Christianity and Capitalism, Part V

A Review of “Just Generosity”, Part II

By

Brent Hardaway

 

Now we get into the meat of Sider’s book, and evaluate his attempt to answer the question we made in the first section of the previous essay of what is going wrong for those who do not escape long-term poverty in the U.S. What is it? Pay close attention - we will see just how much the problem is too much capitalism, or something else.

What Causes Poverty?

Sider begins his comments about poverty’s causes by pointing out the different approaches that conservatives and liberals take towards poverty. Liberals blame structural causes and injustices, and conservatives blame poor personal choices and the breakdown of the family. He states that he believes that the truth lies in between.

“Who is right? Both are partly right. I have lived and worshipped with the poor far too long to side either with the liberal who quickly dismisses the way personal choices contribute to poverty or with the conservative who ignores the way complicated structural barriers make it difficult for many hardworking people to escape poverty. If your factory closes because global economic forces prompted management to move production to Mexico and you can only find a much-lower paying job, the problem is not lack of personal responsibility. On the other hand, if you lose your job because of poor work habits, drugs, or alcohol, personal choices are more clearly the problem.” [Sid.RC.35]

It is very instructive at this point to look at what Sider doesn’t include as irresponsibility here. Dropping out of high school, not moving on to any higher education, and having a child out of wedlock. How he presents them will be key in our discussion.

“A young unmarried teenager who is sexually active, gets pregnant, and then drops out of school is certainly making personal choices that will very likely condemn her to poverty. But how much was her action shaped by the fact that her father left her mother when he lost his job because the factory he worked in moved to Mexico, by the fact that subtle racism helped create an inferior high school, and by the fact that the best-paying job available to her boyfriend was selling drugs? Keep in mind this interconnectedness as we examine some of the personal decisions and behaviors that lead to poverty.” [Sid.JG.39] (Emphasis mine)

Key point here - economic and structural injustices are the key causes of many of the wrong choices that people make. Get rid of those socio-economic problems, and a lot of irresponsible behavior will disappear. So Sider does not walk a very centrist line at all. Clearly, he leans considerably more over towards the liberal position.

We will present Sider’s analysis of structural causes, and then his game plan. At first we will simply provide more detail and elaborate on his point of view, as he does make some good points along these lines. Then, we will look at his assumptions in-depth, and see how much water they hold.

Structural Causes

Poorer schools for minorities in the inner city

Sider discusses the seeming lower quality of schools in high poverty neighborhoods. This primarily affects black and Latino students. Nationally, black and Hispanic 17-year-olds read at a 13-year-old level. Sider also says that blacks are twice as likely to drop out of high school as whites, while Hispanics are four times as likely to drop out. [Ibid, 155}Dropout rates in these schools can be astronomically high.

In some cases, Sider maintains that it is a question of funding. He cites several examples. The most detailed examination is given to the district of Camden, New Jersey, just across the Delaware River from Sider‘s Philadelphia digs. Camden received only $4,000 per student, while wealthier districts like Princeton received twice that amount. At one junior high school, the students were using typewriters that were a generation old. At one high school, the chemistry lab didn’t have any lab equipment, and the school no longer had computers, because the heating system had malfunctioned, and most of them had been destroyed. The district also lacked funds to higher staff that could adequately diagnose and treat learning disabilities, leaving the children who were afflicted with them behind [Ibid, 154] In Texas, the difference in per pupil expenditures was at one time as great as $2,112 to $19,333!! [Ibid, 159] Often, differences in property tax bases make the difference, and he believes that this is an inadequate method for funding education. To remedy this situation, Sider steers a more centrist path here. While he is quite sympathetic to the funding argument, he keenly notes that on the national average, the difference between rich and poor schools is not terribly large. In fact, some poorer districts spend a lot of money, to no avail. The Washington, D.C. district spent $9300 per pupil in 1993, but still suffered from poor student performance. He also notes that heavy bureaucracy and unresponsive teachers unions often play a part. [Ibid, 156]. Sider also wants no part of watered-down curriculums that place more emphasis on self-esteem;

“A loss of high expectations for students and a hesitation to measure success with standardized tests is especially harmful to poor and minority children. Due to what one author calls a ‘poisonous brew of humanitarianism and condescension,’ many educators have low expectations for minority and poor children. Too often programs focused on relevance and self-esteem replace rigorous academic demands. ‘Zero failure’ so nobody feels unhappy has often been the pattern. ‘Happy but dumb’ is hardly what the poor need.” [Ibid, 158]

Sider, after examining the arguments for and against vouchers that would allow poor children to attend private schools, concludes that experimentation is warranted [Ibid, 164-171]. He presents an example of successful inner-city school reform in New York City District 4, which encompasses East Harlem. The district began a program of decentralization and elimination of stifling bureaucratic rules in the 1970s. Teachers and parents were given a great deal of freedom. Between 1974 and 1987, the percentage of children reading at grade level increased from 15.6 to 62.6. [Ibid, 157-58]

Comment: We agree with Sider that access to education is critical, and it is not right that kids in poorer communities should have substandard tools to learn. However, Sider’s analysis is a little late. Since the 1980s, the Federal Government has attempted to compensate for funding disparities. While the average school district receives 7 percent of its budget from Federal coffers, the percentage jumps to double-digits in large urban cities with high-minority enrollments. [Ther.NE.155-56]. In fact, the Camden-Princeton comparison that Sider showpieces is now out of date. By the 2000-01 school year, Camden had fewer students per teacher (11.5 vs. 11.8) and less students per computer (3.5 vs. 5.7) than Princeton. Camden was even spending $400 more per student. However, there was no improvement in academic performance [Ibid, 158].

We would also make one additional comment: In recent years it has become standard procedure in many school districts to try to prepare everyone for college, and this has often meant gutting non-college related vocational classes, such as autoshop. The demand for college graduates will remain high for the foreseeable future, but a college education isn’t necessarily for everyone, and the need (and the pay) for plumbers, construction workers and auto mechanics will also remain just as high as ever. These courses often can be found at local community colleges, so it isn’t impossible to take them. They could, however, be made more accessible.

Fewer Job Opportunities in the Inner-City

“…many jobs moved from central cities to the suburbs. Suburban Industrial Parks replaced crowed factories in decaying urban neighborhoods. Retail jobs moved to new suburban malls, and new suburban office complexes emerged closer to suburbanites’ homes. Since public transportation to suburban locations was inadequate and the urban poor often lacked cars, there was simply not enough good jobs available to the urban poor.” [Ibid, 35]

“The most subsidized rail and subway lines serve largely to enable suburbanites to travel quickly from the suburbs to center city and back. City residents have to live with less subsidized bus lines.” [Ibid, 207]

Comment: Sider scores some valid points here as well, although, once again, it isn’t as if this problem has gone unnoticed. Many cities are making concerted efforts to entice developers to come in and revitalize downtrodden inner-city areas, with varying degrees of success..

This study from the Boston Consulting Group makes some compelling points to he effect that inner-city markets are an untapped source of profitability, and investors should not overlook them. Inner city residents pay higher prices for retail goods and groceries, and sometimes they aren’t even able to get them in their own neighborhoods, leaving pent-up demand. Also, even though inner-city residents have lower incomes, the housing units are smaller than other communities, and thus demand per square mile is rather high. The paper argues that this market simply has been overlooked, and sometimes fear of crime has played a role. Fortunately, crime in cities has dropped quite significantly in recent years, and this is likely to be beneficial to attracting new business.

On balance, then, it would seem that the mechanism of the free market should rush to fill this demand. But There is one problem that must be solved first. As we mentioned in the previous essay, sometimes the problem is too much government, not too much capitalism!! And in the inner-city government interference can be stifling.

This article from The New Republic gives the details of how local governance was done in Harlem for many decades under the Harlem Urban Development Corporation:


Using their influence at HUDC and a range of other uptown institutions, a coterie of politicians known as the Gang of Five--Representative Charles Rangel, businessman and former Borough President Percy Sutton, and former Mayor David Dinkins were the best known--controlled not only all antipoverty funds coming into the neighborhood but also the government-owned land, which, at the time, accounted for roughly two-thirds of Harlem. "Anyone who wanted to do business in Harlem had to go through them," recalls Randy Daniels, New York Governor George Pataki's chief lieutenant in the area.

