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Poverty and Community—Viewpoints | EPI

Opinion pieces and speeches by EPI staff and associates.


Poverty and Community

A New Discussion for the New Millenium

by Jeff Faux

Thank you very much for the opportunity to address this forum on the future of the struggle against poverty in America.

I was present at the creation of the Community Action Program more than 30 years ago, and had a modest role commanding a community development division in the original War on Poverty. So it’s an inspiration for me to see Community Action still alive and fighting the good fight in so many places in America.

It’s a particularly appropriate time for those of us with a passion for social justice to look ahead. We are living not only at the end of a century, but at the end of a millennium. The millennium is of course a construct of a certain calendar that evolved out of European history. But for better or worse, it is our calendar, and 100 and 1000 year milestones have enormous symbolic power.
During the last turn of the millennium, people’s reactions were largely framed by the religious character of that age. Many predicted the year 1000 A.D. would bring the end of the earth predicted in the Bible. All over Europe, people sold or gave away their goods and headed for a mountaintop to watch the world go up in flames.

Today, in a more secular world, the millennium is likely to be primarily an act of commerce. Our culture will soon be flooded with images of the future: sitcoms, movies, TV shows, and popular songs. As we sit here, Madison Avenue is dreaming up commercials and slogans that will link every conceivable product — and probably some we have not conceived of — with visions of what the world might be like in the next hundred, if not thousand, years.

A lot of this will be the hyping of technological wonders — honeymoons in space, robots that will clean your house, computerized health care that can allow you to live to be 150 and gene splitters that can order up the child of your choice. One recent magazine suggested that in the future parents will be able to choose the father’s smile, the mother’s personality, and the blond blue-eyed beauty of a Swedish movie star.

It reminded me of the story about the prominent British playwright of the early years of this century, George Bernard Shaw. It seems Shaw received a letter from a famous actress proposing that they mate. What a wonderful contribution we could make to the world, said the actress, if we produced a child with my beauty and your brains. Shaw wrote back that it was an interesting idea, but what if it has my beauty and your brains?

There is nothing wrong with adolescent dreaming about future technologies. But it tends to distract us from the adult question, which is not, what kind of a future will we get, but rather what kind of a future do we want to build?

Put another way, it’s not so much whether we’re going to be clones, but whether we’re going to be sheep — and have the future dictated to us. There’s an old saying that you don’t know where you’re going if you don’t know where you’ve come from. So, I’d like to begin addressing the issue of social justice in the future by looking at the past. Since economics is my trade, I will look at it through the prism of the change in the economic context that has taken place since the War on Poverty was launched in the 1960s, and its political implications.

Depending on your politics, the 1960s were a time of extraordinary activism that made historic changes in race relations, dramatically reduced poverty, challenged the political elite over a misconceived war, and released the forces that created the environmental and women’s movements. Or it was a time of breakdown in law and order dominated by draft-dodging dope-smoking hippies from which the nation has still not completely recovered.

From an economist’s point of view, what the 1960s represented was the third decade of a continuous rise living standards for the American working class. Year after year since the beginning of World War II, real wages and living standards rose continuously for the typical American person working for a living.
This was the era of the post World War II social contract in which those who worked for a living and those who invested for a living agreed implicitly to share the benefits of rising productivity. It was the real New Deal, ironically coming after the great war was won and Franklin Roosevelt had died. It was motivated to some extent by a national government that needed social unity at home as it engaged in its historic struggle with the Soviet Union.

When, in the middle of the 1960s, the War on Poverty was declared, the poor were looked at as the people who were “left behind.” They were not sharing in social contract — because they were a racial minority, because they were handicapped, or because they had some other disability that left them out of the mainstream.

