Summer Economics/ CS 2006

230+ years and still going strong(Chris Alm - History)

Poverty has always existed in America and to this day it continues to be a persistent problem with no end in sight. There are many reasons for why people have been in poverty throughout our country’s history. One reason which was often given by those not in poverty is part of a social theory called Social Darwinism which was created around the turn of the 20th century. The Social Darwinists, like so many people in American society before and after them, believed that those in poverty were living in that condition because of their own faults and immoral values. However, this was not always the case. A second reason for people’s poverty was the circumstances and the times that people found themselves living in. (10)
One of the greatest set of challenging circumstances that was likely to push people into poverty occurred for those who were not, at least at first, considered to be true Americans, that is, immigrants and even more so, African slaves. Immigrants have poured into America in waves throughout our country’s history. During the 1800’s immigrants from all over Europe arrived in America searching for prosperity and a better life than the one they had had back in their native country. One group who came in especially large numbers were the Irish. Unfortunately for the Irish, they often came to America with little money and were often viewed by many of those already living in America as a group barely above slaves. In general, the Irish, along with many other immigrant groups, were only able to get low paying, unskilled jobs, and as a result had low standards of living. In the South, the Irish, along with the Scottish, made up the social class commonly known today as Rednecks. Sometimes, these people lived in total poverty and were seen to be at the lowest level of society, besides slaves, that is. (5)
African slaves, and later, African freedmen, almost always had difficult lives and were more often than not subject to lifestyles of poverty. Of course, when they were slaves, many African-Americans lived under harsh conditions with little food and sometimes inadequate housing as a result of their masters choosing that lifestyle for them. However, even after 1965 and the end of the Civil War, life didn’t really improve for African Americans and many of them remained in poverty. This continued impoverishment was in part due to some of the laws that were established, namely the Black Codes, and later, the Jim Crowe Segregation Laws. These laws placed the newly freed African Americans back into living situations of poverty and almost comparable to the slavery they had just been liberated from. Many of the freedmen became sharecroppers in the South, meaning that they often did not own their own land or even their own tools and as a result had to rent them out from their white employers who did own them. Also, because they were sharecroppers, they had to pay their employers a large sum of the profits for each year’s harvest. Often, the freedmen sharecroppers had to buy all of their living necessities from a single store and as a result the storeowner could set prices as high as he liked and this pushed the freedmen into even deeper poverty. Also, the crop-lien system, in which the freedmen used their crops as credit in order to get loans and be able to buy more goods caused the freedmen’s lives to decline more into poverty. (2) (10)

A thirteen year old sharecropper in Georgia.
http://www.amarilloart.org/images/lange_2.jpg

The years before and after the turn of the 20th century brought another source of poverty to America. During this time of the Gilded Age, big corporations and monopolies were flourishing in America and the elite were becoming richer and richer. However, the same could not be said for those at the lower levels of society. For those who were working in the factories at very low paying jobs, and for those who could not even get one of those low paying jobs, life was very difficult. The poverty line around the turn of the century was $500 and 40% of those in the working class were below that line. (4) Also, one third of the workers in America at that time were immigrants and as mentioned earlier that led to problems of its own. (4) A good example of the lives and of the poverty of working people at this time can be found in the book, The Jungle, by Upton Sinclair. Written in 1906, The Jungle was meant to alert people to the horrible and squalid working conditions of the Chicago Meat Packing Industriey. (3) (10)
During the Roaring 1920’s many Americans reached new levels of prosperity. The stock market was booming and agriculture in the West was producing more than it had it years. However, not everybody was faring quite as well. During this time, 60% of Americans did not make enough money to sustain a minimal lifestyle. (1) African-Americans and sharecroppers were still struggling although many people at the time tried to ignore those in poverty and focus on the successes that America was having after its recent victory in the First World War. (6) (10)
All of this prosperity came to an end on October 29th 1929, however, as the stock markets crashed and America entered its lowest point in economic history, the Great Depression. During the Great Depression, salaries fell by 40% and industrial wages by 60%. (8) Also, one third of Americans were below the poverty line. 12,000 people lost their jobs each day and 12 millions people were out of work in total, the unemployment rate rising to an estimated 25% and possibly even higher. (7) The few jobs that were available would first go to White unemployed people before going to unemployed African-Americans, thus perpetuating the poverty of African-Americans brought on at least partially for racial reasons. In agriculture, farmers had been very successful in growing a large quantity of crops, however, the supply was far greater than the demand and as a result prices dropped and farmers ran into trouble during this time as well. Many farmers were eventually forced to burn much of their crops because they simply didn’t have any use for it. (1) (9) (10)

