A SECRET IN THE NEWS: THE COUNTRY'S PERMANENT POOR
It can be the best of times or the worst of times, but whether in prosperity or recession, there is one constant in the United States economy--the richest country in the world has maintained a permanent class of Americans who are poor. That is not an accident. It is maintained by official action as deliberate as Alan Greenspan's protection of the prosperity of banks and stock markets. In this case it is the scandalous maintenance by new laws and regulations, new tax codes, and special multi-billion tax waivers for favored giant corporations. Those in this permanent class are not the momentarily unemployed. Most of them shift jobs. Or alcoholics, addicts and the handicapped. Most of them work. Neither are they inevitable as temporarily unlucky in a world of global economic change. Long before the "new economy" and after it, none of our Western European peers of affluent nations has sustained a permanent class of the poor like one in the U.S. Those other countries have social policies that prevent it.
When confronted with persistent poverty in the world's richest country, the American mainstream print and electronic media seem to take as their mandate the biblical words from Matthew, "The poor ye will have always." They do this with little concern that poverty in the midst of plenty in the world's richest country is an American exception among all advanced societies. (The U.S. is the richest in Gross Domestic Product and in per capita income is second only to Luxembourg.)
The news media may protest that they do cover the poor. And in one sense, they do. But these are typically isolated stories about a hard-luck family in a disaster area, or profile of the plucky Midwest downsized manager flipping burgers at McDonald's ---sympathetic features but depicted as isolated cases. Reported only rarely and obscurely is why the United States, among all its affluent peer countries, retains a poor class year in and year out.
Given the symbiotic relationship between our national politicians and the main news media, that media failure has consequences. What the main media ignore, political leaders know they can safely ignore. The needy appear only at election time in stereotyped rhetoric and campaign photo ops. The empty rhetoric without subsequent media follow-up has deepened the comfortable assumption that in America poverty is an unavoidable act of God. When a government report documents one element in permanent poverty, like the 1997 HUD 1997 document on the unrelenting rental housing crisis, it passes out of print in one day, not followed up with emphatic subsequent stories, which is the process that produces political pressures for action. Or the mainstream news relates it to the "millionaire-market" housing scene in San Francisco Bay or midtown Manhattan, not the same crisis for average families in suburbs of Chicago and rural Kansas and thousands of other cities and towns.
Permanent poverty may have been inexorable in biblical times, when there really was inadequate food, inefficient use of arable land, rigid class systems, slavery and serfdom. But today's world has enough food for everyone, and affluent countries like the United States have enough rich resources to guarantee their populations enough decent food, housing, universal health care, jobs and pensions. Most of our peer countries do exactly that. Only the United States has chosen not to rid itself of a permanent poor.
The United States is unique among the world's advanced industrial societies-France, Germany, the United Kingdom, for example. It has retained this dubious exception s for so long - almost half century ---- that a poverty class in this country is now seen as normal, inevitable, and, with parallel media unconcern, consequently invisible.
Who are "the American poor" and are they really poor?
Government statistics periodically adjust the poverty level in the country to reflect changes in the cost of living. In 1999, for example, a family of three with a household income of $13,880 or less was classified as living in poverty. Of the 32 million Americans in poverty, 72 percent were in families. These include one of every five American children. These are not poor because they lack Cuisinarts and BMWs. They are poor because they lack enough food, shelter, and access to other elementary living conditions in any modern society.
Why do we permit this when our peer nations do not? The answers are not mysterious: official housing policies, deliberate shifting of national wealth to the top through destruction of the national progressive income tax, mammoth special favors for corporations, and cynical treatment of the national minimum wage.
Why do the mainstream news media share the blame?
A dramatic demonstration of media's guilty involvement occurred thirty years ago. When, suddenly, as though from nowhere, we had homeless families living in the streets. For national civic life it was the dead canary in the coal mine. We know why the canaries die in the mines: it is a warning of methane gas kills sensitive canaries before it kills human beings. The dead canary of structural American poverty was the sudden appearance of the homeless in the early 1980s.
In the 1980s, the number of poor Americans began climbing noticeably. By 1998-1999, the average poor child was further below the poverty line than he or she was in 1979.
The 1979-1980s change tells something crucial. By the mid-1980s, seemingly out of nowhere, for the first time since the Great Depression, large numbers of individuals and families were living in the streets. "The homeless," is a social phenomenon usually associated with countries like Bangladesh, but has now survived as a visible urban fixture in this richest of countries.
