SUMMARY: In South Africa, voters will go to the polls Wednesday in an election that could present the strongest challenge to date for the ruling African National Congress. A recent wave of xenophobic attacks has put the issue of immigration front and center, amid growing frustration with high rates of unemployment and poverty. Special correspondent Fred de Sam Lazaro reports.
SUMMARY: Baltimore [Maryland] has acquired a reputation for corruption, illustrated recently by Mayor Catherine Pugh, who resigned over allegations she had inappropriately taken payment in exchange for political favors. But the more ominous threats confronting the city, such as rampant crime and poverty, persist. Amna Nawaz talks to ProPublica’s Alec MacGillis about what could be a “fresh start” for Baltimore.
SUMMARY: In rural Wilkesboro, North Carolina, nearly a quarter of residents live in poverty, well above the national rate. Residents there say their needs and concerns are not being discussed in the national political dialogue, which means for some, they won't vote at all. Lisa Desjardins reports.
HARI SREENIVASAN (NewsHour): All right, this was your assignment for today, but since the election is so close, we have got you working on lots of different things.
And, as part of our Chasing the Dream series, you just recently went out to rural North Carolina.
LISA DESJARDINS (NewsHour): That's right.
And out there, we found a large group of people and a very large issue that the truth is the campaigns have nearly ignored.
It is a place rich in landscapes and in spirit, fiercely proud of its Appalachian heritage. But amid that beauty and strength, the towns of Western North Carolina are struggling, and many feel no one is listening.
MARK TRUDELL, North Carolina: I don't have a savings. It is pretty much paycheck to paycheck.
DARLA DIETZ, North Carolina: And I don't think politicians realize how many of us. This is the face of poverty.
LESLIE DIETZ: They don't understand that there are people that actually try to get by and honestly make a living, and they automatically assume the worst.
LISA DESJARDINS: It's a conversation happening far outside of Washington.
As the economy slowly improves in many places, here in Wilkes County, at the edge of the Blue Ridge Mountains, by many accounts, times are getting tougher. Wilkes saw median income plunge 30 percent since the year 2000 down to $33,000 per household. That's the second steepest drop in wealth in the nation.
SUMMARY: Rachel Barton Pine is one of the most accomplished violinists in the world, but her upbringing wasn't one of privilege -- as a ten-year-old prodigy with an out-of-work father, she bought her concert clothes in thrift stores and relied on space heaters for warmth. Now, Pine uses her success to help other disadvantaged violinists escape poverty. Jeffrey Brown reports.
JEFFREY BROWN (NewsHour): And told them a bit about herself.
RACHEL BARTON PINE: And we were often one missed payment away from losing the roof over our heads, which was the scariest thing of all when I was a little kid.
JEFFREY BROWN: Pine, in fact, knows something of the plight of her audience. Her father was mostly unemployed, and the family had to scrape by.
RACHEL BARTON PINE: So, We had these three sort of grocery crates rescued from the garbage and this one little electric heater. And I would rotate it every 10 minutes, so that, as part of me was warming up and thawing, another part would be starting to freeze.
But we had to do unusual things, like get my concert clothes from a thrift store and try to fix them up to be something presentable for stage.
JEFFREY BROWN: These days, Pine tours the world a good part of the year, traveling with her husband, Greg, who serves as her manager, and their 4-year-old daughter.
But she feels a pull to give back wherever she goes.
RACHEL BARTON PINE: Sometimes, I go to hospitals. I have even been to prisons, and just wherever music can uplift people’s spirits. That’s the meaning of being a musician.
SUMMARY: Child poverty is worse now than it was before the Great Recession, despite strides toward economic recovery. That's according to a new report by the Annie E. Casey Foundation, which found that rates were most severe for African-American and Native American children. Gwen Ifill talks to Annie E. Casey Foundation President Patrick McCarthy and Mark Hugo Lopez of the Pew Research Center.
GWEN IFILL (NewsHour): The economy may be recovering from the great recession, but a new report finds many have been left behind, especially children.
The findings from the Annie E. Casey Foundation show 22 percent of U.S. children were living in poverty in 2013. That’s compared to 18 percent in 2008. Those rates were nearly double among African-American and Native American children, with problems most severe in the South and the Southwest.