Unemployed people standing in a bread line during the Great Depression.
http://www.freedomsfoundationaz.org/ffvfactiv/ffvfprog/Bread%20Line.jpg

In the 1960’s, President Lyndon Johnson launched a war on poverty known as the Great Society. Johnson organized the Office of Economic Opportunity (OEO) to create housing and educational programs to benefit the poor. Medicaid was one of the programs that Johnson created through the Great Society. Medicaid is a welfare program which gives medical care to the poor. Although it did help in some respects, Johnson’s Great Society eventually disappeared, partly as a result of Republican’s combating it in Congress and partly because of the Vietnam War. However, there are still programs, such as Medicaid which have survived until today and are still beneficial to people living in poverty. (10)

President Lyndon Johnson, creator of the Great Society.
http://www.historyplace.com/specials/calendar/docs-pix/johnson.jpg

Poverty has been a part of American society for centuries and will probably continue to be in the centuries to come. There will always be people who are unable to get jobs, for whatever reasons, and there will always be people who can only get jobs which will not sustain a standard of living above the national poverty level. Fortunately, a person’s race is beginning to contribute less to poverty and maybe some day it will not be a factor at all. Hopefully, poverty will improve overtime for the people of America.

(1) http://inlet.org/esp//chapvi.htm
(2) http://www.pbs.org/wgbh/amex/reconstruction/sharecrop/sf_economy.html
(3) http://www.pbs.org/wgbh/amex/carnegie/gildedage.html
(4) http://xroads.virginia.edu/~MA01/Davis/photography/reform/gildedage.html
(5) http://66.102.7.104/search?q=cache:ioJvmkgauakJ:en.wikipedia.org/wiki/Redneck+irish+clay+eaters&hl=en&gl=us&ct=clnk&cd=1
(6) http://www.historylearningsite.co.uk/America_economy_1920's.htm
(7) http://www.historylearningsite.co.uk/wall_street_crash.htm
(8) http://66.102.7.104/search?q=cache:i4c7cwzwaH4J:www.britannica.com/eb/article-77868+great+depression+poverty+level&hl=en&gl=us&ct=clnk&cd=1
(9) http://66.102.7.104/search?q=cache:Fu6AIJgdlRoJ:us.history.wisc.edu/hist102/lectures/lecture18.html+great+depression+poverty+line&hl=en&gl=us&ct=clnk&cd=1
(10) Brinkley, Alan. The Unfinished Nation: A Concise History of the American People. New York, New York: Mcgraw-Hill Companies Inc., 2004

The Current Situation of National Poverty (Samantha Ng - Current State)

The United States of America measures poverty in terms of poverty threasholds. A family is considered in poverty if their total income is below the poverty threashold determined every year.(1) In 2004, 37 million people were in poverty, and the national poverty rate was 12.7%. The rate has been slowly increasing since 2000, where the rate was 11.3%. While the rate has increased in recent years, the overall trend for poverty in the United States is declining. In 1959, the average poverty rate was 22.4%. The rate soon dropped to around 11-12% and maintained that rate until 1980, where it increased to 13-14% until the mid 90’s. In 1995, the rate began to drop again, and has remained at around 11-12% ever since.(2) America looks at poverty in absolute terms. This means that a person in poverty is “lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.”(3)

