Unbalanced Wealth

Income inequality is real, and the gaps loom large.

Click here for a nifty infographic about income inequality on the New York subway, how median household income changes from station to station.

The United States has a problem with income inequality. And it’s particularly bad in New York City—according to recent data from the U.S. Census Bureau, if the borough of Manhattan were a country, the income gap between the richest twenty per cent and the poorest twenty per cent would be on par with countries like Sierra Leone, Namibia, and Lesotho.

Some highlights:

$205,192—The highest median household income of any census tract the subway has a station in (for Chambers Street, Park Place, and World Trade Center, all in Lower Manhattan).

$12,288—The lowest median household income (Sutter Avenue, on the L in Brooklyn).

$191,442—The largest range in median household income on a single subway line (for the 2, which includes Chambers Street/Park Place, in Lower Manhattan, on the high end, and East 180th Street, in the Bronx, on the low end).

$84,837—The smallest range in median household income on a single subway line (for the G, the only non-shuttle subway line that doesn’t pass through Manhattan).

$142,265—The largest gap in median household income between two consecutive subway stations on the same line (between Fulton Street and Chambers Street on the A and the C lines, in Lower Manhattan). –Idea of the Week: Inequality and the New York Subway

Here’s a thought: asset building for low-income individuals.

Meaning, let’s give people with low incomes the opportunities, incentives and education to encourage saving and investing for the future.

I’m going to a Medicaid expansion rally in Missouri’s capital, to lobby for legislators to pass Medicaid expansion in Missouri, so that people with low incomes in Missouri can purchase insurance, hospitals will continue to receive funding to cover the cost of mandatory treatment of those who are uninsured in emergency rooms (doctors are required to treat people in emergency rooms in cases when it will prevent death, regardless of ability to pay; those who are uninsured are not limited to those who are undocumented, but also those who have been documented immigrants for less than five years and those who have elected to pay a fine rather than purchase insurance) and funding that pays for education of future doctors through residency programs and medical school tuition assistance. Medicaid expansion also has ramifications for the Missouri economy, because it pays for a significant amount of treatment and pharmaceuticals that could not be purchased otherwise, not to mention that it is the primary payer of long-term care, which is not covered by Medicare, and is rarely covered by private insurance. It is common for people in the middle class to spend down their assets to meet the requirements for Medicaid, in order to pay for long-term care, because they do not have enough money to pay for long-term care themselves. Furthermore, Medicaid expansion will help hospitals stay open, especially in rural areas, where the cost of treating those who are uninsured will hit the hardest and where hospitals receive less funding in the first place.

Want to know more about Medicaid expansion? Or want to know what Medicaid and Medicare are, and how they are being affected by the Affordable Care Act? Watch this video by Ryan Barker, policy analyst at the Missouri Foundation for Health:

Because I’m going to a Medicaid rally tomorrow, I don’t have the time or energy to write much original content for my Unbalanced Wealth series. But here are some resources on asset-building for low-income individuals.

Dr. Michael Sherraden was named one of TIME’s 100 most influential people in 2010 for his research on asset-building for low-income individuals.

How he became involved in social work:

Sherraden began his direction toward social work as an undergraduate at Harvard University, where he majored in social relations, specializing in both sociology and psychology. After college, Sherraden met his wife, who came from a long family line of social workers.

Having worked in Arkansas directing a residential center for troubled teenagers, Sherraden fell in love with the field and chose to continue his studies at the University of Michigan, where he earned a Ph.D. in social work and psychology.

Although Sherraden’s pursuit of social work was partly influenced by his wife, he attributes much of his interest in the field to his parents and upbringing. Sherraden grew up in a small town in rural Kansas, where his parents ran a grocery store.

“My parents were always doing things for people through the church, from organizing visits to the elderly to driving people to medical appointments,” he said. “They didn’t talk about it much, but they were always doing it. I think it had a big impact on me. Not right away, but I grew up in this mentality.”

A March/April 2000 essay entitled “Building Assets to Fight Poverty.”

At the federal level, IDA legislation also has bipartisan support. Two important IDA provisions were included as state options in the federal “welfare reform” act of 1996. First, states can use Temporary Assistance to Needy Families (TANF) funds to match savings in IDAs. Second, assets accumulated in an IDA are exempt from asset limits for all federal means-tested programs – in other words, in IDAs the welfare poor can save without penalty. Another federal IDA initiative, the Assets for Independence Act of 1998, provides $125 million for IDA demonstrations over five years. At this writing, the Savings for Working Families Act of 2000 has been introduced in the House and Senate; it would create over one billion dollars in tax credits to financial institutions and others who support IDAs.

