05 January 2007

Economic Caste as a Way of Life

MSNBC reports that December saw the creation of an additional 167,000 new jobs which left the year-end unemployment rate unchanged at 4.5%. However, the article also examines the growing divide between the graduate-degree haves and have-nots.

Once again, skilled, blue-collar jobs left the country in droves in 2006. They were replaced by positions in the education, health-care, and professional services industries at equal or higher average salaries. The problem is, of course, a skilled factory worker with a HS diploma or even Bachelor's education can not find work as a nurse, high school teacher, lawyer, or publicity manager without undergoing several years of retraining at the college and graduate level.

So, these middle-income workers, who often earned up to $22-25/hour for their specialized skill sets, are now taking minimum-to-low-wage jobs because you don't need a related degree in order to become a supervisor at Burger King or a meter reader for the gas company, but you do need to pay your bills on time and feed your kids.

The problem faced, time and time again, is that poverty breeds poverty. No one designs anything of quality for poor people because they can't pay for it. Therefore, what little income they have often goes out as soon as it comes in, not just because their debt-income ratio is so high, but also because they have to buy substandard goods and are constantly replacing or repairing them. This trend runs from housing (which I've brought up many times) to groceries to clothing and transportation.

The manufacture of toxic clothing can be addressed by lawsuits and regulation. Cheap mass transportation issues can be solved on a regional and state level, and benefit more than just the poor. But, by far, the most dangerous of these are the housing and food nexuses. Substandard housing, as we've seen even locally [1, 2, 3], comes with a nightmare of health issues in addition to the costs of reconstruction and/or finding a new place to live. The hidden cost in eating low-cost foods is in decreased health and increased medical costs. Yet, unfortunately, most people living below a living wage have no or minimal health insurance to help them address such health concerns as they arise. Instead, those health problems have to fester, unaddressed, while they continue work, until the problems cannot be avoided, by which time their care and treatment is financially exponential.

Really, poverty is big business, but it is definitely not a good quality business. It becomes a Catch-22, as the health issues mount and the work and income floods out the door, creating an abyss from which whole cultures still haven't risen, in spite of the health of their government's pockets (and here I'm talkin' Appalachia as well as Nigeria).

Enter Acumen Fund, which is a philanthropic venture capital group dedicated to identifying and giving financial boost to the best entrepreneurs and organizations focused on delivering critical, affordable goods and services--such as healthcare and housing. The Acumen Fund's goal is to improve livelihoods, health and opportunities for the poor, while proving there's money in doing it.

Looking for a fiscally savvy yet socially progressive firm to invest your money and/or time with? Check them out. They are trying to break the economic caste cycle permanently.


Vivian J. Paige said...

I guess they can just pull themselves up by their bootstraps..... Wait - they don't have any bootstraps!

Good post!

Kempis said...

I agree with the assessment made that poor people are profitable for business. Unfortunately most businesses take advantage of that and choose to be parasitic about it.

The other thing with regards to health care and the poor or working class uninsured. Since they are cash customers they lack the bargaining power an insurance company has. So the uninsured also pay higher prices for health care than a wealthy person would.

Enjoyed your post.

TL Patten said...

Thanks for keeping the dialogue going, Vivian & Kempis. These issues hit hard with me. I'm definitely lower income, at least in Charlottesville. If I were making this much and living in Michigan, where my family is from, I'd be doing fairly well.

In some parts of Michigan, living with un- and underemployment is an art form. Hunting is a way to stock up the freezer and cut down on groceries. A few men I know are fine archers, so they get started during bow season. You might as well close the schools the first few days of rifle season. A successful season is financial survival some years.

Garage-saleing is another means of stretching those meagre dollars. I have a cousin who plots out her driving route for every Saturday morning between April and September. It's her version of power-shopping at Short Pump or Potomac Mills, and, with 3 young kids in the house, it's even cheaper than Wal-Mart. She has patience, that one: I've known her to wait 8 weeks to find a decent vacuum cleaner.

I have an uncle who has lived here occasionally and was homeless in Charlottesville. He moved back to Michigan a couple of years ago and is doing better. My half-sister became another addict lost in, and eventually dropped out of, the system when I was just a child. She died in Richmond in 1980. I'm too familiar with how the government treats such people.

In 1993, I answered my father's phone and got an earful from the "Friend of the Court" who insisted upon backpayments and hospital care on my above-mentioned sister's behalf. I replied that she had died 13 years ago at the age of 21 and was obviously owed no monies, and, therefore, I wanted the name, address and phone number of my governmental "Friend" who was willing to threaten a court hearing for her continued support so that I could countersue for every penny they had taken from my father since 1980.

Needless to say, my father was on the lower end of the income scale, though not actually at poverty level. I don't think they would have tried that with someone of means, because means = confidence and ability to stand up to the system. They backed off immediately after that phone visit. Dad never let me instigate an official investigation or serve documents on them.

I've never been poor myself, at least by definition, but I know extremes of poverty through the lives of friends and relatives who have had their dreams and lifestyles demolished by early marriages gone bad, layoffs for outsourced factory work, undereducation, and the resultant spiraling depression and the addictions and behaviors that chronic poverty leads to.

Poverty is more than a condition--it becomes a mindset, one that it is to the wealthy's advantage to incubate and nurture, because it provides them with a steady supply of needy serfs, a near 100% return of those serfs' paychecks, and lots of governmental dollars to boot.