Note that in 1960, this country was more divided by race and ethnicity than it is today. Still, prosperity was widely shared. As a result, the white working class on the whole supported, although sometimes reluctantly, civil and political rights for minorities. An effort to end poverty was commonly, if erroneously, believed to benefit blacks more than whites. Part of the package was a sweetener called Medicare, which was perceived to benefit all Americans regardless of color. But the critical factor was strong broad-based economic growth that seemed to assure that the improvement of living standard for minorities would not require a decline in living standards for whites.

The effort continued even after the Republicans took over the White House in 1968. People don’t often realize this, but under Richard Nixon the War on Poverty actually expanded. The difference was that it shifted from an emphasis on community self-help to entitlements — direct government checks. Given the relentless attack on entitlements by Nixon’s political heirs, this is yet another irony of American public life.

Then something happened. In 1973, after more than three decades of steady increases, real wages stopped rising. They stagnated for about six years, and after 1979 began to drop.

Today, after six years of very strong economic expansion, the wages of the typical worker in real terms are 10% below where they were in 1979. As was said by one of the previous speakers, it is even worse for young people. A male high school graduate with up to five years of experience is now earning about 25% less than the same type of individual was earning in 1979.

This is not the kid who dropped out of school and is spending his time smoking dope and stealing cars and sleeping late. This is the kid who did what he was told. He got a high school diploma, and then after he got out of high school, he did what society expected: he went out and got a job.

It turns out that if you are more than 50 years old, you are doing better statistically than your parents did. Now, I know your parents didn’t have the 24 inch color television or the sixteen disc CD player. But think about it not in terms of the gizmos, but in terms of what it takes to raise a family, put a kid through college, have a house, have a car, and be able to take a vacation. If you measure progress in human terms, then if you’re over 50, statistically, on the average, you’re doing better than your parents.

If you’re between the ages of 35 and 50, you’re doing about the same. If you’re closer to 35, you’re doing a little worse, and if you’re closer to 50, you’re doing a little better. If you’re below the age of 35,
you’re clearly doing worse. Now, it is important to remember that productivity — which economists will tell you is the basis for higher income — did not stop growing after 1973. Output per worker although it slowed down, continued to rise. What changed was that wages stagnated and then fell. In other words, while the economy continued to generate increasing wealth, it was not as broadly shared. Not surprisingly, the result has been a large upward redistribution of income and wealth. The share of both income and wealth that is going to the bottom 60% — and by some estimates, going to the bottom 80% — of American families is the lowest it has been since we began collect those numbers.

These are good times, as we’re reading every day in the newspaper. And yet, for 60 to 80% of American families, real incomes are below where they were six years ago. We all know what families have done to keep up. It used to be that you could actually raise a family with one person going to work. Now it takes two, and in some cases we’re finding it takes three. Kids are going to work not just for extra pin money — not just to buy an extra pair of basketball shoes — but to help pay the mortgage.

People are also more in debt. One of the uncomfortable little secrets of our economic success is the credit card. In the 1980s, government debt fueled the economy. In the 1990s, it has been consumer debt. The share of consumer income now going to pay off debt is at an all time high and rising. Simple arithmetic tells us that this is unsustainable. Think about that the next time you hear a TV talking head assure you that the current business expansion will last forever.

In order to keep their incomes up, people have also been working longer hours. Today, the typical American worker is working a hundred hours a year more than he or she was in 1979.

It’s not just wages that have stagnated. Fewer working people now get pension and health insurance benefits on the job. It’s no accident that these economic conditions have led to increasing anxiety among the middle-class working families of all races and ethnic groups.

Alan Greenspan, chairman of the Federal Reserve Board, reports that in 1991, 25% of American workers were afraid of losing their jobs. Five years later, 46% of American workers work every day in fear of losing their job. Now remember, this increased anxiety occurred during five years of economic expansion.
This rising insecurity among middle and lower middle income working people has dramatically altered attitudes toward those at the bottom.

Suppose you’re a 50-year-old, laid-off worker, or a single mom making $6 an hour when it takes $10 an hour to live, or you’re a college graduate who’s been driving a cab over the past four years and doing part-time work. You are trying to figure out why, when you are doing everything you’re supposed to, you still can’t pay the bills at the end of the month.

