The poverty crisis is devastating young Americans. Here's what the president can do about it.

Commentary about business and finance.
Sept. 19 2011 7:12 AM

Young, Poor, and Desperate

The poverty crisis is devastating young Americans. Here's what the president can do about it.

Poverty. Click image to expand.
How the poverty crisis is affecting America's young people

America excels in dramatic crises: When a bank goes bust, when a tornado strikes, there's no country in the world that rises to the occasion better. But we don't do so well with the accretive and perhaps more widely destructive social shifts that creep up on us, which is why the realization that we have a full-fledged poverty crisis is so troubling.

Publication of the Census Bureau's 2010 annual report on income—as dry a data set as there could be—reveal a shocking rise in poverty.

Median family income fell 2.3 percent between 2009 and 2010—to $49,445—but more significantly, is down 7.1 percent from its peak in 1999. The percentage of the population in poverty—15.1 percent—is the highest since 1993, and the total number—46.2 million—is an all-time high. We have given back a generation of economic progress.

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But it gets much worse.  Below this topline data is evidence of a more insidious picture of poverty and joblessness among the young and among  African-Americans.  Income for households headed by someone under 24 fell an astounding 15.3 percent between 2007 and 2010. The poverty rate among those under 18 is 22 percent. For those 18 to 24 it is 21.9 percent, and for blacks under the age of 18 it is a staggering 39.1 percent. 

But this should be no surprise, since declines in income follow increases in joblessness,  and the burden of the jobs crisis has fallen hardest on the young and African-Americans. The stated unemployment rate for whites aged 16 to 19 is 23 percent, and for blacks of that age it is a staggering 46.5 percent. (And recall, the formal unemployment rate is a significant undercount.)  In the past year—which was supposedly a period of recovery, however painful and spasmodic—the number of those ages 16 to  19 who were working dropped by more than 500,000; the number of those counted as not even being in the work force increased by 600,000. 

These numbers portray an unraveling of the social safety net.  The convergence of multiple polices—reduced taxation of the wealthy at all levels of government and greater dependence on taxes that fall on the poor (sales and payroll taxes, in particular)—has weakened government programs that help the poor and the young.

We have also had a full-fledged intergenerational transfer of wealth going on in our nation. The programs that consume the greatest percentage of our federal budget benefit seniors—Medicare and Social Security in particular—and have been rather well protected by politicians.  The investments  that benefit the younger generation—education, housing, and job training for instance—fall by and large into the non-defense discretionary spending part of the budget that has been subject to the most cuts.

We are facing a moral dilemma.  We have actually done a reasonably effective job preserving the income of seniors. Medicare and Social Security have worked, future financing issues notwithstanding. But we are failing abysmally in investing in the next generation. How can we do both in a financially viable manner?

If we resolve the current fiscal crisis by cutting more deeply the investments we need to make in the young, we will be making a grave error. This makes it more urgent that the administration do something dramatic on the jobs front.  What has been proposed—primarily a payroll tax cut–isn't enough.  It is time for the president to channel Franklin Roosevelt, to create modern versions of the CCC and WPA for those under 25—not an entitlement program, a work program.  The economy, our social fabric, and the president's political viability depend upon it.

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