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Recession Expands Connecticut’s Pockets of Poverty


By Keith M. Phaneuf

Though Connecticut’s overall economic health remains higher than that of most states, the last recession dramatically expanded the income gap that sparked the Occupy movement, both in Hartford and nationally, according to a new report from the University of Connecticut.

University economists, who released the latest issue Monday of their quarterly economic journal, also warned that the modest job growth from the first half of 2011 plunged to “paltry” levels between July and September as public-sector job losses took their toll.

“Connecticut, along with most other northeastern states, has gotten off fairly lightly in absolute terms” compared with other sections of the country, economist Arthur W. Wright wrote in the latest issue ofThe Connecticut Economy. But “the data also suggests a longer-term increase in the incidence of poverty within the Nutmeg State and shows that the recession has hit several counties particularly hard.”

Most economists say that what has become known as The Great Recession began nationally in December 2007 and ended by July 2009. In Connecticut, which tends to both enter and leave economic downswings later than the national average, the recession generally is charted between March 2008 and the first few months of 2010.

For more than three decades, national poverty rates — generally a measure of a household’s ability to buy basic food supplies — have largely tracked recessions closely. Those rates usually spike early during a downswing, then inch slightly higher as it nears its end.

Between 2006 and 2010, the national percentage of households below the poverty margin rose from 12.3 to 15.1 percent. By comparison, Connecticut’s rate jumped from 8 percent in 2006 to 8.9 percent in 2007, but it had fallen back to 8.3 percent by 2010.

But using a fairly recent U.S. Census Bureau methodology for estimating poverty rates on a sub-state basis tells a different story, Wright wrote.

The poverty rate for New Haven jumped by one-fifth during the last recession and now hovers close to 12 percent. In Hartford and Windham counties, the rates grew more modestly, but still reached 10 percent.

And the pockets are starting to spread beyond their traditional centers. Though the overall poverty rate for Fairfield County remains at about 8 percent, it was less than 7 percent before the last recession. In proportional terms, the Fairfield County rate grew faster than that of any other county.

Between 2009 and 2010, the state’s household income dropped 6.7 percent, tied for worst nationally with Vermont and Nevada. At the same time, statistical measures of income inequality for Connecticut worsened, said economist Steven P. Lanza, publisher of The Connecticut Economy.

The causes of the inequality are the result, in part, of the state’s failure, over the past two decades, to recognize the situation, Wright said.

“Connecticut has been resting on its laurels,” he said. “We are a relatively high-cost, high-income state. We haven’t really been getting the job growth or the income growth that we would need to change this for some time.”

That problem is compounded, at least in the short term, by an end to the modest job gains the state enjoyed this year, Lanza said.

After gaining about 4,000 jobs in the first half of the year, the state lost 1,400 jobs in the third quarter of 2011. That has left Connecticut with a “paltry” growth average of 800 jobs per quarter, Lanza said.

What changed dramatically between July and September? The federal, state and municipal governments are balancing their budgets by reducing staff.

“It’s really the public sector that is, in many ways, hamstringing this recovery,” Lanza said, noting that public sector employment dropped by 1,500 positions in the last quarter. That drop coupled with continued losses in professional and business services and the financial services sector overwhelmed modest gains in health care and manufacturing.

 

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Poverty of Ideas: Despite Economy, Right Still Blames Poor for Being Poor


By Marjorie Valbrun, America’s Wire News Analysis

When the U.S. Census Bureau recently released its annual report on the economic status of American households, few people were surprised that black and Hispanic households showed the highest increase in poverty rates. The two groups were hit harder by the economic recession and had higher rates of unemployment than white and Asian households, so news that poverty rates for them surpassed 25 percent in 2009, though troubling, was not entirely unexpected.

A surprise was that political conservatives continued to blame poor African-Americans and Hispanics for the very act of being poor even as 43.6 million Americans of all racial stripes, 12.3 percent of them white, are living in poverty and collectively struggling to survive the fallout of an economic downturn—widespread layoffs, massive home foreclosures and loss of retirement savings and other assets.

The new poverty figures are the largest recorded by the Census Bureau in 51 years and reflect a consecutive increase in U.S. poverty over the past three years. They are an indication of the powerful economic, political and structural forces that play a role in the financial well-being of American households and that tend to have a more significant and negative impact on already poor and struggling families.

President Barack Obama acknowledged as much during a recent speech at the annual legislative conference of the Congressional Black Caucus.

“This historic recession, the worst since the Great Depression, has taken a devastating toll on all sectors of our economy,” Obama said. “It’s hit Americans of all races and all regions and all walks of life. But as has been true often in our history and as has been true in other recessions, this one came down with a particular vengeance on the African-American community.”

