Failing middle class nears poverty line

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A new government poverty measure meant to better count disposable income has also exposed the startling demise of America’s middle-class in the face of two decades of class warfare and pay-to-play politics by predatory elites.

About 100 million Americans are now either living in poverty or just above it, according to this article in The New York Times. Given our nation’s 315 million people, that’s about one in three.

Fifty-one million middle-class Americans are now considered near-poor because they earned less than 150 percent of the government’s national poverty line under the new count. That’s three-quarters higher than the official account published in September. The national poverty line was $24,343 for a family of four in 2010.

The size of the near-poor population took Census Bureau statisticians by surprise.

“These numbers are higher than we anticipated,” Trudi J. Renwick, the bureau’s chief poverty statistician, told the Times. “There are more people struggling than the official numbers show.”

Thehome new measure, which is known as the “supplemental poverty measure” was meant to give policy-makers a sense of the effect social safety-net programs are having amid one of the worst economic climates for the poor and middle-class since The Great Depression. It accomplishes this by including costs that erode disposable income for those above the poverty line and greatly expand the ranks of the near-poor who have too much money coming in to qualify for programs such as food stamps and public assistance. Those costs include child care, out-of-pocket medical expenses and taxes.

Housing costs are also a headwind for the middle-class, both for those trying to stave off foreclosure and those who have already been transformed into renters.

The construction of multi-unit buildings is now the driving force in U.S. residential construction, as developers shift from single-family homes to apartments in response to our transition from a nation of middle-class homeowners into a nation of renters.

Hard times are also exposing the role of local payfactory-to-play politics in undermining the ability of city public housing authorities to provide emergency housing to displaced workers – one of their core missions. Many cities now open the waiting lists for their public housing projects every five or 10 years, thereby monopolizing this resource for the members of the politically connected churches who dominate housing authority boards.

The result has been devastating for the near-poor, which includes traditional middle-class workers struggling with employment issues, health insurance costs and mortgage debt.

The new count was undertaken by The Census Bureau at the request of the Times after what the paper described as a “lost decade of flat wages.” However, the story failed to note that those flat wages were inflated by employer spending for worker health care, which the government counts as “compensation” – just like their salaries. That type of compensation is not disposable.

Most economists hailed the new measure, but said its disturbing findings told them nothing new about stagnant wages.

public“It’s very consistent with everything we’ve been hearing in the last few years about families’ struggle, earnings not keeping up for the bottom half,” Sheila Zedlewski, a researcher at the Urban Institute, a nonpartisan economic and social research group, told the Times. “There are a lot of low-income Americans struggling to make ends meet, and we don’t pay enough attention to them.”

The results scrambled the picture of poverty in many surprising ways, according to the Times. A fifth of the 51 million near-poor were lifted out of poverty by benefits the official poverty count would have overlooked. But more than half were pushed down from higher income levels: more than 8 million by taxes, 6 million by medical expenses, and 4 million by work expenses like transportation and child care.

In essence, the new cocarunt found that some unemployed poor actually live better than middle-class workers, because of the paucity of tax loopholes and government support for the latter. And it did so without taking into consideration the higher quality of public housing (above right) available to those traditionally considered poor in comparison with the cost and quality of the rental stock available to idled workers whose tax dollars help fund public housing but are unable to access it.

As a result, many near poor are now living in their cars (left),  with relatives, and on the streets.

The biggest difference between the affluent, elderly, poor and middle class is the absence of political lobbyists for the latter. The result has been a distribution of burdens and benefits that is breaking middle class families as the nature of our representative government has shifted to the wealthy.

Half of the 659 U.S. Senatcar campors and Representatives were millionaires in 2010, according to an analysis by the nonpartisan Center for Responsive Politics. They had a median net wealth of $989,000. By contrast, only 1% of the 315 million Americans are millionaires. The U.S. had a median household income of $50,046 in 2009-2010.

Times reporters Ason DeParle, Robert Gebeloff and Sabrina Tavernise found that the near-poor look more like “The Brady Bunch” than “The Wire” from a demographic perspective. Half live in households headed by a married couple; 49 percent live in the suburbs. Nearly half are non-Hispanic white, 18 percent are black and 26 percent are Latin. Perhaps the most surprising finding was that that 28 percent work full-time, year round.

“These estimates defy the stereotypes of low-income families,” Ms. Renwick told the Times.

Part of the problem is the reticence many middle-class Americans feel about admitting they’re in financial distress. Many still cling to the philosophy of “faking it until you’re making it.”

laptopThe Times cited Phyllis Pendleton, a social worker with Catholic Charities in Washington, as an example of the near-poor. She has one BlackBerry, two Buicks from the 1990s, and a $230,000 house. She and her husband, a janitor, make about $51,000 a year, which is more than 200 percent of the official poverty line.

However, once their taxes, medical care and transportation to work are subtracted they’re only left with a disposable income of about $40,000 a year. Once the poverty threshold is adjusted for their region’s high cost of living that amount shrinks to $31,000 – 29% above the poverty line and smack in the middle of the near-poor cohort.

We’re “living paycheck to paycheck,” Pendleton told the Times. “One bad bill will wipe you out.”

Pro-democracy protester Buddy Bolton (below right), 40, of Brooklyn, is also in that cohort. He had a six-figure income four years ago as a creative director for children’s television programs, but his $55,000 in savings were wiped out by medical costs from a shoulder injury after he lost that job.

boltonBolton was sleeping with other members of Occupy Wall Street in Lower Manhattan’s Zuccotti Park before New York City’s billionaire mayor forced them out last week.

“We are allowing our jobs to go overseas and that’s having an adversarial economic impact,” Bilton said. “I slept down here in Zuccotti Park next to an unemployed machinist and his wife – a middle class family who is now sleeping in their car and on the street. This can’t be allowed.”

The Census Bureau plans to officially release the findings from the new poverty measure Monday.