May 9, 2006
America’s ‘Near Poor’ Are Increasingly at Economic Risk, Experts Say
If you haven't figured out by now, I'm a New York Times junkie… What I like is they don't dumb down the discussion about money and what it means to be financially secure in this country. When I finish up my mid-term, I'll write more about what's on my mind…
May 8, 2006
from nytimes.com
America's 'Near Poor' Are Increasingly at Economic Risk, Experts Say
By ERIK ECKHOLM
ANAHEIM, Calif. — The Abbotts date their tailspin to a collapse in demand for the aviation-related electronic parts that Stephen sold in better times, when he earned about $40,000 a year.
He lost his job in late 2001, unemployment benefits ran out over the next year and he and his wife, Laurie, along with their teenage son, were evicted from their apartment.
They spent a year in a borrowed motor home here in the working-class interior of Orange County, followed by eight months in a motel room with a kitchenette. During that time, Ms. Abbott, a diabetic who is now 51, lost all her teeth and could not afford to replace them.
"Since I didn't have a smile," she recalled, "I couldn't even work at a checkout counter."
Americans on the lower rungs of the economic ladder have always been exposed to sudden ruin. But in recent years, with the soaring costs of housing and medical care and a decline in low-end wages and benefits, tens of millions are living on even shakier ground than before, according to studies of what some scholars call the "near poor."
"There's strong evidence that over the past five years, record numbers of lower-income Americans find themselves in a more precarious economic position than at any time in recent memory," said Mark R. Rank, a sociologist at Washington University in St. Louis and the author of "One Nation, Underprivileged: Why American Poverty Affects Us All."
In a rare study of vulnerability to poverty, Mr. Rank and his colleagues found that the risk of a plummet of at least a year below the official poverty line rose sharply in the 1990's, compared with the two previous decades. By all signs, he said, such insecurity has continued to worsen.
For all age groups except those 70 and older, the odds of a temporary spell of poverty doubled in the 1990's, Mr. Rank reported in a 2004 paper titled, "The Increase of Poverty Risk and Income Insecurity in the U.S. Since the 1970's," written with Daniel A. Sandoval and Thomas A. Hirschl, both of Cornell University.
For example, during the 1980's, around 13 percent of Americans in their 40's spent at least one year below the poverty line; in the 1990's, 36 percent of people in their 40's did, according to the analysis.
Comparable figures for this decade will not be available for several years, but other indicators — a climbing poverty rate and rising levels of family debt — suggest a deepening insecurity, poverty experts and economists say.
More people work in jobs without health coverage, including temporary or contract jobs that may offer no benefits or even access to unemployment insurance. Medicaid is offered to fewer adults (though to more children). Cash welfare benefits are harder to secure, and their real value has eroded.
About 37 million Americans lived below the federal poverty line in 2004, set at $19,157 a year for a family of four. But far more people, another 54 million, were in households earning between the poverty line and double the poverty line.
"We don't track this group of people, and they are very vulnerable," said Katherine S. Newman, a sociologist at Princeton University who studies low-end workers.
Those suffering a nose-dive say the statistics do not begin to convey their fears and anguish.
Only a year ago, Machele Sauer thought she was entering the middle class. She and her husband, a licensed electrician, owned a large mobile home. He was starting his own business and Ms. Sauer, after bearing their fourth child, hoped to stop waitressing and be a stay-at-home mom.
"We were the ideal family, the envy of others," she said recently as she collected free food and diapers at the Hope Family Support Center, a small charity in Garden Grove, Calif., in Orange County. "And then, boom, everything flipped upside down."
Life fell apart last spring when her husband was arrested on theft charges, linked to a recent drug addiction she says she did not know about. Because of a prior record, he received a long prison sentence.
Now Ms. Sauer, 34, draws on the charity for goods and its director, Gayle Knight, for advice and emotional support, part of a grueling scramble to provide for her four daughters, ages 16 months, 8, 9 and 15. Many days over recent weeks, she dropped them at the baby sitter after school, worked the night shift as a waitress, picked up the sleeping children after midnight then woke up with the baby at 6:30 a.m. before preparing the older three for school.
At first she went on welfare, receiving $600 a month along with paid child care and counseling for herself and the children. As she resumed waitress work—four night shifts and two day shifts a week—she earned about $1,300 a month, which led her welfare payment to be cut to $300.
She receives $200 worth of food stamps that cover bills for just the first two weeks of each month, she said.
"Now the van is breaking down," she said. "With four kids it's really hard to hold a full-time job, and I need to make sure they do well in school." Her goal is to find a way to prepare for nursing school.
The Abbotts, too, sought aid from food banks and other charities, collecting weekly boxes of food and toiletries.
In Orange County, about 220,000 people received food from 400 local charities last year, according to the Second Harvest Food Bank, which distributes donations. Recipients include many families, often Hispanic, with several children and both parents working minimum-wage jobs. Over all, half the families seeking food had at least one working adult, according to a recent study by the food bank.
In the center of Orange County, a world away from its polished coastal towns, borderline poverty is common but seldom visible. On small streets behind strip malls and fast food restaurants, families, sometimes two of them, cram into small, aging bungalows.
What look like tourist motels along Beach Boulevard are mostly filled by working families or single people who stay for months or years, paying high weekly fees but unable to muster up-front money for an apartment rental.
Mr. Abbott, now 58, eventually found a lower-paying sales job. With help from church members, the couple amassed the three months' rent of $2,700 required to rent a one-bedroom apartment in Anaheim.
