Policy Drift – Inequality, Lack of Safety Net Not Ameliorated By Average Growth
It’s fair to be optimistic about the modest recovery of the US economy, though the White House is wisely staying pretty muted this time. The early read on jobs numbers for February looks decent, similar to the previous month, about in the range for an economy growing at an average pace. We’re nowhere near the near-depression of late 2008 and early 2009, and we’re in around the same shape of early 2011, before the debt limit fight and catastrophe in Europe sapped much of the economy’s strength.
Anything can happen again, of course, and gas prices are a major concern. And there are still millions of Americans left behind as the Great Recession recedes, millions who need jobs and who won’t get them in an economy moving at such a languid pace. But I also want to focus on how the effects of policy have changed the nature of what government can do for these people. In the past 15 years – going back to 1996 – extreme poverty in the US has doubled:
The number of U.S. households living on less than $2 per person per day — which the study terms “extreme poverty” — more than doubled between 1996 and 2011, from 636,000 to 1.46 million, the study finds. The number of children in extremely poor households also doubled, from 1.4 million to 2.8 million.
It’s hard not to stick this at the feet of “welfare reform” and other programs that have constrained the social welfare state. What remains of welfare didn’t work all that well in the ensuing slow-growth years, and was completely ineffective in the recession. Similarly, other programs provided little relief for millions suffering through no fault of their own from 2008 to the present.
This is an artifact of government policy. Over the past 30 years, with Republicans in the White House and Congress, the social welfare state has mostly taken a step back. With Democrats in the White House, it has not expanded at all, and in fact has often shrunk in equal measure. Programs like food stamps and unemployment expanded in the recession, as is customary, but those expansions have already been chopped back.
Why do I focus on government policy? The idea behind welfare reform was that it would push people from the welfare rolls onto the employment lines. That just didn’t happen. In fact, it added demand for work to the extent that wages got depressed. Wages have not budged in over a decade, data that correlates with the rise in extreme poverty. Welfare often provided a cushion, along with other safety net programs, so individuals could find a better way to support themselves. Now much of that has been eaten away. They must fend for themselves, and that’s become less and less possible for many in America without equal access to opportunity.
There are very few people in or out of government even reckoning with this circumstance. Former New Jersey Governor Richard Codey is to be admired for going undercover as a homeless man to get a street-level view of the challenges, but he’s a lonely voice. Policies focused on bean-counting rather than adequacy, that set the voices of those who can pay to amplify them above the voices of the silent masses, inevitably lead to this result – a stratified society, two Americas if you will. Policy drift has caused this, and a return to modest growth won’t change that.