There’s some genuine good news in the new Census numbers – and some bad news that we need to pay attention to.
The good news is that, slowly but surely, the overall health of the economy is improving. As a result poverty is dropping a little, and child poverty is dropping quite a bit more.
The bad news is that for too many Americans, economic growth is a pretty theory without much practical effect. Growth is happening to somebody else.
The “economy strengthened in 2013, but too slowly to improve the living standards of many middle- and low-income Americans,” says Robert Greenstein of the Center on Budget and Policy Priorities, who notes that median household income hasn’t recovered from the recession.
The problem is not just that the economy is growing too slowly. it’s that most people aren’t seeing a share of that growth. Neil Irwin says that this fact:
may be the most important thing to understand about today’s economy: Around 1999, growth in the United States economy stopped translating to growth in middle-class incomes. In the last 15 years, median income has been more or less flat while there was far sharper growth in, for example, per capita gross domestic product.
The segment of people actually thriving in the growing economy is all at the top of the scale.
The numbers also show that poverty isn’t a matter of a small, isolated underclass: it’s a live risk for huge numbers of Americans. The author and professor Stephen Pimpare tweeted that, while the number of people consistently in poverty for the last three years is small, nearly a third of Americans experienced at least few months of poverty at some point over those years. “Insecurity is the American experience,” Pimpare said.
This widespread experience of economic insecurity is one reason Americans are disheartened about the political process. People are understandably gloomy about the economy, even as the topline numbers grow. Americans who sense that the economy isn’t working for them are absolutely correct.
While it’s technically true that, as Adam Hartung writes, “economically, President Obama’s administration has outperformed President Reagan’s in all commonly watched categories,” it’s not a case you can make with a straight face to the millions of Americans who are struggling.
Another factor that held down improvements in middle- and low-income living standards in 2013 was premature federal austerity policies, such as the sequestration budget cuts, that restrained economic growth. The changes in federal spending and tax policies that took effect in 2013 reduced economic growth last year by about 1.1 percent of gross domestic product (GDP), according to Goldman Sachs.
This is the new reality. This is the economy we’re living in now. And powerful factors are preventing our political system from doing anything to help.
The main factor is that the stagnation of the middle class is invisible to policymakers, who tend to hear from a privileged few – their donor base and the lobbyists of corporations. It’s beyond question that politicians are more responsive to the concerns of wealthier constituents. The millions of Americans who face poverty, or are one accident or lost job away from poverty, have far less sway in Washington than the lucky few who think that an overly-generous safety net is the only problem we need to fix.
This problem gets even worse during a midterm election, when there’s a smaller electorate whose likely voters are wealthier, older and whiter than the population as a whole.
A coalition of conservative donors, think tanks and media institutions, meanwhile, is advancing inequality. By cutting away the social safety net, block infrastructure investment and refusing to take action on issues like student loans and the minimum wage, conservative politicians are putting more pressure on the most vulnerable Americans. Even though they only control the U.S. House, conservative Republicans have a disproportionate effect on economic policy, and at the state level, Republican politicians are exacerbating poverty, especially by refusing to accept Medicaid expansion.
And the right is investing big to take over the U.S. Senate – promoting strongly ideological candidates like Club for Growth favorite Tom Cotton. Republican Senate candidates and operatives met with K Street lobbyists this week to help build a right-wing majority. If you think prospects for addressing poverty and economic insecurity are bad now, just wait.
The line from the conservative institutions is that poverty is essentially a personal problem, not a systemic one, and that there’s nothing government can do to make it better. Instead, they say, everything will be great once government just gets out of the way, cuts taxes and regulations, and lets the magic of the free market take care of everything. They claim that the social safety net is a “hammock” and we need to cut it back in order to create an incentive for people to work harder.
But this is an easy answer, meant to comfort the already-comfortable. The plain fact is that it’s not the social safety net that has eroded the value of work. It’s an economic ideology that considers workers as a cheap, disposable input. When wages fall far behind economic growth, as they have now, just telling people to work harder is a sick joke. Tell it to Arisleyda Tapia, a McDonald’s worker profiled in the New Yorker this week, who is making $8.35 an hour and was penalized for protesting in support of better wages and working conditions.
When hard work doesn’t pay off, we need a better answer to how to lift people out of poverty and keep them out of poverty. Maybe the answer could include a guaranteed basic income in the longer term. In the short-term, it needs to include more support for collective bargaining rights, a minimum wage workers can live on, and serious investment in direct federal job creation to put paychecks in more pockets.
Seth D. Michaels is a freelance writer in Washington, D.C. He’s on Twitter as @sethdmichaels.