Part of the problem was old-fashioned cronyism. Part was political self- interest: by definition, HUDC's influence was greater on government projects, which strongly prejudiced it against private investment. But both were secondary to the coterie's economic nationalism: members wanted to attract development only if they could control it--only if it included black partners and did not displace poor, black residents. Over time this meant that virtually no business, private or public, was done in upper Manhattan. "If the HUDC gatekeepers weren't playing a meaningful role in the project, if it wasn't their people, if they weren't getting a piece of the action, then it was better that nothing happened at all," one New York businessperson recalls, "no matter how beneficial it might have been for the people of Harlem." Even when other public agencies tried to build in the neighborhood, HUDC called all the shots--who was hired, how the deal was financed, which developers were involved--and often derailed projects. "If you didn't want to use their people, you took your money elsewhere," a local official remembers..…Blockbuster Video waited more than two years to open a store, stymied by HUDC officials who insisted that the chain find a minority partner. “

This article here discusses how excessive regulations, most with no discernable public benefit, have stifled entrepreneurship in Detroit, for another example. It’s not surprising, then, that Detroit has become synonymous with high rates of poverty, unemployment, and urban blight.

Thus, red tape, regulations, and cumbersome bureaucracy has played a part, as well. Thus it is government interference, not the lack of it, in the market place that is a big part of the problem.

Fewer well-paying, low skill jobs

According to Sider, good, well-paying factory jobs have disappeared, due to jobs being outsourced to foreign countries and more automation, leaving the less skilled with fewer options. Wages for less-skilled workers have dropped. From 1979 to 1993, the weekly pay for workers without a high school education dropped 22%, while the pay for those with a college education rose 9.8% [Sid.JG.36-37]

Indian Reservations

To Sider’s list, we will add our own item: Indian Reservations. When one visits an Indian reservation, it looks often looks like a Third World country. And this isn’t a coincidence, because reservation administration often functions in many of the same ways.

Some of the poorest counties in America are those in which a large part of the land comprises part of an Indian reservation. One of these, South Dakota’s Shannon County, is home to the Pine Ridge Indian Reservation. John J. Miller, writing in the National Review, [Mill.OTR] spells out many of the barriers towards economic development. Reservation land is federally owned, not privately owned. Thus, reservation members have no titles to property, leaving them with no collateral for loans. One can lease land from the tribal administration, but this takes a long time, due to bureaucratic roadblocks. And even if one is successful in obtaining this lease, it doesn‘t mean smooth sailing. Bat and Patty Pournier are owners of the Big Bat Texaco gas station and convenience store in Pine Ridge. Their business burned down in 2001. They built a bigger store, but the tribal leadership responded by quintupling their rent under the premise that they could now afford to contribute more to tribal coffers. Fortunately, this measure was eventually defeated, but with all of these roadblocks, it’s not surprising that there are few private jobs and services available on the reservation. These problems must be reversed so Native Americans can share in the economic opportunities that other Americans do.

However, it is a complex problem. Treaties between the US government and Indian tribes in the 19th century established Indian tribes as quasi-sovereign, states-within-a-state. Many Native Americans are fiercely protective of this sovereignty. The Federal government attempted to assimilate Indians into American society in 1953 by terminating tribal governments and putting Indian affairs under the jurisdiction of the states. Many Native Americans viewed this as the latest round of U.S. treaty-breaking. They fought termination in court, and it was eventually reversed in 1983.

Establishing private property rights also opens up reservation land to being owned by outside lenders, and this would effectively end the reservation system, which is another stumbling block to some Native Americans. Indians see reservations as important part of maintaining their cultural distinctiveness. (This also reflected in resistance to relocation to urban areas, where jobs are much more plentiful). Thus, poverty remains on Indian reservations not because of the free market, but because of government interference, in the form of anti-business tribal government and state ownership of land. Overcoming it depends on resistant Indians realizing that they aren’t really benefiting from their current sovereignty status and their willingness to either 1) give it up or 2) use it to establish private property rights and business-friendly environments. This is a structural cause of poverty, but it is one that to a certain extent has been unwittingly self-inflicted. .

One final note; One might ask about the flurry of Indian casinos that have opened up around the country since the Federal Government expanded the rights of tribes to operate casinos 15 years ago. True, some Indians have financially benefited from them. However,

1) Indian gaming is not exempt from the socially destructive effects that typically accompany gambling. Crime frequently follows the building of new casinos. And naturally, those disposed to compulsive gambling have an additional outlet. It would be far better for Indians to develop enterprises in more constructive enterprises.

2) Who benefits financially from the casinos, as well as who belongs to the tribe, are tribal governance issues, and some poor tribe members hardly receive a dime. Jobs also can go to outsiders rather than tribe members.

There are better, more effective ways to lift Native Americans out of poverty.

We now move on Sider’s proposals.

 

The Game Plan

The Importance of Faith-based groups

Throughout his book, Sider is clear that the church has an important role in relieving poverty in the U.S. There are clear instances where behavior causes people to end up in poverty, such as drug abuse and alcohol. He fully supports the proposals for faith-based groups to be funded by the government. This position also enjoyed the support of both George W. Bush and Al Gore 2000 presidential campaign. And, evangelism is very important, as well.

“An inward transformation of values and character produces a radical transformation of outward behavior. While secular agencies and government programs cannot bring about such transformation, evidence clearly indicates that faith-based programs - especially those with a substantial religious content in their activities - can and do.” [Ibid, 85]

Comment: There is one important problem here - some faith groups who accept request funding from the government have seen their freedom to evangelize curtailed [Cam.SMM.133]. Overall, though, we are strongly in agreement with Sider. However Christian organizations are funded, the church clearly has a role to play, just as it has throughout church history and into modern times through The Salvation Army, rescue missions, and other ministries.

However, according to Sider, that is not enough.

Making Work Pay

Sider is well aware of the fact that many (80%) of those who have incomes below the poverty level do not work full-time. In 1960, two-thirds of households in the bottom fifth had at least one worker, whereas in 1991 the amount was only one-third. [Sid.RC.100]. But, he counters, the low wages for less-skilled workers have dropped so far that there is much less incentive to work, so people simply choose not to. And, of course, if 80% of poor households don’t have a full-time worker, then obviously 20% do. This amounted to just under 1.9 million households in 2003 (See here). Wages, he says are unjustly low. Partly responsible for this is that the minimum wage is only $5.15, enough to earn only $10,300 annually someone working 50 weeks of the year. This is barely enough to lift a single person out of poverty, and certainly not enough to lift a family of two or more out of poverty. As Sider says towards the beginning of the book,

“I wish every middle-class person in the United States would spend half an hour honestly grappling with one simple question: How would I feel if I were a poor person living in the richest nation on earth and my comfortable neighbors simply did not care enough to offer me real opportunity?” [Ibid, 46]

As Sider sees it, the Jubilee principle requires that “all who work responsibly should receive an income that enables them to be healthy, dignified members of their community.“ [Ibid, 102]

A Job for Everybody That Wants One

Some people want to work, but aren’t able to find it. High school dropouts have an unemployment rate of 15% (and this only reflects the dropouts who are counted in the labor force), whereas college graduates only have an unemployment rate of 3%. [Ibid, 109]

In the long term, the solution is for schools to do a better, more equitable job of educating. But, we aren’t there yet, and so today’s high school dropouts and those who did not learn any type of skill have been cheated out of a quality education. “We dare not leave today’s poor in poverty that we can help correct.”, he says. [Ibid, 102]

So, Sider proposes that government guarantee a job to everyone who wants one. Two examples that he holds up as models for this idea is the Works Progress Administration (WPA), which provided employment for millions of workers during the Great Depression. Some of the more notable projects that were completed under this program are Hoover Dam and the Philadelphia Museum of Art (where Rocky ran up the steps J ). He also mentions the Youth Incentive Entitlement Pilot Project, which offered minimum wage jobs to inner city high school kids from 1978 to 1981. He insists that not all of the jobs that the government guarantees need to be under the government’s umbrella. Partnerships with private businesses and organizations can also provide some of the jobs. [Sid.RC.111]

Sider proposes that these jobs would pay 90 percent of minimum wage, and this would give workers an incentive to find regular employment. But those employed by these programs who have dependants would be eligible for Sider’s proposed income supplements, which we will review shortly.

