[US] For the lowest-income workers, a slide into poverty

from The Northwest Pennsylvania Business Journal

By: Dave Gardner

Stress on low-income families is being compounded by ongoing earnings stagnation, and rising costs for the essentials of life.

The Keystone Research Center (KRC) reports that poverty is on the rise. According to KRC, in the last five years, poverty in Pennsylvania has increased by approximately 25 percent and almost one out of every six Pennsylvania families is poverty stricken.
KRC reports that falling earnings have played a role in the poverty growth, and that Pennsylvania's lowest paid workers have lost ground with wages for the third straight year.

The spread of poverty is not limited to Pennsylvania. According to the U.S. Census Bureau, 37 million Americans live below the poverty line. This is four million more than during the 2001 recession.

Stagnant earnings have become a fact of life for many Americans. The current median annual income is essentially unchanged from its 2001 totals, and more than 46 million Americans are without health insurance. This total is rising.

The percentage of households making more than $100,000 a year has also grown along with the poverty levels. In 2005, 17.2 percent of households earned six-figure incomes, while in 1990 only 12 percent made the inflation-adjusted equivalent.

Varying definitions

Jim Calderone, Ph.D., dean of the College of Professional Studies and Social Science at College Misericordia, explains that there are many different ways to define poverty. He says the official federal definition involves a family of four with an annual income not exceeding $19,350.

Dr. Calderone states that the gap is growing between the "haves" and "have-nots" in America. He says Pennsylvania is one of seven states with growing poverty.
While the national rate for overall poverty is 12 percent, statistics for northeastern Pennsylvania (NEPA) indicate that poverty around the region is somewhat uniform. In Luzerne County, 11 percent of the residents live in poverty, with Lackawanna County at 10.6 percent and Wyoming at 10.2 percent.

"It's vital to understand this does not include people in near-poverty or the working poor," says Dr. Calderone. "It's also a fact that rural or suburban poverty can be invisible."

Dr. Calderone says there are numerous implications if a family works and the resultant wages are not meeting their needs. These include illness, the acceptance of risky jobs and family members who are more likely to use a hospital emergency room in place of a family physician.

Poor prenatal care is also a long-term healthcare implication that is kindled by poverty. Other negative consequences of poverty include single households with poor working mothers who endure sub-standard housing. Parental fatigue and inattention can also create long-term probelms.

"Poverty saps hope, and cuts across all color lines," says Dr. Calderone. "A sense of not being able to get ahead takes place, along with a feeling that there is no seat at the table for them."

Negative trends

Dr. Calderone says, as society feels financially squeezed, it tends to increase bigotry and the "blame game" sets in. He says immigrants are being blamed for job losses, and this sense of victimization can translate into negative actions.
"College could also become only for the elite if costs continue to mount," says Dr. Calderone. "These are all ripples to poverty."

If the cost of living continues to increase for essentials such as energy and healthcare, and the ongoing earnings squeeze grows, Dr. Calderone believes a dangerous situation will intensify and the resultant blame game will result in a demand for quick fixes.

"It's very dangerous for us to start believing tomorrow won't be better," says Dr. Calderone. "Pessimism breeds an 'us versus them' mentality."

Bill George, president of the Pennsylvania AFL-CIO, says that the ongoing earnings stagnation, coupled with huge cost increases for essential items such as energy and healthcare have been very hard on virtually all Americans but have been exceptionally tough on low-income families.

"There also have been legislative changes that increase a utility company's right to shut off service due to an inability to pay," says George. "I fear that if we have a harsh winter, human suffering and death will result."

Wilkes University's Jeff Alves, Ph.D., describes poverty as a motivational problem. "This is a societal issue," says Dr. Alves. "We must be better at using people's individual value to promote them. Satisfaction is the key. A downward spiral occurs when we have nothing to look forward to."

Working poor

Monsignor Joseph Kelly of Catholic Social Services comments that, by the end of September, his organization's Scranton office had already distributed the same amount of rent assistance as in all of 2005. He agrees that the middle class is under financial assault, and that many struggling people have been coming to his organization for help.

"I'm sorry to say Catholic Social Services is out of money for 2006," says Kelly. "Fuel and rent costs are absolutely hurting people. I'm thrilled to see the housing growth in NEPA, but now there is no real low-rent housing available. Out-of-pocket healthcare costs also are hurting."

Kelly says his various charity shelters have been filled to capacity all summer long, and that this is the first time this has happened at Scranton's St. Anthony's Haven in 17 years. One local soup kitchen is serving more than 400 meals daily, and 20 percent of the people being fed are 20 to 25 years of age.

"Many people arrive in work clothes and come from jobs for a meal just to make ends meet," says Kelly. "They are simply being squeezed by food, utilities, rent, stagnant wages and disappearing benefit packages. These are the working poor."

Joan Rogan, executive director with Family Services of Lackawanna County, says her organization is witnessing tighter family budgets putting stress on families.
Rogan notes that some regional wage earners are working two or three jobs, and are away from the home from 7 a.m. to 11 p.m. This places great stress on families with children.

"I don't know how some of these people are doing it," says Rogan. "If professionals are feeling the budget pinch, imagine how it is for those with lower income."
An ominous problem identified by Rogan is how the loss of health insurance or rising co-payments can result in medication not being taken as prescribed. This is particularly grim and can be dangerous for users of psychotropic drugs that treat mental health disorders.

In the event the current earning's gap continues to widen, creating more and more disparity between the "haves" and the "have-nots," Rogan issues a troubling forecast. She envisions a future with more incentives for the working poor to simply use assistance programs, along with a society plagued by more violence.

"There also may be more and more lashing out at minorities at a time when the overall country is becoming more diverse," adds Rogan. "When hopelessness and helplessness develop, emotions run wild and people make bad decisions."