This legislative interest in IDAs appears to be warranted. A large demonstration project on IDAs, funded by eleven foundations, finds that participants are saving an average of $33 per month, matched at an average of 2:1 for accumulations of about $100 per month. Interestingly, very low-income households are saving almost as much as households who are not as poor, and saving a larger proportion of their incomes.

IDAs have demonstrated that low-income, low-wealth households can save and accumulate assets if they have similar opportunities and incentives to the non-poor. This can lay the groundwork for inclusive, progressive asset-based policies now emerging.

His research.

Also, some resources for those looking for people affected by the Boston marathon explosions, hoping to inform people that they are alright after the incident, offering a place to stay and looking for a place to stay in Boston.

Google Person Finder

I Have a Place to Stay

I Have a Place to Stay Responses

Lastly, a pug boat:







I won’t know how much I have progressed, unless I know where I start.

I have a Bachelor of Arts in Psychology, so the concept of a baseline is important to me. Because by knowing where I began, I can know by the end or through the process, how far I have come, and if what I am doing is making any difference at all. It also helps to expose preexisting conditions and extraneous factors.

So in my examination of unbalanced wealth, I will start with my biases and initial thoughts, beginning with the focus on the middle class.

Pastor Tim suggests that we focus on the middle class in order to rebalance wealth. I think that the middle class is important to consider, especially because it is referred to in mainstream media and rhetoric as “the majority of Americans” and “the average American.” Essentially, it is viewed as the norm, the politically safe group to target, because meeting the needs of the poorest in society can be misconstrued as being in favor of handouts and enabling laziness, and working toward deregulating corporations for the wealthy is seen as insensitive, ivory tower, pandering toward those already in power.

However, as a social worker, I am primarily concerned about those who are the most disadvantaged and whose voices are not heard. Therefore, when I see the Wealth Inequality in America video, and watch the curve for wealth distribution among the lower, middle and upper class, I want to see the lower class uplifted. There are things we can do to help the middle class that are needed– for instance, finding better ways to finance college and keep tuition costs low, but I think that rather than maintaining the status quo, we need to change systems (e.g. mixed-income housing, increase access to banks and credit, expand the Harlem Children’s Zone educational model) to expand opportunities for individuals to move from the lower class to the middle class, and to improve conditions for people who have lower socioeconomic status.

This is where ideology comes into play. Part of the reason why I am in the field of social work is due to my Christian faith. As I read the Bible, I was repeatedly struck by how often the God of Abraham called for people to care for the orphans, the widows, the poor and “the least of these.” Not only that, I noted how angry God was when people who claimed to follow Him (yes, I am using the traditional pronoun for God, and recognize there are other ways to address God… or G-d) did not do so. In my interpretation of Scripture, I see these references to the orphans, widows, poor and “the least of these” as referring to anyone whom society marginalizes, who have less voice, if any voice at all, who do not tend to have powerful people to call upon, or personal resources to fall back upon, and whom society tries to forget and people in the mainstream rhetoric do not like to talk about. I would rather focus upon the lower class, rather than the middle class, because we do not like to talk about the lower class. Dr. Purnell released this video during the most recent election, on how welfare is the campaign issue no one is talking about:

I get it. “Welfare” is a loaded term, that brings to mind concepts of “liberty” (individual choice in philanthropic giving) and “deservingness” (aid for older adults has remained relatively stable in comparison to younger adults, especially younger adults without children, because older adults are seen as “deserving” because they are viewed as being unable to work and perceived as deserving aid because they contributed to society throughout their lives). Nonetheless, I think we need to talk about welfare, because it is inextricably tied to strategies to uplift those with lower socioeconomic status, and issues of poverty affect everyone. The issues are in our overcrowded emergency rooms, on violent street corners and in rumbling bellies of school cafeterias.

