Poverty Is a Multi-Pronged Problem

Ron Littlefield | August 19, 2014

Several years ago (more than 30 to be honest), I was speaking with a friend who had accepted a new job and was leaving Chattanooga. He was the head of the local branch of what was then a “Big Eight” accounting firm and had been promoted to a similar position in a larger city.

Because he was a man skilled in analyzing numbers and had spent most of his years in Chattanooga working on volunteer economic development committees, I was interested in his assessment of Chattanooga’s economy and its prospects for the future. He was frank and honest, and quite candid in his response.
 
“I wouldn’t say this to the Chamber of Commerce, but since you asked, let me say that this city is the South America of the United States,” he said. “Do you know what I mean? Chattanooga has a lot of wealth and a lot of poverty and a very small middle class – like South America.”
 
I couldn't say I was shocked or surprised. As a city planner, I was very much aware of the statistics. This conversation took place sometime in the early 1980s and Chattanooga, an old heavy manufacturing town, was working its way through the harsh wringer of change and transforming to a different type of job base. We had then what so many communities have now -- a “barbell-shaped economy,” characterized by large numbers of high income and low income, but few people in the middle.
 
This month, the U.S. Conference of Mayors released a report that paints a sobering picture for cities. It notes that while we may have recovered from the Great Recession in terms of number of jobs lost and regained, we are still struggling with a significant loss of individual income. Of the 8.7 million jobs lost and regained, the average annual wage for an individual has declined almost $15,000. 
 
The report confirms what many had feared. Lost jobs were in high-wage sectors like manufacturing and construction, while new jobs pay significantly less and are in fields like hospitality and administrative support. Additionally, those households already earning the most – the top 20 percent – gained proportionally more than others from the economic shift and the top 5 percent gained the most of all. In short, the recession increased income disparity. The rich got richer; the poor got poorer; and the middle class continued to disappear.
 
“Unless we develop policies to effectively mitigate these trends, income inequality will continue to grow larger in the future,” notes the report, which outlines some of the structural issues at play in the economy and proposes potential remedies. Not surprisingly, some of those actions included investing in education – particularly pre-kindergarten – as well as instituting basic tax and income measures, including adjustments in the Earned Income Tax Credit and minimum wage. The report closes with an appeal to national leadership to take immediate action to reemploy displaced workers while also building a better base for the future economy through programs to improve the nation’s infrastructure.
 
Another report, “Disrupting Poverty: Coming Together to Build Financial Security for Individuals and Communities,” presents a greater spectrum of recommendations – an interconnected matrix of needed actions – to address the problem. The report does a good job of simplifying the interrelationships between efforts by the individual and actions by the community.  In charts, graphs and tables, the report breaks the various tasks down into understandable and actionable pieces, recommending the following:
 
  • It is the responsibility of the individual to: learn, earn, save, invest and protect (conserve their own financial resources through insurance, etc.)
  • It is the responsibility of the community to provide: good jobs, good schools, affordable housing and transportation, access to healthcare and healthy environments, equitable land use and civic engagement (equal representation and advocacy)
  • It is the interconnectedness and interrelationships between these basic societal elements that determine a community's success (or lack thereof) in creating economic opportunity.  
 
It's just that simple -- or is it?
 
I remember a time when self-help remedies were all the rage and motivational speakers haunted community halls and the late night airwaves of cable television. All were hawking their books and tapes, selling tips on how to get rich quick. Someone once suggested that it could all be summed up in two words: work harder.  
 
Of course it's really not that simple, particularly in terms of a city or national economy. The recession demonstrated with drastic and lasting effect that the financial bedrock that we all take for granted can quickly shift and fracture under our feet.  And the damage, destruction and financial disability caused by such an upheaval will not respond quickly to simple prescriptions or the palliatives that might have worked in the past. Things have changed.
 
A city that knows well how things have changed is Dalton, Ga., which lies just to the south of Chattanooga. For decades, Dalton proclaimed itself to be “The Carpet Capital of the World.” Great family fortunes were built there since World War II and Dalton once had a thriving middle class. Today, Dalton lies second on the list of metropolitan areas with the largest percentage of households making less than $35,000 per year, according to the U.S. Conference of Mayors report. The recession dealt it a blow and the fact that carpet is not nearly as fashionable as it once was doesn’t help. One of the most distressed communities in the nation, the city is smaller than it once was with a higher percentage of people living in poverty. Things have changed.
 
I mention this example and point to the not-so-simple reasons for poverty because it’s a great hope that work done as part of the City Accelerator will help us to better understand today's economic symptoms and prompt us to acknowledge today's special financial circumstances, enabling us to find new ways to deal with this worsening plague of poverty and income inequality.  Things have changed.  The situation is not simple but we simply cannot afford to leave it at that. 

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