Comment: Obviously, taxes will need to provide any job that the private sector does not provide. Sider is not quite clear on the nature of partnerships with private businesses and organizations. If this includes more cooperation between the government and temporary/employment agencies, then tax dollars need not be raised to pay for these jobs. He seems to have in mind private businesses that are paid by the government, but he seems fairly flexible about specific details.

It should be noted that Sider does take the Biblical imperative to work to heart. In this regard, his vision is different than a European-style welfare state, where people can remain on unemployment or disability nearly indefinitely.

Strengthening the Family

Sider takes seriously the argument that conservatives have made regarding the breakdown of the family and its relationship to poverty. Single mothers are the group that are most vulnerable to being poor, and those who had their children out of wedlock are even more likely to be poor than those who were married and later divorced. And children not raised in two-parent families are more likely to engage in self-destructive behavior.

Sider correctly some of the blame on no-fault divorce laws. He lifts up states that have passed Covenant Marriage Laws (which require evidence of pre-marital counseling, and allow divorce only for adultery, desertion, imprisonment of a felony, and sexual or verbal abuse of a spouse or children.). Sider proposes even stricter restrictions when a couple seeking divorce have children, such as five-year waiting periods when there is not a mutual desire for divorce, mandatory classes on the impact of divorce on children, and judicial discretion to dismiss frivolous cases. [Ibid, 133]

However, he insists that economic factors play a significant role.

“Unfortunately, conservatives often fail to see how economic factors, especially the inability of low-skilled men to earn enough to care for a family have also played a role. Thirty-two percent of all men between the ages of twenty-five and thirty-four do not earn enough to keep a family of four above the poverty level.” [Sid.JG.125]

Thus, if low-skilled workers could make enough to support a family, many young people in dating relationships who are now having children out of wedlock would get married. And lower-income couples wouldn’t face so much financial pressure, and wouldn’t end up getting divorced.

How to Do It

There are two main strategies that to get to this point. The first is exemplified by Gregg Easterbrook:

“Taxes are already plenty high enough, government already big enough, federal entitlements already too numerous…A new dawn for the poor and the money anguished should come through the free market via “living wage” laws that raise the American minimum wage to at least $10 an hour. Christians, especially, ought to favor such a reform, since its benefits would be concentrated on the least well-off. As a churchgoing Christian (albeit non-orthodox), I feel that American political Christianity should be embarrassed that it spends so much time fulminating about sexual choices and public school textbooks and similar complaints and so little time advocating relief of the suffering of the poor.” [Eas.PP.263-64]

(Um, Greg? Rescue missions? Church food pantries? Church deacon funds? The Salvation Army? Any of this, especially the last one, ringing a bell?J )

Sider, however, opts for a more novel approach. While Sider does favor living wage laws (which are largely passed on a municipal level - all businesses doing work for the city have to pay a “living wage”), and much more modest increases in the minimum wage, he grasps something that Easterbrook does not.

“Interestingly, the vast majority of minimum-wage earners are not poor; only one-fifth live in poor families. Most are second- or third- wage earners (e.g. students or spouses) in middle-income families.” [Sid.RC.107]

So most of the people benefiting from the minimum wage raise are not the people we are trying to help at all. And we can also add another demographic - semi-retired people who live off of pensions and social security and wish to add a little supplemental income and/or merely have something to do.

Sider recognizes that there is no free lunch to substantially raising the minimum wage - anytime a price for a certain item (in this case, labor) is raised, there will be less demand for that labor (resulting in higher unemployment);

“Macroeconomists - big label for economists who study the big picture - remind us that when the cost of labor increases, employers hire fewer workers. So when we raise the minimum wage, a few more people do not have a job at all while those who work at minimum wage earn more. Unfortunately, those most likely not to have a job are low-skilled persons, especially minority young adults.” [Ibid]

Easterbrook does acknowledge this counterpoint, but his response is weak.

“Opponents of a higher minimum wage say it would cause unemployment, but this effect has not been observed in California, which has a state minimum wage of $6.75 an hour…Unemployment in California is consistently at or only marginally different from the national average.” [Eas.PP.260]

This is faulty reasoning, however. An increase in the minimum wage cannot be expected to make much of a difference in the overall unemployment rate for one very simple reason: minimum wage workers make up a very small percentage of the workforce. (In the second quarter or 2001, there were only 2.3 million in the US earning the minimum wage or the lower 90-day training wage, or about 1.7% of all hourly-paid employees. [WA.144] The picture changes dramatically when we look at the specific groups that have a tendency to earn the minimum wage, the truth emerges. For example, this chart shows the unemployment rate for teenagers from the years 1984 to 1996, along with the inflation-adjusted minimum wage. Unemployment was at its lowest point (about 15%) when the real minimum wage was at an historic low point. Federally mandated increases in the minimum wage in 1990 and 1991 pushed it up from $3.35 to $4.25. And, as we can plainly see, teenage unemployment spiked up to 21%.

Even if no empirical evidence was available, the notion that a very significant increase in the minimum wage won’t cause an increase in unemployment should be rejected for one very simple reason: the proposition violates the most important and most proven law in economics, the Law of Supply and Demand. It is saying that an employer will simply keep employing the same number of people, regardless of the cost. Some will, but eventually some won’t, for one simple reason - increasing the minimum wage by a significant amount will eat up all of the profits of at least one business (and the higher the increase, the more non-profitable businesses). That business owner or manager now must do one of two things - go out of business (less people employed) or increase the price of his product (resulting in less demand for it, with the result that less people employed).

Technically, it is possible that hikes in the minimum wage won’t cause more unemployment. But that can only be true if the wage at where supply and demand meet for the least skilled workers already exceeds the new minimum wage. If that is true, then raising the minimum wage isn’t necessary, and will hardly make a difference at all. But without that condition being in place, it’s as plausible as water running uphill.

It does not follow that because a job does not pay enough to provide for a family of four, or even two, is necessarily unjust, because, as we noted, a strong majority of minimum, or near-minimum wage workers do not need to support a family or rent a two-bedroom apartment by themselves. This gives the economy an important flexibility. Workers who do not need to support families can find employment and the public can purchase services that could not be offered if every employer was required to pay a “family” or “living” wage.“ Sider recognizes this weakness in the strategy offered by Easterbrook and others. He takes the Earned Income Tax Credit, one of the more successful Federal anti-poverty programs (and rare in the sense that it enjoys the support of both conservatives and liberals) and decides to build from there.

For those not familiar, the Earned Income Tax Credit pays out money to low-income households, but it does so in a manner that rewards work. In 2003, for the first $10,510 that a household with two children earned, the householder receives a tax credit of 40 cents for every dollar earned, reaching a maximum of $4,204. From $10,510 to $13,730, this amount does not increase. After $13,730, the amount paid by the government declines 21 cents for every dollar earned, reaching $0 at $33,692. Of course, many of these households do not pay any income tax, but they still get the credit. (Strangely, for some reason this is referred to as a “refundable” credit. If you don’t pay any taxes but get tax credits, then they aren’t refunds, they’re outright payments!) It can be received in monthly sums during the year, or as a single, annual, lump-sum payment after filing the Federal Income Tax Return.

With that foundation in place, Sider unveils the main ingredient of his plan - the money needed to make up for income deficiencies should come from additional credits. In Sider’s view, every tax credit and deduction given to the middle and upper classes should be granted to low-income families, even if they don’t pay income tax. And Sider even drops a carrot to conservatives - this would strengthen the family.