Some of those conclusions also echo a recent analysis by the Pew Research Center. It found black children were almost four times as likely as white children to be living in poverty.
Joining me to discuss the cause and the effect of these sobering numbers are Patrick McCarthy, the president and CEO of the Annie E. Casey Foundation, and Mark Hugo Lopez of the Pew Research Center.
Mark Hugo Lopez, why these populations in particular, why are they suffering?
MARK HUGO LOPEZ, Pew Research Center: Well, when you take a look at unemployment rates particularly, you will see that, for African-Americans in June, unemployment was 9.6 percent. For whites, it was 4.5 percent.
That’s almost — the unemployment rate for African-Americans is almost double that of whites. And that’s an important part of explaining the story of why many children live in poverty. Many of their parents either are not fully employed, are unemployed or can’t find work.
GWEN IFILL: Now, Patrick McCarthy, some people might think this wasn’t surprising. We know in some ways that minority populations are at a disadvantage, yet when you look at the numbers overall, in fact, fewer white children are in poverty.
Why are the numbers heading in the wrong — opposite directions?
PATRICK MCCARTHY, President, Annie E. Casey Foundation: Well, I think there’s a number of reasons that we have to look at here.
The economy, as it’s recovered, certainly has produced jobs for some populations, but we know that the recession took out a lot of lower-skilled jobs and low-wage jobs that had been held by African-Americans and Latinos.
And as the economy has recovered, although a lot of the jobs that had been restored are low-wage jobs, the folks who lost their jobs, who have had kind of a precarious grasp of those jobs, are having a much harder time getting employed again.
SUMMARY: More Americans than ever before are spending time in jail despite a drop in the crime rate in the past two decades. That's according to a new report that also found that a disproportionate number of people in jail suffer from mental illness. Judy Woodruff discusses the findings with Nicholas Turner of the Vera Institute of Justice and Margo Schlanger of the University of Michigan.
JUDY WOODRUFF (NewsHour): A new report finds that more Americans than ever are spending time in jail. The Vera Institute of Justice showed that, in the past two decades, despite a drop in the crime rate, the number of people going to jail has increased dramatically.
In addition, those behind bars are staying longer. Some 62 percent of them have not yet been convicted of a crime, and three-quarters of those jailed now are brought in for nonviolent offenses. The report also finds that a disproportionate number of those in jail suffer from mental illness.
Joining us are Nicholas Turner. He’s president and director of the Vera Institute. And Margo Schlanger of the University of Michigan.
Nick Turner, to you first.
Why are the jails and prisons of the United States so full today?
NICHOLAS TURNER, President and Director, Vera Institute of Justice: Well, you have to go back, really, almost four decades. We have, since the early 1970s, been on what some people describe as a binge in this country, a reliance on incarceration and on confinement as the primary strategy to keep people safe. That’s been the argument.
And so, for the past 40 years, the number of people in jail and in prison in this country has gone up almost 400 percent. When you look at jails now, there are additional other reasons as to why we have so many people in jail. In the past few decades, we have increasingly arrested more and more people, not only for felonies or serious charges, but also for misdemeanors.
And we are also seeing more people who are being arrested being put in jail, so there is a general reflex within the criminal justice system still to rely on confinement.
SUMMARY: The recovering U.S. economy has made its strongest showing yet. Employers created a million jobs since November -- the best three-month average in 17 years. And January also boasted the biggest wage rise in six years. But not all sectors saw the same level of growth. To discuss the data, Jeffrey Brown speaks with Diane Swonk of Mesirow Financial.
JEFFREY BROWN (NewsHour): Not only did today’s labor report show that more people found work in January; it also revised the numbers upward for November and December, making 2014 the strongest year for job gains since 1999. And more good news, the increase in wages last month was the largest in six years.
Diane Swonk is a senior managing director and chief economist for Mesirow Financial and joins me from Chicago.
And, Diane, it looks as though the upswing is bringing more people back into the job market. Can you tell us who, what age groups, for example?
DIANE SWONK, Mesirow Financial: Yes.
