On Aug. 30 the federal government reported that average household income fell and the poverty rate rose for the fourth year in a row. The same report also showed that the percentage of people who went without health insurance for the entire year increased; their numbers rose to almost 46 million. While, on average, the bottom 80% of the population lost income in 2004, the top 20% of the population increased both their average incomes (to $151,000), as well as their share of income – to more than half, at 50.1%.

While the well-to-do were gaining, more than a million more people joined the ranks of the ‘officially’ poor, as the poverty rate rose to 12.7%. The official poverty rate understates the real level of poverty, since a family of three has to have less than $15,219 to be counted as poor. At the same time, almost a million more people were without health insurance for all of 2004, bringing the uninsured rate to 15.7%.

Oppressed nationality communities (African, Asian and Latino Americans) and indigenous peoples (Native Americans, Alaskan Natives, Native Hawaiians and other Pacific Islanders) had the highest rates of poverty, lack of health insurance and the lowest average incomes. African Americans had the highest rate of poverty at 24.7%, almost three times that of whites, while Latinos had the highest rate of people without health insurance, at 32.7%, also three times the rate of whites. Native American and Alaskan Native households saw the greatest fall in income (3.7%), to $33,000, only slightly higher than African Americans. In 2004 the average household income of African Americans was only 61% of what an average white household earned.

The income gap between men and women who work full-time and year around did fall slightly from 2003 to 2004, but women still only earned 76.5% as much as men. Even what seems to be good news was really bad – this fall in the ‘gender gap’ was not because women’s incomes rose, but because men’s income fell more than women’s income fell. In addition, this measure of inequality understates the actual income differences between men and women, since women are much more likely to work part-time or temporary jobs.

The trend of businesses cutting health care benefits for their workers was behind the rise in uninsured, since there was sharp drop in the number of people who received health insurance from their employers. This was offset in part by a rise in the number of people who received health insurance from the government. In addition to the greater numbers of uninsured, there were also many more under-insured not counted in this report, as people pay higher co-payments and have a harder time finding a doctor who takes Medicaid (the government health insurance for the poor).

What is so unusual about the fall in average income and rise in the numbers of poor and uninsured is that the economy has been growing for the last three years. While working people labor longer, harder and produce more, the rewards from economic growth go to the well-to-do and the rich.

#UnitedStates #Analysis #capitalistCrisis #incomeGap

Over one hundred years ago, Horatio Alger, Jr. wrote hundreds of novels and short stories about poor young men who achieved a better life through hard work, luck and the help of a wealthy individual. His writings were so popular that the term ‘Horatio Alger story’ came to describe the idea that anyone could succeed in America. This idea is still used by conservatives who defend the gap between rich and poor by saying that there are opportunities for the poor to succeed if they work hard; and that those who don’t succeed remain poor because of their own faults.

In the years after World War II, many poor and working class Americans did achieve a better way of life, buying a house and sending their children to college. While they did work hard like the heroes of Horatio Alger’s stories, their success had less to do with luck and a wealthy patron, and more to do with the strength of unions who forced businesses to pay a living wage and the expansion of public colleges and universities – funded in part by taxes on the rich.

Even then, it was only a minority who were able to succeed. A 1978 study found that 23% of fathers with little education and working in low-paying occupations had sons who became educated and went on to high-paying work. This minority of the successful poor almost certainly had very few African Americans and Chicanos, and women were not even included in the study.

Today, not only is the gap between the rich and the poor growing, but the opportunities that did exist are shrinking dramatically. An updated version of the 1978 study found that today, only 10% of less educated poor fathers have very successful sons, or less that half the rate of only 25 years ago. This is no surprise, given the attacks on unions, cuts in funding for education and tax cuts for the wealthy.

We need unions that will take on the corporations and fight for better wages and benefits. We need to fight to protect public education and other public services, and to stop the attempts to privatize Medicare, social security and other government programs. We need to fight for universal health insurance and jobs or income for all families. And we definitely need to roll back the dividend tax cut and the cut in estate taxes, and raise taxes on the rich.

But achieving these reforms is not enough. Working people would be better off with universal health insurance, access to college education and a living wage. But as long as we live under capitalism, the rich will use their control of the government and corporations to roll back these gains whenever they have the opportunity. That is why working people need political and economic power – socialism – to protect their livelihood, health and education.

#SanJoseCA #Commentary #Socialism #Editorials #incomeGap #HoratioAlger #unions