September 30, 2010
CEPR senior economist John Schmitt testified on Thursday in front of the Congressional Out of Poverty Caucus on “An Emergency Response to the Crisis of Poverty in America: Understanding the Crisis and Refocusing the Fight.” In his testimony, (see his full statement here) John pointed out that:
[E]ven before the Great Recession, the poverty rate was high by historical standards… at the peak of the last business cycle in 2007, one in eight people in this country had an income that we would have considered to be poor a half a century ago. Over the last thirty years, even as the economy grew by almost 70 percent per person, the share of the population that we judge to be poor has actually increased….
But even if we could restore – overnight – the economy to where it was in 2007, poverty would still be unacceptably high. Fortunately, we already know how to lower poverty dramatically. In the 1960s, in less than a decade, we cut poverty by almost half. The keys were economic institutions that linked workers wages and benefits to overall economic growth, and the expansion of the social safety net…
Economic analysts from the White House, to the non-partisan Congressional Budget Office, to former John McCain adviser Mark Zandi all tell us that the February 2009 stimulus package has created millions of jobs. Without those measures, poverty would have increased even more than it did in 2009. But, we now know that the stimulus program put forth in early 2009 was just not big enough. The single most important step we could take to combat poverty in 2011 is to implement a large -scale stimulus and jobs program today.
This is just the latest of CEPR’s recent work to educate the public about poverty and inequality in the United States. Earlier this month, when the Census Bureau released their latest poverty numbers, CEPR’s Shawn Fremstad provided an important focus on a “make ends meet” standard:
According to the report, in 2009 one in three Americans had incomes that fall below the amount most Americans and various budget estimates show is necessary to “make ends meet” — $45,000 to $50,000 for a family of four.
And MSNBC picked up his point:
Fremstad argues that the current poverty threshold is unrealistic.
“Very simplistically, I think it’s too low in terms of the basic amount it takes to make ends meet in today’s economy,” he said…
Fremstad also thinks the poverty measure is too narrow because it fails to account for other sources of income such as food stamps, as well as other factors that could make a person’s financial needs higher, such as being disabled or living in a high-cost area.
“You can be income-poor and asset rich, and in balance that means you’re not poor,” Fremstad said. “You can also have income just above poverty line but be in debt and under water (on your) mortgage.”
For more, check out CEPR’s Inequality and Poverty issue page.