He reminded the audience, though he probably didn’t have to, that African-Americans were at an economic disadvantage before the economic downturn.

“Long before this recession, there were black men and women throughout our cities and towns who’d given up looking for a job, kids standing around on the corners without any prospects for the future,” he said. “Long before this recession, there were blocks full of shuttered stores that hadn’t been open in generations. So, yes, this recession made matters much worse, but the African-American community has been struggling for quite some time.”

Yet almost as soon as the census numbers were released, conservative politicians, commentators and researchers at public policy think thanks were commenting on the role of behavior and personal responsibility, or lack thereof, as factors contributing to the high poverty rate. They also cited the purportedly pernicious affects of government-funded anti-poverty programs, the very ones that kept more people from falling below the poverty line.

A report by the conservative Heritage Foundation on the same day as the census report cited millions of children living in poverty in single-parent households and asserted that the “principal cause is the absence of married fathers in the home.” The foundation report contends that government entitlement programs such as welfare, food stamps and income tax credits that mostly benefit unwed mothers and their children, keep families—especially those with black and Hispanic children—in poverty and are “disincentives to marriage because benefits are reduced as a family’s income rises.”

The foundation also separately asserts that the average poor American is not as bad off as liberal activists, media and some politicians would have the public believe.

According to the census report, about 15.5 million children under 18, the majority of them black, were living in poverty in 2009 compared with 14.1 million in 2008. The poverty rate increased across all types of families. For married-couple families, it grew to 5.8 percent from 5.5 percent and for female-headed families to 29.9 percent from 28.7 percent.

Not all poor families qualify for all of the various assistance programs, and amounts they receive are relatively modest, enough to keep some from falling below the official poverty line of $21,954 for a family of four but not enough to move them far above it.

The foundation report concludes that government intervention could reduce childhood poverty by promoting and supporting policies that encourage marriage among low-income couples. The Urban Institute and other nonpartisan research organizations offer other practical approaches that rely less on value judgments and more on proven government interventions and increased support for struggling two-parent homes. They also call for larger tax subsidies for poor families similar to those that help middle-income families buy a home, save for retirement and pay for their children’s education.

The overly simplistic theory of “marriage as an antidote to poverty” overlooks many important factors that contribute to poverty, and poverty experts do not unanimously accept it. While children raised in two-parent families tend to have better life outcomes, marriage by unwed parents does not guarantee lifting families out of poverty. That’s true especially if couples are not compatible or in love, or committed to making a marriage work; if husband, wife or both lack necessary education or professional skills to secure a well-paying job and enhance the household’s income; and if financial or other stress in the marriage leads to domestic discord or violence.

Marriage would not automatically improve the dismal unemployment rate among black men, some of it the result of racial discrimination in hiring practices, or erase other structural barriers to economic well-being, nor would it suddenly end negative behaviors that conservatives say inhibit economic advancement.

“Certainly there some individuals for whom behavior is an important issue, but the bigger problems are a series of factors that affect African-Americans more than they do other groups,” said Margaret Simms, a senior fellow at the Urban Institute and an expert on the economic well-being of African-Americans.

The conservative commentary conveniently overlooks many of these contributing factors, among them that African-Americans, and to a lesser extent Hispanics, are more racially and geographically segregated than other groups and less likely to live in areas with ample economic opportunities. They often have no access to good public schools that are economically and racially diverse and adequately prepare them for college, selective training programs or skilled jobs. They also generally have no access to good health care, which can mean health problems prevent them from getting and keeping good jobs and seriously drain limited incomes.

“They are also less likely to be in social networks where they have access to the jobs out there,” Simms said. “Most people don’t find jobs through want-ads but through friends, family or neighbors who know about a job opening at their workplace or know about a place that is hiring.”

If they live in large urban areas, as many do, and don’t own cars, as many don’t, they have difficulty getting to jobs in outer suburbs.

“Geographic isolation in neighborhoods where there are few job opportunities make it difficult to have access to where the jobs are and to get to them,” Simms said. “Low-income African-Americans are farther away from the jobs they would be qualified for. Transportation systems are not typically set up to move people from cities to residential suburbs where jobs are.”

Conservatives say the Obama administration should spend less on public assistance programs even though they have proven to be an important safety net for struggling families. Many also oppose extension of unemployment benefits for the long-term unemployed and a temporary program that created 250,000 mostly private-sector jobs for low-income parents and youth.

Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities and an expert on anti-poverty, said cutting back such programs would be a mistake.

“If Congress fails to extend these measures and unemployment remains high, poverty and hardship almost certainly will climb still higher next year,” he said in a statement.

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