The Poverty Trap

“Big wheels roll through fields Where sunlight streamsOh meet me in a land of hope and dreams” “Land of Hope and Dreams”, Bruce Springsteen

Living in poverty in our country doesn’t have to look like this photo, although it certainly can, and in fact does, in many of our largest and wealthiest cities. It can be a single mother working a couple of low-wage jobs to pay for a too small apartment and too little food in the fridge. Or your neighbor who lost his job six months ago and can’t find another. Or debt accumulated through years of illness, or a single accident, and too high insurance premiums and deductibles. Poverty doesn’t have to be seen on the streets, but can remain hidden in the secret despair of every man and woman who want more for their lives, but never get that one break or the help they need and deserve.

We are sold an America that is “the land of hope and dreams”, and it certainly can be for many. If you work hard for years, are incredibly persistent and add a hefty portion of luck to that mixture, you can succeed from humble beginnings. But in a country that is one of the richest on Earth, why do we make it so damn hard?

President Biden said in his recent State of the Union speech and earlier in an interview with Heather Cox Richardson, just published today on Substack, that he can define the United States in one word: “Possibilities”. And I agree that we are a country that holds nearly endless possibilities for many of us. But as I made note in my last post:

“The United States is the only advanced industrial nation that doesn’t have national laws guaranteeing paid maternity leave. It is also the only advanced economy that doesn’t guarantee workers any vacation, paid or unpaid, and the only highly developed country (other than South Korea) that doesn’t guarantee paid sick days. In contrast, the European Union’s 28 nations guarantee workers at least four weeks’ paid vacation.”

The New York Times

We’re also the only industrialized nation on the planet that doesn’t provide affordable healthcare for all of its citizens through a national system, and permits the drug companies to raise prices for ordinary, life-saving medicine to exorbitant levels. And none of this is by accident —these are all cruel and purposeful policy choices.

This opinion piece published in Common Dreams in 2018, titled: “What Does Poverty Feel Like” hits the mark exactly. Poverty isn’t just a status some 38 million Americans achieved in 2021, it is a state of being, a feeling that doesn’t go away and includes plenty of anger, despair, hopelessness and dread—not qualities that propel us to grab for all of the possibilities our country offers.

Another article published in 2015 from the Brookings Institution also places the ‘costs” of poverty in a different category than economics. It’s all about stress, physical and emotional pain and persistent worry. Yet our government’s relationship to poverty is all about statistics: creating poverty “thresholds” to allocate resources, breaking down those living in poverty by region and state and calculating how much money helping the poor adds to our debt.

The problem with this approach is that 38 million people (plus millions more an accident away from poverty) are not statistics and neither are the very real, debilitating emotions they feel. Our country has the responsibility and moral obligation to do a better job putting our great possibilities within reach of all of our people.

At President Biden’s Inaugural celebration, “The Boss” introduced his song, “Land of Hope and Dreams” as “a small prayer for our country”. Enjoy his performance here.

Are we a nation of possibilities, a “land of hope and dreams”?

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Additional Reading

https://www.pbs.org/wgbh/frontline/article/poverty-america-2021-covid-pandemic/

https://www.worldatlas.com/articles/10-notable-countries-that-are-still-without-universal-healthcare.html

“The average American has $52,940 worth of debt across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans.”

From the Federal Reserve Bank of New York's Household Debt and Credit report, 2021

The joy of living debt free, or perhaps oblivious to debt.

I lived for at least a decade oblivious to the debt I was accumulating. It was all neatly swept away each time I refinanced my home mortgage or took out an equity line of credit. Even with several years hindsight, I don’t think I bought or did anything extravagant, and I did put a good hunk of the borrowed money back into updating my home (that’s still called “good debt”). I also kept believing for way too long that I would be hired full-time by the college where I was an adjunct instructor, or one of the myriad other jobs I applied for, so I wouldn’t need to siphon the equity in my home to pay my growing mortgage and bills.

