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Midway through Thursday night’s presidential debate, Joe Biden looked directly into the camera and addressed Americans struggling to pay their bills. He talked about the challenges families face in juggling all their financial obligations at a moment of cascading economic crisis, and lambasted Trump for opposing an increased minimum wage while instead measuring the economy recovery solely by the value of the stock market.
Trump’s response crystalized how removed his worldview is from that of people living paycheck to paycheck. “IRAs,” he shouted out. “IRAs.” In other words, if you have an individual retirement account, invested heavily in the stock market, Trump wants your thanks and your votes for a rising Dow Jones.
But, as of last year, only one-third of workers had IRAs, and about half of workers in the country had no retirement savings to fall back upon. For these workers, hard economic choices today, and potentially even harder choices as they become older and near retirement, increasingly shape their reality.
Too often, discussions of poverty that would address why so many people in this wealthy country live right on the economic margins get shunted aside. Though Biden addressed that issue more directly than Trump did at the debate, he also went out of his way to refer to the struggles faced by middle-class people in the U.S. rather than to focus on those who have never accessed the middle class in the first place.
In doing so, Biden was adhering to a time-tested script. For it’s become something of a cliché in recent presidential election cycles that candidates tend to focus more on the “struggling middle class” than on the problem of entrenched poverty in the United States. After all, there’s usually far more political capital to be made appealing to the economic middle than to those in the bottom quartile of the economy, who tend to vote at a far lower rate than the rest of the population — a point that Bernie Sanders, who did talk about poverty a lot in both the 2016 and 2020 campaigns, but who didn’t end up victorious, has ruefully acknowledged.
In 2020, however, the pandemic has created two distinct trends that are changing the terrain in which politicians’ positions on poverty are evaluated: The first is that the pandemic economy has accelerated all the trends toward inequality that were already defining the 21st century U.S. economy. Three billionaires — yes, you read that correctly — now control as much wealth as the bottom half of all Americans, more than 160 million people. That’s an utterly extraordinary example of oligarchy; in fact, it’s fair to say that this represents one of the most extreme maldistributions of wealth in human history.
The men in question — Bill Gates, Jeff Bezos and Warren Buffett — have managed to consolidate unfathomable amounts of money during this time of public health and economic crises. Bezos, in particular, has pushed a business model — selling products at a rate that undercuts competitors, delivering those products to consumers’ homes in a way that is safe and convenient for a health-conscious public, and taking a cut of every transaction — that, in essence, channels a growing proportion of American consumer spending directly into the bank accounts of one Jeff Bezos. Back in 2017, before Bezos’s net worth more than doubled, his personal wealth was larger than the gross domestic product of more than 140 countries. I haven’t encountered updated numbers on that particular front, but it’s a fair bet that the pandemic economy has resulted in Bezos’s wealth outstripping that of many more additional nations. Put Bezos, Gates and Buffett together, and you practically have a G20 economy.
Of course, the flip side to this deeply unsavory trickle-up effect is an escalating poverty crisis at the bottom of the U.S. economy — and, more generally, a global reversal of anti-poverty trends that is now resulting in hundreds of millions of people around the world falling into destitution during these pandemic months.
Despite the trillions of dollars that Congress allocated early in the pandemic to try to mitigate the effects of mass unemployment and the stagnation of large parts of the economy, by the end of the summer, the U.S. numbers on poverty were stark.
In 2019, after nearly a decade of economic growth, poverty rates in the U.S., according to Census Bureau analyses, had fallen to 10.5 percent. While that number didn’t tell the full story — for example, it didn’t account for the impact of millions losing access to health insurance as the Trump administration sought ways to undermine the Affordable Care Act — it did suggest that a low-unemployment economy was seeing some distribution of economic benefits down the income-ladder. By this autumn, however, all of those gains had gone, and tens of millions of families, whose income and businesses had been impacted by the pandemic, were seeing their government assistance truncated. Some are able to survive without the additional unemployment payments and stimulus checks, or without additional small business loans and grants. But, with unemployment high and opportunities for new business limited, many aren’t.