So you come home, and you turn on the television. Although their styles may be different, whether it’s Bill Clinton or Newt Gingrich or your favorite media pundit, they are sending a similar message: “It’s a new competitive world out there. There are six billion people who want your job, and most will work for less then you will. You had better train yourself to compete against them with all the computer power you can get. And, by the way, lower your expectations. Don’t expect us to help you, just because you’re an American. We’re in a global economy, and the era of big government is over.”

The message is: “You are on your own.”

Even Social Security — the most popular and most effective anti-poverty program we’ve ever had — is now in jeopardy. This was the pride of America’s social democracy. Politicians for years called it the “third rail” of politics — “Don’t touch Social Security, or you’re going to get politically electrocuted.”
Yet it is being battered today by a sophisticated campaign to turn the public safety net, which guaranteed a minimum level of income for the elderly, into a private fund in which your future will depend on your ability to outsmart the stock market.

Given the shredding of the safety net for working people in this country, is it any wonder that they’re hostile to poverty programs and programs that help the poor? When the government tells them they are on their own, they look around and say, “Well, if I’m on my own, why shouldn’t everybody be on their own?”
This economic environment thus makes fertile ground for the cynical political attacks on the poor– such as the stereotypes of the welfare queen riding in a Cadillac or the young mothers having babies in order to get a few more dollars a month on their welfare check.

The shift in political consciousness has altered the language with which we now discuss social problems. If effect, we are defining them away. For example, it used to be that we were concerned about the problem of poverty. Now poverty is a real problem. It’s difficult to solve. It’s a problem for serious people to wrestle with.

But now that we are all on our own, that we are not our brothers’ and sisters’ keepers, we’ve changed the subject. The problem of reducing poverty has been redefined into the problem of reducing welfare rolls. Now that’s not really a hard problem. You just cut people off and throw them on the street. It’s amazing it took them so long to figure it out.

Of course it still hasn’t solved the problem of poverty. Getting people off the welfare rolls is not necessarily getting them into jobs that will make them self-sufficient.

We at the Economic Policy Institute have studied the current job market for people who are not on welfare but who have the same characteristics as those who are. This is the best measure of the low-wage economic sector that people being reformed out of welfare are entering. It turns out that even in good times, those at the low end of the labor market who are not on welfare have an unemployment rate of somewhere between 20-25%. In other words, people are being thrown into a world where there still are not enough jobs for them.

Three results are certain. First, large numbers of people at the bottom of the labor market will still end up unemployed. Second, as more people get dumped into that labor market, the supply of labor will expand, putting downward pressure on wages. Our own estimate is that the effect of welfare reform over the next few years will be to lower the real wages of people now making $7.50 an hour or less.

Third, it will aggravate the tensions between the poor and the working poor. In many cities for example, welfare recipients have been substituted for regular public employees making just a little above the minimum wage. Indeed, welfare reform seems designed to set one group of poor or near-poor people against another. The other day I saw a picture in the New York Times of a group of Latino working women standing outside a daycare center in Brooklyn. They had been told that their children were being shut out of the slots in this day-care center because the slots were being reserved for welfare people.

Now, what does that signal? What does that tell working people who are not on welfare and who are made desperate by the fact that they have no place to put their kids?

The message is: “We are not interested in eliminating poverty. We are interested in eliminating welfare. You are on your own.” So it’s no wonder that people just above the poverty line become a bit “meanspirited,” as one of the previous speakers termed it, about those just below.

When you ask politicians here in Washington about this problem they will tell you, “There is just not enough money in America to help everyone who needs it.” Of course, there is enough to spend several millions of dollars to campaign for a job as a member of Congress that pays $130,000 a year for two year

Think about that.

