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A Poor Record on Poverty

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    Posted: 29 August 2006 at 10:21am

A Poor Record on Poverty

8.29.2006 -- This morning, the Census Bureau released new poverty, income, and health insurance figures for 2005. Through 2004, the poverty rate had increased each year of George W. Bush's presidency -- from 11.7 percent in 2001 to 12.7 percent in 2004. New 2005 data released this morning shows the problem didn't get any better. The numbers "mark the worst performance in recent decades for poverty and median income during an economic recovery." The Bush administration "dropped the ball entirely" on poverty since the issue "forced its way to the top of President Bush's agenda in the confusing days after Hurricane Katrina." ("Does [President Bush] often talk about poverty? No," Tony Snow admitted recently.) But in a "sign that the income inequality may rise higher on the US policy agenda," Treasury Secretary Henry Paulson admitted this month that "many Americans simply aren't feeling the benefits" of economic expansion. Now it's time for Bush to take action.


The inflation-adjusted median hourly wage for American workers has declined two percent since 2003, the New York Times reported yesterday, and "wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947." Unlike late 20th-century trends, wages have not kept pace with increasing productivity. "Worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent," with benefits -- not wages -- accounting for most of the increase. Meanwhile, the top one percent of earners "received 11.2 percent of all wage income" in 2004, "up from 8.7 percent a decade earlier and less than 6 percent three decades ago." America's growing income inequality led economist and columnist Paul Krugman to label the past 25 years the "The New Gilded Age." From 1980 to 2004, "real wages in manufacturing fell 1 percent, while the real income of the richest 1 percent -- people with incomes of more than $277,000 in 2004 -- rose 135 percent." Administration policies are only widening the gap. Aug. 20 marked the 10-year anniversary of the last federal minimum wage increase to $5.15 an hour. The minimum wage is now at its lowest level in 51 years, but conservatives played politics with the proposed increase by tying it to estate tax cuts for multimillionaires.


Our broken health care system has made surviving in today's economy more difficult. The new Census data for 2005 shows 46.6 million Americans do not have health insurance, up from 45.3 million in 2004. Since 2000, the Bush administration has created three times as many uninsured Americans as new jobs: six million uninsured versus 1.9 million new jobs between 2000 and 2005. The cost of employer-based insurance increased 9.2 percent in 2005 as hourly earnings climbed by only 3.2 percent. The average costs of providing medical care for a family of four rose 9.6 percent. The Commonwealth Fund found 50 percent of families earning less than $35,000 a year reported having trouble paying medical bills. (The percentages are similar for families earning $35,000 to $49,000, making it more likely medical costs could drive them into poverty.) Ninety-five percent of companies polled by benefits consultants Watson Wyatt expect to restrict health benefits for retirees in the next five years. And recently, the administration angered governors by announcing plans to "cut Medicaid payments to hospitals and nursing homes that care for millions of low-income people." The administration's focus has been on health savings accounts (HSAs) and Association Health Plans (AHPs), proposals that "will not begin to solve the problems of the 46 million Americans without health insurance" and "will cause new dilemmas for those fortunate enough to have health care coverage." "We've had absolutely no federal effort or interest in insuring the uninsured since 2000," Emory University's Ken Thorpe said. "This has not been a priority of the Bush administration." To fill the void, states are working to provide comprehensive health care coverage.


Housing costs are also eating into the budgets of low-income Americans as "the scarcity of affordable housing" becomes a "deepening national crisis." Roughly 15.8 million households spend more than half their incomes on housing, a 14 percent increase between 2001 and 2004. Low-income Americans have been hit the hardest. "Neighborhood decline is fueling the loss of affordable housing and exposing residents to poor neighborhood conditions," Harvard University's Joint Center for Housing Studies found. "From 1993-2003 the supply of rentals affordable on a $16,000 income fell by 1.2 million, while in 2001 12 percent of such rentals were operated at a loss." The report concluded: "Unless governments step up to these challenges, spending on housing will increasingly crowd out spending on pensions and savings among those with low and moderate incomes." The federal government is taking a step back. The U.S. Department of Housing and Urban Development recently announced a $600 million public housing funding shortfall, which means "public-housing agencies now must deal with an unexpected 14.5 percent cutback in federal funding."


Ten years after welfare reform passed, many single mothers and their children have been unable to escape poverty; "social workers and researchers are raising concerns about families that have not made the transition and often lead extraordinarily precarious lives." "With some one million single mothers -- with some 2 million children -- in an average month being both jobless and without income assistance from TANF (Temporary Assistance for Needy Families), other cash aid programs, or other household members, it is clear that much work remains to be done." The Economic Policy Institute found the poverty rate for low-income single mothers increased three percentage points from 2000 to 2004, but annual hours of work fell from 1,170 to 1,068. Over the same period, child poverty rose from 15.9 percent to 17.5 percent and the "number of children with cash incomes below one-half of the poverty line increased by 758,000." Despite the increasing poverty, the number of children receiving TANF assistance or related state benefits declined. New welfare rules from Congress and the Bush administration create a strong incentive for states to cut their caseloads, whether or not families find jobs. For states whose caseloads don't fall, the new rules will "require states to focus intensely on making more poor people work, while discouraging other activities that might help untangle their lives." "nder new federal rules, studying for a bachelor's degree no longer counts by itself as an acceptable way for people on welfare to spend their time." "I feel nauseous," one welfare recipient and incoming college senior said about the change. "This is my ticket...out of poverty." Source: Center for American Progress

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