A recent study by researchers at Columbia University estimated that, since May, an additional 8 million Americans have fallen below the poverty line. The measure that these researchers use — measuring on a month-by-month basis rather than via annual averages — is somewhat different from Census Bureau measures, resulting in them estimating higher numbers each month in poverty. But, even factoring that difference in, the trends are dismal.
A year ago, by this methodology, about 15 percent of the U.S. population was in poverty in October 2019; today, factoring in CARES Act payments, that number is 16.7 percent. If you factor out those payments, it is 18 percent. That’s nearly one in five Americans, or somewhere north of 60 million people, struggling in any given month.
Perhaps even more concerning are the “deep poverty” numbers. A family is considered to be in deep poverty if their various income streams (from work, from government assistance) bring them up to no more than 50 percent of the poverty line. Anti-poverty advocates and researchers have long argued that the choices families in deep poverty have to make (do they pay the rent or buy food, for example) are so extreme that they result in long-lasting physical and psychological health impacts, especially for young children. The researchers at Columbia documented a huge spike in deep poverty from March onward. Even taking into account CARES Act funds, they found that more than 7 percent of Americans each month since the beginning of summer have been experiencing deep poverty. That compares with 5.8 percent before the pandemic hit.
With Congress gridlocked these past months, additional pandemic assistance funds have largely ceased to flow. As a result, for millions of Americans, the depth of poverty and economic insecurity is becoming more extreme. Up to 35 million are at risk of eviction in the coming months. The number of elderly Americans at risk of homelessness is skyrocketing. And even if Congress and the White House do somehow hatch a stimulus deal this week, as seems at least vaguely possible, it will take weeks (if not months) for benefits to be distributed to needy individuals and families around the country. Meanwhile, for those on the edge, a bad situation simply gets worse.
And, even if and when Congress does free up funds, no stimulus package will be able to mitigate the consequences if a conservative majority on the Supreme Court rules the Affordable Care Act unconstitutional in the coming months. The Economic Policy Institute has estimated that nearly 30 million Americans could lose their insurance, rendering them peculiarly vulnerable to economic devastation if they fall ill, and more than a million workers could lose their jobs in health care fields.
Of course, the cascading poverty crisis is not a crisis that is unique to the U.S. Around the world, the pandemic has obliterated years of economic growth, resulted in hundreds of millions of children losing access to education, and devastated entire industries, especially in the tourism and leisure sectors. Recently, UNICEF estimated that 150 million children had been thrust back into poverty since the spring. There are now roughly 1.2 billion children globally living in conditions of poverty. UNICEF’s analysis concludes that these numbers will increase even more in the coming months. The World Bank recently estimated that poverty increases around the world will results in tens of millions of poor people in middle-income countries falling back into deep poverty. In other words, middle-income countries are, as a result of the pandemic, increasingly looking like lower-income countries did prior to the pandemic.
This is not just a moral crisis; it is a vast, and growing, geopolitical crisis. For the kind of unfettered poverty that is being unleashed will, if left unchecked, likely result in massive political turmoil over the coming years and decades.
Even if effective vaccines against the coronavirus are developed and widely distributed in the near future, there is simply no way societies can fully recover from this vast upheaval, this trauma, without the crafting of meaningful, trans-national, anti-poverty initiatives. It’s long past time for U.S. politicians to confront this head-on. It is time to craft policies — such as increasing taxes on the super-wealthy so as to shore up money to invest more heavily in job-training, preschool programs, health care access and other interventions that have a proven track-record of reducing poverty — that can effectively redistribute the wealth that is now hyper-concentrated at the top of the economic pyramid to the tens of millions domestically, and hundreds of millions internationally, who have crashed through the safety net and into economic despair. It is time to bring this conversation out of the shadows once and for all, and to recognize that the economic health not just of the “struggling middle” but of those at the bottom of the pyramid is of fundamental importance to the broader well-being of our global community.