Action Alert

Income Inequality in America

A Quiet Fire Quickly Burning Away Ladders of Opportunity

Income Inequality in America

As the U.S. economy recovers from the 2008 “Great Recession,” high unemployment rates in conjunction with low-wage work have created a dire situation for many Americans. Applications for food stamps and supplementary assistance are at record highs; one third of Americans are considered to be among the “working poor;” and according to recent census data, roughly 15 percent of American citizens are living in poverty.  A new report from the Organization for Economic Cooperation and Development (OECD) highlights the slower-than-normal pace of recovery and the high level of income inequality Americans are now experiencing. The report states that “middle-class and disadvantaged families have been struggling with a changing job market and with the high costs of education and health care.”  For every 1 percent increase in income inequality, there is a corresponding 0.2 - 0.3 percent decline in net growth. Recent census report analysis shows one fourth of all Americans live in “poverty areas,” where one in five persons have an income that is below the poverty level.
While income inequality is the buzzword of the day, some researchers point to the trend of mass mergers of companies and corporations — a process jumpstarted in the 1980s — as one culprit adding to the nation’s income gap. Lack of diversity and competition in the marketplace have given corporate mergers a near monopoly on vital services like health care, and costs for the consumer have consistently risen as a result. This situation has allowed for huge payoffs to corporate executives, while squeezing the pockets of everyday Americans who can no longer afford the basics and are losing their jobs, homes and businesses at an alarming rate.

In a recent interview with former Labor Secretary Robert Reich, he expressed that “95 percent of the economic gains since the recovery have gone to the top 1 percent, and you can't really have an economy that is functioning in that lopsided kind of way.” Less competition also leads to depressed worker wages. In 2010, the Justice Department uncovered that “top executives at Google, Apple, Intel, Intuit, Pixar and Adobe made secret agreements not to recruit one another’s employees in order to suppress salaries, even as their profits soared. Tech workers who brought an antitrust case against this cartel estimate that the scheme in effect stole $3 billion from more than 60,000 workers.”  
New proposals from President Obama and Congress to raise the national minimum wage are attempts to address the growing problems of income inequality and poverty, but some fear it is a misguided effort. Opponents of the $10.10 minimum wage increase criticized the president’s proposal, saying that if it went into effect, “half a million people would lose their jobs.” A Congressional budget report that estimates the economy would lose around 0.3 percent of its workforce by 2016 due to companies downsizing in order to pay higher wages is cited by those pushing back against a wage increase. However, this is only a rough estimate, and nearly 16.5 million workers would potentially see their wages increase as well.  And according to the former labor secretary, “the predominance of the evidence shows that you can raise the minimum wage fairly substantially, certainly to $10.10, without having very substantial negative employment effects.”
The government is struggling to lower the national debt (which is now over $16 trillion) while also maintaining its vital social assistance programs. Faced with a staunchly divided House and Senate in 2013, compromises were made in order to achieve this goal. Towards this aim, in November 2013 the federal government passed a revised and controversial Farm Bill (2013), under which the national Supplementary Food Assistance Program (SNAP) is funded.
When trying to tackle an increasing national debt, social programs aimed at helping American citizens are often the first to feel the budgetary axe in the name of fiscal responsibility. Unfortunately, the SNAP program is no exception. In November 2013 the passage of the Farm Bill stipulated a $5 billion reduction in SNAP program benefits, which is equivalent to the amount all emergency feeding programs in America provide annually. The bill also mandates an additional $8.6 billion in cuts over 10 years. The reductions in SNAP would amount to an average $90 monthly decrease in food benefits for roughly 850,000 families.

Cuts Hurt the Most Vulnerable

For many, especially children, these massive cuts to the SNAP program couldn’t have come at a worse time. According to anti-hunger organization Bread for the World, “half of all American children will receive SNAP benefits at some point before age 20, and 90 percent of African-American children will enroll in SNAP before age 20.”  Food insecurity is an issue that affects the entire nation: over 48 million Americans today, with 15.9 million being children.  One in six children in America are at risk of going hungry, and among black and Latino populations the number jumps to one in three.  In 2011, the five states with the highest rates of food-insecure children were: New Mexico, the District of Columbia, Arizona, Oregon and Georgia. Scholars, economists and activists all agree that poverty is the predominant driving force behind food insecurity.