One of the biggest encouraging points about the job participation rate, where more people threw their hat in the ring, was that younger people were rejoining the labor force. Many of these people had been sidelined for many years; 25-to-34-year-old men, in fact, had the highest labor force participation rate in two years, a big jump there.
We also saw an increase in the 35-to-44-year-old age group. This is a group that the Federal Reserve had been watching carefully because they had been sidelined by the recession, but clearly they’re too young to retire and they had to come back at some point in time. So the fact that they were reengaged is quite encouraging.
SUMMARY: In Mississippi, where the unemployment rate peaks at 15 percent in some areas, pockets of new manufacturing have ignited hopes for an economic rebirth. And while signs of growth give some people hope for a new era, how much will the area's poor actually benefit? NewsHour's John Larson reports as part of our continuing series, "Main Street America."
NARRATOR: In this south central mountain country, over a third of the population has faced chronic unemployment.
MEGAN THOMPSON (NewsHour): For as long as anyone can remember, the coal country of Eastern Kentucky has struggled. In 1964, President Lyndon Johnson came through here after he declared the War on Poverty. This is the area became the face of his campaign.
PRESIDENT JOHNSON: We are just not willing to accept the necessity of poverty.
MEGAN THOMPSON: Back then, the poverty rate in some areas was around 60 percent.
Eastern Kentucky has made big strides in the last 50 years since Lyndon Johnson came through here. But even still, the area continues to struggle today.
MEGAN THOMPSON: The poverty rate in Eastern Kentucky has dropped, but in some parts still hovers around 30 percent. Unemployment in some counties is more than 10 percent, much higher than the national average. And the region is still dependent on coal, which has meant trouble as the industry’s gone south.
MEGAN THOMPSON: How big is the coal industry?
TOBEY MILLER: Everything here stems off of coal.
MEGAN THOMPSON: Like many here, Tobey Miller’s roots run deep, and they run through the coal mines.
TOBEY MILLER: Well, my Papaw, he worked in the mines. Used to tell me stories about when he moved here.
MEGAN THOMPSON: Miller’s papaw – his grandfather – bought the family farm in Knox County in 1941 with the money he earned from coal. Miller’s dad worked in coal. And straight out of high school, Miller did too, welding the heavy machinery used in the mines. Miller’s family – his wife, two daughters and granddaughter – lived well. He earned more than $50,000 a year. That’s double the median household income around here. But then a year ago, Miller was told his job was being cut.
SUMMARY: Syndicated columnist Mark Shields and New York Times columnist David Brooks join Judy Woodruff to discuss the politics behind the debt limit increase, the outlook for legislation on fighting poverty and new enrollment numbers for the Affordable Care Act.
MEGAN THOMPSON (Newshour): By all appearances, Leigh Scozzari is living a comfortable suburban life. She baked cookies one recent afternoon with her four-year-old twins at her mom’s place in Shirley, Long Island - about 65 miles east of New York City. Scozzari owns an SUV… the girls spend their days at a nice day care center ...and Scozzari works a full-time job.
LEIGH SCOZZARI: A lot of people look at me and they judge me just by looking at me, like, "Okay, well, she has a job, you know. She-- you know, she has a home and-- you know, her kids look very well taken care of. Why would she need any help at all?"
MEGAN THOMPSON: Scozzari needs help because by official standards, she and her daughters live in poverty. Her job as a certified medical assistant pays just over 19,000 a year and offers no benefits. So Scozzari is on Medicaid, gets food stamps, and a government subsidy to pay for child care she could never otherwise afford. This 30-year old single mom lives in that two-bedroom house with her mother and pays rent. Her car has almost 200,000 miles on it and is in such bad shape Scozzari says she’s afraid to drive it.
LEIGH SCOZZARI: I live paycheck to paycheck. That’s what it is right now.
MEGAN THOMPSON: Do you have any savings?
LEIGH SCOZZARI: Typically, I have enough probably to get me through the next week or so. But as far as having a savings, no. I worry about-- not being able to have enough food to feed the girls. I worry about them not having the opportunities that other kids-- are going to have. So I'm constantly worrying, you know, always worrying.
