Economic Recovery Leaves Low-Income Working Families Behind

By the end of 2011, the official unemployment rate had dropped to 8.5%. The stock market seemed on its way to recovering the huge losses of 2008-9. The housing industry showed signs of life.

But the number of low-income working families rose to 10.4 million — up by 200,000 from 2010, according to a new brief from the Working Poor Families Project.

This means that nearly a third — 32.1% — of all working families struggled to make do with incomes below 200% of the Census Bureau’s applicable poverty threshold.*

The percent of low-income working families has steadily increased since 2007, when the recession set in. In that year, 28% of working families were poor or near-poor.

So we now have about 47.5 million people — 23.5 million of them children — in the group WPFP has carved out, i.e., those in families with children where the members who were at least 15 years old collectively worked a minimum of 39 weeks during the prior 12-month period.

What this tells us, of course, is that high unemployment doesn’t sufficiently account for the high poverty rate — or the more realistic 200% of that rate.

It does account for some part of it. According to the brief, the share of low-income families working dropped a bit between 2009 and 2011 — from 73% to 71%.

A larger part of the story seems to be the types of jobs those low-income family members had. About a fourth of the adults in these families worked in just eight occupations — all of them characteristically low-wage, e.g., cashiers, health aides, restaurant wait servers.

The brief tells us that many were working part-time — not by choice — and often in multiple temporary jobs.

But the data in the source it cites are very old. So we really don’t know how much cobbled-together, on-and-off employment boosted the number of working families who, at best, had barely enough to make ends meet.

We do know, however, that these working arrangements made them even more economically insecure than they would have been otherwise.

The rise in working poor families, as WPFP defines them, is another indicator of growing income inequality in the U.S.

While the poorest fifth were getting 5% of all income earned, the top fifth were getting 48% — not, in many cases, only income earned by the (figurative) sweat of their brows.

Looking at average incomes by education level, WPFP concludes that increasing the portion of workers with at least some postsecondary education “would go a long way toward narrowing the income gap.”

As I’ve written before, I find this doubtful, though it would surely move some of the low-income workers up from the bottom fifth.

We’d still have growth in low-wage occupations that can’t be fully automated or shipped overseas.

Employers won’t pay more merely because they can’t find enough qualified workers who’ve got, at most, a high school diploma or the equivalent. They won’t recreate the mid-wage jobs they’ve eliminated either.

WPFP seems to recognize this, since it also addresses job quality — and in terms that would apply mainly to low-wage occupations.

On the policy front, it recommends raising and indexing the minimum wage, mandating comprehensive paid sick and family leave, enforcing fair labor and other workplace standards and “ensuring that if public job creation expenditures persist, they benefit workers and their communities.”

All but the last would be easier for workers to gain for themselves if we had full employment again, i.e., a labor market with relatively few job seekers for jobs employers want to fill.

Economist Jared Bernstein, who’s long championed full employment as a policy goal, cites, only half in jest, the advantages workers gained when the “black death” plague swept Western Europe in the 14th century.

Well, we’re far from full employment. And happily no one’s predicting a plague. But it doesn’t look like we’re going to get public job creation expenditures.

What looms instead are job losses — at least a million, maybe over twice that — if Congress can’t agree to stop the briefly-delayed across-the-board spending cuts.

Same result — or perhaps worse — if it replaces them with equivalent cuts that shield defense, as the House majority wants.

And undoubtedly a much larger number if the Republicans succeed in forcing additional cuts on top of the $1.2 trillion already enacted the last time they ginned up a debt ceiling crisis.

This, as the WPFP brief indicates, would be a double-whammy for working poor families — not only an even worse labor market, but spending cuts in programs that help them meet basic needs and and become card-carrying members of the working middle class.

* Double the threshold for a two-adult, two-child family is $45,622.

A Bad Debt Deal, But It Could Have Been Worse

Welcome to the Monday Morning Quarterback Club. We’ve got lots of members rehashing the weekend debt ceiling game — players as well as spectators like yours truly.

The White House is celebrating a bipartisan deal that it claims is a win for both “the economy and budget discipline.”

House Speaker John Boehner says “it’s not the greatest deal in the world,” but there’s nothing in it that violates our [right-wing Republican] principles.”

The pundits generally agree with Boehner that it’s not the deal one would have wanted. Beyond that, they diverge dramatically. Washington Post blogger Ezra Klein provides a good sample — and a smart assessment.

