Tuesday, December 16, 2008

Rich Lose Billions While the Poor Get Poorer


Staggering amounts such as $700 billion for the financial service industry and the relatively paltry $15 billion proposed for the auto industry pale in comparison to the estimated $1.7 trillion the recession will exact in future losses by the continuing plight of America's poor.

A study released today by a bipartisan child advocacy group takes into account that children born in poverty tend to become lower wage earnings and suffer from poor health without the help of consistent health-care coverage.

The Center on Budget and Policy Priorities said last month that more than 10 million adults and 3 million children could dip into poverty during the current economic downturn and may further hamper those still reeling from the previous recession of 2001.

A story from earlier this year when the state of the economy was bad, but not yet in the free fall that is seemingly occurring today, explained that while the economy expanded after 2001, the number of those in poverty increased by over a million.

This unfortunate phenomenon was touched upon last year by Nobel-winning economist and New York Times columnist Paul Krugman during a speech at The Commonwealth Club where he said, "There have been huge gains at the top of the income distribution. A few people got much more richer, and that took all or almost all of the gains."

Krugman also explained a notion that, a year later, seems quite prescient: "We are fully back to the levels of inequality not seen since the 1920s. It's an extraordinary thing."

As many media types struggle to pin a moniker on this "financial crisis" (this one has nearly runs its course), some are now calling it the "Great Recession." Either way, it is the poor who are shoulder the biggest burden.

The Department of Labor said last week that more than 573,000 Americans applied for unemployment insurance. Indiana's fund is insolvent and California, New York, Ohio and Rhode Island may not be far behind. If government aid is struggling to keep up with demand, it is likely non-profits that fill in the cracks are having trouble keeping their doors open.

Nearly half of the non-profits in the Twin Cities area of Minnesota are resorting to staff cuts because of higher costs and dwindling donations.

A feature story from the Rocky Mountain News illustrates in detail the problems the poor and local non-profits have keeping people warm and nourished. Similar problems are surfacing in the San Francisco Bay Area.

Just last September, an Alameda County non-profit that administered health care to about 1,000 East Bay children closed its doors – and this is in one of the country's wealthier counties.

Gaudy figures on the pages and web sites of the newspapers' business sections may titillate headline makers across the nation, but it seems during a recession, the poor are the canary in the coalmine.


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