SUMMARY: In 1964, President Lyndon Johnson launched a broad platform to abolish American poverty. Fifty years later, Kwame Holman looks back on the historic legislation, while Jeffrey Brown talks to presidential historian Robert Dallek, Angela Glover Blackwell of PolicyLink, and Glenn Hubbard of Columbia University about our progress.
Stacey Calvin spends almost as much time commuting to her job — on a bus, two trains and another bus — as she does working part-time at a day care center. She knows exactly where to board the train and which stairwells to use at the stations so that she has the best chance of getting to work on time in the morning and making it home to greet her three children after school.
“It’s a science you just have to perfect over time,” said Ms. Calvin, 37.
Her nearly four-hour round-trip stems largely from the economic geography of Atlanta, which is one of America’s most affluent metropolitan areas yet also one of the most physically divided by income. The low-income neighborhoods here often stretch for miles, with rows of houses and low-slung apartments, interrupted by the occasional strip mall, and lacking much in the way of good-paying jobs.
This geography appears to play a major role in making Atlanta one of the metropolitan areas where it is most difficult for lower-income households to rise into the middle class and beyond, according to a new study that other researchers are calling the most detailed portrait yet of income mobility in the United States.
The study — based on millions of anonymous earnings records and being released this week by a team of top academic economists — is the first with enough data to compare upward mobility across metropolitan areas. These comparisons provide some of the most powerful evidence so far about the factors that seem to drive people’s chances of rising beyond the station of their birth, including education, family structure and the economic layout of metropolitan areas.
Climbing the income ladder occurs less often in the Southeast and industrial Midwest, the data shows, with the odds notably low in Atlanta, Charlotte, Memphis, Raleigh, Indianapolis, Cincinnati and Columbus. By contrast, some of the highest rates occur in the Northeast, Great Plains and West, including in New York, Boston, Salt Lake City, Pittsburgh, Seattle and large swaths of California and Minnesota.
“Where you grow up matters,” said Nathaniel Hendren, a Harvard economist and one of the study’s authors. “There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty.”
That variation does not stem simply from the fact that some areas have higher average incomes: upward mobility rates, Mr. Hendren added, often differ sharply in areas where average income is similar, like Atlanta and Seattle.
The gaps can be stark. On average, fairly poor children in Seattle — those who grew up in the 25th percentile of the national income distribution — do as well financially when they grow up as middle-class children — those who grew up at the 50th percentile — from Atlanta.
Geography mattered much less for well-off children than for middle-class and poor children, according to the results. In an economic echo of Tolstoy’s line about happy families being alike, the chances that affluent children grow up to be affluent are broadly similar across metropolitan areas.
The team of researchers initially analyzed an enormous database of earnings records to study tax policy, hypothesizing that different local and state tax breaks might affect intergenerational mobility.
What they found surprised them, said Raj Chetty, one of the authors and the most recent winner of the John Bates Clark Medal, which the American Economic Association awards to the country’s best academic economist under the age of 40. The researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.
But the researchers identified four broad factors that appeared to affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods.
Income mobility was also higher in areas with more two-parent households, better elementary schools and high schools, and more civic engagement, including membership in religious and community groups.
Regions with larger black populations had lower upward-mobility rates. But the researchers’ analysis suggested that this was not primarily because of their race. Both white and black residents of Atlanta have low upward mobility, for instance.
The authors emphasize that their data allowed them to identify only correlation, not causation. Other economists said that future studies will be important for sorting through the patterns in this new data.
Still, earlier studies have already found that education and family structure have a large effect on the chances that children escape poverty. Other researchers, including the political scientist Robert D. Putnam, author of “Bowling Alone,” have previously argued that social connections play an important role in a community’s success. Income mobility has become one of the hottest topics in economics, as both liberals and conservatives have grown worried about diminished opportunities following more than a decade of disappointing economic growth. After years of focusing more on inequality at a moment in time, economists have more recently turned their attention to people’s paths over their lifetimes.
Polls show that Americans are worried about whether living standards will rise for most people in coming decades, as they have for nearly all of the nation’s history. In interviews in Atlanta and its suburbs, residents reflected many of the national concerns and many of the patterns in the study.