He starts first with the Child Dependant Care Tax Credit.

“Ironically, some conservative pro-family advocates support a dependent care tax credit but do not insist that it be refundable. Surely the kind of refundable dependent care tax credit proposed here encourages work, empowers the poor, and strengthens the family. Every pro-family person should endorse it.” [Sid.RC.109]

Currently, help with child-care for low income single parents comes in the form of government subsidies. Sider has a number of problems with this approach,

“One problem with this , as (the late) Senator (Patrick) Moynihan observes, is that it creates two classes of working moms. A minority get free (or subsidized) government government-provided child care. The rest have to pay for it. One solution, of course, would be to provide free childcare for all poor working moms. But that would be highly unfair to poor two-parent families and even discourage marriage (I.e. this would encourage cohabitation - a couple may not get married to keep getting their child care paid for.) We could solve that problem by providing free child care to all poor parents who work - single moms and two-parent families. But that would mean discriminating against two-parent families who treasure parenting so much that they choose to live on less money so one parent can be at home with the children.” [Ibid, 108]

Sider proposes offering a $1000 to $1500 Dependent Care Tax Credit that is “refundable” to all households where the total amount of work hours meets or exceeds 40 hours. For him, this covers all of the above problems.

Then there is the Child Tax Credit, which offered parents a $500 credit for children under seventeen beginning in 1999.

“This is a wonderful pro-family move, and it probably should be expanded to $1,000 over the next five years. (It since has been. It was supposed to go back to $700 in 2005, but Congress recently extended it). There is one ghastly problem, however. This tax credit is not refundable. Therefore, it is absolutely useless to the poor who owe no taxes…How can pro-family organizations celebrate tax breaks for middle-class families that offer no help at all for the families most in need of assistance?” [Ibid]

To fully visualize what Sider as proposing, I’ll reproduce a chart from page 115 of Sider’s book, based on 1998 dollar amounts:

 

Income sources (current as of 1998)

Two-parent family of four (total forty hours of work from one or both parents)

Single parent with one child (parent working thirty hours)

With Proposed Changes

Two-parent family of four (total forty hours of work from one or both parents)

Single parent with one child (parent working thirty hours)

Minimum Wage $5.15/hr

$10,300

$7,725

Increase to $5.50

$11,000

$8,250

EITC

$3,756

$2,271

Increase

$4,410

$2,814

Food Stamps

$2,916

$1,316

Same

$2,738

$1,190

Dependant Care Tax Credit

$0

$0

Make “refundable”

$3,000

$1,125

Child Tax Credit

$0

$0

Make “refundable”

$800

$400

Less Social Security (7.65%)

$788

$590

$842

$631

Total

$16,174

$10,722

$21,106

$13,148

Poverty level (1998)

$16,530

$11,235

$16,530

$11,235

 

 

He also has one final add-on - lower-income households persons do not pay enough income tax to qualify for the home mortgage interest deduction:

“Would not a house to call their own strengthen poor families? Few material things anchor a family more securely than home ownership…A refundable Home Ownership Tax Credit (HOTC) could offer significant economic incentive and hope for lower-income families to purchase a home of their own. Such a tax credit (worth $1,000 to $1,500 a year) could be modeled on the EITC. Only homeowners working at least twenty hours a week would be eligible.” [Sid.RC.134]

And lastly, one more problem - the disparity in wealth. Keeping the Jubilee principal in mind, Sider proposes Individual Development Accounts (IDAs).

“At birth and/or other points (e.g. each birthday until age sixteen, passing a grade, finishing high school), the government would deposit money in the IDA of every poor U.S. citizen, and the money would be invested in stocks and bonds….A portion of the peson’s growing IDA could be used at certain points to create additional wealth-e.g., 50 percent of accumulated assets for a college education; 25 pecent of accumulated assets after age 30 for a down payment on one’s first house. At age sixty-five, the IDA would add to the person’s retirement income…What would be the effect if every inner-city youth knew…that he had a personal IDA that would provide tens of thousands of dollars for a college education and/or the purchase of a first home? Genuine hope for the future might encourage different behavior.” [Ibid, 206]

And now to unpack and evaluate.

When Is a Tax Break Not a Tax Break?

Our first stop will be a brief one. If Sider were simply to state that his goal of offering tax “breaks” for non-income tax payers was merely to get around the problems of raising the minimum wage to “family wage” levels, that would be one thing. But to say that low-income families not benefiting from a certain tax credit in and of itself constitutes a “ghastly” problem doesn’t make any sense. The reason that tax breaks are created is to give those who pay taxes more of the money that they earned back, not to redistribute money to those who didn‘t actually earn it. If I don’t pay any income tax, then I don’t have any taxes to get back. Now, I’m going to go out on a limb here and propose that when Sider took his kids out to movie matinees, he didn’t split the difference in the discount with his children!

The Labor Market

Now we move to the availability of jobs, how much jobs are paying, and the hope of escaping poverty by working. In short, Sider paints a picture of large numbers of people who only have minimum wage jobs available to them, year after year after year. In fact, this is the most extreme example, and saying it is extreme is a colossal understatement. His analysis fails to take into account the following facts.

1. Sider fails to note how rare minimum wage workers are, and that those perpetually working at minimum wage are even rarer still. Sider’s goal is to enable minimum wage workers to support a family at that rate of pay year after year. But the number of people who are in these circumstances is negligible. We’ve already noted how few minimum wage workers there are. But minimum wage workers rarely stay at that wage for very long. Part of the reason that minimum wage workers are paid the rate that they are is that many of them are new to the labor force. As such, they have little or no practical work experience, or a work history that would establish that they can be trusted to show up and get along with co-workers. As they gain work experience, they learn how to be more productive workers. And most “low-skill” jobs teach a worker new skills, like learning to operate a cash register or punch on a 10-key pad. So, their productivity, and concurrently the market value, of their labor goes up, even if they have no specific job skills acquired outside of work.

To illustrate the importance of these points, we will take single mothers, the demographic group that is most at risk for being in poverty, especially long-term poverty, and look at there hourly pay rates by educational level. (data is from 2001 and comes from here):

Education level

25th Percentile

50th Percentile

75th Percentile

HS Dropout

$6.25

$7.00

$9.00

HS Graduate

$7.00

$9.00

$11.98

Some College

$8.00

$10.50

$14.18

College Graduate

$12.00

$16.83

$23.10

 

And the percentage earning the minimum wage, or slightly above it, is very low, indeed.

Education level

At or below min. wage ($5.15)

$5.15-$5.50

Dropout

8.2%

4.2%

High School graduate

3.8%

1.7%

College (1 or more years)

3.4%

0.9%

 

And what about these few? How long are they remaining at a minimum wage pay rate? Not very long at all, on average. If one begins working at minimum wage, the probability that that worker will still be earning the same amount one year later is only 10.5 percent. (See here, page 21, Table 3). Just under half will earning $1 an hour more. After 4 years of working, about 75 percent will be earning $1 an hour more, and over half will be earning $2 an hour more. .

So, even though there are some workers who are working full-time and are still poor, we must ask, how long are these workers remaining in poverty? The answer? Not that long. In fact, looking at the group of welfare recipients who left the rolls in the first months of 1996, we see the poverty rates drop dramatically as the number of months off of welfare increase. Doubtless, many of these former recipients were low-skilled. But just a little time in the labor market increased their incomes significantly. (Source: here)

Basis of calculating poverty

% in poverty last 6 months of welfare

% in poverty 19-24 months after leaving

% in poverty 37-42 months after leaving

Not including EITC

57.9

44.8

31.8

Including EITC

55.8

40.8

24.9

Including food stamps and other assistance

46.1

28.8

19.2

 

This actually shouldn’t be a surprise. Remember that Sider proposed that a family of four should get $4,932 more than they are currently getting and a family of two should get $2,426. Yet, the breadwinner in each family would only need to earn a wage of $7.62 ($2.47 above minimum wage) and $6.76 ($1.61 above), respectively, to get to these amounts!

