Tue, Oct 18, 2005 - Page 7 News List

Katrina uncovers poverty states away

WIDENING DIVIDE It has taken a catastrophe to rekindle debate, but after barely registering as an issue for a decade, poverty is back on the political agenda

THE GUARDIAN , DETROIT, MICHIGAN

There is perhaps good reason for cynicism. Items on the agenda in Washington include the extension of tax cuts on investment income and repealing the estate tax, both aimed at the wealthy. Also proposed are tens of billions of dollars of cuts to services like food stamps, federal student loans and Medicaid, the health insurance for low-income Americans.

Bush's vow to pay for reconstruction in New Orleans without raising taxes means further services are likely to be cut.

Democrats have also attacked the government for suspending the minimum wage requirement for companies working in the hurricane-hit region. The minimum wage of US$5.15 an hour has not in any case been increased since 1997; adjusted for inflation it is at its lowest level since 1956.

Rarely, if ever, has poverty continued to rise so long after the end of a recession. The median household income in the US has stagnated for the past five years at around US$44,400, the longest period on record. Globalization is forcing US companies to keep prices low to compete and many manufacturers are closing factories and shifting production overseas: 2.7 million industrial jobs have been lost since 2001. Many of those workers are moving into lower-paid service jobs. Unions are weak.

The pressure on wages at the bottom is creating a new class of the working poor.

Valerie Bland, 33, a single mother, fills a supermarket trolley at a food pantry in Detroit run by a local community group called Focus:Hope, which also provides training to get people back to work. Her job as a nursing assistant doesn't pay enough to cover the bills and buy food for her infant son.

"I would be struggling without this program," she says. "I am still penny-pinching but this takes some of the stress away."

Welfare to work reform in the 1990s tilted benefits in favor of people with jobs, leaving a less effective safety net. Healthcare costs continue to rise at double-digit rates.

Yet the rich continue to get richer. For the first time in the census, the top 20 percent of earners in the US took over half the total income. The bottom 20 percent took just 3.4 percent. Only the top 5 percent of households enjoyed real income growth during the year.

A recent survey released by market research firm TNS said the number of millionaires in the US has reached a record 8.9 million, rising for the third successive year.

"With the Bush re-election, it's hard to make a case that there is a high political cost to ignoring or even exacerbating our poverty problem. Inequality promotes greater inequality because once you have disenfranchised a generation then their progeny is facing ever higher barriers and it's that much tougher to get out," one researcher says.

The question for many is how long poverty will remain a topic in Washington. Katrina made New Orleans a magnet for charity.

"It slammed the door shut on us," Fernandes says. "Organizations like ours were feeding the impoverished in the south before the storm; we were feeding them through the storm; and we are feeding them after the storm."

also see story:

A closer look at the politics of extreme poverty

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