Jose Lopez, a 40-year-old who runs a local painting crew, said he wished he had enough time, amid work and parenthood, to go back to school.
Lampra Jones, a recent graduate of a chiropractic program who has struggled to find work, called herself “a loner” and said she wished she knew more people to help with her job search. “If you don’t know the right people,” said Ms. Jones, 28, “you’re not going to get anywhere.”
Michael Novajovsky, a father of three in Gwinnett County with a temporary job as a network engineer, said in an interview that the struggle to build a better life often felt similar to “a lottery.” His job pays $27 an hour but comes with no health insurance for him, his wife and his three children.
His wife, Sherrie, recently left a job at a diner that required an hour’s commute by bus. She would like to find a new job with health insurance, but the family has only one car. “I’d work just to have insurance,” Ms. Novajovsky said.
In previous studies of mobility, economists have found that a smaller percentage of people escape childhood poverty in the United States than in several other rich countries, including Canada, Australia, France, Germany and Japan. The latest study is consistent with those findings.
Whatever the reasons, affluent children often remain so: one of every three 30-year-olds who grew up in the top 1 percent of the income distribution was already making at least $100,000 in family income, according to the new study. Among adults who grew up in the bottom half of the income distribution, only one out of 25 had family income of at least $100,000 by age 30.
Yet the parts of this country with the highest mobility rates — like Pittsburgh, Seattle and Salt Lake City — have rates roughly as high as those in Denmark and Norway, two countries at the top of the international mobility rankings. In areas like Atlanta and Memphis, by comparison, upward mobility appears to be substantially lower than in any other rich country, Mr. Chetty said.
Especially intriguing is the fact that children who moved at a young age from a low-mobility area to a high-mobility area did almost as well as those who spent their entire childhoods in a higher-mobility area. But children who moved as teenagers did less well.
That pattern makes economists more confident that the characteristics of different regions — as opposed to something inherent and unchangeable in the local residents — are helping cause the varying mobility rates.
Lawrence Katz, a labor economist who did not work on the project, said he was struck by the fact that areas with high levels of income mobility were also those that established high school earliest and have long had strong school systems. Mr. Katz, a Harvard economist and former Clinton administration official, called the work “certainly the most comprehensive analysis of intergenerational mobility in the contemporary U.S.”
The project’s other researchers were Patrick Kline, a professor at the University of California, Berkeley, and Emmanuel Saez, a Berkeley economist who won the Clark Medal in 2009.
The comparison of metropolitan areas allows researchers to consider local factors that previous mobility studies could not — including a region’s geography. And in Atlanta, the most common lament seems to be precisely that concentrated poverty, extensive traffic and a weak public-transit system make it difficult to get to the job opportunities. “When poor communities are segregated,” said Cindia Cameron, an organizer for 9 to 5, a women’s rights group, “everything about life is harder.”
Ms. Calvin, the day care worker who commutes more than three hours, recently tried to rent an apartment closer to her job, in a better school district and a neighborhood closer to grocery stores. But the landlords required more income than her roughly $1,200 in monthly take-home pay, she said.
She now plans to stay for another couple of years in her three-bedroom home, in a set of tan garden apartments in DeKalb County, east of Atlanta. By then, she expects to have married her boyfriend — they are recently engaged — and may be able to afford to move.
“I’m a little disappointed I had to renew my lease,” she said. But she is happy that she has a routine that allows her to play an active role in her children’s school, including with the PTA, and to be home when they arrive home.
“It’s enough to get by,” Ms. Calvin said.
JEFFREY BROWN (Newshour): ..... ending extreme poverty around the world by 2030. That's the ambitious goal announced by World Bank president Jim Yong Kim, as his organization and the International Monetary Fund begin their annual spring meetings with delegates from around the globe.
The World Bank has come under strong criticism at various times since its founding in 1944, including, as it happens, by Kim himself. An American born in South Korea, Kim is a doctor, a leading global health advocate and winner of a so-called MacArthur genius grant. In the late 1980s, he demonstrated against World Bank policies, even calling for its end.