(1)

A few of the major factors that influence national poverty are: lack of education, unemployment, population growth, and race. Poverty has a much larger impact on African Americans and Hispanics than on those who are White or Asian. For 2004, the poverty rate for African Americans was 24.7% and 21.9% for Hispanics. Both the White and Asian poverty rates were below 10%. These differences in poverty rates can be explained through history. As Chris mentioned, African Americans began their economic struggle as slaves, and were at a huge disadvantage compared to their White owners. Hispanics and other immigrants also were at a disadvantage when they immigrated to America because they did not speak much english, they were discriminated against and they were only given low paying jobs. Most of the Asians came to America for the gold rush in California or to work on plantations in Hawaii. While they also began with little money and low-end jobs, they worked hard, saved up money, and overcame their most of their economic struggles.(4) These early racial circumstances have contributed greatly to the current poverty situation.
Lack of education is another large factor in poverty. Many people who have not completed high school cannot get high paying jobs, and often have difficulty paying bills and supporting their families. Those in families with a female householder and no husband are especially affected by poverty in America. In 2004, 30.5% of these families were in poverty, and the poverty rates for these families who were African American or Hispanic were even higher.(2) We saw an example of people who are extremely close to living in poverty in the Walmart video we watched in class. Most of the employees did not have college degrees and therefore had no hope for getting a higher paying job.

(1)

Unemployment is related to a lack of education in that many people with out a high school diploma cannot find jobs. The United States’ unemployment rate is at about 5%, but as we learned in econ, this does not mean that 95% of the population has a steady or sufficient income. Unemployment is a large contributor to the national poverty level, and is made worse when the population increases. It is unfortunate when one person is living under the poverty level, but it is much worse when that person has three or four children to support as well.(5)
The government tries to help those in poverty by setting up programs, such as welfare. These programs are meant to help those living in or close to poverty overcome their financial strains and get them back on their feet. Welfare does help, but some feel that people abuse it and take advantage of tax payers’ money. The government also tries to help by encouraging students to stay in school. They create programs such as “No Child Left Behind” in order to keep more kids in school.(6)
The current situation on national poverty is getting better, yet there is still room for much improvement. Hopefully, by examening what we can do to help this situation, we will be able to continue to lower the poverty rate until it is no longer an issue.

Sources:
1)http://www.npc.umich.edu/poverty/
2)http://www.census.gov/hhes/www/poverty/histpov/hstpov2.html
3)http://72.14.203.104/search?q=cache:xMUgQ9hC0ukJ:en.wikipedia.org/wiki/Poverty_in_the_United_States+united+states+poverty+2005&hl=en&gl=us&ct=clnk&cd=2
4)The Unfinished Nation by Alan Brinkley
5) http://whirlwind.he.net/~ercarlso/student/Poverty_and_rapid_population_growth.html
6) http://www.ed.gov/nclb/landing.jhtml

Just a Spoonful of Sugar Makes the Poverty Go Down(Mark Ohara - What Should Be Done)

When analyzing what can be done about our nation’s poverty problem, I was stumped as to what could be done even if we had the resources and the control to accomplish anything. I wondered where to find suggestions on what to write about and decided that in order to find solutions, I must first discover what causes the poverty.

