News

Stanford panel: economy, not war on poverty, failed

Stanford center on poverty and inequality, issues first annual report

The U.S. economy's failure to deliver jobs has left the country with persistently high rates of poverty and income and wealth inequality, a panel of experts convened at Stanford University said Monday.

Growing gaps in educational achievement and health -- including life expectancy – reflect the income and wealth disparities, panelists said.

Six years after the start of the Great Recession, the proportion of 25-to-54-year-olds who hold jobs, the so-called "prime-age employed," was nearly 5 percent lower than it was at the recession's beginning in December 2007, New York University sociologist Michael Hout said.

"What we see is an upstream economy that's failing to deliver jobs and then generates much poverty, which places unrealistic demands on our schools, our penal system and health-care system," said Stanford sociologist David Grusky, who directs the university's Center on Poverty & Inequality.

Grusky convened fellow sociologists, economists and political scientists from Stanford, New York University, University of Michigan, Columbia University and the Federal Reserve Board to present what he said is the center's first annual report on poverty and inequality.

"It's definitely not sexy, but what we're committed to is making sure the general public has the data, information and facts they need to participate meaningfully in discussions about poverty and inequality," Grusky said.

The nation's official poverty rate increased from 12.5 percent in 2007 to 15 percent in 2012, with child poverty rising from 18 percent in 2007 to 21.8 percent in 2012, the report said. The increase would have been significantly larger had it not been for aggressive safety-net programs, the report said.

Grusky assembled a panel of experts to discuss what he called the "downstream" effects of joblessness.

Those include disparities in health outcomes and life expectancy and a widening income-related educational achievement gap even as progress is measured on the racial achievement gap.

Because the income-related educational achievement gap is already large when children enter kindergarten and grows only modestly thereafter, "there are reasons to think a lot of these trends don't have to do with the quality of schools but with the quality of early childhood environments," Stanford Professor of Education Sean Reardon said.

But Reardon reported that recent testing of kindergartners found some narrowing of an income-related achievement gap after a long period of widening. Reasons for the progress are not yet clear, he said.

"Vast social disparities" persist in health outcomes, including life expectancy, despite U.S. health spending that exceeds that of other developed nations, University of Michigan epidemiologist Sarah Burgard said.

Since 1960, American men have gained 10 years of life expectancy and women eight years, but most of those gains have occurred to people above median income, Burgard said. The increase in life-expectancy was greatest for higher income brackets and "stagnant for lower income brackets," she said.

Despite continued growth in U.S. health spending, the proportion of Americans who have any health insurance has declined since 1999. As of 2012, slightly less than 85 percent of all Americans were insured, but the proportion of children with insurance increased by more than 3 percent between the late 1990s and 2012, attributable to the 1997 Children's Health Insurance Program, Burgard said.

The Great Recession increased the amount of income inequality, but not the amount of consumption inequality or the share of total income going to the top 1 percent, the report said.

But after the recession ended in 2009, income and consumption inequality increased, "resuming what has been a nearly relentless growth in inequality over the last 30 years," the report said.

In 2012, the bottom 20 percent secured 3.4 percent of total income.

Former University of Michigan economist Sheldon Danziger, now president of the Russell Sage Foundation, refuted the idea that safety-net programs enacted 50 years ago by President Lyndon Johnson have failed.

"We did set in motion a safety net that's much broader than it was 50 years ago, but it's the economy that failed," Danziger said. "If we counted all the safety net programs, poverty would be lower – it would not have fallen from 19 percent to 15 percent, but from 19 percent to 11 percent.

"There's been a failure of economic growth to benefit not only the poor but also the middle class," he said.

Founded in 2006, the Stanford Center on Poverty & Inequality is one of three national research centers on poverty, said Ajay Chaudry, deputy assistant secretary in the U.S. Department of Health and Human Services. The other two are at the University of California at Davis and the University of Wisconsin at Madison.

"Diminished opportunities for economic mobility is the defining challenge of our time and the focus of President Obama's second term," Chaudry told the assembled Stanford crowd of more than 150 Monday.

Comments

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Posted by Mom
a resident of Esther Clark Park
on Jan 14, 2014 at 12:12 pm

How very sad that more than 1 in 5 children live in poverty. That fact alone should break the heart of every American.