Last year, picked by President Obama, he became the bank's chief, after serving as president of Dartmouth College since 2009.
I talked with Dr. Kim at World Bank headquarters in Washington this morning and began by asking what's new in his goal of attacking poverty.
BARACK OBAMA: It's also about the biblical call to care for the least of these, for the poor, for those at the margins of our society, to answer the responsibility we're given in Proverbs to speak up for those who cannot speak for themselves, for the rights of all who are destitute.
RAY SUAREZ (Newshour): Now a fuller picture of what it means to be poor in America.
For years, the Census Bureau's official measurement of poverty has often been characterized as inadequate. One month after releasing official numbers, the Census Bureau offered a new unofficial count today that looked at the poor through a different lens.
It found there are approximately 49 million people living at or below the poverty line. That's about 16 percent of the population, or roughly one out of every six people, and 2.5 million more than counted just last month. That's just one of the changes. The government also assessed in a new way how income and living expenses affect all this.
We round out the picture now with Ron Haskins, co-director of the Brookings Institution's Center on Children and Families, where, among other things, he follows poverty, inequality and welfare policy. And Heidi Hartmann is president of the Institute for Women's Policy Research, a policy research organization focused on women and the economy.
And, Heidi Hartmann, for years, people have complained about the old poverty line and how we arrive at it, basically taking the cost of food and people's incomes and coming up with a formula. This adds a lot more data into the determination. Is it a better picture of who is poor in the country?
HEIDI HARTMANN, Institute for Women's Policy Research: Oh, absolutely. It's definitely a better picture.
For one thing, the new measure is counting the non-cash benefits that people receive from the government, such as food stamps, that wasn't counted before. So you would expect that to decrease the poverty rate as measured. But this new measure increases the poverty rate. And that's because of some of the expenses now that are being counted that were not counted before.
For example, for older Americans, we're now counting medical expenses. Those are very high for older Americans. So in this new measure, we see more older Americans poor. We're also counting work expenses, so if you're a single mom who is working, you're now getting some benefits that are being measured that weren't being measured before.
But you're also seeing your work expenses being counted, being deducted from your income. So, that's working in the opposite direction. But it's a fuller measure.
RAY SUAREZ: Quickly, before we go, if you take a good look at what's in these numbers, do you get, if you're not poor, a better idea of what life is really like for those 49 million Americans?
RON HASKINS, Brookings Institution's Center on Children and Families: It's pretty hard to tell by looking at numbers.
But if you have an idea, which I think most Americans do, because many Americans have been in poverty in the past or know people who have been in poverty, and you look at the numbers of how many million Americans are poor, I think it's very helpful for America to know that. But I think it's more helpful for them to learn that the government programs make a big difference, and it's helpful for the poor to know that, if they try to work, even if they make low income, they can do much better because of government programs.
So, to me, that's the main message of this report, that government programs are effective in helping poor people, especially if they're helping themselves.
RAY SUAREZ (Newshour): At a time when much of Washington is focused on helping the struggling middle class, today's report outlined the magnitude of the problem for 15 percent of Americans who live in poverty. More than 46 million lived below the federal poverty line last year, the highest number since the census began tracking that data five decades ago.
The poverty line is lower than you might think: $11,139 a year for a single person, $22,314 a year for a family of four. The poverty rate itself is at the highest level since 1993.
We examine what's happening with two people who study this carefully. Douglas Besharov is a professor of public policy at the University of Maryland. He joins us from Boston. And Isabel Sawhill is a senior fellow at the Brookings Institution. Her work focuses on poverty and social policy.
JUDY WOODRUFF (Newshour): It's been widely reported that poverty levels rose during the recession. But a new report documents the magnitude of that rise among families, and finds that poverty rates among children rose substantially throughout the last decade.
The Kids Count study from the Annie E. Casey Foundation discovered that the official child poverty rate rose by nearly 20 percent from 2000 to 2009. And, in 2010, 11 percent of children lived with at least one unemployed parent.
Patrick McCarthy is the president of the foundation. And he's here to tell us more about those numbers and their effect on children.