The irony is that I was borrowing exactly the way the lending industry and its accomplices encouraged—from the equity in your home—if you were lucky enough to own one. In the early 2000’s housing prices were climbing on their way to a bubble-bursting recession, and homeowners were encouraged to “manage” their debt by paying it off through their equity. And that is exactly what I did, many times over, until the housing bubble burst and I, and millions of other homeowners, were out of equity, and eventually out of a home.

This method for borrowing money has it’s good points: the interest rate for a refinance or a “cash out” refinance (where you are handed some of your home’s equity and then could use that to pay down your other debt, or vacation in Tahiti) is much lower than credit card or personal loan interest rates. It also saves you from the mortifying tasks of asking to borrow money from family or friends, or declaring bankruptcy.

And borrowing from your home’s equity is even considered “good debt” provided you allocate it for improvements to your home or pay off other higher interest debt, rather than take that aforementioned trip to Tahiti. The difference between good debt and bad debt, according to a 2020 article from CNBC is “… what the debt does for you — and it should always be more than what you do for the debt.”

Good debt is defined as loans to buy a home, get an education or start a business, because there is a foreseeable return on investment. Conversely, bad debt is accrued when spending on credit to accumulate material possessions with no long term return on the money spent, except the momentary flush of excitement one feels when purchasing (or wearing) something extravagant (See above CNBC article).

Statistics gathered by the Federal Reserve Bank of New York and reported in Business Insider, show that by far, the highest debt that individuals and families carry is their mortgage, and not surprisingly, student loan debt comes in second.

Here's a breakdown of the average amount of each type of debt according to the Federal Reserve Bank of New York's Household Debt and Credit report from the first quarter of 2021: 

Debt Type Average Balance

Mortgage debt $36,730

Home equity lines of credit $1,210

Auto loan $5,000

Credit card debt $2,780

Student loan debt $5,730

Other debt (personal loans, payday loans, etc.) $1,490

Chart from Business Insider

According to these statistics, most of the debt we carry is characterized as “good debt”, but like with most opposites, the line between good and bad can be quite blurred. Did you receive a quality education and are you reaping the benefits in both your understanding of the world and a satisfying high paying career? Do you absolutely love your home and is it gaining considerable value over time?

What does this mean for all good, debt-carrying Americans today? The stimulus payments and extra unemployment benefits allowed many of us to pay down our debt; in fact, we paid off a record breaking $83 billion in credit card debt in 2020. But with skyrocketing prices in the last 14 months or so, and wages not keeping pace, Americans are accumulating debt again. My finances are following this exact pattern.

You would think that lenders and the government regulating them would learn from the near-crippling recession we suffered just a dozen years ago, caused in part, by soaring home prices and excessive (and encouraged) use of the increasing equity in your home. But in its usual profit-first way, lenders want you to pile up that “good debt” yet again during this housing bubble.

Don’t let that equity go to waste! Use it to pay off the credit card debt you’ve accumulated because of soaring prices on consumer goods:

How are your finances doing these days? Have you taken on new debt in the last year or so? Leave your comments here.

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It’s not good news for renters or potential home buyers right now. Statistics show that across the country in the last 12 months or so:

— Rents have risen an average of 40% in some cities, and “According to an analysis conducted by RedFin, rents in the US jumped 14% in December 2021 to $1,877 a month, the largest rise in more than two years.”;

— The median home price in the United States, although it varies rather drastically by state, “…was $346,900 in 2021, up 16.9% from 2020, and the highest on record going back to 1999, according to the National Association of Realtors.” ;

— Mortgage interest rates are also headed up with more hikes expected in the coming year, making it more difficult for prospective buyers to qualify for a loan.

With the already precarious financial situation many people are in, this sharp increase in housing costs can mean living on the edge —having a roof over your head one month, eviction and homelessness the next.

Senator Sanders isn’t the only one alarmed about rising housing costs. Here’s what Bloomberg News is Tweeting about it.

And so is Dan Price, CEO of Seattle-based “Gravity Payments”, who, in 2015, cut his own salary from $1.1 million to $70,000/year while raising his employees’ minimum salary to $70,000/year.

