Why are we poor?
The federal poverty level for a family of four is an annual income of $26,200. In the North Country, the ALICE (Assets Limited, Income Constrained, Employed) level is an annual income of $45,000. ALICE families are what we used to call “working poor.”
Across New York, 31% of families fall into the ALICE category. In the North Country, it is much worse. For example, in Malone, the median household income is $36,667, well below the ALICE level and only half of the national median income. More than a third of our North Country families are poor. Most of the rest, like much of rural America, are just making do.
So, why are we poor? There are many reasons but here are the key ones:
¯ Since Ronald Reagan was president, government policies have benefited the rich. Now, the top 1% own a third of the wealth. The bottom half own just 2%.
¯ The value of labor versus capital has been in constant decline. Real wages versus stock prices over the past 30 years, adjusted for inflation, are up just 25% versus 313%.
¯ Increasingly, access to education and technical skills determine income levels. Men with BA’s earn $1 million more in their careers than men with high school degrees.
¯ Salaried employees in cities make far more than their rural counterparts.
¯ Government programs to help lower-income families are focused on urban versus rural areas. For example, Title 8 housing for lower-income families generally requires an investor and property manager, making less than 50 units unprofitable and ruling out many rural areas.
These five factors explain why rural America continues to fall behind. So the trick to avoid being poor is to get a good education, create a little wealth, and let that wealth grow thanks to favorable tax policies that include lower taxes on the growth of capital than on wages. Capital that is not just stocks and bonds, but for most people real estate, i.e., homes.
Government policy lets people who already have capital multiply that wealth through the magic of compounding returns and low taxes. Matthew 25:29 says “For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath.” Or, as sung in “Ain’t We Got Fun,” “there’s nothing surer, the rich get richer and the poor get poorer.”
Avoiding poverty is not easy. Getting an education while poor means working while studying, and tuition for many is only affordable by taking on large debts that reduce future wealth building opportunities. Hard-working people without good educations don’t make enough to save and build the capital that can grow — they are barely feeding their kids. The harder they work the more behind they get. Anger and depression result, exaggerating the “we-they” divide and further eroding trust in the government that has failed them.
What would help us out of this mess? Paying less for essential services would help. Money for childcare is essential. If parents can work, everyone benefits. Beleaguered and underpaid childcare providers cannot stay afloat if they must rely on payments from already strapped parents, but their educated kids are our ticket out of poverty. Broadband is critical too. High speed internet lets kids get a better education, telecommuters with high-paying jobs live rurally, and telemedicine improves (or saves) the lives of people living remotely. Then there is the cost of healthcare itself, where one serious illness can throw a family into bankruptcy. And higher education is priced for the rich, but access determines who will be rich next.
Surveys show that Americans, in general, agree on these key needs: childcare, broadband, healthcare, affordable education, and reversing the widening wealth gap. Note that these are all in the purview of government, a government that many don’t trust ever since Ronald Reagan said: “Government is not the solution to our problem; government is the problem.” Today, the distrust of government is strongest in rural America. So, government is the solution to many of our greatest needs, but government is not trusted by rural Americans. This contradiction cannot hold.
There are some things that we cannot do but that government can. We cannot regulate the airways, or make sure that our food and drugs are safe, or maintain our electrical grid, ports, and interstate roads. Only government can reduce the costs of healthcare and education, wire rural areas for broadband, and so on.
How can we square the anger and distrust of government with the need for government to address these existential issues? Clearly, by electing people we trust who can truly represent us, not poseurs who fire us up with conspiracy theories. The politicians who claim that our biggest problems are immigrants, election fraud, gender issues, or vaccination threats are using fear to stay in office. That is one reason that we are poor, because being generally conservative and protective of our way of life, we tend to get sidetracked by cultural versus quality-of-life issues. Guns, abortion, and illegal immigration all generate angst in our political discourse, but these are not issues that help us live better lives today, as would quality childcare, access to the internet, and affordable healthcare and education.
We must address our inadequate incomes by electing and supporting representatives who want to address these real issues rather than swallowing and regurgitating the latest conspiracy theory. Trusted representatives who want the wealth gap closed, not just by taxing the rich but also by creating more wealth-building opportunities for our poorer citizens. Politicians who focus on real needs rather than on invented threats.
If the government can take the burden of health and childcare off our backs, provide the infrastructure to live rurally (especially broadband), and underwrite higher education, then we can work our way out of the poor-get-poorer cycle. We are strong, hard-working, and clever people who, given a chance, will on our own start to close the income gap.
Lee Keet lives in Saranac Lake.