PATRICK MCCARTHY, Annie E. Casey Foundation: We have tracked the well-being of children for 22 years. And this year, we decided to look at how the children have been faring as the recession has played out. We found some very disturbing statistics. As you said, the child poverty rate has gone up. It's now at 20 percent of all kids living in poverty.
Even more troubling in some ways is that the children who are on the edge of living in poverty, those children who live with families that are at 200 percent of the federal poverty level, we now have 42 percent of all children, 31 million children in the U.S., living at that level.
We like to think of it as two or three paychecks away from economic catastrophe.
JUDY WOODRUFF: Something like 31 million children, I saw, living below -- at or below $43,500 a year. It's a stunning figure.
PATRICK MCCARTHY: It is a stunning figure, especially when you consider what the research tells us what happens when children grow up in poverty or when they slip into poverty as a result of recession.
We know that kids who grow up poor are much more likely to end up being poor themselves. They're more likely to have children too early with teen pregnancy. They're more likely to become involved with the criminal justice system as they grow up. They're less likely to be employed. And they're less likely to fully use the talents that they're given.
What we have found most recently, though, is that even with children who slip into poverty for a period of time due to a recession are also facing long-term impact as adults on all of those variables.
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JUDY WOODRUFF: Now, your organization, the Annie E. Casey Foundation, did this research, and then you have recommended some strategies for tackling some of this.
What are some of the more important strategies you're recommending?
PATRICK MCCARTHY: Well, we recommend a two-generation strategy.
We basically look at the research and say that children who grow up in poverty have a much tougher time. And now that we have so many children facing economic insecurity, we think it's very important to invest now in their families, so that they don't slip into poverty.
Specifically, unemployment insurance is a key protector of kids and families when unemployment is as high as it is. The earned income tax credit, the child tax credit, these kinds of things help to supplement wages and keep kids out of poverty.
The two-generation strategy means focusing on the parents, but also then investing early in children. We know from research that high-quality prenatal care, high-quality child care and pre-K, and especially education in the early years is critical to put children on a path towards opportunity.
JUDY WOODRUFF: Now, all of these things, however worthy, cost the government one way or another. And we're now in an environment where so much of the energy and the noise is around cutting spending. So how do you advance those ideas in this political environment?
PATRICK MCCARTHY: Well, that's -- that's actually a very important feature of what we have to look at.
When there's this kind of deficits that states have to deal with and the national debt, et cetera, it really is a time to focus. And we believe that what you need to focus on is what's most important, so every dollar is used in the best way, what's most cost-effective, and what can you do now, in 2011, that's going to shape what this country looks like in 2031, in 2041, and in 2051.
In fact, the crisis that we face right now is an opportunity to focus as sharply as we can on investing in the future.
JEFFREY BROWN (Newshour): Now we continue our series on inequality in the United States.
A new report from The Annie E. Casey Foundation finds that the poverty rate among children has risen by 18 percent over the last decade. That means two million more children dropped below the poverty line, back to levels of the early 1990s.
NewsHour economics correspondent Paul Solman is looking at the widening wealth gap. Tonight, he explores possible connections between inequality and the financial crisis.
PAUL SOLMAN: Took our more debt because, he says, America is growing more unequal. Since the top one percent now commands more than one-third of all wealth, how's the bottom 99 percent supposed to keep up with the Joneses, if not the Kardashians? By borrowing.
FRANK LEVY, Massachusetts Institute of Technology: In the 1950s and 1960s, everybody's income was rising. Everybody had some claim on economic growth, so that people could buy a middle-class standard of living. If you go back to the '70s into the '80s, when things began to flatten out, people started dealing with that by putting a second earner into the labor force.
But that obviously has limits. And so, once that was pretty well exhausted, once you started getting into the '90s, then we're into the home equity loans and the credit card stuff and all the rest of that, trying to keep consumption growing like it had been before.
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DAVID KOTZ, University of Massachusetts, Amherst: If the economy's going to expand, while profits are going up very rapidly and wages are stagnating or falling, which has been the rule since 1980, then who's going to buy the increased output of the economy? It's possible only if households borrow to maintain their living standard.