Two of the three national research centers on poverty are located in California. What does that say abut us? We want knowledge to make change? I do hope so.


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Posted by Norm
a resident of Midtown
on Jan 14, 2014 at 12:53 pm

There are odd mind patterns at work in the "war". I recently had a decrease in my Section 8 housing assistance that raised my share of the rent. Allowances for disabiled head-of-household went, as did the one for out-of-pocket medical costs. The move was based on saving the government money. And I spend more money from my VA disability.

Very soon after, I was notified be the Cal-fresh (still commonly referred to as food stamps) folks that because of the rent change, my benefit from them would be increased to offset the change.

I cannot use the Cal-fresh allowance to pay the extra rent, utilities, or anything else. I can't buy food for anyone outside my household. I shop frugal and don't eat much. I wasn't spend my whole allowance before the raise, and I didn't think I'm going to spend the increase.

The logic of cut and spend baffles me.


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Posted by Steve C
a resident of Menlo Park
on Jan 15, 2014 at 12:13 pm

None of this will change until we run the Reagan followers out of any public office, and not just in Washington. Everyone should pay attention to the new strategy of the these folks: take over all branches of government at the state and local level, one state at a time, funded by PACs that conceal the sources of funds and contributions. The Koch brothers are big supporters of this strategy.


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Posted by Scott
a resident of another community
on Jan 16, 2014 at 12:09 pm

This is a rather disappointing report in that it almost seems to try to protect businesses from their share of the blame in the Economic mess we are in. The Economy, is a collection transactions, for goods and services, carried out by agents, in its simplest form. The Economy does not hire anyone, this is done by an agent, a business, government, even individuals can be agents that create jobs. So to say joblessness is a result of the economy really is letting businesses off the hook. The government is forced to borrow money to hire more people, so its should not be the primary source of new jobs. The report should have mentioned how companies have used the cheap bonds to buy back shares rather than invest in new plants or equipment, that might have created more jobs. It could discuss the profitable companies laying off thousands of workers, just in case. It could look at the cash horde that the larger companies have amassed instead doing something favorable to the economy, such as hiring a few more workers, or lowering their prices just a bit and letting their consumers have a little more to spend on other things, or even giving a raise to their employees. Stagnant wages, while prices are rising reduces what the consumer has available to spend. The decision to hold firm on wages is a business decision that has been at the root of the "bad" economy. But since companies feel no obligation to protect the Economy that allows for their success, they make all their decisions to benefit their shareholders.

This is a concept that has to change, and I believe will change over time. Businesses now spend more to protect the Environment because public pressure and the environmental laws caught up with their practices of dumping pollutants. The longer the Economy is stuck, the greater the public pressure will be on these companies to at least make token efforts to improve the economy, and if that is not enough, there will be public pressure for laws to protect or improve the economy.

Income will never be equal, there are some who do jobs that are so specialized that they will be able to command a higher wage. However, beyond wages, their can be a sense of fairness in things. I watch with disbelief as CEO's receive their yearly bonuses while the workers often receive next to nothing. Didn't all the employees contribute somewhat to the final results for the company? Shouldn't they share equitably the rewards of the companies success? I believe in these kind of things, we can send a message to the CEO's that their 500% bonus should be embarrassing when their workers get nothing. To this end, I have a petition on Change.org that calls for an increase in the tax rate on executive bonuses in excess of what the average bonus for all workers at that company. Please take a look and help me do a little towards calling attention to the issue of inequality.

Web Link


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Posted by Perspective
a resident of Greater Miranda
on Jan 17, 2014 at 5:27 am

All I have to do to see that this report of a report is flawed is to note that the writer states that the recession has ended.

No, it hasn't. We continue to lose more jobs, more employed, than we do create jobs. That, alone, is "real", and affects all of us. The fewer of us employed, the more poverty there is, the less tax income to the State and Fed there is, the less tax-based support of poverty there is.

Simple, really.

Now, think hard about why we don't have jobs.


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Posted by musical
a resident of Palo Verde
on Jan 17, 2014 at 6:46 am

Last I heard, we have more jobs than housing.


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