In a post last year, I wrote about what Price highlights in this Tweet—that Wall Street financial firms and individual billionaires are gobbling up both farmland and housing, and either renting or selling these properties at exorbitant prices…

But statistics don’t tell the whole story, and in fact, the numbers can be misleading. One example is this 2022 map of the average rent for a one bedroom apartment in each state. The map itself isn’t misleading, and I assume the calculations of median rents are correct. But the problem is the square footage and location of the rentals for the price range. I live in Columbus, Ohio, and according to this map, Ohio’s rent has gone up significantly in the last two years, but remains quite low compared to many other states: The average rent in Ohio for a one bedroom apartment is $808. This price probably doesn’t include additional upfront, out-of-pocket costs like non-refundable pet fees plus extra money each month per pet, and application and background check fees.

Because I have been searching since last fall for another, larger, apartment, I can tell you that if you find an apartment for $800 a month, it’s probably between 500-650 sq. feet, and lacking in a few basic amenities, like in my case, a dishwasher and microwave. (By the way, my one bedroom also has no central air, terrible plumbing, subpar electricity and is currently renting for $1,035 a month including pet fees.)

A decent two bedroom apartment or single family home, usually between 850-1100 square feet, currently costs between $1,400 and $1800 a month—in the nicer suburbs, a small home can rent for $2,400 a month or more. By comparison then, Ohio’s alleged median rent of $808 gets you a broken down shanty with no appliances, located in a high-crime neighborhood.

And the soaring home prices and higher mortgage interest rates? According to Nobel Prize winning economist, Paul Krugman, we are probably not headed for a housing bubble like our last one preceding the Great Recession. But there is still much to worry about because millions of Americans are caught between rising rents and overpriced homes. The higher the rent, the less likely current renters will be able to save for a down payment on a home, and many run the real risk of eviction and homelessness. And it may take decades, if ever, for lower income residents to claw their way out of the hole rising housing prices have put them in, and achieve the “American Dream” of home ownership and the wealth building opportunity that comes with it.

This 2021 article in The Guardian argues that millennials do not prefer to rent, unlike the standard refrain, and are being locked out of the housing market by “untrammeled capitalism”. This part of capitalism can be trammeled, though, with a few restrictions or at least disincentives to corporate ownership of single family homes, rent control and substantial government support of affordable housing.

What do you think about soaring rent and home prices? Let your thoughts rip in the Comment section below.

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Amazon announced the following in its most recent earnings report: “Amazon is raising the price of its annual Prime subscriptions from $119 to $139 per year in the United States, the company announced along with its earnings report Thursday. The price of a monthly subscription will also increase from $12.99 to $14.99.” And… “The company's profits also doubled during the December-end quarter, to $14.3 billion, blowing past Wall Street analyst expectations.”

CNN Business

Note to readers: “I’ve interrupted my regular writing schedule this week to tend to other writing matters. This post will serve as a combo between my regular weekly post, which usually appears each Thursday, and Sunday Evening Reads, which inexplicably appears just after midnight each Monday morning. I’ll return to my regularly scheduled posting next week. Thanks for your indulgence!

We’re all getting hit lately with the rising costs of goods and services. Economists call it inflation, progressives call it corporate greed. I call it frustrating because my paltry income doesn’t keep pace with rising costs. Whatever your income, though, the continuous and steep rise in prices has been a shock.

When I heard the news a few weeks ago that Amazon was raising the price of its Prime Membership, I was angry. I had decided to finally pay for Prime in late 2020 (instead of taking advantage of an occasional free membership trial) because I was having my hip replaced in a few months and knew I wouldn’t be shlepping groceries to and from my apartment’s parking lot. And I wanted groceries delivered from Whole Foods, where I usually shop, without a delivery charge. Less than a year later, Amazon decided that Whole Foods was done with free delivery and would now charge $9.95 per order. It also raised its already high prices even higher and has major supply chain issues, so it’s rare to find fully stocked shelves.

