Thursday, July 27, 2006

Wake Up!

What is this American Dream? I hear it used all the time and it seems to mean something different each time it is used. I suppose that's fine in the sense that it is supposed to be a "dream" -- something personal to each person. Like snowflakes, no two dreams are alike.

But a dream is really a fantasy and this is how I see the American Dream. Close your eyes and imagine a world that does not exist as you see it, and likely never will. The way the "American Dream" is frequently used, it would best be described as the American Fantasy. You're as likely to see a street paved with gold in America as you are to go from the shipping docks to the executive suite. Horatio Alger's rags to riches stories fit this category. More on this American Fantasy later.

Others view the American Dream as an aspiration. This is something to strive for that is attainable but difficult. Maybe you hope to get that promotion where you'll have your own office and be able to afford that house in the burbs. In other words, these people want to move up one notch. Maybe they hope to have that "middle class lifestyle" that originally was the hope of the American Dream. (Unfortunately, this is less and less considered to be a respectable goal or lifestyle.) To some, moving up one notch is making the American Dream come true. But it's not a dream -- here we have the American Aspiration. With a combination of luck and hard work, anyone can achieve that smaller aspiration.

Still others "dream" of even less. I saw a commercial yesterday for a new show of TLC about migrant workers. The "host" said that these workers (who toil all day in the heat at some of the worst jobs possible) are living the American Dream. If they are dreaming they may in fact wish to wake up. This is not the American Dream in the same sense as the American Fantasy. Here we have the American Life. You can work hard and probably be paid what you expect for any given job. The police will probably protect you. A bank will let you invest the money however you like if you accumulate enough. And you get to enjoy the "freedoms" of this nation. All that migrant worker wants is to make money today while he can and then hope he can make more tomorrow. There is no hope for rising in the ranks and becoming the farm owner, or one day driving a Mercedes. This is quite simply the American Life. And as the host says, they are living it.

But most hold onto the first option mentioned here. People dream in this fantasy world -- increasingly detached from the way America truly operates -- and yet have no idea that they are dreaming. The world of fantasy and the concept of reality blur. Is this "American Dream" really an American Fantasy? Yes, and I'll explain that more in my next post. And, assuming it is a fantasy, why can't people start to realize that the American Dream is grounded in nothing more than tradition? Well, I have answered this to an extent in discussing myths and realities towards welfare recipients. Many of the same concepts hold true here as well as some new ones.

Robert Rank spent 10 years investigating welfare on a policy and invididual level before writing Living on the Edge. In the end, he gave us his subtitle: The Realities of Welfare in America. This is a great place to start when examining the American Dream. Horatio Alger didn't write books about the middle class teacher who wanted to be a rich banker. The American Dream, as it has been used for the past century (and more), is focused on the poor becoming middle class or now, I'd argue, the poor becoming rich. So the dreams of welfare recipients, and the realities of how those dreams pan out, is a good place to examine whether this is a complete fantasy after all. More next time.

Tuesday, July 25, 2006

The American Dream (Initiative)

Horatio Alger is dead, and I have argued that his dream (fantasy?) also died long ago. Some of you may have noticed Hillary Rodham Clinton's newest project in the news lately: The American Dream Initiative with the Democratic Leadership Council.

This is further evidence that it is finally becoming painfully obvious that the American Dream just doesn't exist. For one, evidence suggests that social mobility is a massive exaggeration in this country. For another, what happened to the benefits? Getting to the middle class just isn't the same anymore. Middle class families are faced with dual-income pressures like never before, as well as pressures to buy houses in areas with excellent schools, and a myriad of other expenses once never even considered (for instance, see Elizabeth Warren's discussion in The Two Income Trap and Juliet B. Schor's Overspent American). Needless to say, during this same period we are working longer hours, earning stagnant wages, and finding that our money buys less and less when everything from gasoline to health care to college just continues to take a bigger chunk out of our pay checks (for example, see Juliet B. Schor's earlier book, The Overworked American and Teresa Sullivan's The Fragile Middle Class).

Let us also not forget the psychological problems that result from these pressures, decreased purchasing power of our middle class dollars, etc. Indeed, reports on the middle class psyche continue to indicate that it is not a secure place to be in society. This supposedly "core" aspect of our culture is always wanting more and always worried about ending up with less (Barbara Ehrenreich's Fear of Falling is a good place to start on that second point).

So with the American Dream Initiative, too little too late is nonetheless a welcome addition to a country in denial. I am somewhat bothered by the clear emphasis on college. By pushing college as the paith to the middle class lifestyle, the Initiative seems be avoiding the true problem. The true problem is that the middle class today just isn't a great place to be. Some of it is monetary; some of it is psychological. But to emphasize college loses sight of reality--a college degree just doesn't really matter anymore. To use an image from Schor, standing up in a crowd doesn't provide a better view once everyone stands up (the Initiative seeks an America where as many people go to college as possible). For many, many people, college is a waste of money. I'm not saying people shouldn't go to college, but we have to remember to work on what happens when they get out.