The deal, he says, represents “the lowest-common denominator.” No entitlement cuts, no tax increases, no stimulus spending and no infrastructure investments.

Actually, there’s not much of anything specific, except for targets and process. Which makes it very much like the balanced budget amendment the deal commits Congress to vote on.

Big dollar figures. Percent cuts for this and that. Very little that enables anyone to fault the President or members of Congress for their choices about program-specific spending.

By and large, I agree with many of the less ferociously angry analysts and advocates on the left. It’s a bad deal, but not as bad as it could have been. And not nearly as bad as no deal at all.

It’s a bad deal because there’s no balance between spending cuts and revenue raisers — though that was rightly a key item for the Democrats.

Not so bad as it could have been because, Boehner notwithstanding, the bipartisan Congressional committee that’s been charged with figuring out how to get to the bigger of the two deficit reduction targets could, in theory, propose new taxes and/or other tax code reforms that would reap more revenues.

It’s a bad deal because it requires spending cuts when the economy actually needs another infusion of stimulus spending.

New figures show the economy has all but stopped growing. Economists say that’s largely because consumers aren’t buying enough.

Federal spending cuts will inevitably throw more people out of work. And jobless workers and their families don’t go on shopping sprees. Nor others who feel justifiably anxious about future paychecks.

To make matters worse, the deal doesn’t provide for an extension of long-term unemployment benefits — something many hoped the White House could get into the package. A top-rated stimulus left for another, doubtful day. A growing gap in the safety net meanwhile.

The deal is not as bad as it could have been because the first round of cuts will be small, relative to the total deficit reduction targets. Also not so bad because a significant portion will have to come from defense — meaning that programs for low and moderate-income people won’t bear the entire brunt.

It’s a bad deal because it puts these programs at high risk.

Congress has to come up with about $900 billion in savings and then an additional $1.5 trillion.

That second target will almost certainly mean deeper cuts in non-defense spending of the kind Congress must approve on an annual basis, e.g., aid to public education, job training, targeted nutrition programs, or big cuts in mandatory spending for entitlements like Social Security, Medicaid, Medicare and food stamps.

The deal is not so bad because the programs for seniors and low-income people of all ages would be protected from the automatic spending cuts that will kick in if Congress doesn’t act. Well, almost. Medicare provider rates would be cut, but benefits couldn’t be.

Last but not least, the deal is not so bad because the alternative would have been no hike in the debt ceiling at all.

No one knows what this would have meant for our economy and all of us hapless spectators. Surely a spike in unemployment and a halt to monthly disbursements for veterans’ benefits, Social Security, food stamps and the like.

Either that or a Constitutional crisis if the President decided, as some advised, to just direct Treasury to pay our government’s bills anyway. Hard to believe our floundering economy wouldn’t have totally tanked.

A good bit of the Monday morning quarterbacking has involved what the President could have done to get the debt ceiling raised without such collateral damage.

He’s roundly faulted for not being tough enough. I myself have felt frustrated to see him shift so far to the right that he would actually, as in the White House statement, laud a rollback in non-defense discretionary spending to a level last seen under President Eisenhower.

But I’m inclined to agree with former White House economist Jared Bernstein’s view that “lousy negotiating skills” had little to do with the outcome.

The President and Democrats in Congress had to deal with the fact that a significant number of House Republicans were willing — some even eager — to see the economy plunge off a cliff.

There are times when you’ve got to pay the ransom to save the hostage. I think this was one of them.

I take some comfort in knowing that whatever dreadful deficit reduction plan this Congress passes can be undone by future Congresses.

In short, we live to fight another day. And fight we truly must.

Dark Deficit Clouds Over DC

I’m following — some would say obsessively — the byzantine maneuvers on Capitol Hill. Wasn’t going to write about them, but can’t stay focused on anything else.

Bills passed in the House that can’t pass in the Senate. Bills offered in the House that can’t pass there because some Republican members think they’re not extreme enough.

I’m gripped by suspense. Will Congress raise the debt ceiling before the drop-dead date? What will happen if it doesn’t? What will happen if it does, but only for a short period of time? Will the President follow through on his almost-but-not-quite veto threat?

And I’m profoundly disheartened because whatever deal gets passed — and I’m pretty certain one will be — will do grave damage to low and moderate-income Americans.

