophy that, unfortunately, would be viewed as quaint and outmoded today.

In the early 1970’s, Milton Friedman, the leading conservative thinker in those days, mocked this humanistic approach to sharing economic development. In his groundbreaking essay about the new neoliberal ethos, he wrote that a business “that takes seriously its responsibilities for eliminating discrimination and avoiding pollution is preaching pure and unadulterated socialism. The only corporate social responsibility a company has is to maximize its profits.”

Money and earnings were all that counted for Friedman and his followers, including Ronald Reagan and Margaret Thatcher. Trade unions were viewed as an encumbrance and their power and influence were gradually curtailed at every turn. Union membership dropped from close to 30% of workers in the post-war era to less than 10% by the 1980’s.

According to a Gallup Poll conducted in 2020, two-thirds of Americans favor workers joining a trade union, but the actual low numbers of employees with a union card testify to employers’ successful strategies in stymying most membership drives.

This continues to mean that, despite record company profits, workers’ wages and benefits, taking inflation into account, have remained stagnant. Fifty years ago, a company CEO was paid around twenty times the average shop floor worker; today, the multiple is edging towards a disparity of four hundred.

Workers are disgruntled and angry that the booming economy is not reflected in their paychecks. In fact, housing costs and college expenses are more onerous than ever. No wonder that reflecting on this crisis in many families, Pope Francis forcefully rebuts the trickle-down neoliberal theory of economics: “The promise was when the glass was full, it would overflow, benefiting the poor, but what happens is when the glass is full it magically gets bigger. Nothing ever comes out for the poor.”

The stock market has gone from strength to strength, but 10% of investors own 84% of the shares, and half of American households own none.

What about taxes? Who is funding the government? In “Triumph of Injustice,” two distinguished economists, Emmanuel Saez and Gabriel Zuchman, point out that working-class people pay 25% of their earnings in taxes, the middle class pays 28%, the upper middle class pays a little more, and the millionaires and billionaires manage to get by at 23%. These figures cover all taxes, federal, state, and local government.

A recent Boston College study reveals that three out of four American workers aged 50 to 62 do not have an employer-funded retirement plan or supplementary health insurance when they retire. This is a major issue evident in the large number of retirees in nursing homes, mostly covered by Medicaid.

With the presidential election in November, why is it that the issue of poverty is rarely raised by Democrats and never heard about from Republicans?

Gerry OShea blogs at wemustbetalking.com