Thus, while getting a job may not immediately lift one out of poverty, it can lift one out of poverty in a fairly short amount of time. All in all, your odds of lifting yourself out of long term poverty vastly improve if you simply:

1. Don’t drop out of high school.

2. Get a job.

Thus, of the 1.9 million working poor, some are only short-term. But, in fact, there are some other factors regarding the working poor that we need to take into consideration.

1. The poverty income calculation does not include food stamp assistance. Granted, it doesn’t subtract out Social Security taxes, but even so, taking this into account would reduce the working poor population some more. And Sider also points out that many who are eligible for the EITC don’t claim it, either because they don’t know about it, or they don’t know how to get it. [Ibid, 106]. The calculated working poor population would likely take a good-sized drop if these items weren‘t true.

2. In 2002, there were 360,000 people who earned less than $10K while working full time 50 weeks or more. (see here, “Work Experience of Householder Chart”). This would seem to be incongruous, considering that minimum wage for 50 weeks by itself is $10.3K. It seems likely that many of these had unreported income, or suffered some sort of business/investment loss, and thus, their pay was actually higher than their income. So it is possible to be one of “The Working Poor” and earn a non-poverty wage.

3. It would also seem likely that many of those who continuously work full-time yet are stuck in long-term poverty probably belong to large households, since a little work experience and the EITC can lift a two- child household out of poverty fairly soon. $25K is enough to lift a family of four out of poverty. But for a family of six or more, the worker(s) can still earn $25K and still be poor. In 2003, 4.25 million of the poor lived in households of six people or more. (See here). Sider doesn’t discuss this at all, and it’s highly relevant, since the maximum EITC amount goes to families with two children or more - it does not increase with a third, fourth, or fifth child. Should “refundable” tax credits be given for each additional child? This is an important question that Sider’s analysis really should have taken into consideration.

We will examine Sider’s portrait of how hard it is to not drop out of high school in a little while. For now, we continue looking at the labor market.

2. Sider is off-target about the severity of the decline in wages for less-skilled workers, and fails to note and discuss a major reason why the declines have taken place.

The rate of pay for high school dropouts has been dropping, though there are some important facts that must be included into this analysis. In 1979, only 67.7% of adults between the ages of 25 and 64 had completed high school. By 1993, the rate had risen to 80.2% (See here). So, those lacking a high school education would represent roughly the bottom third of earners in 1979, while in 1993 they would represent roughly the bottom fifth. That means that the median earner of high school dropouts would have dropped down from approximately the 17th perrcentile to the 10th.

What’s more, there is scarcely a mention of one reason that wages for lower-skilled workers have been stagnant to declining: Immigration (legal and otherwise) from Latin America. The U.S. Department of Labor estimates that 50 percent of wage rate declines are due to this one factor. [Han.MSB.13] So while demand for low-skilled workers is already low, we deal with another problem; a constant influx of these workers. We will discuss immigration policy in the next essay. For now, we note that it is a factor in declining or stagnant wages for low-skilled workers.

As we noted in the second essay, the notion that the best paying manufacturing jobs have gone overseas is a red herring. The heavy, high-paying type of manufacturing, such as aircraft and machine manufacturing actually saw employment increase after the U.S. established freer trade in the 90s. (Of course, aircraft took a hit after 9/11, but this should rebound in time). There has been much talk of the recent trend to outsource high-paying white collar jobs to foreign countries, and we will discuss that shortly. However, the outsourcing problem has been vastly overblown.

A recent study by Maury Harris, chief economist at UBS Investment Research, the total amount of jobs lost to outsourcing amounts to only 400,000 a year. This is paltry, considering that there were 333,000 initial claims for unemployment during the week I am writing this. Admittedly, there are some variations in estimates in the number of jobs outsourced, but most are somewhere in this ballpark. And by some counts, this is actually less than the jobs gained by “insourcing” (See article here - free registration required), as European capital seeks economic asylum in the U.S. In Oct. 2004, the U.S. unemployment rate stood at 5.5%. This seems high because of the unemployment rate stayed under 5% during the last few years of the 1990s. But this is still a lower rate than 25 of the last 40 years, and a lower rate was not experienced between the years 1974 and 1987!

3. The number of skilled, good high-paying jobs is high

This is a very important point. Sider views the disproportionate increase in the rate of earnings of highly skilled workers as an injustice that must be corrected. However, this increase actually reflects some VERY, VERY GOOD NEWS!! If wages for highly-skilled workers are increasing, it is because the demand for such workers exceeds supply. Thus, all of the market mechanisms that we discussed in the previous essay are creating outstanding opportunities for more and more people, not taking them away, as Sider insinuated. However, there aren’t enough people available to fill them.

Fresno, CA, where I live, is a city with a persistent double-digit unemployment rate. In such a place, you would imagine that blue-collar jobs that pay $15-$20 an hour would be easy to fill. Yet, in the past year, I have seen two newspaper articles reporting that positions of that type take months to fill, while unskilled positions can be filled in days. (Alas, only two-thirds of Fresno adults have a high school diploma). One auto repair shop had an auto tech position that had been open for a YEAR. Despite the job paying $40K a year with benefits, the shop had seen only two applicants in the entire time!

On a national level, The U.S. Department of Labor expects that these major sectors of the U.S. economy will create the most jobs between now and 2012. Clearly, high-skill, high-paying jobs lead the way. The top four are:

1) Professional and related

2) Services

3) Management Business & Financial

4 Construction and Extraction

Most of these sectors involve positions that require high levels of skill, with the exception of some service jobs. I emphasize “some” because many people automatically think “fast food worker” when they hear services, but this includes health services, education, and business services - all of which pay well and are expected to grow in employment by leaps and bounds in the coming years. So although Sider decries the division of wealth, the hard fact is that a good chunk of recent and future wealth was made (and will be made) on the minds of the super-skilled, not on the broken backs of minimum-wage workers. (Think Microsoft, Oracle, etc)

Now, about the outsourcing of high-paying white collar jobs to foreign countries (particularly India) high-tech jobs, ranging from call-center techies to financial analysts to computer programmers. The significance of this is also overdone for several reasons. There are many hidden costs to outsourcing, and it is only a matter of time before more companies get bitten and catch on. This article here highlights some of the hidden costs such as vendor selection, transition and training, and turnover. In fact, Dell Computers recently moved their call centers from India back to the U.S. after experiencing quality complaints from customers. In addition, it is much more difficult to maintain control over intellectual property in less developed countries, and you have little recourse.

It isn’t just that people must acquire skills to support their families - the U.S. economy is demanding the goods and services being produced by high-skilled people. What’s worse, baby boomers will begin to retire shortly, which will strain the labor pool. And as this population ages, they will demand more health care. For all of the talk about providing health insurance to those that don’t have it in this country ( a very legitimate issue that we will take up in the next essay), it must not be forgotten that we must have enough health care professionals to actually give the care. It is extremely vital that our work force acquire high levels of skill, otherwise we face long waits for urgent medical care and diminished technological innovation.

And what about jobs that require an education, separate from training provided from an employer? What about learning a trade? Trade education, we have made clear, can be made more easily accessible. But how inaccessible is that training now? Sider’s insinuation has been that it is lack of access to education that keeps people from obtaining it. It is on this claim that we now turn our attention to.

Education - Who Is To Blame?

This really is the million dollar question, and much of what will follow in the next essay will spring from the foundation laid here. There are really two levels we need to examine. Whether a student graduates or drops out of high school goes a long way to determining whether that person will be stuck in long-term poverty. The question of whether a student goes on to college does not so much play a role in determining poverty as it does in determining if that person will rise from a lower-middle class income to a middle-class or upper-middle class income. We will start with the dropout/high school graduate level.

