Stuck in Poverty

One in five US adults now lives in households either in poverty or on the cusp of poverty, with almost 5.7m having joined the country’s lowest income ranks since the global financial crisis. Many of the new poor, or near-poor, have become so even amid an economic recovery that is widely expected to lead the US Federal Reserve to raise interest rates next week for the first time in almost a decade. More than 45 per cent of them — almost 2.5m adults — have joined the lowest income ranks since 2011, long after the post-crisis recession was ostensibly over. Any notion of a recovery still seems a long way off to many in the US.  A large part of the shrinking of the US middle class, which for the first time in decades now forms less than a majority of the country’s adult population, has surprisingly been due to the country’s growing affluence, the Pew study found.

“There’s a new American dream,” says Torrey Easler, a Baptist preacher who helps feed a growing population of poor in the town of Eden, North Carolina. “The old American dream was to own a home and two cars. The new American dream is to have a job.”

Julián Castro, US secretary of housing and urban development said this is in part because “the argument that the poor are impoverished because they are somehow lacking or to blame has too often carried the day”. That misses a point, he says. Many in the middle class are vulnerable to slipping back, which means “the concern about what happens with the middle class and also what happens with the impoverished becomes more and more relevant to the lives of American families across the board.”

The country’s lowest income group — defined by Pew for a three-person household as earning less than $31,402 a year — has also grown at more than five times the rate of the middle class in the past seven years. There are now 48.9m adults in this bracket in the US, up from 43.2m in 2008 and just 21.6m in 1971.

Kathryn Edin, a Johns Hopkins University sociologist argues that the shrinking social safety net after landmark 1990s welfare reforms has made the US a harsher place to be poor than it was. The offshoring or automation of many low-skilled jobs has also made rising out of poverty harder than it once was, she says: “The bad jobs of yesterday were just much, much better than the bad jobs of today.”

“It’s a tough world out there when you get into these very competitive, knowledge-based, very up and down, transient businesses that are here today and gone tomorrow,” says Robert Doar, a former New York City social services commissioner and now a fellow at the conservative American Enterprise Institute. “But that’s not what the problem is at the bottom. The problem for people at the bottom is that they can’t get up and be in that game.”

Elsewhere in the world this trend of increasing poverty is the same. The proportion of Guatemalans living below the poverty line increased from 51.2 percent in 2006 to 59.3 percent last year. 23.4 percent of the total Guatemalan population lives in extreme poverty. 

In Israel, despite the increase in employment, poverty rates have gone up, even in families with two breadwinners. This shows that employment is not the be-all and end-all, despite finance ministers’ promises over the years. The data show that even a full-time job is not a guarantee against poverty. The statistics also showed that the rich got richer with the disposable income of the top 20 percent climbed 5.3 percent, compared with 2.6 percent for the middle class and 0.4 percent for the bottom 20 percent.