I have a normal curve as the picture for this post, because I have the possibly naive idea that the normal distribution should approximate the distribution of people in the various classes of society. Very few people who are in poverty and very few people who are wealthy, with a huge middle class in between. I think this makes sense from a quality of life standpoint, because people do not need to be above middle class to be happy. Career blogger Penelope Trunk references researchers and a comedian to make this point:

How much money buys happiness? A wide body of research suggests the number is approximately forty thousand dollars a year. Daniel Gilbert, professor of psychology at Harvard University, says once you have enough money to meet basic needs — food, shelter, but not necessarily cable, incremental increases have little effect on your happiness.

Aaron Karo, comedian and author of the forthcoming book, Ruminations on Twentysomething Life, responds to the number with, “If you want to draw a line in the sand, happiness is having enough money so you don’t have to move back in with your parents.”

To someone who just spent four years in college living off nine-thousand-dollar loan stipends, an increase to forty thousand means a lot — moving from poverty to middle class. But it’s a one-time rush. After you hit the forty-thousand-dollar-range money never gives you that surge in happiness again.

Twentysomethings who are looking for happiness from their careers will benefit from research about their parents’ choices. Richard Easterlin, professor of economics at University of Southern California says previous generations have proven that our desires adjust to our income. “At all levels of income, the typical response is that one needs 20% more to be happy.” Once you have basic needs met, the axiom is true: more money does not make more happiness.

Of course, one might also consider that the concept of the middle class is in question. Apparently, we don’t always agree on what “middle class” means and some might even argue that the middle class is being wiped out! Part of it might also have to do with personal issues with contentment, different philosophies on fiscal management and regional differences in cost of living. However, I think we can all identify when a person is living in poverty, especially considering that the federal poverty calculation is flawed and underestimates the amount that a person needs to live. My friend is trying to live below the poverty line as an experiment, and even that’s not easy. Basically, around five decades ago, people decided how much a person need to eat to live. And since then, federal poverty measures have not changed, except with adjustments for inflation. To read the history of federal poverty measures, click here.

[Aside: The federal poverty measures also affect calculations such as the Cost of Living Adjustment (COLA) made to Social Security, which results in the COLA not taking into account that a) older adults eat less, but b) spend much more on health care. Toss in Medicaid spend down requirements needed to qualify for long-term care support and then you get a bunch of older adults who have fallen from the middle class into the lower class. It’s no wonder many older adults can hardly scrape by on Social Security! I made a former post on Bernie Sanders’ proposal to improve the COLA here.]

Ultimately, I do think we need to pay attention to the middle class, but we should not forget about those who belong to the lower class. What’s more, I think we need to focus on efforts to alleviate poverty with a variety of strategies, ranging from direct assistance to policy change.

Got an entrepreneurial, creative mind? Would you love to have some cash with which to test an idea? The D-Prize competition offers $10,000 to $20,000 to selected applicants who have an idea to scale up and distribute a solution to fight poverty.

D-Prize Competition

Forbes Article on D-Prize

Apply today!

Let’s talk wealth distribution.

Recently, I watched Park Avenue: Money, Power & the American Dream (click to watch), a point-of-view film by Alex Gibney. The description of the film on the PBS website is as follows:

Academy Award-winning filmmaker Alex Gibney (Taxi to the Dark Side, Enron: The Smartest Guys in the Room) presents his take on the gap between rich and poor Americans in Park Avenue: Money, Power and the American Dream. Gibney contends that America’s richest citizens have “rigged the game in their favor,” and created unprecedented inequality in the United States.

Then Tim Isbell, the former senior pastor of my church back home, posted his thoughts on wealth distribution in response to a friend’s inquiry about a video entitled “Homeless in High Tech’s Shadow.

I’m still developing my knowledge and forming my thoughts on poverty, politics and economics. I have a lot to learn, so what better way than to start a conversation?

These next days, I want to start searching for answers about the issues surrounding poverty. My goal isn’t to get solutions, though they may be there. It is not to persuade or be persuaded, although that may happen. It’s not to nail down ideology at the expense of gathering knowledge, or vice versa. It is to get understanding and to arrive a place where we can start agreeing on principles, facts and values. Some of this will be subjective and we will disagree, but I hope we end up disagreeing on the things that make us who we are, and not on the things that can be debunked or the things that cause us to react with irrational or unreasonable fear. Any thoughts I arrive at or express are, as my “Posts” page states, subject to change. Views publicized do not necessarily imply endorsement.

As would be fitting a conversation, I want to structure my approach as a response to my pastor’s original post.

