July 15th 2000

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Articles from this issue:

Cover Story: Human Genome mapping milestone?

Editorial: Managing Australia’s interests in S.E. Asia

Canberra Observed: Defence: opportunity beckons for Howard Government

Families: The hollowing of the middle class continues

New South Wales: Follow Swedish model: drug forum told

Trade: Canberra capitulates without firing a salvo

Doctors suspended over 32 week abortion

Straws in the wind

Education: New Queensland syllabus attacked

Economics: UN to look at the Tobin Tax

Media: GST ads unchained media bias

Development: Amartya Sen: the return of humane economics

Comment: The politics of suicide

Law: Death penalty debate resurfaces in USA

United States: Rising tide leaves poor floundeirng

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United States: Rising tide leaves poor floundeirng

by News Weekly

News Weekly, July 15, 2000
The percentage of working poor in the United States has increased over the past 30 years, and failed to go down during the past decade of economic growth says Dr Linda Barrington, author of Does A Rising Tide Lift All Boats?: America’s Full-Time Working Poor Reap Limited Gains in The New Economy.

The title of the report is taken from President John F. Kennedy’s famous statement that implied that a strong economy helps rich and poor alike.

The study was produced by a non-profit organistion called The Conference Report, whose membership numbers 3,000 companies and organisations in 67 countries, including major American companies from AT&T to Coca Cola to Microsoft. According to Dr Barrington:

“Simply working full-time year-round, even in a booming economy, is not enough to lift everyone out of poverty. The economic benefits from this technology-driven growth have not been dispersed evenly across the work force.”

Lower incomes

The study provides statistics from 1963 and 1998 suggesting that the national percentage of employment in high-paying industries has significantly shrunk and the percentage of employment in middle-paying industries has declined dramatically.

It found that America’s emerging technology sectors have produced greater low-skill employment, for instance, by allowing low-skill, low-productivity workers to do jobs they were not previously able to do. A cashier who cannot add or subtract, for instance, can now rely on a computer to handle such equations. But such new entry into the work force through low-skill jobs does not necessarily guarantee a living wage.

The study notes that “Workers with mid-level skill, unable to obtain high-skill jobs, might be ‘forced’ into the expanding low-skill, and hence low-wage, jobs if employment at the middle of the skill distribution is shrinking faster than the worker pool,” says the report.

Today, the US is in its fourth year of strong economic growth and low inflation, and its ninth year of economic expansion, the study notes. And recent statistics show a record number of people are employed full-time and year-round, it says. Yet the percentage of full-time workers classified as poor (earning less than $13,290 in 1998) has generally remained steady over the last decade — between 2.5 percent and 3 percent of the population, up to 5 million with dependents. In fact, this number has gradually increased over the past three decades, says the study.

“Even in the face of near record lows in the national unemployment rate, poverty is rising among those who are fully engaged in the work force. This is not the outcome one would expect from the longest economic expansion in US history,” the report found.

The statistics reflecting poverty — which is defined by the US Government based on family income (excluding government assistance), family size, and age of the head of the household — do not show perfect trends. Levels of working poor sometimes fluctuate significantly from year-to-year and ethnic groups in some regions of the country at times do better than others.

Poverty among ethnic minorities working full-time in the South, for instance, has gradually decreased over the past two decades. In the Midwest and the Northeast, however, poverty among working ethnic minorities has generally increased. Such disparities, the study says, could reflect varying economic structures in different regions of the country.

Also, the report finds that low-paid full-time workers of color in the South made dramatic gains following the civil rights movement in the 1960s and 70s.

That would help explain the enormous decrease in working poor in the South from nearly 30 percent in 1966 to around 7.5 percent in 1974 — helping to greatly bring down the national average. But while recording such trends, the report says, “Definitive answers to the question of why this is happening are unclear.”

While the US has consistently exhibited wider income inequality than other countries, American workers benefit by being more “economically mobile,” having greater opportunities to “improve their circumstances, moving from poor to rich,” says the study.

But it also says that while many do leave poverty each year, even more people over time join the ranks of the poor, many of them returning. There is “a poverty class that may not (indeed, most certainly does not) include the same individuals from year to year, but which is growing in number and share of the working population,” says the report.

Ethnic minorities in particular, it says, tend to move out of poverty and then back into poverty more often then whites; and this can hamper their long-run savings and investment efforts, and the transfer of wealth across generation.

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