Many economists — not all of them liberals — say that spending cuts should wait until the economy is growing at a healthier pace. Say that won’t happen until the unemployment rate drops to something closer to normal because, needless to say, jobless people and their families don’t buy more than they absolutely have to.

Yet all the deficit reduction plans afloat would cut spending next year below the already-cut levels in the continuing resolution that’s the substitute for a regular budget now.

And none of them would shield safety net programs that get their funding from annual appropriations.

These programs, recall, don’t just protect poor people from destitution. They also create and preserve jobs — both directly in the agencies that administer them and indirectly because they give beneficiaries some spending power.

Nobody knows what all this will mean for the District of Columbia because nobody knows how either the crisis or the solution will play out. But we can make some educated guesses.

The Chief Financial Officer has warned of short-term financing troubles if the debt ceiling isn’t raised. Also of longer-term constraints from what I guess he foresees as losses of federal funds due to cuts in Medicaid and other federal programs, e.g., aid to public education.

He expresses worries about a bond downgrade due to lack of ready cash and impacts on revenues the District gains because the federal government is headquartered here.

There could, however, be other impacts. If interest on Treasury bonds rises because they’re no longer viewed as 100% safe, interest on other new bond issuances will rise. Interest on loans in the private sector too.

Include here not only financing for development projects, but home mortgages, car loans, higher education loans and plastic debt. Hardly a stimulus to local consumer spending.

And what about recovery in our anemic job market? The National Employment Law Project gives us a partial answer.

A fact sheet it’s not yet posted provides state-by-state (and District) figures for jobs lost or gained since the recession began, plus new jobs that would have to be created to accommodate growth in the working-age population.

The District, it shows, would have to gain 30,100 jobs just to get back to where we were in December 2007.

How can we possibly get anywhere near this number when federal spending cuts will mean widespread job losses?

We’ve got residents working in federal agencies, in local companies that provide them with contract services, in District agencies that depend in part on federal funds, in the organizations they contract with and in a large number of for-profit businesses that grow, shrink or die on the basis of consumer spending.

All vulnerable to layoffs as the federal budget cuts unroll. More certain hardships for our most vulnerable neighbors too.

I don’t recall when I’ve ever felt so anxious about our community — and our country. And I’ve been watching federal policymaking for a long time.

Speak Out For The True Conservative Position On Deficit Reduction

It’s time for those of us who care about the needs of low-income people to advocate a conservative position.

As you probably know, programs that serve these needs are at high risk as the President seeks to forge a compromise that will avert a default on the federal debt.

The Republicans are demanding at least $2 trillion in spending cuts, along with “reforms” in Medicare — maybe other so-called entitlements too.

They’ve said they won’t accept tax increases of any sort, betting that the President and other Democrats at the table will cave to avert an unprecedented economic crisis — even if it means throwing poor people under the bus.

It’s hard to imagine a spending-cut-only plan in the trillions that wouldn’t.

There’s nothing conservative about this. It’s a radical departure from a long-standing consensus that deficit reduction plans should, at the very least, protect programs for low-income people.

All the deficit reduction plans passed in the last 25 years did. Several of them actually strengthened anti-poverty measures, e.g., by expanding the Earned Income Tax Credit. The Children’s Health Insurance Program came into being as part of the Clinton era Balanced Budget Act.

Even President Obama’s deficit hawkish fiscal commission adopted, as a guiding principle, “protect the truly disadvantaged.”

The true conservative position is thus to conserve programs that mitigate poverty and offer low-income people opportunities for a better life.

The programs need to be protected from specific near-term budget cuts and also from any automatic cuts that would be triggered if Congress fails to achieve some as-yet undetermined deficit or debt reduction targets in the future.

Leaders of major national faith-based, civil rights, charitable, economic research and advocacy organizations have written the President, the Vice President and the Congressional leaders of both parties urging them to “honor the precedent set by previous deficit reduction negotiations.”

The Coalition on Human Needs tells us that we need to join our voices to theirs. The stakes are alarmingly high and the clock is ticking.

Here are two quick, easy ways to let the President know that we want him to stand firm for the conservative principles of past deficit reduction plans — protection for programs that serve low-income people and revenue raisers that will help make the total package balanced and fair.

We can leave a message on the White House comment line. The toll-free number is 888-245-0215.

We can also use this editable e-mail provided by the Half in Ten campaign.