Pastor Tim writes that Washington must “… collaboratively attack the deficit and debt problems, as well as work to repair the currently unhealthy wealth imbalance.” He suggests that Washington might pursue actions such as:

  1. Reduce the size of our Defense spending to no more than 2-3 times that of the second largest defense spender (China).
  2. Raise tax revenue, primarily from corporations and the very wealthy. While doing this, make the tax code fairer (close lots of loopholes).
  3. Restructure Medicare.
  4. Restructure Social Security.
  5. Continue to strategically invest in future technologies.

He goes on to suggest what policymakers and citizens alike should do.

  1. Actively encourage teachers and students to higher levels of achievement, especially in STEM curriculum (Science, Technology, Engineering, Mathematics).
  2. Encourage healthy 2-parent families. This is crucial part to rebuilding the middle class and to improving our students’ academic performance.
  3. Work to increase the education of males in comparison to females. The politics of the past few decades has successfully improved the education and career status of women, but now the men have fallen behind.
  4. Encourage our smartest entrepreneurs to develop ways to rebuild middle-class jobs. Several are currently working on this problem, but more is needed until we see a healthy middle-class revival.

Therefore, as follows are the issues I will explore, along with the questions I have to ask.

Defense spending. How much do we need to spend? How much are we spending? Why are we spending what we are spending? Toward what does most of our spending go? In which countries are we intervening militarily? Why? Should we be intervening to the extent that we are? In what ways is intervention appropriate?

Taxation. What’s going wrong with our tax code? What’s going right? Who wins and who loses? Why are people opposed to certain taxes? What taxes do people support? What tax credits are gained at the expense of others? Who are the “others” that lose in order for others to win? How do taxes provide incentive or disincentive for individuals?

Medicare. How should Medicare be restructured? Where is the bulk of the spending in Medicare going? How is the Affordable Care Act already impacting Medicare? What proposals for Medicare reform are on the table? What is worth criticizing in each proposal? Why are we considering Medicare reform? Who are the powerful voices that are influencing Medicare reform? Whose voices are not being heard? How are decisions about Medicare impacting those without voice or with quieter/quieted voice?

Social Security. How should Social Security be restructured? Which populations does Social Security impact the most? On what is Social Security being spent? How are concepts of intergenerational justice/fairness impacting the rhetoric around Social Security? How has thought regarding Social Security shifted over the years? Why have thoughts on Social Security changed? What is working and not working about Social Security today? How does the Cost of Living Adjustment (COLA) formulation impact Social Security? How does the Federal Poverty Line formulation influence Social Security? How does longevity and retirement age impact Social Security’s sustainability?

Education and STEM curriculum. Why is the US lagging behind other countries? In what areas are we lagging? What states, cities and regions are lagging, and why? What conditions preclude educational success? What are factors that contribute to strong STEM curriculum? What is at work in the gender disparity in STEM achievement? How can we encourage girls to pursue STEM studies and careers? Why should we encourage girls to pursue STEM?

Family. What family structures are conducive to children’s educational attainment, parental saving behaviors and wealth accumulation? Why? How do these structures differ by socioeconomic status? What is the “marriage industrial complex?” How does community play a role in child rearing and education? What is the role of older adults in community and family today? What workplace policies are necessary to support caregivers of dependents, ranging from children to people who are disabled to older adults?

Career and Demographics. What populations are disproportionately impacted by unemployment and underemployment? How do genders differ when it comes to career selection? Are men falling behind women and why? Is gender the primary lens through which we should assess employment and educational success? How does career selection impact regional economies? What is the role of local government in creating incentives for corporations and regulating business activity?

Jobs and entrepreneurship. What are the characteristics of sectors, companies and individuals who create the most jobs? Where do we find the most job satisfaction? What are trends in employee benefits and why do these trends exist now? How are social entrepreneurs meeting the needs of their communities? In what ways are sectors, companies and individuals creating jobs for people who have low to moderate incomes, with lower levels of educational attainment and fewer job skills? In what ways are organizations and individuals preparing individuals for work? How are job readiness programs impacting those who are homeless? Disabled? Older? Former prison inmates? How do visa restrictions and citizenship policies impact immigrant work status?

Phew, that’s a lot! Have questions to add? Have answers to give? Got people you think I should interview, or books and articles I should read? Please post a comment! I would love to hear from you!