The utopian dream of wiping out poverty in the United States has been put on hold — again — as this nation, and indeed the entire world, claws its way out of a global recession.
On Thursday, the Census Bureau announced that 3.8 million more Americans could count themselves among the ranks of the poor last year. That brings the number up to 43.6 million, up from 39.8 million in 2008 and moves the country’s official poverty rate up to 14.3% last year, rising from 13.2% a year earlier. Is this any surprise, considering that unemployment remains at a stubborn and relentless 9.6%?
On the same day that the Census made this sobering announcement, the Senate passed the Small Business Lending Fund Act of 2010.
Why should Wall Street care?
Because as the nation goes, so does Wall Street — in the long run. In some ways, these dismal figures dovetail with the fact that the world's gross domestic product shrank last year, according to the Merrill Lynch Global Wealth Management and Capgemini 14th annual World Wealth Report.
However, the number of high-net-worth individuals globally reached 10 million, a figure seen in previous, and better, years. The high-net-worth set, which includes anyone with more than $1 million of investable assets, saw its wealth climb 18.9% to $39 trillion, the Capgemini report said. And, ultra-high-net-worth individuals fared even better. Those with investable assets of at least $30 million saw their wealth soar by 21.5% last year. And, the largest concentrations of the world’s high-net-worth individuals were in the United States, Japan and Germany.
True, the wealthy set has started to see signs of recovery in their own portfolios. But not everyone in the United States has been so lucky and too many people are still riding out this economic storm.
The political and economic pundits have spent the last couple of years proclaiming that the production of jobs by small business owners will be the nation’s salvation — at least in terms of the bleak employment picture.
The small business legislation, itself says that its purpose is “to address the ongoing effects of the financial crisis on small businesses by providing temporary authority to the Secretary of the Treasury to make capital investments in eligible institutions in order to increase the availability of credit for small businesses.” So, Treasury is establishing a $30 billion “Small Business Lending Fund” so community banks can make loans to the small companies that have been hammered by the economic fiasco and the credit crisis.
David Levine, co-founder and executive director of the American Sustainable Business Council, emailed a statement around Thursday, saying: “Small businesses account for most of the job creation in this country and, with this bill, our businesses and many others like them can do even more to help build a vibrant and sustainable economy."
The bill passed in a 61-38 vote that ran along party lines, with only two Republican, Sen. George LeMieux of Florida and Sen. George Voinovich of Ohio, joining the Democrats.
Although it’s a noble gesture and a step in the right direction, the small business loan fund is like putting a band-aid on a large wound that really needs a tourniquet to stop the hemorrhaging.
Despite the fact the Dow is up and many U.S. corporations are sitting on huge cash reserves, the Census data shows that 2009 was the third consecutive annual increase in the poverty rate. In fact, according to the bureau, “the number of people in poverty in 2009 is the largest number in the 51 years for which poverty estimates are available.”
The report goes on to say: “Comparing the change in household income between 1999, the year that household income peaked before the 2001 recession, and 2009, suggests income inequality is increasing.”
So much for progress.
Last year, the family poverty rate and the number of families in poverty were 11.1% and 8.8 million, respectively. And that rate increased for all types of families, the bureau said. Digging deeper into the report, the bureau noted: “The increase in the overall poverty rate was larger than the increase in the poverty rate during the November 1973 to March 1975 recession.”
And the state of health care coverage last year didn't look any better.
The number of people with health insurance declined to 253.6 million last year from 255.1 million a year earlier. In addition, between 2008 and 2009, the number of people covered by private health insurance decreased to 194.5 million from 201.0 million, while the number covered by government health insurance rose. More tellingly, the number covered by employment-based health insurance dropped to 169.7 million from 176.3 million.
Will health care legislation be one answer? Will this small business bill or any of the current policies of the Obama Administration really make a difference? The solutions can’t come fast enough.