The other pillars? 1) save for retirement, 2) workers equipped with the tools of management (yikes, talk about an uneasy managerial class! 3) build wealth and own a home, and 4) afford health insurance. I commend the initiative for raising problems up to a more visible place in American politics, but honestly believe this is a very effective game plan. The main problem, however, rests in what happens between the ears of many Americans: trying to get ahead is not the answer to any problem any working American faces. More on this another time....

Wednesday, July 19, 2006

Bye Bye Wage Hike

I previously posted about a strong Democratic push to block any Congressional pay raise until Congress agreed to raise the federal minimum wage from its 1997 freeze at $5.15/hour. Well, that didn't happen. Congress got their pay increase and the federal minimum wage remains at $5.15/hour--just as it approaches a 51-year low in buying power. The federal minimum wage may be symbolic more than anything, but it is quite a symbol. It identifies the lowest level of pay we, as a nation, believe a worker deserves. In the richest nation in the world, a person who works full-time all year can barely make ends meet. The lowest paid workers live in states represented by individuals earning $171,800 per year. A full-time minimum wage worker (at the federal level) can hope to earn under $11,000 per year. So if that worker chooses to work two jobs for a combined 80 hour week, he can hope to earn under $21,500 without a day of vacation.

Those who cry out "In $5.15 we trust" claim that increases will upset our free market economy and cause a drop in employment. Others scream out that we're debating about high school kids who work in malls and drive their parents BMWs to work. Thankfully, social commentators like Barbara Ehrenreich (Nickel & Dimed author) continue to quietly point out the flaws in those arguments. You can check out Ehrenreich's most recent post on minimum wages in her blog here. Previous increases in the minimum wage at the federal and state levels have not shown the negative employment effects cited. And certainly, some minimum wage jobs are filled by high school kids, but research indicates that this convenient stereotype only applies to about 20 percent of minimum wage workers.

I don't think I've ever discussed minimum wage in this blog without at least mentioning the Earned Income Tax Credit and similar programs, I want to point that out here again. Certainly, no discussion of minimum wages can be fair and honest without pointing out that programs like the EITC has increased the amount of money in our lowest wage workers' pockets at the end of the day. But such increases are not enough to compensate for the loss in buying power of the minimum wage, the programs are not utilized by a decent portion of the eligible population, and they are considered a hand out rather than truly "earned income" by many recipients.

It is worth noting the continued momentum at the state level previously discussed. I've noted that the federal minimum wage is symbolic more than anything for the majority of minimum wage workers in this country. So while I do find it significant that the federal minimum wage remains stagnant (and I find Congressional justifications disturbingly telling), minimum wages are actually rising throughout the country. Montana and Nevada will consider a raise in November. Momentum is on the rise in Ohio, Arizona, Missouri and Colorado to get a ballot initiative together. And other states are moving ahead with further increases in Pennsylvania, Maryland, North Carolina and West Virginia. As I previously mentioned, recent increases were seen in Arkansas and Michigan (a tribute to ballot initiatives pressuring the legislature). Delaware, Maine, Rhode Island and Massachussets will soon join Arkansas and Michigan.

To conclude, it is my belief that the lowest wage workers should be paid at a level where a full-time worker can afford basic necessities without having to work 80 hours weeks or stand in line at a food pantry. But what truly bothers me is the offensiveness of this omnipresent $5.15 figure. The minimum wage should be a livable wage, or should not exist at all. I don't see the point in keeping the wage at $5.15/hour. Abolish it or update it--but keeping it stagnant is patronizing.

Friday, July 14, 2006

Barriers to Medicaid

Taking a break from my earlier subject, I wanted to just mention a development in Medicaid that many may now be familiar with. On July 1st, a new Medicaid rule took effect that required proof of citizenship by all Medicaid recipients.

Advocates for the new rule, such as Representative Charles Norwood Jr. from Georgia, point to "the outright theft of Medicaid benefits by illegal aliens" and hope this rule will preserve Medicaid for our citizens. Reports by mayor, advocates for the poor and the elderly, and articles from papers such as the Washington Post, however, argued that this idea is a lot worse than it sounds. In fact, millions of current Medicaid recipients may find it difficult or impossible to comply with the rule.

In the past, most individuals could simply sign a statement as proof of their citizenship. Now, a homeless person must present a birth certificate or passport. The same is required of elderly African Americans born in the South where birth certificates were apparently not consistently provided. And lest we forget the mentally disabled who may not have access to any documentation whatsoever, yet alone official documents proving citizenship.