I won’t evaluate the pros and cons of a Prime Membership, but you might be interested in this recent opinion piece in the Times, where a recovering Prime Member describes her life sans Prime.

What I would like to explore are the opposing views on price hikes, particularly during an ongoing, once-in-a-hundred-year pandemic.

— First there are the traditionalists who don’t bat an eye at product price increases, because of course, a company has to make up for even the slightest rise in its supply chain costs by passing that cost onto the consumer. They have to consider their shareholders, who would rise up like an angry mob (that means everyone these days) to protest their declining share wealth.

Take this example from The Motley Fool that sounds like an Amazon press release.

“Note that Amazon has increased the customer value a Prime membership provides over those years, so there is more bang for the buck.”

The Motley Fool fails to mention exactly what that extra “bang” is…

https://www.fool.com/investing/2022/02/08/amazon-costco-raising-membership-fee/

— Even NPR puts a positive spin on the Prime price hike, emphasizing that the company hasn’t raised its prices since 2018.

“The subscription service remains the singular most influential program for Amazon. Prime members are historically very loyal, beginning most of their online shopping searches on Amazon.”

https://www.npr.org/2022/02/03/1077088524/amazon-raises-price-of-annual-prime-membership-to-139

— This excellent article from Business Insider published just yesterday, is not as easy on corporations, price hikes and greed. It uses Starbucks as an example, but Amazon is doing the same: recording record profits and raising their prices.

“During the last quarter of 2021, for example, Starbucks reported an eye-popping 31% increase in profits, and revenue increased for the quarter by almost 20% to just over $8 billion. On the same call that Starbucks announced those terrific numbers, the corporation also announced that it would raise its prices over the next year — probably more than once.”

https://www.businessinsider.com/how-measure-inflation-raise-prices-corporate-profits-supply-chain-2022-2

Finally for this evening, I recommend that you spend five minutes watching this video put together by Senator Bernie Sanders’ team that lays out exactly why Amazon and its former CEO, Jeff Bezos are the poster boys for corporate greed.

https://www.facebook.com/watch/?v=10157019494367908

Let me know what you think about the Amazon Prime price increase. Will you pay it?Do you think greedy corporations are at the heart of our across-the-board inflation?

I’d love to hear your thoughts in the comment section below!

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“Should five percent appear too smallBe thankful I don't take it all'Cause I'm the taxmanYeah, I'm the taxman”

Taxman”, George Harrison

Enjoy The Beatles playing the full song here:

Actually 5% is quite a bit more than Senator Elizabeth Warren originally proposed for a wealth tax on America’s richest: she thinks a 2% tax on all wealth over $50 million dollars per family is enough to fund a good hunk of the planned expenditures of the Build Back Better Bill. Right now, however, a couple of Senators put the kibosh not only on the proposed wealth tax, but the entire BBB bill.

I am hardly a student of economics, but I have long believed that the wealthiest among us should pay more in taxes, and of course they do under our graduated tax structure. But those in the wealth stratosphere can pay for an array of savvy accountants and lawyers who can easily “minimize the impact of the tax” for their clients by exploiting numerous loopholes built into the tax laws. The ultra wealthy also seem to have much of their wealth in investments like stocks that aren’t taxable until they are sold, so as long as it is only income that is taxed and not overall wealth, billionaires are free to accumulate their massive asset stockpiles, pass it to their heirs through tax protected trust funds and thus maintain generational wealth.

This appears fine on its face—they earned their money, they should do what they want with it— but with our treasury running a deficit and social and infrastructure programs needing a boost of federal money just to be brought on par with other industrialized countries, is it still OK to allow tax avoidance by the biggest players in our economy?

A friend and reader of Crime and Punishment sent me a fascinating article from The Washington Post that focused on one billionaire as he spent his day watching his wealth grow in the stock market and presumably other investments, and at the same time managing the distribution of millions of dollars in donations—he figured the more he earned, the more he could give away, and has pledged to donate 90% of his wealth.

