Debunking the Myth of Universal Prosperity
by Joel Blau, Professor of Social Policy; Director, Ph.D. Program, School of Social Welfare, SUNY at Stony Brook.
"We are all better off, and poverty has vanished."
The stock market boom of the 1990s bequeathed to us a great myth of universal prosperity. Even after the bubble has burst, we still have difficulty comprehending what really happened. The experience of New York City completely debunks this myth, both before and after the events of 9/11.
Nationally, a recent Congressional Budget Office study shows that between 1979 and 1997, the average after-tax income of the top one percent of the population grew by an inflation-adjusted figure of $414,000, or 157 percent. At the other end of the spectrum, the poorest twenty percent of Americans lost $100 of their after-tax income. During the same period, their average real income fell three percent. Although all income groups did do somewhat better in the late 1990s, gains occurred at half the rates established during the 1950s and 1960s, and the overall pattern continued to be quite skewed.
Within the country as a whole, New York City is perhaps the preeminent example of this dual economy. New York State is the only state where the top fifth of the population receive more than fifty percent of all income, and it is largely the divergent neighborhoods of New York City that enable it to hold this unique distinction. The City includes both Wall Street and Bedford-Stuyvesant, the Upper East Side and Harlem. While most people know about these extremes of wealth and poverty, few acknowledge that much of New York City life is lived just above the poverty line.
Three factors contribute to this under-recognized phenomenon. First, since the official federal poverty line (now $17, 603 for a family of four) ignores the growth in average incomes as well as changes in buying patterns, it underestimates the basic level of need by twenty to twenty-five percent nationally and by fifty to sixty percent in New York City. Second, as a city of extremes, New York has an affluent segment of the population that bids up the overall cost of living. And third, a service sector sharply bifurcated into high and low wage jobs has replaced a manufacturing sector where salaries tended to converge around the mean. Waitresses, cashiers, limousine drivers, and hotel maintenance staff-these low-wage workers have an ever more difficult time coping with the rising cost of living in New York City.
| ...thousands of the near poor will be added to the pool of those who already meet the poverty guidelines. |
A report issued by the city's United Way throws these trends into sharp relief. The report calculated that in order to reach full self-sufficiency, a single parent in Brooklyn with one pre-schooler and one school age child must earn $44, 592 The same family would need to make $44,208 in the Bronx, $46,728 in Staten Island, $46,836 in Queens, and more than $74,000 in lower Manhattan. From stock clerks to bartenders, from janitors to truck drivers, not one of New York's low wage occupations earns this kind of money.
And this was the predicament of the working poor in New York City before September 11th. Since the attack, the Fiscal Policy Institute has estimated that in the fourth quarter, 105,200 New Yorkers will lose their jobs, almost 80,000 as a result of layoffs, and another 25,000 as a result of firms that leave the city. Sixty percent of the layoffs are concentrated in predominantly low-wage industries, especially restaurants, retail trade, hotel, air transport, and building services, where wages average just $11.00 an hour. The occupations incurring the brunt of these layoffs include waiters, cashiers, janitors, retail salespeople, and food preparation workers.
Nor is this dismal portrait the full story. Another 76,000 workers have avoided layoffs by working fewer hours, with a consequent decline in their weekly earnings. This pattern has been particularly evident in the taxi and car service industry, where drivers in a recent New York Times article reported that their income had plummeted as much as forty percent. In industries that have been hardest hit like apparel, which has much of its production based in Chinatown, a fifteen percent decline in total business volume is expected to trigger some 2600 layoffs.
When the effects of September 11th compound the hardships that low-wage workers previously encountered, thousands of the near poor will be added to the pool of those who already meet the poverty guidelines. To render meaningful help, we first have to end the myth of universal prosperity, which obscures their daily struggles and makes them invisible. In addition, at a time when the tunnel vision of welfare reform confines social workers to an ever narrower arena of social policy, we must work to explain why from a more universalistic perspective, it is more than merely the most desperate of the poor who deserve our help.