Inflation:
According to an article in the Honolulu Advertiser, one of the reasons for poverty in the United States is that jobs that used to provide enough money to support families have become insufficient because of inflation. We can see the effect of this inflation by looking at some statistics given by the article. It says, “About 35 million Americans lived in poverty in 2002, which is 1.7 million more people than in 2001, according to census data. The federal poverty threshold for a family of four was yearly earnings of $18,392 in 2002. Almost 40 percent of working-age poor people were employed, and the percentage working full-time all year increased 45 percent from 1978 to 2002” (http://the.honoluluadvertiser.com/article/2004/Jun/13/bz/bz12a.html). We can see the immediate effects of inflation and how it continues to hurt our nation’s poor.

http://www.midamericanenergy.com/eew/help/images/4_2a_checkout.jpg
If we had unlimited resources and control, I would regulate inflation. There have been many proposals on how to stop inflation. I read an article in the July 2006 edition of BusinessWeek magazine that mentions a way to, at the very least, restrain inflation. It says, “The Fed’s goal has been to find the level of interest rates that will bring down the economy’s growth rate just enough to restrain inflation but not so much to harm the economy” (Cooper 29). So far this process has been hard to control, but I believe that if the Fed’s have enough power and control over interest rates and the overall flow of money, then managing America’s inflation should be a relatively easy task. I will increase the funding going to the Fed’s research and create a division of the Federal Government whose sole purpose is to observe the GDP and monitor inflation. That way we will be able to find other methods of keeping inflation manegable.
By doing this, the poverty-stricken would have an easier time finding stable jobs that will support their families. Also, inflation makes it harder to buy necessities such as groceries, clothes and shelter. The amount people can buy with their minimum wage salaries cannot keep up with the rapidly changing inflation.
Inflation has become an increasingly worrying to the United States and controlling it would benefit many Americans. We need to put a leash on this before it gets out of hand and we are unable to do anything about it.
We can see the history of America's inflation in this graph:

http://www.csus.edu/indiv/j/jensena/sfp/us/us_in_h.jpg

Education:
In our current world, education is priceless especially when dealing with poverty, and I believe that we need to emphasize that fact now more than ever. One reason that Americans are in poverty is that they are uneducated. It has been proven that when employers see the college degrees they tend to pay higher salaries and offer better positions. It says in an article written by the Center on Budget and Policy Priorities that the relationship between the decline in the poverty level and the decline in the unemployment rate, “seems primarily to reflect the effects of the lowest unemployment rate since 1969, as well as rising wages... The Census report demonstrates the power of the beneficial effects of a strong economy and especially of a low unemployment rate” (http://www.cbpp.org/9-26-00pov.htm). That means that if the young men and women of the United States went to college, our unemployment rate would decrease because companies would hire people from our nation instead of immigrants from places such as China and India. That is why if there were unlimited resources and control, we could make getting higher education a reality for the American people who once believed that it was too expensive or a waste of time.
One thing that would definitely be done is the creation of more scholarships for people from families with low incomes. Also, to make the idea of college more appealing, the government could reward families with one or more of their family members in college with tax cuts, tax refunds or other helpful monetary compensations.
Another thing another thing we could do is educate the people. If we teach Americans about poverty and how to avoid it, there will definitely be a change in the way people use their money and deal with poverty. I would create more Public Service Announcements and create more organizations that go around to schools and workplaces giving seminars on poverty.

http://departments.oxy.edu/registrar/catalog/images/class_outside.jpg

Charity:
Another way to help fight poverty would be getting more people involved to try to stop it. We could start giving a lot more of the money the rich earn to the poor in the form of taxes so that they will be able to get new equiptment for the public schools in low-income areas and youth guidance programs for orphans or families that utilize the services of Big Brothers Big Sisters. If we could make the families with higher incomes more willing to understand the needs of the poor by having them share their wealth with them, there would be a decrease in the level of poverty and more people would get involved in fighting it. This would be done the same way that the education of the people would be done. There will be explanations and future compensations for all the high-income families that are being taxed to help the Americans in need.