This particular billionaire, Leon Cooperman, who made his money as an investor and hedge fund manager on Wall Street, also spends quite a bit of his time lobbying Senator Warren and other elected officials who are proponents of a wealth tax. He is attempting to convince them it’s a bad idea for everyone, and he’s passionate about his cause:

"What made America great is our system of capitalism, incentivizing work and effort and ingenuity," he'd written. "Capitalism has flaws, but socialism has no benefits. Why not spread my work ethic instead of just my wealth?"

I think he has a point, but I’d much rather hear your thoughts on this issue. Should we pay down our country’s debt and distribute the wealthy’s money to those most in need, or should we depend on their good will and philanthropy to help as they choose? Does it really have to be one or the other? Even Mr. Cooperman, who says he pays an effective tax rate of 34%, is willing to up his share to a maximum 50% tax rate.

Let me know what you think in the Comments section below.

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I wrote this essay a few years ago, and as you can see, it eventually became the basis for this newsletter. I’m publishing it today, with just a few tweaks, because I’ve been off tending to my ailing dog (you’ll recognize his photo below as my crack research assistant for this newsletter), but also to remind my readers and me why I’m writing Crime and Punishment.

This essay touches on many of the ideas I have already discussed in individual posts and includes a few scenarios from my personal experiences to illustrate how regular, educated people (like me) can get caught in the cycle of debt and poverty.

The Catch-22 of Poverty

There’s something strange about poverty in America today. It is more pervasive than most realize, yet somehow remains elusive — unable to be pinned down, grabbed hold of and tossed away for good. I’m tempted to say “this isn’t your grandparents’ poverty”, although my paternal grandparents and their six children managed to land on the other side of the Great Depression. My Italian immigrant grandfather was an entrepreneur of sorts, and owned a store, a hotel and a large home until the scourge of the depression hit. Their family never fully recovered financially, but help came in the form of federal government programs that provided jobs, our country’s baseline social safety net, and an investment in our collective future with the G.I Bill, without which my father likely would not have been the first in his family to graduate college.

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“I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.”

Dr. Martin Luther King Jr.

It isn’t just in January that we should celebrate the life of Dr. Martin Luther King, Jr., along with a three-day winter weekend and sales using his name in vain. Is it too much to hope that we should all try to honor his legacy daily, by revisiting his words and actions and taking them forward to help solve today’s racial and economic injustices?

A friend and reader of Crime and Punishment sent me and article (which I can no longer access), published a few days ago in Market Watch, that discusses a lesser known area of Dr. King’s peaceful quest for social and economic justice: eradicating the debilitating poverty that had always been a part of our national heritage and was hitting our Black population particularly hard in the 1960’s. In 1967, Dr. King wrote what was to be his final book, Where Do We Go from Here: Chaos or Community?, in which he laid out his plan for a guaranteed income for all citizens, and reiterated this idea later that year as part of his address to the Southern Christian Leadership Conference convention.

Just about 55 years later, I offered my take on our country’s need to implement a “Guaranteed Basic Income” to help ease our country’s morbid, economic inequality, taking my cue from former Presidential Candidate Andrew Yang and Dutch historian and author, Rutger Bregman, who both eloquently advocate for UBI. If our government provided enough money each month to cover the basics for those below a certain income level, it would perhaps ease the gnawing fear that those with limited resources suffer daily, and give millions of our citizens a small break—allow them to take a breath and spend a few minutes dreaming of better things for their future.

Dr. King knew this breathing room to be a necessity for the poor when he said:

“The dignity of the individual will flourish when the decisions concerning his life are in his own hands…When he has the assurance that his income is stable and certain, and when he knows that he has the means to seek self-improvement.”

Last year on Dr. King’s birthday, NPR hosted an interview with Michael Tubbs, the former mayor of Stockton, California, who started a basic income program for Stockton’s poor when he was mayor, and since has founded, “Mayors for a Guaranteed Income”, now 62 cities strong. Tubbs cites Dr. King as inspiration for his guaranteed income program as mayor and the foundation he started:

“I think anyone who studies Dr. King realizes that he saw that racial justice and economic justice were intertwined.”