There is enough money to pay obscene salaries to corporate CEOs. Back in the 1960s the ratio of the CEO salary to the typical worker on the assembly line was about 34 to one. Today it’s more than 200 to one.

One of the business newspapers last month noted the compensation of a chief executive for a company that is losing money. He gets paid $2 million a year in regular wages and then another $2 million as incentive pay. So think about this. Here is somebody whose regular wage is $2 million a year and needs another $2 million as incentive to get out of bed in the morning and go to work.

And there is enough money to maintain a U.S. military budget at the same level in real terms as it was in the mid 1970s when the Soviet Union was armed to the teeth. In case they haven’t heard, the Soviet Union is out of business and the Cold War has been over almost ten years.

When these facts are noted, the answer in the media and other places in the establishment goes something like this: “Shut up, you are doing fine. America is Number One in the world. We have got the biggest army. Nobody can touch us. Would you rather be in a crummy place like Europe — France for example — where it is so hard for people to get rich?”

Well, the poverty rate for children in France is 6%. The poverty rate for children in the United States is 22%. Now, which country do you think cares more about the next generation? “Not to worry,” they say. “Once we finish downsizing, once the rich get all of the tax breaks they need, once our corporations finish outsourcing to Third World countries where children work for a dollar a day, then, we will start sharing our prosperity with America’s have-nots.”

This is after a decade of being told that after we got the federal budget balanced then we could spend a little more money on education, training, and rebuilding poor urban neighborhoods. We now have a balanced federal budget. But raise the issue of social spending and in this town you’re laughed out of the room. The debate is between those who want more tax cuts and those who want to pay off the national debt — a bizarre notion from 19th century economics that helped keep us in the Great Depression.

For 15 years now, we have been told to be patient, that the time for social justice will come, that the time for investing in our future is just around the corner. It’s reasonable to ask, if the time to address the problem of poverty is not now — when the stock market is soaring, when the federal government is running a budget surplus, when America’s rich are bloated with wealth, when we are told that we are the world’s only economic superpower — when will it ever be?

The truth, of course, is that the era of big government is not over. It is not over for the big business lobbyists who crawl all over this town. Every working day, they insert another little amendment in an obscure law, or influence a federal regulatory decision, or fund a special program that helps their clients. Under cover of “free trade,” we make international agreements that protect investors at the expense of working people and the environment. Under cover of deregulation, we encourage megamergers that further concentrate economic power at the top.

Years ago, the late Michael Harrington, whose book, The Other America, inspired the War on Poverty, quipped that America really was a combination of two systems: Socialism for the rich; free enterprise for the poor.

Technically, we are moving ahead into the 21st century; socially, we are moving toward a mean-spirited 19th century vision of what America ought to look like, where the vast majority of people’s lives are cramped by the struggle to survive and keep out of sweatshops while a small elite lives behind walls guarded by private police, with government existing primarily to protect their wealth.

Still, the good news is that the future is up for grabs. None of us knows how it will turn out.

John Kenneth Galbraith once said, “There are two kinds of economists, those who don’t know and those who don’t know they don’t know.” If you remember nothing else of what I have said and I’m going to say this morning, remember this: Do not trust any forecast of the future.

Again, the real question is: What kind of America do we want and how are we going to get it?

To begin to answer that question, we have to be clear about what the past experience means for the future. To me, it is not that a war against poverty is hopeless. It is that a war against poverty designed as a charity — in which the affluent majority stoops to help out a small and dwindling number of people left behind — is obsolete. Today, it’s not the bottom 20% that is being left behind. It is at least the bottom 60%.

Building the future is not just about helping “them.” It’s about helping all of “us.” It is about building a future in which social and economic justice is built into the fabric of our national life. The problem of poverty needs to be linked to the problems of the country, and both need to be solved together.

The question of what kind of future we want was actually on the national agenda about 20 years ago. If some of you remember the Bicentennial Celebration of the Declaration of Independence that took place in the mid 1970s, there was a movement all over America to hold forums in communities, neighborhoods, and states quite like what you are proposing here. Much of it was aimed at discussing what people wanted their states and localities to look like in the year 2000.