We’ll state our conclusion upfront; Sider, like many pundits, whether conservative are liberal, fall into the same trap. Since lower-income inner city minority youth disproportionately perform poorly, they receive a disproportionate amount of attention in journals, op-ed pieces, commentaries, etc. In and of itself, this is good - our focus should be on where the biggest needs are. But if you are talking about the problem of high school dropouts OVERALL, you need to talk about two facts that never seem to come up;

1. The majority of high school dropouts are WHITE.

2. The majority of high school dropouts are MIDDLE or UPPER-CLASS.

 

Here is a survey of 15-to- 24 year-olds taken in 1996 regarding high school dropouts. Here is the key data:

By Race

 

Race

% of dropouts

% of population

White

52.8

66.1

Black

20.4

15.7

Hispanic

20.2

12.9

Asian/Pacific Islander

4.8

4.7

 

By Income

Income Level of family

% of dropouts

% of population

Bottom fifth

30.8

13.9

Middle three-fifths

56.8

56.7

Top fifth

12.5

29.4

 

We’ll discuss disparities in racial performance first.

Whites

While the vast majority of white, middle-class kids turn out to be responsible adults who complete, at the very least, a passable level of education, one truth urgently needs to be pointed out - a suburban, middle-class, or even an upper-class upbringing is NOT a one-way ticket to a college education and a high income. A small percentage (somewhere in the single digits), drop out of high school and turn out to be pretty much useless for a decade or more of their adult lives. Now, I’ll grant that not all dropouts can be classified in this way. Some may have already learned a trade from their upbringing, some may plan a military career, and in some cases a kid may have a sick relative that no one else can care for. But if you went to a middle-class or upper-middle class school out in the ‘burbs, then you know what I’m talking about. There were plenty of kids who cut class, did drugs, and where disrespectful to teachers, on occasions when they actually bothered to show up. Actually, even a few of these turkeys managed to at least graduate. This contrasts with Sider’s portrait of high school dropouts as being primarily disadvantaged minority kids from the inner-city who, if they didn’t feel so hopeless, would just cheerfully choose to finish school and start wonderful, healthy Cleaver-like families if our society weren’t so uncaring!

From that previously mentioned survey, here are some really bad reasons kids dropout of school, with emphasis on reasons that male students drop out.

 

Reason Dropping Out (more than one answer possible)

Total

Male

Did not like school

51.2%

57.8%

Could not get along with teachers

35.0%

51.6%

Was suspended too often

16.1%

19.2%

Was expelled

13.4%

17.6%

Friends dropped out

14.1%

16.8%

 

Over half didn’t like school! Hey, I just didn’t feel like finishing! Over half could not get along with teachers.! Do you think that maybe, just maybe, some of these guys won’t get be able to get along with co-workers or bosses? Could that play a role in explaining why the unemployment rate for dropouts is so high? Sider’s worried how these guys can support a family? If they didn’t have the follow-though to finish high school without any of the backup plans previously mentioned, how in the world are they going to handle marriage and parenthood? That involves doing a whole heck of a lot of stuff that you don’t feel like doing. It also requires extensive skill development! Compared to that, graduating from high school is a ***MAJOR CAKEWALK***. And about 1/7 dropped out because their friends did. (Wonder if their friends jumped off a cliff?)

A Sept. 14, 2003 article from the New York Post discusses how an increasing number of white, middle-class kids are ending up homeless in the city;

Welcome to the coddled lifestyles of New York's new "homeless" - young kids who, besides getting pampered by charities, rake in hundreds of dollars a week begging on the street…Peaceful, articulate and well-read, they're more likely to resemble Grateful Dead groupies than the freight-train-hopping hobos of yore. And while these predominately white, liberally pierced and tattooed kids - one of whom told The Post his stepfather is a Wall Street bond salesman - are all…..getting "away from material life"… 21-year-old Tom (is) The oldest of four children, he grew up on a 200-year-old Victorian estate in Chatham, N.J. and his stepfather sells municipal bonds at HSBC Bank on Wall Street. Tom left home five years ago after getting kicked out of school for drinking and playing hooky. He remains on speaking terms with his parents, but they no longer give him money. …. Like his girlfriend (Dawn), he spanges around NYU, though makes only about half as much as she does. The couple is thinking about going to Philadelphia this fall to find another squat. "There are 31,000 abandoned buildings down there," Dawn said. "Ideally, we'll be able to live for free." "I don't find joy in a 9-to-5 gig," Tom told The Post. "I'm kind of happy with the way things are now. And if it ever gets to the point where I'm not, I'll change my life."

Oh, the cries of the oppressed, huddled masses.

Sider admitted that dropping out of high school was a behavior cause of poverty, but he attributed it to structural factors, like poorly performing schools and subtle racism. But we can’t use these excuses for white kids. Thus we could expect that the same percentage of minority kids would drop out if all factors were equal, and we can attribute this to simple lack of follow-through. For the sake of argument, let’s assume that all of the disparity between minorities and whites can be attributed to racial and social injustice. And since I’m writing this shortly after a presidential election, we’ll take 538 dropouts (one for each electoral vote), representing a cross-section of the dropout population, and count how many dropouts can be explained by candidate N. Justice, or Ima Slacker. Slacker gets the share of minority dropouts that would drop out if they dropped out at the same rate as whites.

 

Ethnicity

Electoral Votes

Justice

Slacker

White

284

0

284

Black

110

43

67

Hispanic

109

54

55

Asian/Pacific Islander

26

6

20

Other

9

7

2

Total

538

110

428

 

Slacker wins in a landslide. But even this is we assuming that the entire difference in performance was due to structural injustice. But is that assumption correct? Let’s take a look at each minority group.

Asians

Curiously, Sider says nothing about Asians. Although the Asian dropout rate is slightly higher than for whites, the real story lies in the success of Asian students. In short, they are beating the pants off of white kids. Asian children report that their parents, on average, expect A-minuses or better from them, higher than the B-minus expected by white parents. [Thern.NE.94] Thus, it should come as no real surprise that Asian households earn higher incomes than whites, and that Asians are twice as likely to have four-year degrees as whites. [Ibid.NE.85] By itself, this should bring us to one conclusion; some ethnic groups take education more seriously than others. And this shouldn’t surprise us, either - ethnic groups form subcultures. Each group has a value system that influences that group’s basic worldview and priorities. This in turn influences the behavior of the members.

Think about this for a minute. The most affluent group in the U.S. is a minority group. Not only that, it is a group that came to the U.S. through immigration, with many of them having virtually nothing when they got here. What’s more, many of them suffered discrimination, prejudice, and structural evils. When the first Chinese immigrants came to the U.S. in the mid-19th century, they were deeply resented by native-born Americans, partly because their presence depressed wages somewhat, but also because they were thought to be inferior. Many of them did dangerous work, particularly working on the Trans-Continental Railroad. Japanese-Americans were interred during World War II, and their businesses and homes were unjustly seized. Yet, this community has long since recovered in terms of affluence.

Armenians and Jews are two more groups who were at one time disadvantaged and discriminated against, yet are today more affluent than the Anglo majority. This is powerful evidence that prospering in the U.S. does not require wealth or income distribution. In the U.S., countless individuals have arrived on our shores with nothing but tattered clothing and have become quite wealthy, and it’s even been done by people who have been rejected by the mainstream of society. By all means, discrimination and prejudice are hideous evils and must be fought against wherever they are encountered. But one still can encounter these things and prosper. You just need to find something that people really want done..

Blacks

Let’s start off with some good news here. This chart shows the educational levels of the main racial groups in the U.S. And while the dropout rate for blacks is twice as high as it is for whites, this still means that eight out of ten blacks aged 25 or over have at least a high school diploma. And the percentage of blacks with college degrees reached 17.2 percent in 2002, a 66% increase since 1990. The percentage of blacks who go on to some sort of secondary education is about the same as whites. [Thern.NE.33]

But the bad news is, as we previously noted, is that even when black kids graduate from high school, their skills are at the eighth-grade level. Thus, while we see many blacks entering college, the deficiency in skills begins to catch up with them there, and they are less likely to complete a degree. So the lack of performance at the K-12 level is key, and that also ties in to the disparity in as is our examination of the high school dropout.