And Tubbs is specific about the reasoning behind simply giving people a minimum income;

“…when we talk about how the most productive times in our country and the way the middle class was built, it was built by giving things to people, by giving land to people, by giving education to people. And I think guaranteed income's in that same vein.”

And over half a century after Dr. King laid out his guaranteed income plan, our country is still struggling with racial and economic injustice, and in some respects it has gotten worse, given the widening gulf between the ultra wealthy and everyone else. The last two years of the pandemic have exposed our system’s injustices to an extent not seen before, and the short-lived stimulus payments combined with the child care tax credits statistically demonstrated that government relief reduces poverty. In one of the richest nations on Earth, isn’t it finally time to abandon the failed “wars on poverty” of the past and simply eliminate poverty by giving, yes giving, those below a certain income level a guaranteed minimum income?

Let me know what you think of a guaranteed basic income in the comments below. I’d love to hear your ideas!

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“ ‘Humans are vastly more cooperative than most other species.’ Our cultural institutions can reinforce inequality, she said, but they can also fight against it.”

Dr. Siobhán Mattison, evolutionary anthropologist at the University of New Mexico

I always tend to resent the scientific research conducted on animals, not just the cruel, invasive kind which needs to end, but even basic cognitive research, because the benefit of the results usually accrues to humans. I want the benefits to flow the other way sometimes—how can we help other creatures and their habitats with what we learn from studying them? Clearly I care about us humans, though, because that’s what Crime and Punishment is about—understanding the reasons for the horrendous inequality in our society and helping to balance the forces that create it—with an end goal that we all have a better shot at thriving.

That’s why this recent New York Times article titled “Checking Privilege in the Animal Kingdom” is fascinating. It turns the tables on the typical research balance of power, and surprisingly, it focuses on my favorite topics: intergenerational wealth and inequality, but in the other animal kingdom.

Here are some of their findings:

Young red grouse are more likely to succeed in establishing their own territories when their fathers and other kin are nearby. Hyena daughters born to high-ranking mothers inherit their status, and get dibs on fresh meat. Some chimpanzees and capuchin monkeys crack nuts using stone tools that their parents used before them.

In other words, even other animals are likely to survive longer, have better health and maybe get a leg up on the competition if they have some assistance from their parents, other relatives or friends, an issue I discussed in a previous post regarding human generational wealth.

These scientists also apply concepts and words to their research that are normally applied to human behavior, like “intergenerational wealth” and “inequality”, just as Suzanne Simard and Peter Wohlleben use the words “communication”, “sharing” of resources and the “Mother Tree” when researching and discussing the power of trees and old-growth forests. This helps close the gap among humans, other animals and our natural habitats and helps us search for answers that benefit the collective whole.

— If you want to go deep into animal cognition, here once again is the Stanford Encyclopedia of Philosophy.

“Comparative cognition is the scientific study of animal cognitive capacities that recognizes humans as animals and acknowledges that all animals are evolved biological organisms.”

https://plato.stanford.edu/entries/cognition-animal/

— Another and earlier article on this subject in Slate Magazine titled: “These Animals Stick Up for Social Justice” discusses research that shows we mammals don’t like to be bossed around and will form “coalitions” to overthrow any renegade leaders…sound familiar?

“But sometimes the top dog gets toppled, inequality diminishes, and equality prevails. Looking at species other than our own shows that inequality (the subject of a special issue in Science this week) may not be inevitable. These animals provide glimpses of how humans got the way we are and what our potential may be for equality.”

https://slate.com/technology/2014/05/animal-social-justice-equality-in-bonobos-chimps-monkeys-lions-baboons.html

And finally for this evening, a fun piece from Psychology Today that shows just how dogs and monkeys, for example, react to unequal treatment or rewards. There certainly are comparisons to these outcomes in today’s job market, for example. Don’t like the rate of pay or benefits? Refuse to do the work and quit!

“Cooperative animals act differently when they are being treated unfairly.”

