In Fear of Poverty

“The prevalent fear of poverty among the educated classes is the worst moral disease from which our civilization suffers.”

When William James, ostensible father of American Psychology, penned this line over a century ago, he had embedded the idea in a discussion on religious experience, in which he also extolled the virtues of voluntary poverty.

Today, in a totally distinct context, James’ words are imbued with new meaning. Due to economic recession and what many economists have deemed a jobless recovery in contemporary America, people who never before feared poverty—the educated, or middle class—must now confront harsh new realities. The current conditions are like nothing we’ve ever seen.

Conspiring myriad circumstances have created a fortuitous cocktail of calamity. As is typical in periods of economic contraction, the recent recession meant that many jobs were shed. However, other underlying, precipitating factors have been largely obscured by the more recent crisis of 2008-09. For instance, although the economy did grow in terms of business expansion following the recession of 2001, hiring into private sector jobs continued to decline for the next several years. Meanwhile, scores of jobs, both blue and white collar, have been permanently eradicated over the past decade due to outsourcing, weakening leverage of labor unions, payroll cuts in favor of maximizing shareholder value, and automation.

The numbers that we are now seeing have no precedent. According to a February 20, 2010 New York Times article, labor experts suggest that the U.S. economy will need to add 100,000 jobs per month in order to absorb all potential workforce entrants. Yet with around 15 million Americans currently without jobs, the length of even the most optimal timeline for decreasing unemployment is staggering, at several years. While the 9.7% overall unemployment rate reported by the Bureau of Labor Statistics for January 2010 was a decrease of 0.3 percent from the previous month, this number is somewhat deceiving. Actual unemployment rates for certain—and possibly more vulnerable—segments of the population are much higher. For instance, last month 17.6% of black males were unemployed; meanwhile, a whopping 24.7% of construction workers were rendered jobless by January. Finally, the overall underemployment rate has hit 17.3%. This figure represents a more accurate barometer of the economic climate since it includes the unemployed, workers with full-time eligibility employed part-time, and those who have given up on looking for jobs out of sheer despondency.

Here in Massachusetts, the seasonally-adjusted unemployment rate rose from November to December 2009, from 8.3 to 9.1%, according to the most recent statistics available from the Mass. Department of Workforce Development. The Commonwealth consists of twelve areas in which changes in job availability are recorded. During the same period at the end of 2009, job gains were recorded in three of the twelve areas, while net gains occurred in nine. Some employment sectors (i.e., Education and Health Services; Other Services; Financial Activities; Government; and Manufacturing) added jobs in December 2009, while others (i.e., Trade, Transportation and Utilities; Leisure and Hospitality; Construction; Professional, Scientific, and Business Services; and Information) posted losses. Overall, the labor force in this state is trending towards decline across sectors—from unskilled to skilled to professional fields. When coupled with other factors such as household debt (on average 30% higher in the U.S. today than a decade ago, according to Newsweek), clearly any fear of poverty—whether from working- or middle-class perspectives—is real and justified.

At Spare Change we are witnessing the insidious effects of creeping desolation. While many of our vendors are fighting through “typical” situations of poverty, forced to live on the streets or in shelters, new vendors whose circumstances are “atypical” continue to enroll. Some of these individuals were once solidly located in the middle class but have depleted their savings and run up debts during long periods of unemployment. Others have lost or are on the verge of losing homes to foreclosure, after struggling to meet mortgage payments. These “new poor”, as the Feb. 20 New York Times article refers to them, may still enjoy more comfortable material surroundings than their peers who must sleep on park benches and in doorways. But make no mistake—they too are struggling under crushing financial, emotional, and psychological angst.

Bemoaning a bad situation may contribute to raising awareness, but ultimately the act of circulating unemployment statistics will do nothing to effect change. Therefore, swift, pervasive, and consistent action must be taken. At the federal level, one component to a multifaceted charge to reduce unemployment and create jobs could be to renew the Temporary Assistance for Needy Families (TANF) program, created by the American Reinvestment and Recovery Act (ARRA) of 2009, which is set to expire at the end of September of this year. The TANF has thus far been utilized for subsidized employment programs at the state level, and also to provide cash support and short-term assistance to low-income families. While the latter of these uses should certainly be continued as necessary, in the interest of more permanent solutions it would be crucial to expand upon the former, creating more job opportunities in order to foster longevity in recovery.

Other stimulus initiatives should be explored at the national level. Despite some scathing criticisms of the ARRA, a February 16, 2010 New York Times analysis of this $787B stimulus package argues that the Act has indeed precipitated positive effects. For example, as a direct result of the funding the ARRA provided, between 1.6 and 1.8 million jobs have been added nationwide, with an ultimate impact of 2.5 million jobs. In order to capitalize on such benefits, many economists recommend that future stimulus endeavors legislated by Congress should focus on direct aid to states and cities, which appears to be the most effective form of federal capital infusion.

Yet, ultimately the problems of unemployment and economic languor cannot be solved by government intervention alone. After all, the feds—appropriately manifesting a distinctly American trend—have dug themselves into an abyss of debt, and even many very liberal Democrats are now calling for tourniquets to curb hemorrhaged governmental spending.

To return to James’ quote, we must all, as citizens, acknowledge the moral dimension that expanding poverty evokes. We must reflect upon and perhaps reconsider the meaning of the term “fellow American”, assessing the social responsibility that such a notion implies, a brotherhood that is obscured by cultural inculcation of individualism.

So let’s bring job creation to the local level. If you know of work to be done—albeit to fulfill a temporary or seemingly self-addressable need—consider hiring a neighbor who might be experiencing adversity. You may only be able to put a few dollars in his or her pocket, but the psychological boost that you will offer to that individual’s sense of value and self-worth will be priceless. And those couple of dollars certainly won’t hurt. To get started with your own micro community development initiative, see the Situations Wanted (page 15) listed in this issue.

Groucho Marx once said “I worked myself up from nothing to a state of extreme poverty.” The humor inherent to this quote is somewhat muted today—these words have become too personal for too many people. As individuals, we may not be able to eradicate the all of the ills that poverty exacts globally, or even to halt its encroachment into our own lives. But we do have the power to determine our outlook and reactions to misfortune. Let us not shrink then in fear of poverty. Instead, let’s band together to fight the thing with empathy, solidarity, and mutual enrichment.