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January 15, 2004

A war worth fighting

In his State of the Union message 40 years ago, President Lyndon Baines Johnson declared a “war on poverty.” His commitment was to eliminate poverty in America, not just ameliorate it. Johnson believed that it was unconscionable for citizens to go to bed hungry in the wealthiest nation in the world.

At the time that Johnson declared war, the elderly were more afflicted with poverty than any other age group. Since 1964, that poverty rate has declined from 30 percent to 10 percent now. Analysts agree that the elderly received extraordinary benefits because they are inclined to vote more consistently than other age groups.

In response to Johnson’s call to fight poverty, Congress voted legislation to create Medicare and Medicaid, Head Start and the Job Corps. Also, Congress approved increases in Social Security payments and Aid to Families with Dependent Children. The poverty rate fell from 19.5 percent in 1963 to 11.1 percent in 1973. However, steady progress beyond that point has been difficult.

As might be expected, African Americans were the group suffering from poverty the most. When the war on poverty broke out, more than 40 percent of blacks were living below the poverty level. By 1973 that figure had dropped to only 31 percent. Since then it has dropped another seven points to 24 percent in 2002.

Analysis of the data indicates that social decay is one of the primary causes of low incomes. The group with the lowest income is the single parent family, which is usually headed by a woman. However, the median household income of black married couples in 1998 was $47,382. This is almost $7,000 greater than the $40,912 median income of all white households.

Two-income families have become the staple of the middle class. However, there is a problem looming with this strategy. In the past a family’s standard of living was determined by what the husband could earn. The wife was the safety net. If the husband lost his job or became too ill to work, then the wife would enter the labor force to pick up the slack.

The common practice now is for a family’s standard of living to be determined by the combined income of both husband and wife. Consequently there is no back up because the family’s expenses contemplate both incomes. As a result economic meltdowns are quite common.

In their book, “The Two-Income Trap: Why Middle-Class Mothers And Fathers Are Going Broke,” Elizabeth Warren and Amelia Tyagi predict that at the current rate of bankruptcies, one of every seven children in America will suffer a bankruptcy in the family by the end of the decade. This is not the result of undisciplined trips to the mall. The authors cite as the primary reason for this the high cost of housing.

In order to find a decent school district for their children, families have moved into towns where the cost of housing is excessive. As a result they get locked into huge mortgages. Nonetheless, families will continue to take these financial risks in order to attain the middle class standard of living.

Although few realize it, the effort to end poverty would create a society that benefits everyone. President Johnson’s dream of a broad middle class, if it were realized, would create make a reasonable standard of living that is affordable and available to all.

 

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