Yeah, don’t we all?

https://www.psychologytoday.com/us/blog/ulterior-motives/201812/how-animals-react-inequality

Let me know what you make of these studies of animal cognition and behavior and the study of “generational wealth” and inequality in the animal kingdom. Please comment below!

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“From San Diego up to Maine,in every mine and mill,Where workers strike and organizeit’s there you’ll find Joe Hill,it’s there you’ll find Joe Hill!”

“Joe Hill”, Date: 1936 ; Composer: Earl Robinson ; Text: Alfred Hayes.

Listen to Joan Baez sing “Joe Hill”.

This ballad, brought to life with that gorgeous, Baez soprano, still gives me chills. And listening to it now resurrects the need for solidarity with working people and their rights across the globe. Yes, I use the word “solidarity”, like Senator Bernie Sanders continues to use that word when he speaks about both the microcosm of workers organizing with a unified voice to demand better pay and working conditions, and the macrocosm of millions of Americans uniting and demanding changes to our government from the ground up.

Those with similar concerns and needs have long banded together to make their lives better, and that type of organizing is perhaps more important in today’s economy than ever. According to Federal Reserve data as of the second quarter of 2021, this is the first time “the total wealth of the top 1% has been higher than the middle 60% since the Federal Reserve began tracking this data in 1989”. There needs to be some serious pressure put on those in power to flip this inequality —and that’s where unions enter the picture.

I won’t discuss the history of unions in America or worldwide, although it is both a beautiful and sometimes bloody story. But what I will focus on is the growing income and wealth disparity in this country and how it coincides with the decline of union power.

Unions had their heyday in the 1950’s and 1960’s (when the economy was booming, corporate taxes were high, and this country had a real, robust and growing middle class), and began a decline in the early 1970’s, at the same time that income inequality began to rise. That decline in union power continued through the Reagan years (recall when President Reagan intervened and fired over 11,000 striking air traffic controllers), and unionization of both public and private sector employees remains low.

In fact, our laws regarding unions changed too. Specifically, a 2018 U.S. Supreme Court decision ruled that states could not require “public employees who are represented by a union — but have chosen not to formally become members — to contribute to the costs of collective bargaining”. In effect, this decision partially defunded public employee unions and likely helped diminish their power.

In that same year, economists from Princeton and Columbia compiled and studied data that showed a strong correlation between increased union power and reduced poverty rates, and conversely, a decrease in the number and size of unions and increased poverty rates. This research did not distinguish between public and private unions, but rather focused on the overall impact of unionization.

Additionally, the study concluded that “unions can also affect the earnings of nonunion workers.” One way is when private company management sees unionized competitors (if that scenario still exists), raising employee wages, they tend to raise their employee wages to stave off a union movement in their company.

The working paper the economists produced, titled “Unions and Inequality Over the Twentieth Century: New Evidence from Survey Data,” showed that union workers today receive an average of 20% more in pay, a boost which has held steady since the 1930’s. Not only do unions have the power to negotiate higher pay for their workers, they also negotiate entire benefit packages, including health insurance, which raises the union members’ overall wealth. And for non-college educated workers, this was their ticket into the middle class.

Data from other studies, discussed in a 2021 article from Business Insider, demonstrate that just living in a state with high unionization rates lowers the chances of all of that state’s residents, union and non-union members alike, from sliding into poverty: “…states with higher unionization rates had average poverty levels about 7% lower than states with lower unionization rates”. In other words, unions help everyone, whether directly or indirectly.

Despite the heavy decline in union membership and power over the last forty years or so, and the corresponding rise in wage and wealth inequality, there might be a smidgen of hope on the horizon…

Progressive elected officials like Senator Sanders stand in solidarity with workers, literally marching on picket lines with union members as they strike to negotiate better wages, benefits and working conditions. And Senator Sanders and other prominent officials continue to call out the union-busting tactics of mega companies like Amazon and Walmart, some illegal, that prevent unions from starting altogether or interfere with workers’ votes to unionize under the collective bargaining rules.