Poverty in the United States is a growing problem with very real consequences for American citizens and families, and one of the areas directly impacted by poverty is the ability to secure food. The United States’ national food insecurity rate jumped in 2008 and has remained at elevated post-recession levels with a staggering 48.8 million people living in a food-insecure household. And there are at least 10 states that exhibit higher rates than the 14.7 percent national level of food insecurity, including Mississippi (20.9 percent), Arkansas (19.7 percent), Texas (18.4 percent) and North Carolina (17.0 percent).  And the problems don’t just end with SNAP. Many states have responded to their budgetary problems by reducing their Temporary Assistance to Needy Families (TANF) subsidies and limiting unemployment insurance remittances. This combination of substantial reductions and cuts to these “safety net” programs will have potentially devastating affects upon the poorest of Americans.

Disparate Impacts of Income Inequality on Food Access

Data from the Food Research and Access Center (FRAC) highlights disparities in food access and shows that not only do lower income households have an increased risk of food insecurity, but they also have greater difficulty in obtaining healthy and quality foods. The survey data shows that “those with annual household income less than $24,000 reported problems accessing affordable fresh fruits and vegetables 2.5 times as frequently than those with incomes between $60,000 and $89,999 (13.8 percent vs. 5.7 percent).”  Many in poverty are living in areas considered “food deserts,” where no healthy, affordable options for consumption exist. Taking away the supplemental dollars needy families receive will both exacerbate their immediate living struggles and impact their long-term overall health. “The largest disparity came when measured against self-reported health status. Among people reporting poor health status, the prevalence of fruit and vegetable affordability and access challenges was four times that of people reporting excellent health status (20.0 percent vs. 5.0 percent).”
There are state actors who are beginning to organize against the federal slashing of social benefits and who have found innovative ways to maintain their assistance programs. States such as Pennsylvania, New York and Oregon are utilizing a loophole in the Farm Bill that allows them to continue providing food assistance to needy families if they qualify for heating assistance as well. The program, commonly referred to as “heat and eat,” has angered some members of Congress, who are calling for an end to what they deem “cheating and fraud.”
Some state legislators and governors are determined not to let their citizens go hungry. Tom Corbett, governor of Pennsylvania, declared that he would spend an additional $8 million in heating assistance this year to prevent a $300 million cut in food stamp benefits for state residents.  "Gov. Corbett took [steps] to make sure that Pennsylvania's children are fed, and that families in need are not impacted by what is one of the most substantial federal cuts to food benefits," said Kait Gillis, a spokeswoman for Pennsylvania's Department of Public Welfare. The District of Columbia and Vermont are now working to do the same thing. The OECD recommends that “growth could be bolstered by new reforms of taxes, education, training, immigration and working conditions — all of which could improve the economic prospects of middle-class families.”

Pressure on Congress must also be increased to let representatives know the time for political squabbling is over and that millions of out of work and hungry American families continue to suffer while Congress remains in gridlock. Organizations like Feeding America help in combating hunger by providing over 3 billion pounds of food annually to the needy through a network partnership with 200 localized food banks. Assistance like this goes a long way in helping the less fortunate in all of our communities, but food banks alone will not tackle this issue in America. And that’s why we need the help of members like you.

Posted or updated: 9/5/2014 11:00:00 PM

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Take Action

Income inequality and food security can be pushed to the front of our nation’s political agenda. Act to drive Congress to champion an end to inequality in America.

  • Contact your congressional representative (Congressional switchboard: (202) 224-3121) and urge them to support H.R. 2384 — Food Security and Improvement Act (2013) and H.R. 3353 — Extend Not Cut SNAP Benefits Act (2013) so that millions of needy families can have fair access to food.
  • Check out the latest economic survey published by the Organization of Economic Cooperation and Development (OECD) to see what the state of the American economy really looks like.
  • Read “Assisting Personal Mobility,” #3003, pages 181 - 182; and “Bread for the World Covenant Church,” #4055, pages 563 – 566, in The Book of Resolutions of the United Methodist Church (2012).
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