More Americans Find Jobs, Yet More Slip Into Poverty
AMERICANS are getting some mixed news about the nation's economy. Much of it points to a disturbing divide in the standard of living. More people are finding work and at better wages, but the pool of impoverished is also growing fast.
Last Friday, the United States Labor Department announced that unemployment fell to a four-year low, and that many of the recent job gains are full-time and high-paying positions. But just a day earlier, the Census Bureau reported that, although the economy has been growing since 1991, almost 40 million Americans live below the poverty line. That line is defined as an annual income of $14,763 for a family of four. From 1992 to 1993, the number of poor jumped by more than 15 percent.
Labor Secretary Robert Reich, who was buoyed by last month's drop in the jobless rate to 5.9 percent, warned Friday that the continuing ``trend toward inequality'' is dangerous. ``We have the most unequal distribution of income of any industrial nation in the world,'' he said. ``We can't have a prosperous society with a huge gap between the very rich and everyone else.''
Incomes for middle Americans are also slipping: Median household income edged down more than $300 from 1992 to 1993. And the number of Americans who have no health insurance climbed for the sixth year in a row, to just under 40 million. More than 70 percent of the uninsured are not poor; the reason for their growing number is that the tally of those who receive benefits from their employers is dropping precipitously.
``The widening income disparities, high poverty rates, and deteriorating health-care coverage in 1993 all reflect long-term trends,'' says Isaac Shapiro, acting co-director of the Center on Budget and Policy Priorities in Washington.
The Census data reveal that almost one-half of the nation's income went to the richest one-fifth of households - the highest share ever recorded. The proportion of national income going to the broadly defined middle class and to the poorest one-fifth of households plummeted to historical lows.
The inflation-wary Federal Reserve, which has raised interest rates five times this year in calculated moves to head off higher prices, has been targeted by critics as a threat to robust economic growth. After the Labor Department released the unemployment data Friday, the Americans for Democratic Action, a nonpartisan political group, picked up on most economists' projections that Fed Chairman Alan Greenspan will soon push rates higher.
ADA national director Amy Isaacs blasts Mr. Greenspan ``for failing to recognize the positives of economic growth.'' She says a ``further interest-rate hike would seriously slow the current far-from-robust employment growth pattern and inhibit the job increases necessary to significantly reduce the ranks of the 14 million unemployed and underemployed.''
Mr. Shapiro is also skeptical that the economy needs to be slowed. He says ``rising poverty and eroding middle-class incomes are not a sign that economic growth is too strong.''
While slower economic growth would put today's poor in greater jeopardy, he says, more Americans on the edge will fall into the poverty category because there is an inadequate safety net to catch them. Last year, he says, ``the purchasing power of Aid to Families with Dependent Children (AFDC) benefits continued to slide'' and some states cut back welfare payments or eliminated them. ``Between 1970 and 1994, the AFDC benefit for a family of three without other income fell 47 percent in the typical state, after adjusting for inflation,'' he says.
The country's economic divisions are particularly relevant in light of the November elections. Despite the growing poverty gap, Americans increasingly don't want to provide a safety net. The Times Mirror Center for the People and the Press, a polling organization, in an October report, found that the number of Americans who think government should take care of needy people fell by 12 percent between 1992 and '94.