Capital Ethiopia Newspaper

The grim reality of poverty in America

A research study made in 2010 on employment related youth immigration in West Africa by the Yaoundé, Cameroon based Think-Thank revealed that 76% of those who responded stated that their life-time dream was to go to the US and Europe to realize their long standing quest for better employment and higher earnings which the study interpreted to be better lives. A similar study on countries in the Horn of Africa revealed that 92% of the respondents dreamed of going to the US and Europe to secure better lives with freedom and security. The respondents, particularly those in the Horn of African countries, might have good and logical reasons for immigrating to the US and Europe taking in to account the prevailing political, economic and security situations of their respective countries. However, the prevailing economic and social conditions of both the US and Europe are not in a position to maintain their status as “the promised land” for the youth of Africa to realize their lifetime dream. Indeed, the US and Europe of today are totally different than the US and Europe the whole world used to know some years ago. Europe, particularly the countries using the Euro as their common currency is terribly affected by the financial crisis and the deep economic and social crisis. Water is now at their nose. The same is true in the US. The successive financial crisis devastated its financial sector and posed a serious and formidable challenge to the very foundation of its economic structure. The prevailing economic woes caused by the financial crisis forced millions of Americans to take its devastated brunt. In other words, the current economic crisis seriously challenged America’s long standing status of “a country of opportunity and fortune”. As is the case in Europe, today’s America is not the same America of yesterday. The latest US census report revealed the harrowing economic reality of the American people. The United States is currently griped by the seriously biting nails of poverty. It is hard, particularly for us (Ethiopians), to easily understand the very fact of the rampant poverty in the US especially if we will try to analyze the definition and compare the status of poverty with our own experience of poverty. Nevertheless, whether we like it or not, the prevailing economic situation of the US is worth considering and we should adjust our life time dream of having a better and more prosperous life in the US accordingly. Squeezed by rising living costs, a record number of Americans, nearly one in every two, have fallen into poverty or are scraping by on earnings that classify them as low income. The latest census data depicts a middle class that’s shrinking as unemployment stays high and the government’s safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families. Commenting on this latest economic and social revelation, Sheldon Danziger, University of Michigan public policy professor stated that safety net programs such as food stamps and tax credits kept poverty from rising even higher in 2010, but for many low-income families with work-related and medical expenses, they are considered too ‘rich’ to qualify. He argued that, the reality is that prospects for the poor and the near poor are dismal. If Congress and the states make further cuts, we can expect the number of poor and low-income families to rise for the next several years. In the past few weeks, The US Congress was sparring over legislation that would renew a social security payroll tax reduction, part of a year-end political showdown over economic priorities that could also trim unemployment benefits, freeze federal pay and reduce entitlement spending. Some analysts questioned whether people classified as poor or low-income actually suffer material hardship. They argued that while safety-net programs have helped many Americans, they have gone too far. Some people argue that the poor live in decent-size homes, drive cars and own wide-screen TVs. There’s no doubt the recession has thrown a lot of people out of work and incomes have fallen. As the country has come out of recession, it will be important that these programs promote self-sufficiency rather than dependence and encourage people to look for work. According to a study made by the US Conference of Mayors, Twenty nine cities report that one in four people who need emergency food assistance do not receive it. Many formerly middle-class Americans are dropping below the low-income threshold, roughly $45,000 for a family of four, because of pay cuts, a forced reduction of work hours or a spouse losing a job. According to the latest census, States in the South and West of the US had the highest shares of low-income families, including Arizona, New Mexico and South Carolina, which have scaled back or eliminated aid programs for the needy. By raw numbers, such families were most numerous in California and Texas, each with more than 1 million. According to a new supplemental measure by the Census Bureau that is designed to provide a fuller picture of poverty, about 97.3 million Americans fall into a low-income category, commonly defined as those earning between 100 and 199 percent of the poverty level. Together with the 49.1 million who fall below the poverty line and are counted as poor, they number 146.4 million, or 48 percent of the U.S. population. That’s up by four million from 2009, the earliest numbers for the newly developed poverty measure. The new measure of poverty takes into account medical, commuting and other living costs as well as taxes. Doing that pushed the number of people below 200 percent of the poverty level up from the 104 million, or one in three Americans; which was officially reported in September 2011. According to the census report which analyses data based on age, children were most likely to be poor or low-income; about 57 percent, followed by seniors 65 and over. By race and ethnicity, Hispanics topped the list at 73 percent, followed by African-Americans, Asians and non-Hispanic whites. Even by traditional measures, many working families are hurting. According to a new analysis by the Working Poor Families Project and the Population Reference Bureau, following the recession that began in late 2007, the share of working families who are low income has risen for three straight years to 31.2 percent, or 10.2 million. That proportion is the highest in at least a decade, up from 27 percent in 2002. Among low-income families, about one-third were considered poor while the remainder – 6.9 million – earned income just above the poverty line. Many states phase out eligibility for food stamps, Medicaid, tax credit and other government aid programs for low-income Americans as they approach 200 percent of the poverty level. The majority of low-income families – 62 percent – spent more than one-third of their earnings on housing, surpassing a common guideline for what is considered affordable. By some census surveys, child-care costs consume close to another one-fifth when a mother works. Paychecks for low-income families are shrinking. The inflation-adjusted average earnings for the bottom 20 percent of families have fallen from $16,788 in 1979 to just under $15,000, and earnings for the next 20 percent have remained flat at $37,000. In contrast, higher-income brackets had significant wage growth since 1979, with earnings for the top 5 percent of families climbing 64 percent to more than $313,000. A survey of 29 cities conducted by the U.S. Conference of Mayors released on 15 December 2011, points to a gloomy outlook for those on the lower end of the income scale. Many mayors cited the challenges of meeting increased demands for food assistance, expressing particular concern about possible cuts to federal programs such as food stamps, which assist low-income pregnant women and mothers. Unemployment led the list of causes of hunger in cities, followed by poverty, low wages and high housing costs. According to this survey, across the 29 cities, about 27 percent of people needing emergency food aid did not receive it. Kansas City, Nashville, Sacramento, and Trenton, were among the cities that pointed to increases in the cost of food and declining food donations. The Mayor of Seattle cited an unexpected spike in food requests from immigrants and refugees, particularly from Somalia, Burma and Bhutan. As well indicated on the survey, among those requesting emergency food assistance, 51 percent were in families, 26 percent were employed, 19 percent were elderly and 11 percent were homeless. To add on the statement of his Seattle compatriot, the Mayor of Kansas City, who co-chairs a mayors’ task force on hunger and homelessness said that people who never thought they would need food are in need of help.