Advocates of Medicaid recipients filed suit in federal district court on June 29 challenging the new rule's constitutionality. Perhaps in response to the critics, or in an attempt to pre-empt a hearing by the federal court that very next day, the White House announced exemptions to the rule for certain individuals. Now approximately 8 million recipients will not be required to provide additional proof of citizenship. Medicaid administrators claim the exemption is intended to apply to the same groups mentioned above as those who may find complying most difficult.

Yet the lawsuit remains pending. The Administration made its announcement in time for the July 7 hearing, and an attorney for the plaintiffs put the new exemption in perspective:

We are pleased that the administration will spare 8 million citizens from the harm caused by this law. While the plaintiffs are thrilled that new regulations protect some of the most vulnerable Americans, we are not out of the woods yet. There are still 40 million Americans who must comply with this law or face loss of coverage. This includes disaster victims, the homeless, the mentally disabled, and foster children.

The next hearing is coming up on July 28. I write on this issue for obvious reasons--Medicaid is fundamental to the poorest and most vulnerable individuals. Our representatives pursued this legislation under the Debt Reduction Act. I only want to point this out. You can come to your own conclusions.

Wednesday, July 05, 2006

Drawing the Line

I think it is important to explore the determination of poverty in America as it is directly related to how we view (and determine) assistance to low-income families. I previously asked: how much is enough? That question has not been answered, nor has it been fully explored. A related question is: how little do you need to be considered poor? I firmly believe these questions must be answered before we can talk much more about wages (including the minimum wage) and public assistance for low-income workers (including the EITC). Some of the ways these are all related (for better or worse) should become clear over the next few posts and I will briefly introduce the relationship before concluding this post. Here, I'm just giving a brief intro that I hope isn't too painful.

Two figures are relevant today in determining who is poor in America (from an official standpoint): the poverty thresholds and the poverty guidelines. The most concise explanation of these and their differences is here. In summary, the threshold is used by the Census to determine "who is poor" each year, while the guidelines are a simplification of the threshold used for administrative purposes of various federal programs.

The initial poverty threshold set the "line" at $3,000 in the early 1960s. Adjusting for inflation, the original $3,000 in 1962 dollars is $18,039 in 2004 dollars. That falls between the 2005 poverty guidelines for a family of three ($16,090) and a family of four ($19,350). In 1969, the poverty threshold was indexed to the Consumer Price Index.

But are the methods for arriving at these numbers accurate? In other words, is this really the best way to determine poverty? Some argue that housing and health care take up a larger percentage of income today then in the past. Recently, gas prices clearly hit home for poor families more than ever. Another criticism is that these numbers are applied across the board to families living anywehre except Alaska and Hawaii. And still other criticisms abound. Don't we care more about who is in the family rather than just how many people? The "poverty line" is the same for a single mother of two as it is for a married, dual-income couple with one child (a similar criticism I'd make about the minimum wage, and one of the more intelligent and effective aspects of the EITC). Particular criticism has been directed to the Census' release of its latest report on February 14, 2006. Particulars here will have to wait.

One of the ways federal and state agencies have handled the inadequacy of the poverty figures is in relaxing the eligibility requirements of certain programs. Often, the poverty guidelines are used as a reference, with program eligibility set at 125%, 185%, etc. This is easy to see in Colorado, using the website referenced earlier. The eligility requirement for the Colorado Indigent Care program is 185% of the 2005 (federal) Poverty Guidelines for a family of four. This is for a program specifically targeted at imporverished individuals!

More generally, the Colorado Fiscal Policy Institute's Self-Sufficiency Standard for Colorado estimates that the poverty level, in reality, is two or three times higher than the federal guidelines. CFP estimates that a single-parent with an infant or preschool-age child required $44,000 merely for "basic budget needs" in 2005. This is rather dramatic, really. The minimum wage for a single mother in Colorado should then be about $21/hour. That number could drop with an effectively implemented federal and state EITC, an entire exemption from state and federal income taxes, and other state assistance to preserve income otherwise allocated for food, housing, child care, etc. Playing with these numbers very briefly in my imaginary world, the minimum wage for a single mother with a young child in Colorado should really be set at about $15/hour. These are controversial points, with little grounding in reality, but I am throwing them out there to point out (or begin to point out) the relationship between poverty determinations, our nation's lowest legal wages, and state assistance targeted at working individuals (like the EITC).

And Colorado is just one example. Some could argue that the guideline is going to be an average of sorts, resulting in a low "line" for states with higher costs of living and a high "line" for states with lower costs of living. But I'll attempt to show that this is a flawed argument on many levels.

I'll end there for today.
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