If you are interested and have an extra hour, it’s worth it to see this virtual town hall hosted by Senator Sanders just a few nights ago. It features three unions that are currently striking, including the United Steelworkers Local 40 (where 450 members from Special Metals, a company owned by Warren Buffet), and other workers who are on strike in Alabama and California. What their companies offered them by way of negotiated contracts is shocking: lowering their wages and increasing the cost of their health care. The union heads do much of the talking, describing why they made the decision to strike, their negotiations and what they might need to do to get their wages and working conditions to meet even their bare minimum needs. This town hall is a must-see if you want to better understand what’s really going on between union workers and the companies they make rich through their labor.

https://www.facebook.com/watch/live/?ref=watch_permalink&v=1572486033114354

Now is the time to talk about how you feel about unions and whether you’ve been a union member. I’d love to hear your thoughts!

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Additional viewing: Harlan County, U.S.A

This Academy Award winning, 1976 documentary by Barbara Kopple is brilliant.

https://www.amazon.com/Harlan-County-USA-Norman-Yarborough/dp/B001XT4ZQC

“ So what happens? He gets the title shot in the ballpark. What do I get? A one-way ticket to Palookaville.”

Terry Malloy, “On the Waterfront”

Enjoy the full movie clip here:

How can you not love this movie? A regular guy “takes a moral position against his own self-interest”…and wins. In this clip, Marlon Brando’s character, Terry Malloy, is lamenting his lost shot at the title and what he got instead: “A one-way ticket to Palookaville.” (By the way, I’m thrilled to finally be able to put one of my favorite movie lines to good use, so just keep repeating “Palookaville” as you read this newsletter).

This is supposed to be a country where we all have a shot at the title—fair and square— or at least that’s what we’ve been told. But how many of you believe you have gotten a “fair shot”, a clear path to thrive, rather than just exist? In reality, what so many of us seem to get instead is that “one-way ticket to Palookaville”. We never quite seem to pull ourselves up and out of our downtrodden circumstances or even our barely middle-class life, and get that shot at greatness. Or if not greatness, how about that shot at a middle-class and upper middle-class life where we don’t have to worry about every penny?

In our case, though, it’s not a mob boss who brings us down, it’s our country’s laws and culture that keep the average working class person’s head down, incentivize behemoth corporations to use money to dictate the trajectory of our laws and determine what we get in the way of support.

In Crime and Punishment, I’ve written about how our country’s uncapped interest rates, manipulated credit scores, massive corporate subsidies, punishing personal bankruptcy laws and the failure of our elected officials to see the value of investment in our country and its people, directly keep millions of America’s people poor in one way or another.

In the next year, I’ll take deeper dives into many of these issues, call out the surprising ways companies, particularly those in the financial industry, flaunt existing laws designed to protect the consumer, and investigate the myriad racial disparities that continue to plague people and communities of color, including land, air and water pollution.

I’ll also focus more on the things we can accomplish together to stop this overt assault on fairness and equity. I’ve always believed that real power is created when people join together to fight for justice, and there are countless examples in our country’s short history, like the civil rights movement, including today’s #BlackLivesMatter organized protests, and peaceful marches for LBGTQ rights, animal rights, strikes for workers’ rights, and more. And this activism comes from the bottom up—when many regular folks like you and me join their voices and say: “To hell with the way it is, we need and want our lives to be different and better!” As Senator Sanders says:“Not Me, Us”.

And for that I’ll need your regular engagement and support in 2022. We are all in this together, and I intend to build a community here that will encourage each of us to learn and grow. What I will continue with on Crime and Punishment is to curate these important stories of injustice for you, analyze them in historical context, and guide us, with your help, to just protests and solutions that will benefit the many, not just the few. Americans deserve more than “a one way ticket to Palookaville”, don’t you think?

I am thankful for the number of subscribers who have joined Crime and Punishment since my inaugural post on September 15, 2021, and look forward to the new year with gratitude for all those who choose to join our community.

Here’s to a wonderful New Year for all of you!

Crime and Punishment: Why the Poor Stay Poor In America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

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