Poverty” by Paul Downey

January 24, 2018; New York Times and the Brookings Institution

From the depths of the Great Recession, the US economy has seen nine years of strong growth. Employment has increased, and the unemployment rate has declined to a historically low level of 4.1 percent. Wages, which were stagnant during much of this period of growth, have begun to inch up. The recent rewriting of the Federal Tax Code has spurred many employers to further sweeten the pot with bonuses, salary increases, and improved benefits. Yet, with all those positive signs, a significant number of Americans are quietly living at a level of poverty that rivals any in the world. The need appears to be so great that one Nobel Prize-winning economist has been prompted to shift his philanthropic priorities, signaling a challenge to the overall sector.

How bad is the situation? Over the first two weeks of December, Professor Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights, visited the United States. His findings, perhaps surprising, painted a very disturbing picture as he compared how the US, one of the world’s wealthiest nations, compares to other developed nations:

  • US health care expenditures per capita are double the OECD.…But there are many fewer doctors and hospital beds per person than the OECD average.
  • US infant mortality rates in 2013 were the highest in the developed world.
  • Americans can expect to live shorter and sicker lives.
  • U.S. inequality levels are far higher than those in most European countries.
  • In terms of access to water and sanitation, the US ranks 36th in the world.
  • The youth poverty rate in the United States is the highest across the OECD, with one-quarter of youth living in poverty compared to less than 14 percent across the OECD.
  • The Stanford Center on Inequality and Poverty ranks the most well-off countries in terms of labor markets, poverty, safety net, wealth inequality, and economic mobility. The US comes in last of the top 10 most well-off countries, and 18th amongst the top 21.
  • In the OECD, the US ranks 35th out of 37 in terms of poverty and inequality.
  • US child poverty rates are the highest amongst the six richest countries—Canada, the United Kingdom, Ireland, Sweden and Norway.

Using $4 per day as a standard for defining extreme, “world class” poverty, Nobel Prize winning economist Angus Deaton found that even in a time of economic expansion, there are 5.3 million Americans who meet that standard and live at the very bottom of our economy. Writing an op-ed in the New York Times, he observed, “This is a small number compared with the one for India, for example, but it is more than in Sierra Leone (3.2 million) or Nepal (2.5 million), about the same as in Senegal (5.3 million) and only one-third less than in Angola (7.4 million). Pakistan (12.7 million) has twice as many poor people as the United States, and Ethiopia about four times as many.”

Extreme need is a “high standard” when considering who needs help, even in a growing economy. A recent look at the realities of job growth by the Brookings Institution illustrates that there are many who will need assistance over the long term.

Well into year nine of this expansion, the number of employed Americans with high school diplomas contracted by 2,095,000, and the number of people working without a high school diploma fell by 900,000. The share of all job gains claimed by Americans with some college but no B.A. degree was just over half their share of the labor force. Through it all, the number of college-educated Americans with jobs jumped by 11,909,000. That’s 1,253,000 more than the total 10,656,000 net new jobs created across the economy, suggesting that college grads are also now claiming new jobs that used to go to people without a B.A. degree.”

Because, as Rick Cohen observed a number of years ago in NPQ, “the nonprofit sector and the infrastructure that support it are crucial delivery mechanisms for fighting concentrated poverty and social inequity—and the sources of the most effective policy and program models for state and federal policy-makers to emulate and fund.

At a time when the burdens of responding to these millions of men and women who face the pain of extreme poverty and the many more who live somewhat above this level fall on the nonprofit community, the conclusion Deaton has drawn from this reality will be heartening and provide a way to reposition the need for philanthropic giving at home.

For years…the needs of poor Americans (or poor Europeans) have received little priority relative to the needs of Africans or Asians. As an economist concerned with global poverty, I have long accepted this practical and ethical framework. In my own giving, I have prioritized the faraway poor over the poor at home. Recently, and especially with these insightful new data, I have come to doubt both the reasoning and the empirical support. There are millions of Americans whose suffering, through material poverty and poor health, is as bad or worse than that of the people in Africa or in Asia.

Alston observed that “There is no magic recipe for eliminating extreme poverty, and each level of government must make its own good faith decisions. But at the end of the day, particularly in a rich country like the USA, the persistence of extreme poverty is a political choice made by those in power. With political will, it could readily be eliminated.” The current administration does not see those in need as a priority.

Writing in the Chronicle of Philanthropy almost five years ago, Pablo Eisenberg worried that “matters of poverty seem to be off the radar screen of nonprofits. Most nonprofits…remain satisfied in pursuing their more-narrow agendas, whether related to the environment, education, or gay marriage. They show little concern about the ravages brought on the country by income inequality, homelessness, hunger, and unemployment.”

If government won’t take the lead, and the nonprofit and philanthropic community won’t either, we are going to see the richest country in the world allow itself to move up the rankings.—Martin Levine