Exploring the Outcomes of Economic Loss

Exploring the Outcomes of Economic Loss: Out of a "lost decade" and straight into economic malaise--how is  the country's financial condition affecting Americans' mobility?Exploring the Outcomes of Economic Loss: Out of a "lost decade" and straight into economic malaise--how is the country's financial condition affecting Americans' mobility?
Deborah Blagg

Reeling from the effects of the recent recession, with Congress unable to agree on a path to recovery, the US economy closed the first decade of the 21st century with historic levels of unemployment and poverty. Figures released by the Census Bureau early last fall indicate that in 2010, 46.2 million Americans were living at or below the poverty threshold ($22,050 for a family of four), a number that had grown by 2.6 million from the previous year to the highest level in the 52 years for which US poverty rates have been published. US Bureau of Labor statistics show that unemployment has been at 9 percent or higher since mid-2009; last summer, Gallup released the results of a survey on underemployment showing that 19 percent of those working part-time in 2010 had tried in vain to find full-time jobs.

Lawrence Katz says the United States has repeatedly educated the next generation for jobs in expanding markets.Lawrence Katz says the United States has repeatedly educated the next generation for jobs in expanding markets.Many observers would agree with Lawrence F. Katz RI ’06, the Elisabeth Allison Professor of Economics at Harvard, that prospects for a quick fix are bleak. “Even if, magically, we put in place the right policies to launch a robust recovery today, the four years of decline since 2007 would leave scars that wouldn’t heal,” notes Katz. As the Occupy Wall Street Movement emerged last fall, the global press widely quoted Katz’s characterization of the past 10 years as a “lost decade,” when middle-class families lost economic ground and opportunities for young job seekers dwindled. But Katz is careful to point out that the erosion of our economic well-being took much longer than a decade.

“Shrinking job opportunities in traditional middle-class jobs and rising economic inequality have been factors since the early 1980s,” he stresses. “The recent crisis exacerbated pre-existing trends, but none of this happened overnight. There have been some broad changes—most notably technological change and globalization—that have shifted labor demand away from middle management, clerical, and high-wage production jobs (the middle-class jobs of the mid– 20th century). The bargaining power of many middle-class workers has been undercut by the weakening of private-sector unions and, at the same time, families have been squeezed by rising health-care and higher-education costs.”

This year at the Radcliffe Institute, three scholars are using their time as fellows to look more closely at some of the trends, policies, attitudes, and circumstances associated with the country’s financial condition. Their research shines light on how the economic times we are living through are changing us, sometimes in unexpected ways.

A New Pattern of Poverty

The seeds of journalist Amy Goldstein’s fellowship project grew out of her two-decade career at the Washington Post. A staff writer and part of a team of Post reporters who earned a Pulitzer Prize for their coverage of the aftermath of 9/11, Goldstein most recently has been assigned to the paper’s national social-policy beat. That experience has brought her face-to-face with Americans struggling to adjust to unexpected downward mobility.

Amy Goldstein sees a new pattern of decline in the United StatesAmy Goldstein sees a new pattern of decline in the United StatesDuring two memorable reporting trips—one to southwest Florida and the other to Columbia, South Carolina—Goldstein met people who were “shell-shocked” to find themselves falling out of the middle class. “These were people who’d had economically stable lives and suddenly found themselves applying for welfare or lining up at food banks,” says Goldstein. “What emerged in 2008 and 2009 was nothing like the structural poverty we’ve traditionally had. It’s a new pattern of decline, with the potential to reshape our national identity."

In her work as the Katherine Hampson Bessell Fellow at Radcliffe, Goldstein is getting beyond the headlines and writing about the deeper impact of the economic crisis on realms such as family relationships, mental health, political alignment, and state fiscal policies. “We read, for example, that Americans are losing their homes,” she observes. “But what happens then? I’m interested in exploring the things that follow when people become unemployed.”

Her first line of inquiry is job retraining. “I want to see if the model of dislocated workers going back to school to reroute their careers still works in an economy in which there aren’t many jobs at the other end,” she says. After researching past eras of heightened unemployment, Goldstein has begun her “shoe-leather reporting” by interviewing students and administrators at a two-year college in a midwestern community “with relatively fresh economic bruises.” She says, “I wanted a place that wasn’t part of the long-term Rust Belt. No one city is a perfect metaphor for everywhere, but you want to pick someplace that represents recent trends.”

