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A Fundamental Barrier

Rich Kids Stay Rich, Poor Kids Stay Poor

By Ben Casselman and Andrew Flowers

 

On Friday, a team of researchers led by Stanford economist Raj Chetty released a paper on how growing up in poverty affects boys and girls differently. Their core finding: Boys who grow up in poor families fare substantially worse in adulthood, in terms of employment and earnings, than girls who grow up in the same circumstances. (The Washington Post has a good write-up of the paper and its implications.)

But beyond its immediate conclusions, the paper, like much of Chetty’s recent work as part of his Equality of Opportunity Project, points to a deeper truth: In the U.S., where you come from — where you grow up, how much your parents earn, whether your parents were married — plays a major role in determining where you will end up later in life.

 

Take, for example, the chart below. . .read more here.

How to build wealth at "the bottom" Part 2

So, here's how we ended in my last post:

. . . a growing underclass struggles with intensive  toxic stress, resulting in a spiral downward for tens of millions of Americans. 

Poverty is growing. 

Poverty is tragic.

Poverty presents possibly the most serious threat to our nation's long-term security. 

What is necessary to overcome these negative forces?  How, in fact, do we build wealth at "the bottom?"

This seems so obvious, but to overcome poverty and its various expressions leading to the toxic stress ravaging so many urban neighborhoods we must create higher income levels among today's working poor. 

How do we do that? 

What steps must we take if we are really serious about attacking the problem of poverty? 

Step one:  raises wages, and not just to minimum wage expected standards.  Wages must rise to a livable level--the paycheck required for a full-time employee to be able to care for himself/herself and whatever family.  Wages have risen for the upper-class at historic and astounding percentages over the past 20 years, while the middle and lower classes have seen wage stagnation and exploitation produce the biggest income gap since the early 20th century.  This must change.

Step two:  provide quality, affordable health care to everyone who works and for the disabled who cannot work.  Health care costs and health disasters drive much of the growth in poverty since the 1990s.  An example of leadership failure in this regard is the state of Texas' refusal to expand Medicaid for our poorest citizens.  Not only is this shameful, it is terrible business practice. 

Step three:  develop and execute on a plan that enables millions of us to prepare for and purchase a home.  Nothing grows real wealth like homeownership. The expansion of efforts to teach financial literacy when coupled with the real prospect of home ownership will only drive incomes in the right direction.

Step four:  expand educational options for everyone.  Creative efforts to re-purpose public schools and libraries as community learning centers for children and adults could produce good results.  Finding ways to reduce student debt for those seeking college opportunities will be essential to progress in filling the mid-level and upper-level skill sets for which employers continually request. 

Step five:  eliminate predatory lenders and lending schemes and provide consumer protection against such unjust businesses.  Payday lenders must be declared illegal enterprises.  At the same time, banks must develop credit products for low-income households as a part of their community reinvestment requirements. 

Step six: require 1-2 years of national service along the lines of AmeriCorps on the part of all our high school graduates.  This "youth corps" effort would come with a monthly stipend and educational awards upon completion of each members tour of service.  Such an effort would provide meaningful work for students, significant impact on communities and pathways to careers across the spectrum of labor sectors. 

Stay tuned for part 3.

Poverty mounts. . .

The Growing Gap

Battling poverty--the complexity

Policy makers find it very hard, if not impossible to talk to one another across the widening socio-political chasm.  This appears especially the case when it comes to poverty and its alleviation. This inability to talk in light of largely unrecognized complexities makes the following compelling for me. 

So, how do we explain and understand why people are poor in the United States?  How about this as a starting point in answering this important question?

"Despite the conflicting nature of these left and right analyses, there is a strong case to be made that they are, in fact, complementary and that they reinforce each other. What if we put it together this way? Automation, foreign competition and outsourcing lead to a decline in well-paying manufacturing jobs, which, in turn, leads to higher levels of unemployment and diminished upward mobility, which then leads to fewer marriages, a rise in the proportion of nonmarital births, increased withdrawal from the labor force, impermanent cohabitation and a consequent increase in dependence on government support."

Read Thomas B. Edsall's opinion in his complete essay, "What Makes People Poor?"

Tax policy and income inequality

This is startling! 

No wonder we have major issues.

James Baldwin on "Poster Children" outcomes

Krys Boyd, host of the KERA radio jewel, THINK, interviewed me earlier this week.  We talked about poverty and my assignment as chair of Mayor Mike Rawlings' new "Task Force on Poverty."  During the course of the interview, she asked me about the poor who battle through and "make it" to a better life.  I acknowledged that a very few do manage to find better lives on their own.  I call them poverty's "poster children."  The whole discussion reminded me of what James Baldwin once said about the idea.  He was quoted  in an Atlantic Monthly essay by Ta-Nehisi Coates.  

Here's what Baldwin said:

The people, however, who believe that this democratic anguish has some consoling value are always pointing out that So-and-So, white, and So-and-So, black, rose from the slums into the big time. The existence -- the public existence -- of, say, Frank Sinatra and Sammy Davis, Jr. proves to them that America is still the land of opportunity and that inequalities vanish before the determined will. It proves nothing of the sort. The determined will is rare -- at the moment, in this country, it is unspeakably rare -- and the inequalities suffered by the many are in no way justified by the rise of a few.

A few have always risen -- in every country, every era, and in the teeth of regimes which can by no stretch of the imagination be thought of as free. Not all these people, it is worth remembering, left the world better than they found it. The determined will is rare, but it is not invariably benevolent. Furthermore, the American equation of success with the big time reveals an awful disrespect for human life and human achievement. This equation has placed our cities among the most dangerous in the world and has placed our youth among the most empty and most bewildered. The situation of our youth is not mysterious. Children have never been very good at listening to their elders, but they have never failed to imitate them. They must, they have no other models. That is exactly what our children are doing. They are imitating our immortality, our disrespect for the pain of others.