That's why we have seen the huge growth in household debts in the economy. Millions of families unable to pay their bills from their declining income were forced to borrow against their home to keep the electric power on.
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PAUL SOLMAN: Professor Conrad blames the crash on the rich exploiting inequality by renting their money at fat interest rates to those trying to stay in the middle class, and not only by taking out a mortgage or a home equity loan.
CECILIA CONRAD, Pomona College: I would expand on that story a bit and probably have a slightly different take, because I would expand it to include not only homeownership, but when you look at credit card debt, if you look at the growth of the fringe banking sector, the sort of payday lenders, the growth in those, all of those were helping to fuel consumption. It's the modern version. Instead of, let them eat cake, it's let them have flat-screen TVs.
The deepest recession in modern times has sharply increased the ranks of the poor during the past year, with 1 in 7 people in America officially counted as living in poverty.
The news from a US Census Bureau report released Thursday underscores how deeply the Great Recession has affected the nation's standard of living. The key findings of report, which compared income, poverty rate, and health-care insurance coverage in 2009 with 2008 numbers, include the following.
- Some 43.6 million people were living in poverty last year – the highest number since 1959, five years before President Lyndon Johnson declared his War on Poverty. The poverty rate was 14.3 percent, up from 13.2 percent in 2008 and the highest level since 1994. Hispanic households took the hardest hit: Their poverty rate rose 2.1 percent from 2008's level, compared with a 1.1 percent jump in the rate for blacks and whites. (The US government considers an annual income of $21,756 to be the poverty line for a family of four.)
- A record number of Americans, 50.7 million, were not covered by health-care insurance in 2009. At the same time the survey was being taken, Congress passed President Obama’s contentious health-care reform law.
- The median household income was $49,800 last year, about the same as in 2008. This "hold steady" figure for income may reflect the fact that many people were helped by the government safety net, such as unemployment insurance, which Congress repeatedly extended and which kept some 3.3 million people out of poverty, according to the Census data.
The data, contained in a statistic-thick 87-page report, are likely to have widespread implications for policymakers, say economists and analysts. Here is how some of them interpret the numbers.
- The poverty rate is likely to rise further, predicts Isabel Sawhill, a senior fellow at the Brookings Institution in Washington, in a new analysis. The rate will approach 16 percent and stay high for most of this decade, she says. The recession will add some 10 million people, including 6 million children, to the poverty rolls.
Robert Greenstein, executive director of the Center on Budget and Policy Priorities in Washington, writes in an analysis that in the past three recessions the poverty rate has not fallen until a year after the unemployment rate began to fall.- Some advocates for the poor hope the new data spur Congress to ameliorate the situation for the needy. One way would be to renew the Emergency Contingency Fund (ECF), part of the Temporary Assistance for Needy Families, which expires at the end of this month. The fund, targeted to low-income individuals, pays employers to take on workers.
“It helps pay for the cost of bringing a new person on,” says Rachel Gragg, federal policy director at the National Skills Coalition, which is lobbying Congress to extend the program for another year at a cost of $2.5 billion. “Most states say they will have to stop their existing programs if it’s not extended,” she says.
Another program designed to help low-income people, the Earned Income Tax Credit (or Making Work Pay program), is set to expire, too, on Dec. 31. “With this report, extending that could be a discussion item,” says economist Richard DeKaser of Woodley Park Research in Washington. “With poverty at its highest level, you could argue the least fortunate should be shielded from a tax burden.”- Congress may want to delve deeper into safety net programs such as TANF and Medicaid, suggests Ron Haskins, a fellow at the Brookings Institution. Lawmakers are likely to find that Medicaid has “expanded like mad” because fewer Americans now have private health-care coverage. “It’s functioning like a good safety net program,” he says, adding that the same can be said for food stamps. But, he says, Congress might want to examine TANF, which replaced welfare, to examine why the program hasn't grown, even with higher poverty. “No one knows why,” he says.
- After the November election, Congress may dissect the data to determine how to reduce the budget deficit, says Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pa. “The National Commission on Fiscal Responsibility and Reform in December may want to tie how to pay for fiscal austerity to the distribution of income and wealth,” he says. “Where is the burden going to fall?”
