Poverty and what we can do about it


Part 1 of 2: Can Jobs and Education Fight Poverty?

 

For social workers and those who work hard fighting poverty every day there are two primary methods used to attack the problem: treating the symptoms of being poor (e.g. feeding, clothing, and sheltering those in need) and job training / education programs (giving individuals the tools they need to pull themselves out). Both are essential and valuable work, and those who do it should be praised for their dedication to making the world a better place. However, we should not fool ourselves into believing that expanding business opportunities and educating our workforce alone ever has much hope of reducing the overall poverty rate. A more thorough vision of social change is necessary if we are to reduce poverty worldwide and here at home.Food Basket Poverty

 

What is poverty?

In 1963, President Kennedy’s administration established a set amount of food needed by an individual or a family in a week. They decided no family should have to spend more than one-third their income on food, and thus the US poverty line was set at three times the value of the established food basket (currently $11,770 per year for an individual). The category called “near poverty” is 150% of that number (currently $17,655).

 

How many people are poor?

The estimate of 3 billion people living in poverty worldwide should shock all of us. Even in the US, the world’s largest economy, we have 51.2 million people (15.4% of the US population) living in poverty, 1.84 million of them in Georgia. In Athens-Clarke County, the poverty rate is significantly higher still, which has been a source of worry and frustration.

In 2002, when Athens had a poverty rate of 28%, we were identified as one of Georgia’s persistently poor counties by the Study on Persistent Poverty in the South from UGA. In 2006, the group Partners for a Prosperous Athens was formed to take an in-depth look at our poverty problem and to provide recommendations. Yet, in 2008 the “great recession” struck and poverty numbers nationwide ballooned. In 2013, Athens had a 38.3% poverty rate, meaning 46,319 people living in poverty. This is enough to give Athens the highest poverty rate for any metro county in the country.

Some have argued that 38.3% is not an accurate reflection of poverty in Athens because of our large student population. Some students in Athens do live in poverty and struggle with minimum-wage jobs, fearful of losing their share of the shrinking HOPE program, and their struggles should not be overlooked. However, other students have rich parents and extravagant lifestyles even if they technically qualify as “poor”. When students are removed, Athens poverty stands at 26.9% which is lower but still much higher than the state average.

 

Why does poverty exist?

Some may feel that poverty exists because the poor are uneducated or unemployable for some other reason. If true that lack of education is the primary reason why poverty exists, then one might expect Athens to have a significantly less well-educated population than the Georgia average. Upon examination, this turns out not to be true:

education athens-GA

According to the Carl Vinson Institute at UGA, Athens actually has a better educated population than average, with twice the number of graduate and professional degrees found in the rest of Georgia and a roughly equal percentage of people lacking high-school diplomas.

The Census Bureau has been tracking education attainment in the US for many years. The chart below displays this data, showing that our population is becoming more educated over time.

Education attainment

The percentage of the US population not graduating high school has declined while poverty rates have actually risen since the 1970s:

poverty rate historical us

Education is an important anti-poverty tool on the individual level, but it isn’t enough by itself to lower poverty on a societal level. Some might feel that what really matters when fighting poverty are the number of jobs available. However, this theory also doesn’t quite explain the poverty we see in Athens since the unemployment rate here is actually lower than the state average right now (5.7% in Athens, 6.3% in Georgia). What we lack aren’t just jobs but quality jobs that pay a living wage.

 

How can we fight poverty?

Common sense tells us that jobs and education should be powerful tools in the fight against poverty, but we shouldn’t accept this as fact without critical examination. Let’s consider the example of Caterpillar, the world’s leading manufacturer of construction and mining equipment, which has recently opened a plant in Athens and is currently employing close to 1000 people.

There is no doubt that Caterpillar has been a boost to the local economy and is providing much needed jobs which pay a living wage, but should we expect this one plant to lower our poverty rate? If not, how many Caterpillar plants would need to open in Athens to bring our poverty rate down to the state average? Let’s do some math!

 

120,938 (ACC Population Estimate 2014)

– 30,000 (UGA students in Athens)

= 91,000 (Non-student Population)

24,479 (Non-students in Poverty, 26.9%)

– 15,561 (Non-students in Poverty, GA avg, 17.1%*)

= 8,918 (Quality Jobs Needed)

932 (Caterpillar jobs provided)

**Number of Caterpillar plants needed = 9.6

 

*GA Average poverty when students are excluded.

**Using the 26.9% poverty rate number for Athens (not 38.3%) and assuming that all jobs pay a living wage and go to people currently living in poverty.

 

It is unlikely that we will get 10 employers the size of Caterpillar moving into Athens anytime soon. It is even more difficult to imagine that these companies would provide all of their jobs to people currently living here in poverty. The economic boost we’d receive from an extra 9,000 quality jobs in Athens would also stimulate demand for service-sector hiring, but these jobs would not likely pay a living wage and the minimum wage of $7.25 / hr is not enough to bring a family over the poverty line.

Even in a best-case scenario for economic growth in Athens, our poverty rate will remain significantly above the state average if our only plan to eliminate it involves job training and attracting businesses from out of town. This type of approach seems even less viable if we remember the cost of luring Caterpillar to our community, which was substantial. The total package from the state and local governments involved was $77.7 million in tax incentives and outright grants. The local governments in Oconee and Clarke counties spent $9.5 million to buy the plant site, $6.7 million in improvements to hwy 316 and 78, and $1.5 million in water and sewer connections, with the majority of the cost borne by Athens-Clarke. This was apparently not enough, so Caterpillar also asked for $15 million in tax incentives and the local governments capitulated to these demands as well. Given that Caterpillar is not required to remain in Athens past the point when their activities would become fully taxable, is it unreasonable to question whether we will break even on this arrangement?Logo_uaw

Even if it could be demonstrated that these kinds of “business-friendly” policies would eventually lead to a decline in the Athens poverty rate, it may be at the expense of increasing poverty elsewhere. Remember, these jobs came from somewhere. Caterpillar is headquartered in Illinois, but they have begun a “southern strategy” to avoid confrontations with unions. In 1994, 10,000 members of the United Auto Workers union went on strike against Caterpillar for 17 months. They were completely defeated and were forced to go back to work without a contract.

 

More recently, the International Association of Machinists went on strike against Caterpillar for over 3 months in 2012. They were eventually forced to accept a pay freeze lasting 6 years; their pay is still frozen.

chi-righttowork-caterpillar-strike-20130703-001

Earlier that year, Caterpillar locked out a group of workers from their plant in Ontario, Canada because they refused to accept a 50% cut in pay. They held to their refusal and Caterpillar closed their plant permanently. This all happened while Caterpillar was enjoying record profits. CEO Doug Oberhelman was rewarded with a 60% pay increase that year for relentlessly cutting costs. When asked about his large raise at a time he was asking workers to accept pay freezes and even cuts, he responded, “That’s just the way the system works.” Unfortunately, this is probably accurate.

Faced with difficult economic times, countries, states, and even local communities seem to feel that they have no choice but to cut taxes, provide grants, and do whatever they can to attract outside capital investment to their area, even if this means depriving their neighbors of the same opportunities. It’s time we realized that this kind of competition is not to our benefit in the long-run and that other economic models exist, which should be considered as alternatives to corporate capitalism. In part two of this two-part series, we will explore these other alternatives in detail and see if they might provide some kind of solution to Athens’ (and the world’s) pressing poverty problem.

[See Part 2 here]

Chris Dowd
8/31/15

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