We had Atlanta 2000, Iowa 2000, California 2000, and so forth. Some of these were good and some were not so good. In some, poor people and their organizations were involved, in others they were not. Many of the ideas made sense, some did not. The exciting thing was that people were focusing together, as neighbors, as citizens, on what they wanted for their community.

The process was extremely valuable. It had some concrete benefits. As you might know, or even remember, that was the time of the energy crisis. In many areas the Bicentennial planning shifted people’s focus from the issue of cheap gas to how they could create sustainable communities. In others, it led to innovative land-use planning. In others, focus was on schools. Its strength was in its diversity.

It was bipartisan. The Ford Administration supported it. The Carter Administration supported it. So did Republican governors and Democratic mayors. Most of all, it was open to ordinary citizens to participate in a communitarian dialogue about their future. Unfortunately, it pretty much stopped dead in the early 1980s. After the election of 1980, few people remained interested in collectively shaping the future anymore. The idea of the responsibly involved citizen gave way to the idea of the opportunistic investor who, in the words of one sociologist, “bowls alone.”

Suddenly, in America the greatest thing a citizen could do was to get rich. The hell with your neighbor, your community, your country. Once you make your killing, you can move away from the problems. Build yourself a private “city on the hill” where barbed wire fences and private police will protect you. The ideal has become not only to get rich, but get rich quick. Making a fortune in the stock market promised to get you there quicker than working and saving. Stock market speculation has been defining the American dream for the last 15 years.

I don’t know what is going to happen to the stock market except at some point it’s going to go down. As an economist who knows he can’t predict the future, that’s about all I can tell you. But as a fellow-citizen of this country, I can also tell you that, whatever happens, the stock market is a poor substitute for community.

The librarian at our institute has
a poster on the wall. It reads: “Books can get you through times of no money better than money can get you through times of no books.”

That’s true with community, too. Economic history, like all of life, is fickle. Just when it appears that a nation has found the magic formula that will allow its boom to go on forever, something unexpected happens. Just ask the Indonesians, or the Koreans, or the Japanese. Or read our own history of the events that led up to the crash of 1929. The sense of national community, which often seems so irrelevant when as individuals we are obsessed with getting rich quick, may come in very handy when our problem turns to surviving the next recession, which inevitably will come.

But we cannot wait for the recession to start a new conversation about poverty in America. Poverty is a symptom of a dysfunctional society. The question of what we are going to do about poverty in America is inextricably linked to the question of what we are going to do about America.

We must therefore seize the moment. We need to take advantage of the immense symbolism of the coming millennium to revive the Bicentennial spirit C the American spirit that has always seen the future as something to be shaped, rather than accepted.

From an economic point of view, investment is the society shaping act. What we do or do not invest in today will determine how we and those who come after us live tomorrow. Traditionally, about one-third of all investment in the United States comes from the public sector — education, training, public infrastructure, research and development. But over the last 30 years, we have been reducing public investment dramatically, in a mindless effort to shrink the public sector at every turn.

Does anyone believe that investing in yet another fast food franchise is more important to the country than investing in Head Start, or job training, or decent housing for low-income people? Yet the economic policy that we are following is based on that kind of value judgment.

The public sector is deteriorating all over America. Last year the federal government’s General Accounting Office reported that we needed another $112 billion to fix the nation’s schools — to repair leaking roofs, get the rats out of the basement, and wire up the classrooms for the computer age that so many of our politicians talk about so glibly. Last year, the Republicans in the Congress appropriated zero funds. The President requested 5 billion. When they finished their negotiations, they reached a compromise of — zero!

That refusal to rebuild our schools is a future-shaping act. It is a decision to deny your children and grandchildren an America in which they and their generation have the skills, have the training, have the tools, and have the infrastructure that’s necessary for all of them — as Americans — to compete and to build a decent future.