According to Sider, and even many members of the right (who advocated school choice and charter schools) and the left (who advocated more federal funding for schools), it was a simple matter of putting minority children in better schools. However, this fails to explain some more disconcerting data. Overall, black students score about 33 points lower on NAEP tests than whites. That doesn’t surprise anyone. However, how much does the gap close when black children are raised in more privileged households, and when white children are raised in lower-income households? Not all that much. When a black child has a parent with a college education, the gap between him and his white, raised-by-college-educated parent jumps to 35. When a black child is raised in the suburbs (as 33% are today), the gap only drops to 28. In fact, at the farthest gap drop, which occurs among white children who are raised by a high school dropout or are free-lunch eligible, the gap is still 23.

(The following is based on article here)

Shaker Heights, Ohio, is an upscale suburb of Cleveland. It is highly racially integrated, with a substantial affluent black population. It is also one of Ohio’s best districts, and many black parents moved there so their children could succeed academically. However, this wasn’t turning out as they had hoped. Black students had an average GPA of 1.9, compared with 3.45 with their white peers. A group of black parents, along with the school board, invited the now late John Ogbu, a Nigerian-born UC-Berkeley anthropologist who had studied the academic performance of ethnic minorities in a variety of countries, to come to Shaker Heights and spend a school year examining the district to see if there was any way to explain the disparity. The parents were expecting to find evidence of racial discrimination.

After completing numerous interviews with school personnel, students, and parents, Ogbu turned in some surprising, and initially uncomfortable results;

“Ogbu found a near-consensus among black students of every grade level that they and their peers did not work hard in school. The effort these students put into their schoolwork also decreased markedly from elementary school to high school. Students gave many reasons for their disinterest. Some said they simply didn't want to do the work; others told Ogbu "it was not cool to be successful." Some kids blamed school for their failures and said teachers did not motivate them, while others said they wanted to do well but didn't know how to study. Some students evidently had internalized the belief that blacks are not as intelligent as whites, which gave rise to self-doubt and resignation. But almost of the students admitted that they simply failed to put academic achievement before other pursuits such as TV, work, playing sports, or talking on the phone.”

Another factor was that black parents, even those who were college educated, were less engaged in their children’s schoolwork. They tended to feel that it was the responsibility of the school district to motivate their kids and make them perform well. Indeed, nationwide, black children reported that on average, their parents expected at least C-’s, versus the A- for Asian children and B- for white children. [Thern.NE.94]

When this was presented to the parents, they were not happy. They didn’t dispute the facts, but they were concerned that it would reinforce stereotypes that black kids were lazy and would draw attention away from problems of racism. What is significant about this is that it would seem that these are problems that everybody knows, but we are still uncomfortable talking about them. One black observer, commenting on similar charges by comedian Bill Cosby, says

“That's the dirty little secret of black America. We talk about personal responsibility all the time when we're by ourselves. We talk about it at the NAACP conventions, in our churches, in our communities. We joke about it in comedy shows and in our self depictions in movies and television. (Anybody seen "Soul Plane" yet?) And we complain about it in our communities, where we're tired of gang violence, drug abuse and poor customer service. We talk about it everywhere, except in front of white people.”

This is actually quite understandable, I think. If it is publicly admitted that some problems may be due to behavior as much or even more than racism, then legitimate points about racial discrimination in other areas may be swept under the rug or ignored. Also, this possibly could undermine arguments for the necessity of Affirmative Action. However, one important point needs to be made; Ogbu’s findings don’t discount racism at all. His studies of other cultures led him to form a theory called the “involuntary immigrant” theory. As opposed to voluntary immigrants (who choose to come to a country because they see it as a land of opportunity - like Asians, Irish, German, Italian, etc), involuntary immigrants come to a country because they were forced to. And while voluntary immigrants eventually come to equal or exceed the educational and economic performance of the natives, involuntary immigrants typically underperform in both arenas. For example, ethnic Koreans do fine academically in the countries where they live, except Japan, where they were brought there unwillingly. Ogbu offered the explanation that involuntary immigrants tend to be somewhat resistant to cultural assimilation and also tend to be mistrustful of that culture’s institutions, and that includes the educational system. The same would also apply to Native Americans. Whatever the reasons for this, the fact that this phenomenon is found in other places in the world does give some weight to the thesis. It is unfortunate that some of Ogbu’s critics have accused him of “blaming the victim”. But he seems to be assigning blame to everyone, and it seems appropriate to do so.

Researchers Richard and Abigal Thernstrom also offer a little historical perspective. First, black slaves weren’t allowed to learn to read or write. Then they were allowed to, but were denied the chance to attend school. Once they were given that opportunity, they were placed in very bad segregated schools. And even if a black person managed to get an education, he or she tended not to benefit from it much. [Thern.NE.121] Charles Murray, author of the highly acclaimed book Losing Ground, informs us that black Ph. D.‘s in the 1930s and 40s could be found teaching at black high schools, rather than white universities. [Mur.LG.89] Developing an orientation towards academic excellence isn’t bound to happen naturally in such circumstances. One might still point to the fact that there is an earnings gap of 19% between college educated white and black males as evidence of widespread discrimination in the workplace, but when we look at black men who are equal to whites in math and reading skills, an interesting thing happens; black men earn 9% more! [Thern.NE.38-39] Opportunities for blacks are substantially better than they were just 50 years ago. And it isn’t that black students haven’t realized this. Survey after survey of black kids show that many of them believe that education is important to their success and that better opportunities result from academic achievement. But as the Thernstroms point out, “the cultures of groups are shaped by historical memories and are slow to adjust to new realities.” [Ibid, 121]. In that scheme of things, a generation and a half is a very short time, and apparently not quite long enough for a new view of the world to filter down to day-to-day actions and prioritization. In any event, although all this is difficult as it is to discuss these things, it is necessary to have any hope of achieving equality. The good news is that equality is within reach.

Hispanics

Ogbu attempted to stretch his theory to explain the lower performance of Hispanic students on the grounds that they should be considered involuntary immigrants as well because the United States took the American southwest from Mexico during the Mexican-American War over a century and a half ago. However, this won’t hold water, as the Thernstroms explain;

“Only about 50,000 Mexican nationals stayed on in the area after the United States acquired it. Just a tiny fraction of the more than 20 million people of Mexican ancestry are descendants of those original settlers. The vast majority are themselves immigrants…” [Ther.NE.103]

And of course, not all Latinos in the U.S. are Mexican. The category includes all individuals from Spanish-speaking countries in Central and south America. Neither is “Hispanic” a single ethnicity. Hispanics may be white (descended from the original Spanish or Portuguese settlers, Indian (Aztec, Maya, or Inca), African (descended from the slaves brought by the European settlers), or a combination of the three. Nonetheless, the majority do come (and are coming) from Mexico, and are either Indian or mixed ancestry.

First, we need to correct one misleading statistic. Sider claims that Hispanics are four times more likely to drop out of high school. It is true that if we are talking about Hispanics being four times less likely to have a high school education than whites. But this is because so many Hispanics are recent immigrants. Their native countries often only provide free education through the elementary or junior high level. The result is that just under 45% of Hispanic immigrants have completed high school. Many of them never actually attended an American school. [Ibid, 106-7] Among native-born Hispanics, the dropout rate drops to just under 15%, just slightly above the black dropout rate of 13%. The average Mexican immigrant, for example, has completed about 8.5 years of school, the average 2nd generation Mexican has completed just under 12 [Ibid, 108]

Over the course of American history, new immigrants have typically come to the U.S. with very little, and initially they are at a disadvantage with respect to the Anglo majority. However, it has been par for the course for educational and income disparities to disappear within 2 or 3 generations. However, this has not happened with Hispanics, even if we acknowledge the difference between immigrant and native-born Hispanics. While 2nd generation Mexicans complete just under 12 years of school, 3rd generation Mexicans only add a fraction of a year to this amount, and this trails both 3rd generation whites and blacks. [Ibid.108]

The Thernstroms see many parallels between today’s recent Hispanic immigrants and Italian immigrants of the 19th century. Among them are:

1. Italian parents were from more disadvantaged southern Italy, just as Hispanic immigrants tend to be darker-skinned Indians from disadvantaged rural areas of Latin America. Newly arrived Italians had little education, and often had to take the more menial jobs available.

