Bernd Debusmann is a Reuters columnist. The opinions
expressed are his own.
By Bernd Debusmann
WASHINGTON The minimum wage in the world's
richest country has just been raised by almost 12 percent. That
followed a 13.6 percent hike last year and looks like major
progress for those at the bottom of the economic ladder. At
first sight, at least.
Examined more closely, the figures highlight poverty and
economic inequality of Third World proportions.
The latest increase took effect last week and brought the
minimum wage to $6.55 an hour. Adjusted for inflation, this is
less than it was in 1964, the year President Lyndon Johnson
declared "unconditional war on poverty in America."
Poverty won, as free-market champion Ronald Reagan put it a
quarter of a century later.
Then, 13 percent of the U.S. population lived below the
official poverty line. In 2006, the most recent year for which
the U.S. Census Bureau has statistics, it stood at 12.3
percent, or 36.5 million people. On the other end of the scale,
the U.S. economy produced billionaires at a steady pace.
There are 469 of them, by the latest count of Forbes
magazine. In 1982, when the magazine started its annual list of
the richest Americans, there were just 13 billionaires. Today,
the United States has the largest gap between rich and poor of
any Western industrialized country. In terms of equitable
distribution of income and wealth, the U.S. is closer to Iran,
Argentina or Mexico than to Canada or Germany. (That is
according to the Gini index, a complex statistical measure of
inequality named after Corrado Gini, the Italian economist who
devised it in 1912.)
"There has been a massive shift of income from the bottom
and middle to the top," says Holly Sklar, director of Business
for Shared Prosperity, a network of business owners supporting
higher minimum wages. "The richest 1 percent of Americans have
increased their share of the nation's income to a higher level
than any year since 1928, the eve of the Great Depression."
Poverty and inequality are not usually subject of wide
debate in the United States but this is an election year which
might mark the beginning of a change. A poll this month by TIME
magazine and the Rockefeller Foundation showed that 85 percent
of Americans are unhappy with the economy and think their
country is on the wrong track. TIME termed the percentage
The poll also showed a striking shift of sentiment towards
the role of government in solving the country's problems. More
than 80 percent favored public works projects to create jobs
and 70 percent advocated government programs to help those
struggling to survive in a sinking economy marked by falling
home prices, foreclosures, and sharply higher prices for fuel
TIME termed the results "a counterreformation of sorts in a
Republican-led era that emphasizes deregulation and
Are there parallels between the present and the mood that
led to the New Deal social reforms of the 1930s? Some scholars
say yes. In the words of Jacob Hacker, a political scientist at
Yale University, "we have an economic order that is not well
placed to deal with the challenges of the 21st century, just as
back then there was a realization that the world had changed
but the government hadn't."
No matter who wins on November 4, Democrat Barack Obama or
Republican John McCain, it is difficult to see economic gains
flowing as freely to the top 1 percent as they did in the eight
years of President George W. Bush.
Both candidates have announced plans to reform a health
care system which has contributed greatly to the economic
anxieties reflected by polls. There is a good reason why the
Census Bureau's annual report is entitled "Income, Poverty and
Health Coverage in the United States."
The number of Americans without health insurance has risen
relentlessly since the beginning of the millennium and now
stands at 47 million (out of a population of 301 million). More
than 22 million hold full-time jobs and for many of them,
falling ill can spell financial disaster and a slide from the
edge of the middle class to the ranks of what is
euphemistically known as "the working poor."
That is the label for those working at the minimum wage -
an estimated two million - or close to it. Often they work two
or three jobs and still can't make it. They include people who
are forced to sleep in cars, trailers or shelters.
How miserably the system has failed is highlighted by the
large crowds turning up for free weekend clinics run by an
organization called Remote Area Medical Volunteer Corps. It was
founded in 1985 to bring medical services to the Central Amazon
Basin, an area ill-served even by Third World standards.
The organization's founder, Stan Brock, calls the clinics
"expeditions" to where the needs are greatest. Sixty percent of
the expeditions now go not to the Amazon or other Latin
American regions but to places in the United States. The most
recent expedition, last weekend, was to Wise, in the southwest
corner of Virginia. (You can contact the author at
Debusmann@Reuters.com) (Editing by Kieran Murray)