“But the people don’t want more government,” say the media talking heads.
In the abstract if you ask the American people if they want bigger government, they will say no. But ask them if they want the specific things that government can provide, it’s a different story. One poll I looked at yesterday asked the following:

Do you think that the government has an obligation to guarantee every American a minimum level of health care? 86% said yes.

Do you think that the government has the obligation to provide childcare for working mothers? 75% said yes.

Do you think that the government has an obligation to provide a job for everyone willing and able to work? 72% said yes.

So there is some disconnect going on here in our political dialogue. A disconnect between the political leadership that is constantly telling us to lower our expectations of government and the common sense of the American people. The common sense we had 200 years ago when the government started building canals, roads, and harbors to a growing country; the common sense we had in the 1930s when the government rejuvenated American agriculture, and made it into a world class industry. The common sense we had when we created the first public education system in the world C surely one of our greatest achievements as a nation.

I could not have gone to school if I had had to pay the full cost. I was educated in a public grade school, public high school and public university. The opportunity to go to college was a remarkable gift from the previous generation of Americans. Should we do less for the next generation?

The elimination of poverty in America cannot be done without the leadership of the public sector. I don’t mean that there is some magic bureaucratic cure. I mean that only the public sector has the scope and authority and ability to mobilize the resources and energize the spirit for this great task.

But this will not happen without a democratic transformation of the political discussion in America. One in which the expectations of what we can do together, using government as an instrument of a positive vision of our common future, are raised. And that will not happen unless someone — and there’s no one else here but you and me C is ready to use their imagination.

In that spirit, imagine if every community action agency in America got a serious conversation going among the citizens of their town or county on the question of what kind of a community we want by the year 2010, or 2020. Not just where we are going to build a civic center, but what we are going to do to assure so that everybody has an opportunity to have a decent job, raise a family, retire with a little dignity.

Imagine if, as a result of these community forums, people started talking over the kitchen table, in cafes, bars, and on the job. Imagine if that generated letters to the editors of local newspapers? Imagine if that generated some real conversation on talk radio?

Imagine how different a conversation with a politician might be as a result of this new discussion. We all now have the experience of candidates for Congress coming to town with the usual empty small talk: “How’s the family? Great basketball game last night. Blah, blah.”

Imagine if the response was: “We appreciate that you care about my family and our basketball team, but we want to talk about our investment needs, we have unemployed people who want to work in this town, and many jobs that need to be done in order to get our community where it wants to be by 2010. Instead of giving away our money in tax breaks for those who don’t need it, and military spending that only makes the world a more dangerous place, how about helping us invest in our future?”

“And what about the fact that more than half the children in our town that are eligible for Head Start can’t get in the program? That one third of our families aren’t making enough to support a family? That children are growing up in drug-infested deteriorating housing?”

“And, by the way Mr. or Ms. Candidate, tell us what you would like to see your Congressional District look like in 2010?”

The candidate might drag out the old cliche that social programs don’t work. Imagine having informed people in your community who would argue that point, who would point to the many examples from all over America of programs that nurture the transition from welfare to work, that provide opportunities for the poor, that meld together community needs and job creation.

And when they evade the question or mollify you with rhetoric without action, or tell you that these things are too complicated or would take too long to discuss, imagine that voters in your community would start looking for other leaders, and find ones that are willing to talk about a common vision and not treat their constituencies like children.

The problem is not that we lack good ideas for attacking poverty. The problem is not that we lack the money. The pr
oblem is not that the people don’t care. The problem is that we have lowered our expectations, both of America and of each other.

So as we approach the new millennium, the task is to rekindle the imagination that lies within us, and apply it to shape a future in which every American has the economic opportunity upon which to build a fulfilling life. Get that discussion going and you will change the future — not just of your community, but of your country.


Jeff Faux is the president of the Economic Policy Institute. He is the author of The Party’s Not Over.