Boom for Whom? Poor People Left Behind as the Economy Grows

Boom for Whom?  Poor People Left Behind as the Economy Grows

President Trump continues to boast of record economic growth taking place on his watch, and to credit it to Republican tax policies. "We've turned it all around,” he said in July. “Once again, we are the economic envy of the entire world." Fact-checkers continue to dispute some of his facts and point out that he inherited a strongly recovering economy, but all agree that the stock market is booming and economic growth is steady and respectable. But who benefits from that growth? While corporate profits rise and stockholders flourish, what is happening to the people at the lower end of the income distribution? 

In mid-September the US Census Bureau reported that at the end of 2017 12.3% of Americans still lived in poverty, a change of less than half a percentage point from the year before. 18% of America’s children—almost one in five-- lived in poverty .   The supplemental poverty rate, which takes into account the cost of housing in different parts of the country, was basically unchanged at 13.9%.  This might suggest that economic growth is helping the rich and perhaps also the middle class while leaving the situation of the poor basically unchanged. Unfortunately, the news looks worse than that.  While median incomes rose for most Americans, the income of the bottom 10% of wage earners remained flat.   In the meantime, inflation rose by more than 2% in 2017,meaning that those wages purchased less than they had done a year ago.  Inflation is still outstripping wage growth, so that the real wages of workers in construction, manufacturing, and service industries fell between summer 2017 and summer 2018. This is a headache for middle-class workers. For people already struggling to get by, another small loss can be devastating.  And while the number of Americans who lacked health insurance had been falling steadily since the passage of the Affordable Care Act, that decline has stopped, leaving 28.5 million without coverage.

Last December Philip Alston, a UN special rapporteur on poverty and human rights, gave a vivid and visceral report on the reality of poverty hidden behind those figures. He described adults who were toothless because they couldn’t pay for dental care and Medicaid doesn’t cover it in most states, families who lived in yards flooded with raw sewage, poor people living next to piles of toxic waste, homeless people being told to ‘move along’ by officers who couldn’t answer when the evictees asked where they were supposed to go. Alston wrote, “American exceptionalism was a constant theme in my conversations.  But... today’s United States has proved itself to be exceptional in far more problematic ways that are shockingly at odds with its immense wealth and its founding commitment to human rights...contrasts between private wealth and public squalor abound.” He pointed out that, while the US is the world’s wealthiest country, we also have the highest rates of incarceration and infant mortality in the developed world. Youth poverty rates and overall income inequality are higher in the US than in any other reasonably prosperous Western democracy. 

What are the Republicans in power doing about all this? Trump is denouncing—not poverty, but  ‘fake news.”  He scoffed at Alston’s claim that 18.5 million Americans live in ‘extreme poverty,” and proposed a different figure: only 25,000 people.  This is based on the Heritage Foundation’s accounting, which defines “‘extreme poverty’ as living on less than $4 a day, $1,500 a year. Someone who had $1,500 to live on every year would not count as ‘extremely poor.” And that $4 figure includes not only actual income but also the value of food stamps, Medicaid, housing assistance and all other safety-net benefits. The lucky owner of that $1,500 might not be officially ‘extremely poor’ but it’s hard to picture just how he would manage to live.

Trump, however, declared this summer that the war on poverty is largely over and we have won it, and continued policies that weaken protections for poor people. His Administration gave states permission to impose work requirements on Medicaid recipients. When a federal judge blocked Kentucky’s proposed work requirements, pointing out that state data suggested 95,000 people would lose coverage, the Trump administration promised to find a work-around to allow the new rules to be implemented.  His appointee at the Consumer Financial Protection Bureau has dropped lawsuits against payday lenders and other protections meant to keep low-income people from being driven into debt by unscrupulous lenders.  Trump’s budget proposals have included major cuts to food stamps, housing assistance and other safety-net programs. So far the Congress hasn’t passed those cuts. But they have cooperated in cutting anti-discrimination rules in lending. And this week, as media stayed focused on the Kavanaugh confirmation hearings, the House quietly passed measures to make their individual tax cuts permanent.  Many analysts have raised concerns that most of the value of these cuts will go to the wealthiest Americans, deepening the inequality Alston deplored—although, like most things in the realm of statistics, this is disputed. But it’s clear that the tax cuts raise the federal deficit, fueling new calls to cut spending on safety nets and other programs.

Alston is on the record warning about that deepening inequality, and about its effects on the poor.  This summer he lamented that ‘the policies pursued over the past year seem deliberately designed to remove basic protections from the poorest, punish those who are not in employment and make even basic health care into a privilege to be earned rather than a right of citizenship...”   The wealth of our nation and of our richest fellow citizens may possibly be ‘the envy of the world,” but our fellow citizens who struggle economically have good reason to envy those who live in nations which have some commitment to providing for the basic needs of all.