David Coates

Introduction to Chapter 4

One tragic consequence of the downturn in the US economy triggered by the 2008 financial crisis was an increase in the number of people in or on the edge of poverty in the United States. As we just saw, unemployment stood at 10.2% officially in November, and was likely over 17% by then if you add in those on part-time work who needed, but could not get, full time employment. Real median family income fell by 3.6% between 2007 and 2008, from $52,163 to $50,303; as the number of the officially poor rose. Only the median family income of those over 65 remained unchanged, as the poverty rate quickened for children under 18, and for adults 18-64.

The official poverty rate in 2008 was 13.2%, up from 12.5% in 2007, the first statistically significant rise in the rate since 2004. In 2008, 39.8 million people were in poverty, up from 37.3 million in 2007. The new poverty rate was the highest since 1997, but still 9.2% lower than in1959 (the first year that the poverty rate was officially calculated). (Source: US Census Bureau, Income, Poverty and Health Insurance Coverage in the United States 2008, issued September 2009). The West and Midwest were particularly badly hit in 2008, as poverty rates rose in 31 states and the District of Columbia. The percentage of children living in poverty grew in 26 states and the District; and the highest concentration of poverty remained where it has long been, in the South. In 2008 the poverty rate in Mississippi stood at 21.2%, and was over 17% in Kentucky, West Virginia and Arkansas.

Research published by the Urban Institute in September 2009 (Caroline Radcliffe and Katie Vinopal, Are Families Prepared for Financial Emergencies) reminded us that “even prior to the current recession, many families did not have enough assets to see them through a modest spell of unemployment, or another financial emergency, such as unexpected medical expenses.” On their definition of asset-poor (ability to live at the federal poverty level for 3 months) 31 percent of American families were asset-poor in 2007, including 67/9 percent of families in the bottom income quintile. By contrast, in 2007 the top 1% of US income earners increased their share of national income to 23.5%, a level of income inequality not seen in the United States since 1928. ‘Two-thirds of the country’s total gains in the five years to 2007 accrued to the top 1%, whereas the bottom 90th percentile saw only 12% of the extra income.” (The Economist, October 7 2009). Charity giving fell in 2008, down 5.7% on an inflation-adjusted basis from 2007 (for the data, see Stephanie Strom, “Charitable Giving Declines, A New Report Finds” The New York Times, June 9 2009).

A USDA report issued in November found that more than 14% of American families – 17 million households – struggled to put food on the table in 2008: the highest proportion of Americans experiencing food insecurity since records began in 1995. “Nearly 7 million households skipped meals or experienced disrupted eating patterns.” (Time, November 30 2009) One in eight Americans – and one American child in every four – used food stamps in 2009: 36 million people using federal funds to buy milk, bread and cheese. As Elizabeth Warren reported in December, “today one in five Americans is either unemployed, underemployed or just plain out of work. One in nine families can’t make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure…. More than 120,000 families are filing for bankruptcy each month [and] the economic crisis has wiped more than $5 trillion from pensions and savings.” (America Without a Middle Class – It’s Not Far Away As You Might Think, alternet.org, posted December 5 2009)

What remains unclear as we go to press is how far the worst excesses of this new level of poverty and inequality will be softened, at least temporarily, by the extra stimulus spending by the Obama administration on food stamps, child tax credits, unemployment benefits and housing and tuition aid. However, the early signs are not great. The number of Americans filing for personal bankruptcy rose by almost a third in 2009, mainly due to job loss and foreclosures. The number of personal filings was 1.41 million, up 32% from 2008: data in The Wall Street Journal, January5, 2010). Unemployment among single women maintaining families is currently 11.6%, 68% up on the figure when the recession began in December 2007. One in three of such families are living on less than the poverty level, with poverty particularly concentrated in families headed by an African-American single mother, or a Latina. ‘In 2008, 43.5% of children in single mother families were counted as poor, compared to 9.9% of children living in married couple families.” (http:///www.alternet.org/story/145918) The burden of a recession caused by the excesses of the rich, that is, is currently being disproportionately born by the innocent among the poor.

David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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