Poor People Are Lazy; I Know So 'Cause I'm Edumacated: The Need To Dispel Misconceptions (Garret Nakata - What Should Be Done)

Education

Poverty on the local level and the national level aren’t much different. One thing that remains constant is that the education our children receive is unacceptably poor. The president of the Organization for Economic and Development released a study that the United States is losing ground in education compared to other countries. The study also shows that,

Among adults ages 25 to 34, the United States now ranks ninth among industrialized nations for the share of its population with at least a high school education and eighth for the percentage of citizens who hold a college degree. Moreover, the OECD found that 15-year-olds in this country are below average compared with their peers in Europe and Asia when it comes to applying math skills to real-life situations.(1) Without higher education, youths cannot attain higher level jobs and therefore must settle for low-income jobs. And with a supply of cheap, foreign labor readily available from Mexico, India, and other countries, these low-income jobs might not be so plentiful, which would lead to a rise in unemployment, or at the very least they’d only be able to get even lower-income jobs. As David Lazarus, a writer for the San Francisco Tribune who wrote an article on the relation between education and poverty, said,

To accomplish [the end of poverty], we need schools that adequately prepare youngsters to seize whatever opportunities come their way and to prosper through personal achievement. That means classrooms that aren't overcrowded or physically deteriorating. It means facilities stocked with the supplies and resources kids need to develop intellectually, socially and emotionally. (1)
This means we need to put more money into supporting our schools and funding educations reforms. But, the closest thing to education reform in recent years is Bush’s ‘No Child Left Behind Act’, which bases success on test scores alone and does not provide adequate funding nor does it lay out standard academic criteria to be taught.

We have to do more than a test. We need to entertain the idea of having each state handle its own education system, instead of nationally coordinated standards, academic programs, and spending. Then we can focus on a state’s specific needs, as opposed to issuing broad solutions that may only apply to a few states. And speaking of education, the public needs to be educated as well. But I’m not talking about formal education; I’m talking about education about poverty itself.

How many people do you think are living in poverty? One million? Two million? Surely the number can’t be any higher than that. Or can it? According to the U.S. Census figures released in 2004, a total of 37 million Americans are affected by poverty.(2)

The fact is that most people just don’t know that much about poverty in America, or have a misguided picture of it. According to surveys given out by the Catholic Campaign for Human Development(CCHD), most people said they believed at the most five million people were affected by poverty. Also, when asked to identify the biggest issues facing the United States only 3% mentioned poverty.(3) How can we solve a problem that the majority of the public doesn’t even know is a problem? By educating the public on this issue, we can spread awareness and increase desire to do something about it. And through education, we can dispel myths surrounding the poor, such as the ever popular, “They are poor because they’re lazy. They could get a job if they really wanted to.” My own mother has told me this. Dr. Vendana Shiva, the author of over 300 papers in leading scientific and technical journals, says that, “The poor are not poor because they are lazy or their governments are corrupt. They are poor because their wealth has been appropriated and wealth creating capacity destroyed.”(4) As we have seen, because of poor education systems, many are unable to get a decent education and higher level jobs are cut off because of that. But, there are those who don’t believe that and shun the poor. A Missouri woman interviewed by the CCHD told them that, “Society tends to believe that if people are poor it is their fault...poor children are not treated as well in school because the teachers seem to feel they are a waste of time anyway.”(3) So, children are being punished for others’ ignorance. This is unacceptable. It comes down to knowing what the real problems are so that everyone is on the same page and can work to a solution that will work. But, simply improving education will not solve our problem. We need to take a look at welfare and the situation of families in poverty.