Emblematic is the failure of the big newspapers and broadcasters to search out the source of the new homeless when they first appeared in the 1980s. Most often, the media refer to the homeless who are alcoholics, drug addicted, or mentally ill. But we always had alcoholics, addicts and the mentally ill before without large numbers of families living in the streets. Something radical had changed.
A hint of what's changed is that the homeless-a minority of the total poor - are homeless even though, according to the Bureau of Labor Statistics, 64 percent of them have jobs, some of them two jobs, but they are still poor by government standards.
No affluent democracy has been able to house its low-wage families by depending on the private real estate industry. Government-subsidized low-cost housing has been found indispensable if all are to be housed in minimally decent homes and apartments. Before 1979, the United States subsidized 200,000 such low-income units a year. In the early 1980s, in the new fervor for shifting everything possible to the free market, subsidized low-cost housing subsidies were cut by 92 percent. That is the central reason we suddenly had a permanent beggar class and families living in the streets. Few readers or TV news watchers were ever told the basic reasons why our homeless happened "out of nowhere."
Why the media's strange lack of curiosity? It was part of the main media's gingerly treatment of basic causes of social ills whose remedies might involve an increase in taxes. On the contrary, the media generally celebrate the opposite-whatever reduces taxes. Explaining the "dead canary" of the suddenly homeless might have stimulated renewed appropriations for subsidized low-cost housing-taxes for the benefit of the most politically powerless group in the electorate.
There are other contributing forces to persistent homelessness. Earlier it had been found that most of the institutionalized mentally ill were improved if they were released to local treatment centers in their home cities and received counseling at local treatment centers. So mental hospitals were effectively emptied, saving millions of tax dollars. But even more taxes were saved by reneging on the promise to shift the saved money to local treatment centers.
The majority of the poor are not mentally ill. They are mentally sound, non-addicted individuals and families. But they remain poor. According to the Department of Housing and Urban Affairs (HUD), from 1985 to 1993 the private market for affordable housing dropped another 20 percent, and, according to the Journal of Housing and Community Development, only 33 percent of Americans eligible by law for federal housing actually can find such housing.
The Journal's December, 1997 issue reported, "With affordable housing out of reach for growing numbers of low-income Americans, the housing crisis can only be expected to worsen...the recent actions by Congress have further disenfranchised an already disadvantaged segment of the American family." In 1995, there were 1.3 million low-cost housing units available for 2.6 million low-income renters, as shown by a survey by the Center on Budget and Policy Priorities. Yet, in that same time period, according to the National Association of Realtors, the median price for a single family house rose 45 percent. With low-cost rental apartments unattractive to the real estate industry and failure of the needed government subsidies for what the private market prefers to reject, the "mystery" of both the homeless and the impoverished 32,000,000 Americans is not very mysterious.
In addition, the poor have been paying steadily higher percentages of their income on rent-more than 50 percent of their disposable income. In a Catch-22, from the remaining half or less must come other indispensable human needs, like food, clothing and payment of their unfair burden of the most regressive taxes.
Underlying the issue is the shameful phenomenon of a radical shift of national personal wealth from the bottom 80 percent of the population to the top 20 percent, with the lion's share of that going to the top 1 percent. The fact that such a gap exists gets into American news occasionally, but as a routine statistic, like the corn crop in Kansas.
The United States has the widest gap in the world between its very rich and its unrich. The gap has grown year after year, neither by accident nor by talent and hard work by the super-rich. American workers are unique in their low share of their employers' revenues compared to our counterpart countries. The typical American CEO receives 34 times the typical American factory worker who now earns less (in absolute dollar terms) than hourly workers in Japan, Germany, or Switzerland. The multi-million- and billion-dollar executive compensations show no relationship to the performance of those corporate executives, according to our most prominent authority on executive compensation, Graef Crystal, formerly of the University of California at Berkeley and now with Bloomberg News. He has said, "It gets worse and worse...It's absolutely sick."
The massive shift of American wealth to the top has been reported in the media, but without the sense of outrage and alarm that would puzzle a Lincoln Steffens, Ida Tarbell, Franklin Roosevelt, or any number of political and media leaders of past eras. Though the main media attitude toward the poor seems to take comfort from the Book of Matthew's resignation to their plight, the media seem less interested in another biblical reference, "It is easier for a camel to pass through the eye of a needle, than for a rich man to enter into the Kingdom of God.."