2. Italians did not plan to stay permanently, and many Hispanic immigrants don’t initially plan to.

3. Because of this, Italians were slow to adopt America as their home country and slower to learn English. Likewise, we find that Asian children learn English much quicker than their Hispanic counterparts. This is the opposite of what we would expect, since Spanish is a fairly close cousin of English. Asian tongues, on the other hand, have very little or nothing in common with English.

4. There was much less emphasis on completing an education in Italian homes, with the result that Italian students performed lower than Jewish students, who attended the same schools. [Ibid, 100-01]

Thus, it is appropriate to designate a third type of immigrant - those who come voluntarily, but don’t really plan to assimilate into the cultural mainstream.

There is one important difference between Italian and Hispanic immigrants, however. While over half of Italian immigrants eventually returned home, this is not happening with today’s Mexican immigrants. As Hoover Institute Fellow and California farmer Victor Davis Hanson explains,

“Mexico, after all, is still a class-bound society where an Indian with ample capital can never quite make it…And here we collide again with the dilemma of illegal immigration. For all the brutality of America, the immigrant senses a weird sort of kindness here..The well-intentioned Americans can deliver to the illegal immigrant housing, medicine and food at a level beyond almost anything found even among the well-off in Mexico City…..Can you show up with a 103-degree temperature at the local clinic and be given an instantaneous shop for strep, with free sample bottles of new antibiotics accompanied by kind words of encouragement from a Stanford Medical school intern? And will your children come home with notices from the local school advising you about free study halls, college scholarships and mental health counseling…? The finest universities of Mexico do not scout out Indians in Oaxaca to redress historic imbalances in their enrollment; America’s Ivy League does.

“No, the immigrant senses that - whether out of altruism, guilt or coercion - the crazy gringos in America treat him better than in his beloved Mexico. So it is harder than one expects to cut this new umbilical cord he has grown in America. Tricky also it is to forsake the mall, the summer blockbuster movie fare, or the free and modern emergency room.” [Han.MSB.46-47]

And so, many stay, but with the mind still entertaining thoughts of going back. And if you might go back someday, doing the things necessary to succeed in America doesn‘t seem necessary. Likewise, on average, Hispanic children report that their parents only expected them to get C-’s, [Ibid.NE.94] just as was true of blacks.

While Hispanics have encountered racism and hardship in the U.S., it has not been the persistent,. system-wide and traumatic type that blacks and Native Americans suffered. It has been more along the lines of that experienced by Asians, Irish, Polish, Jewish and Armenian immigrants, who eventually prospered. No doubt real, but comparatively mild, and can hardly be used to explain underperformance.

By Income

If we do this strictly on an income basis, we must come to a similar conclusion. Only 30% of dropouts come from the bottom fifth. And how many of these attend horrible inner-city schools? Actually, not many. Sider presented some interesting numbers regarding how the poor are distributed throughout the population. Only 12% of poverty households live in high-poverty inner-city neighborhoods (defined as a poverty rate of 40% or more). 31% live in mixed-income urban neighborhoods, and 25% lived in rural areas. Ironically, the poor are most likely to live in the suburbs. [Sid.RC.30] Suburban and rural schools are usually fine, as are most urban (but not inner-city) schools. These schools usually graduate the vast majority of their students, and send a fair amount of kids on to college. What’s more, in small and medium sized cities, low-income neighborhoods are seldom large enough to have their own schools, and the kids often attend the same schools as middle- and upper-class kids. And of course, not all inner-city schools are inadequate. If we were to quantify the amount, the number of dropouts who are products of bad schools can only account for a small fraction of the dropout total. No matter how you slice it, The vast majority of high school dropouts had access to an adequate education and faced no real challenges to finishing.

Is College Unattainable for Poor Kids?

Do lower income students feel hopeless because they don’t have the money for college? Would the knowledge that they can afford it cause them to be motivated?

A recent study by the American Council on Education (ACE) found that 1.7 million moderate and low-income students did not receive any Federal aid because they didn’t apply for it. 850,000 of these would have received a Pell Grant. A key reason is that middle-income students assume you have to be really poor to get it, and low-income students believed that you needed a perfect SAT score.

The first thing to point out is that 850,000 lower-income students are now attending college without the benefit of a Pell Grant AND a Federal Student Loan. These students are probably getting through school by

1) Living at home and attending a local college.

2) Holding a job while attending school or

3) Getting some type of scholarship or

4) A combination of the above

But we should also point out that middle-income students aren’t too likely to be getting much help from mom and dad, as well. Lots of middle-class kids have to pay their own way. In fact, nearly half of America’s millionaires never received any money for tuition from their parents or relatives. [StDa.MND.16] If they can do it, then poor kids can do it as well. How many low-income high school graduates could go to college but just choose not to? Or are unaware that they can? Why must we talk about Individual Development Accounts, when poor kids aren’t applying for money that is already available to them?

A former co-worker of mine was a mother who had emigrated to Mexico in her youth. After a while, her 20-year-old son came to work in the office. One day, I walked in on a conversation of theirs. The mother was pleading with her son to go to college. Now, while this kid didn’t come from a very privileged background, and even though the urban high school that he graduated from wasn’t the best, college was still attainable for him. Fresno boasts a quality junior college and state university, where annual tuition and fees are about $600 and $2500 respectively (Even less at the time, before our big budget crunch.). This was certainly obtainable between working part-time, living at home, and taking out a modest loan. In fact, his sister, then a high school senior, was planning on doing exactly that. The kid, who wasn’t engaged in any anti-social behavior (drugs, gang activity, fathering children out of wedlock) simply shrugged his shoulders and with his characteristic happy-go-lucky grin, said “So?” That a $15-$20/hour job, rather than $6, might await him if he went didn’t seem to matter in the slightest.

Now, non-Californians will object that tuition is higher in other states, and sometimes by a lot. But the point is that even when everyone has the chance to go to college, many kids simply won’t choose to go. A good number may not feel they need it, and they could well be right. And even in states where tuition at state schools is much higher, there are still community colleges which are much more affordable. An AA degree can still be obtained without going too much into debt, and that alone makes a person employable at a not-too-shabby income, certainly well over the poverty level. And some community colleges even have some vocational training programs that last only for several months.

Here’s the bottom line: If a poor student wants a four-year degree, then there is a good chance that he or she can get it. If a poor student wants to learn a vocational skill, then he or she can certainly get that. We are forced to conclude that poverty resulting from a lack of education, by an enormously lopsided margin, is the result of apathy, neglect, and the failure to use the educational resources available rather than lack of access to those resources. If all inequalities in the educational system were eliminated, the picture of poverty in America would change very little. By any measure of counting, the number of people deprived of a level playing field is monumentally dwarfed by the number who were placed on level ground and chose to run at quarter speed.

To be concluded at a later date.

Research Notes

[Cam.SMM] Campolo, Tony. The Radical Evangelical Prophet Tackles the Tough Issues Christians Are Afraid to Face. W Publishing Group, Nashville.2004

[Mill.OTR] Miller, John J. “Off the Rez” National Review. Dec. 31, 2002

[Han.MSB] Hanson, Victor Davis. Mexifornia: A State of Becoming. San Francisco, Encounter Books. 2003

[Sid.JG] Sider, Ron. Just Generosity: A New Vision for Overcoming Poverty in America. Grand Rapids, MI. Baker, 1999

[StDa.MND] Stanley, Thomas J. and Danko, William D. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. New York. Pocket, 1996

[Ther.NE] Thernstrom, Abigail and Stephan. No Excuses: Closing the Racial Gap in Education. New York, Simon and Schuster. 2003.

[Mur.LG] Murray, Charles. Losing Ground: American Social Policy, 1950-80. New York, Basic Books. 1984.

[WA] The World Almanac and Book of Facts 2002. New York. World Almanac Books, 2002