When it comes to our national self-image, Goldstein believes that two factors are particularly powerful: the large number of long-term (longer than six months, by the federal definition) unemployed and the fact that job losses have occurred across such a broad swath of the economy. “There’s a growing phenomenon of people who are not where they expected to be in their lives,” she observes. “How much of that has to happen before it fundamentally changes how we think about ourselves as Americans?"

Opportunities for young job seekers have dwindled, and people in traditional middle-class jobs have lost economic ground.

Mapping the Geography of Need

“Poverty has many faces,” observes Margaret Weir RI ’12, a professor of political science and sociology at the University of California at Berkeley and the Matina S. Horner Distinguished Visiting Professor at Radcliffe. Weir, who directs the MacArthur Research Network on Building Resilient Regions, is studying the rise of poverty in suburban America and issues related to the shifting “geography of need.” While the prevailing image of US poverty has been African American, urban, and nonworking, she notes, “that picture never captured poverty’s diversity, and it is even more outdated today, when half the metropolitan poor live in the suburbs.”

Are we creating suburban spaces of poverty that are in some ways worse than inner-city poverty?

Over the past two decades, Weir says, suburban poverty has spiked for a variety of reasons. Gentrification has driven low-income people out of some urban neighborhoods in search of cheaper housing. Families have moved to the suburbs in search of better schools and to be closer to jobs. Approximately 20 percent of the suburban poor are immigrants, many of whom moved directly to US suburbs to fill low-skill jobs. “Another piece is that more people who have always lived in the suburbs have slipped into poverty because of the recession and wages not keeping up with the cost of living,” she explains.

Margaret Weir says half the metropolitan poor live in suburbs.Margaret Weir says half the metropolitan poor live in suburbs.In her Radcliffe research, Weir is looking at the gaps between the existing urban social service infrastructure and the needs of those living near or below the poverty level in the suburbs. “Inner-city poverty hasn’t gone away,” she stresses, “but one of the questions I have is: Are we creating suburban spaces of poverty that are in some ways even worse?”

Along with limited access to public transportation, affordable housing, bilingual programs, homeless shelters, food pantries, job training, and social service agencies, the suburban poor—many of whom are women and children—face a less obvious challenge. “Suburban poverty is often invisible,” explains Weir, whose current study focuses on suburban neighborhoods outside Chicago and Atlanta. “The poor are spread out more, so the problems that go along with poverty, such as homelessness, tend to look different.”

One recurring theme Weir has encountered in her interviews to date is denial. “Just getting officials to admit that poverty exists is a challenge,” she reveals. “A mother with children working a minimum-wage job and living in an extended-stay hotel because her husband left and she couldn’t pay her mortgage doesn’t fit the stereotype most people have of a poor person,” Weir says. “When municipal budgets are already stretched thin, there is little resolve to expand services for people who are struggling under the radar. They are getting left behind."

While acknowledging the difficulty of developing a new infrastructure to meet the needs of the poor in suburbia, Weir has been encouraged to see some innovative collaborations. “When connections can be built between local service organizations and regional networks of advocacy and philanthropy, local groups are more likely to build the organizational and political resources needed to address poverty,” says Weir. She hopes that one outcome of her fellowship year will be identifying the political coalitions and organizational best practices that are beginning to make a difference in the lives of the suburban poor.

Becoming Poor Enough To Get Better

WMartin Anderson RIGF '12Martin Anderson RIGF '12hen Martin Andersen RIGF ’12 was working as an investment banker in the health-care sector, from 2001 to 2004, it became clear to him that there was something “messy, unusual, and frustrating” about the health-care market. “I had to decide whether I would not let that bother me, or step off track and study it.”

Choosing the latter, Andersen earned an MPH at Yale and is now pursuing a PhD in health policy at Harvard, concentrating in health economics. As a graduate fellow at Radcliffe, he is studying state-run health-care safety net programs that extend benefits to people who have extraordinary health-care expenses but too much income to qualify for Medicaid. “Thirty-two states currently have such programs,” he explains, “and each is different.”

Most of these “medically needy” programs require participants—often elderly people who need extended nursing care or younger patients with chronic ailments or disabilities—to spend out-of-pocket on medical expenses until their assets fall below a state-established level. “The financial impact on families who generally are not that wealthy to begin with is significant,” he notes. Andersen hopes his research will shed light on the costs and benefits of these state-subsidized programs, particularly as we approach the projected expansion of Medicaid in 2014, when new national health-care reforms will take effect.

Illustration by James Steinberg

Photography by Jessica Scrantone

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