Other affluent countries lack the size and causes of the permanent American poor. The answer is simple. The other rich countries have housing, employment, pension, and tax policies that prevent it. The overall answer is an inexcusable fantasy aided and abetted by our major media, newspapers that, for example, have "Correction Columns" for errors like printing the wrong middle initial of a politicians. The media fantasy, aided and abetted by politicians, have convinced the people of the United States of a falsehood, namely, that we are a brutally over-taxed country. The truth is that of all the affluent democracies, Americans are the lowest taxed in the world, including the sum of all local, state, and national taxes. Consequently, when this fantasy is shrill in every political campaign - promising lower taxes as a dire necessity--- it is accepted as an urgently needed rescue of that beleaguered population, the very rich. Though the main media love to find culprits in social problems, on this they practice selective amnesia. For more than half a century, the share of federal taxes paid by corporations has been dropping radically and shifted onto families and individuals. In 1940, corporations paid 40 percent of federal revenues. By 2000 it had dropped to 12 percent. Guess who pays for that shift.
Even though money supply and national wealth have grown, in 1955 corporate taxes paid for 6 percent of our Gross Domestic Product but now pay only 2.5 percent. Except for Japan, U.S. income taxes as 34 percent of GDP are lowest among industrialized nations. The rate in Canada is 36 percent, Germany 39 percent, Switzerland 50 percent. It is not coincidental that most of those other countries have universal health care, guaranteed housing and more generous social benefits than United States.
The top federal income tax rate for the richest Americans was once 70 percent, though people that rich hired the best accountants and tax shelters, so few paid anything like the top bracket. The top rate in 2000 had dropped to 39 percent, and in practice it is closer to 33 percent, and few in that theoretical bracket pay that much for the same reasons. Now the Bush Administration wishes to drop it to 25. The country's progressive income tax is now close to dead.
However, some taxes do go up. The loss of our federal progressive income tax has year-by-year shifted basic American taxes to the most regressive kind in which the poor pay more of their income than do the rich. In the resulting shift of taxes from Washington income tax responsibilities to states, counties and cities, these jurisdictions have resorted to sales taxes, the most regressive kind. Here, of course, the poor pay the most in terms of disposable income. In 1995, according to Citizens for Tax Justice and The Institute on Taxation and Economic Policy, the lowest 20 percent of family incomes paid 12.5 percent of all state and local taxes (property, sales, and fees) while the top 20 percent of families paid 8.5 percent of their family incomes.
A 7.5 percent sales tax on a minimum wage worker represents a significant percentage of that person's income. The same percentage sales tax on a millionaire is a negligible percentage of total income, which is why, in the need for revenues, corporations and the rich insist on sales taxes instead of higher federal income taxes.
The final insult to the poor is the minimum wage. Corporations and the rich fight every move for an increase, the way they fought against creation of the minimum wage in the first place. In 1970 the minimum wage was worth 29 percent more in real terms than it was in 2000. According to the Economic Policy Institute, in 1970 minimum wage workers were living above the poverty level. In 1998, only 19 percent were.
A standard objection that it will reduce the number of jobs available, or force small businesses into failure has no basis in reality. The Institute says a raised minimum wage has never resulted in significant reductions in jobs or closed businesses.
Objectors to Minimum Wage have always raised the image of denying the after-school teen-ager learning how to be productive. But in 1999, 71 percent of people earning the minimum wage were adults.
If the Dow Jones Industrial Average dropped steadily for twenty years it would be front page and leading broadcast news day after day until government took action. That 32 million of our population have their housing, food, and clothing "index" drop steadily for more than 30 years is worth only an occasional feature story about an individual or statistical fragments in back pages of our most influential news organizations. An unnecessary poverty class is shameful in "the leader of the free world" and the richest one at that. A fraction of the media's daily attention to the Dow, the media' role in creating the myth of overtaxed Americans and the notion of an inexorable American poor class, make our mainstream papers and broadcasters a party to a cruel and unnecessary flaw in our society. Corporations and Washington legislators may point with helpless resignation to the biblical assertion that the poor will always be with us, but the experience of other rich countries like Germany, France, Canada, and Britain suggests that the answer lies less in Book of Matthew, and more in The Congressional Record.
Ben H. Bagdikian is the author of In the Midst of Plenty: The Poor in America (Beacon Press, 1963), The Media Monopoly (6th Ed., 2000), other books. He is the former Dean of the Graduate School of Journalism at the University of California at Berkeley.