Welfare and Families

In 1996, The Personal Responsibility and Work Opportunity Reconciliation Act proposed to change the welfare system into one based in the American ideals of independence and self-sufficiency. It was met with harsh criticism and was predicted to result in more damage than good. However, the welfare reform proved to be a roaring success, consistently lowering poverty rates all across the country. But there is still room for improvement. To increase self-sufficiency, we need to recognize and alleviate problems related to marriage and family formation. A proposal by President Bush in 2002 shows examples of what we could do. His plan had three parts to it: The first involved requiring welfare recipients to devote 40 hours in a week to work and programs designed to help them achieve independence. Twenty-four of the 40 hours would be devoted to work, and the rest would be spent in education, job training, and substance abuse programs. By increasing this number to say, 50 hours a week, just think of how much more they could accomplish by working more and spending more time in such programs. The second part involved increasing child care programs, to help alleviate the cost that would come out of the parent(s)’ pockets. It seeks to increase the spending by $800 million by 2007. We could even further increase spending beyond the year 2007 to even further assist families who need it. The third and final part of the proposal involved marriage and family issues. Problems such as teen pregnancies and unstable families are detrimental to the overall well-being of the family and contributes to that family going into poverty. Whether it be through substance abuse or simply the inability to pay for a child because the parents are too young, it is a problem that needs to be addressed. We can solve this problem by funding programs that deal with these types of problems and funding research to find better ways to solve them. Poverty Research News reports that, "Studies have found, for instance, that communication and conflict resolution are key skills in strong, enduring marriages. Other promising approaches include couple-to-couple mentoring, interventions for couples in crisis, and programs to prevent domestic violence. Some states have achieved noteworthy results, as have a good many faith-based and other private organizations." By giving even more funding to these types of programs, that have already shown success, and research that can produce even more success, we can attain stronger and longer-lasting families that will be independent and self-sufficient and provide a nurturing environment for their children. And again, I talk about putting more and more money into existing programs and promoting the creation of even more programs and the question of ‘Where shall we find the money?’ once again rears its oh-so-lovely head.

Funding

Once again, we can find more than enough money in our government’s waste. The Heritage Foundation, “whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense”, reports that if we seriously pursued remedying government waste, we could easily recover $100 billion and listed ten ways that this could be achieved.(5) I shall go into detail about one: According to the Department of Treasury’s 2003 Financial Report of the United States Government, we lost $25 billion in unreconciled transactions, which are funds for which auditors cannot account for. In other words, the government knows that $25 billion was spent by someone, somewhere, and on something, but not who, when, or what.(6) That’s $25 billion that just went down the toilet.

The Congressional Budget Options report presents options for altering federal spending and revenues. By cutting certain programs, we gain hundreds of millions of dollars. For example, there is a proposal to add two new active army divisions, in response to the prolonged conflict in Iraq. This proposal would cost $77.6 billion over nine years. The problem with this proposal is that it would take too long and cost too much to create these divisions for a problem that may not last long enough for them to be of any use. The burden that is created by the current conflict may be lessened in five years and the need for these extra divisions will no longer be necessary. There is also the problem of long-term fiscal obligations that come with this proposal, some of which may last decades after. Proposals such as this can be cut and the money saved can be spent on social programs.(7)

What Can You As An Individual Do?

You as an individual can help the process of alleviating poverty by donating money to organization such as the CCHD or the Center on Poverty or volunteering your time for such organizations. You can visit the World Volunteer Web @ http://www.worldvolunteerweb.org to search for service events in your community. You can also find and contact your local senators here and write to them about any questions you may have about this or other issues.

Center on Poverty @ The University of North Carolina

Sources
1) http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/09/16/BUG5BEOD4L1.DTL
2) http://www.census.gov/hhes/www/poverty/poverty04/pov04fig03.pdf
3) http://www.usccb.org/cchd/issueone.pdf
4) http://www.zmag.org/sustainers/content/2005-05/11shiva.cfm
5) http://www.jcpr.org/newsletters/vol6_no3/index.html
6) http://fms.treas.gov/fr/03frusg.html
7) http://www.cbo.gov/showdoc.cfm?index=6075&sequence=2

Picture Sources
No Child Left Behind Badge - http://doe.k12.hi.us/nclb/images/NoChildLeftBehind147.jpg
Poverty Level Graph - http://geocities.com/mooshly3/poverty_graph.gif
CCHD Button - http://www.nccbuscc.org/cchd/images/logo-1-eng.gif
World Volunteer Web Button - http://www.worldvolunteerweb.org/fileadmin/img/wvw/wvw6.gif