Describing their last several years, Mr. Abbott kept circling back to the emotional toll. Motels, like the one they lived in for eight months for $281 a week, are "dives," he said, "with lots of screaming and fighting and cops being called."
"It was really stressful," he said, "and still you pay a lot of money."
In a new setback, Mr. Abbott has developed chronic obstructive pulmonary disease. He recently had to stop working and go on state disability, which pays $1,436 a month and gives him health coverage.
Ms. Abbott has no health insurance — if she gets sick, she says, she will go to a medical van that serves the homeless. But a generous dentist from church helped her get new teeth, and now she plans to hunt for work.
May 8, 2006
“Money Changes Everything”
from the nytimes.com
More food for thought…
May 7, 2006
Money Changes Everything
By JENNIE YABROFF
GRETA GILBERTSON was caught off guard recently when her 9-year-old daughter, who attends a private school on the Upper West Side, requested a cellphone.
"I sort of snapped at her," recalled Ms. Gilbertson, an assistant professor at Fordham University in the Bronx. "I said, 'Don't think that you're one of the rich kids, because you're not.' " Though her daughter rarely expresses envy of her more affluent friends, Ms. Gilbertson said, it was an "unedited moment" revealing her anxiety over being in a world where other parents have more money than she does.
Carol Paik, a former lawyer who is married to a partner at a prominent New York law firm, found herself on the other side of that money equation. When she returned to school in 2002 to get her M.F.A. in creative writing at Columbia, her diamond engagement ring attracted particular attention from her new group of friends. "When I was working," she said, "I never thought about the ring, it seemed unremarkable."
But at school, she said, "People said things like, 'That's a really big diamond,' and not necessarily in a complimentary way." So she began taking off the ring before class.
If, as Samuel Butler said, friendships are like money, easier made than kept, economic differences can add yet another obstacle to maintaining them. More friends and acquaintances are now finding themselves at different points on the financial spectrum, scholars and sociologists say, thanks to broad social changes like meritocracy-based higher education, diversity in the workplace and a disparity of incomes among professions.
As people with various-sized bank accounts brush up against each other, there is ample cause for social awkwardness, which can strain relationships, sometimes to a breaking point. Many find themselves wrestling with complicated feelings about money and self-worth and improvising coping strategies.
"The real issue is not money itself, but the power money gives you," said Dalton Conley, a professor of sociology and the director of the Center for Advanced Social Science Research at New York University, who studies issues of wealth and class. "Money makes explicit the inequalities in a relationship, so we work hard to minimize it as a form of tact."
For Ms. Gilbertson, that means not having her daughters' friends over to play because, she said, her apartment in Washington Heights is small and in what some parents might consider a marginal neighborhood. For the same reason, she had a pizza party for her daughter's birthday at the local Y.M.C.A.
For Ms. Paik, that meant avoiding inviting her classmates to her prewar, three-bedroom co-op on the Upper West Side, because many of them lived in student housing and she feared they would think she was showing off. "I didn't want to introduce that barrier," she said.
Money's discomfiting effects are explored in the recent film "Friends with Money," in which three of four female friends are well off while one is barely getting by. In an early scene the friends are gathered for dinner when Olivia, a former schoolteacher played by Jennifer Aniston, announces that she has started working as a maid. A few moments later Franny, played by Joan Cusack, says she and her husband will be making a $2 million donation to their child's elementary school. When another friend asks why Franny doesn't just give the money to Olivia, everyone laughs uncomfortably and the subject is changed.
"Money is talked about with such discomfort; it's so taboo," said Nicole Holofcener, the writer and director of "Friends With Money." "With close friends it takes work; I have to make a conscious effort to talk about issues of money that come up between us."
Economic barriers to friendship have come about in part because other barriers have been broken down, sociologists say. College, where people form some of the most intense friendships of their lives, is a melting pot of economic differences. Students from country-club families and those on scholarships are thrown together as roommates, on athletic teams and in classes.
"There has been an incredible expansion of higher education," Professor Conley said. "More people from more varied backgrounds are going to college. There are also more meritocratic admissions among elite institutions."
According to data compiled by Thomas Mortenson, a senior scholar at the Pell Institute in Washington, 42 percent of young adults (age 18 to 24) from the bottom quarter of family income were enrolled in college in 2003, compared with 28 percent in 1970. Enrollment for students from the two middle income quarters also increased. Participation of students from the highest-income families changed the least, with 80 percent attending college in 2003, compared with 74 percent in 1970.
Once college friends leave campus, their economic status can diverge widely depending on their careers. While 20 years ago a young lawyer and a new college instructor might have commiserated about their jobs over coffee and doughnuts, today the lawyer would be able to invite the assistant professor out for a meal at a restaurant with two sommeliers and a cheese expert.
At New York University, for instance, instructors make $35,300 for the current academic year, up from $24,500 for the 1985-86 academic year, according to the American Association of University Professors. A first-year associate at a large New York law firm, however, can earn as much as $170,000 with a year-end bonus, compared with about $53,000, including bonus, in 1985.
"In New York City we're on the front lines of the rise in inequality in income because it's happening at the top half of the income distribution ladder," Professor Conley said. "The difference between the middle and the top has grown incredibly."
Although the wealthy can wall themselves off in buildings with doormen or in high-tax suburbs, other trends in society lead the affluent to brush up against the not-so-affluent. Gentrification, an urban movement from Prospect Heights, Brooklyn to downtown Los Angeles, moves the professional class into the neighborhoods of the working class. They mix when their children attend the same school or participate in athletic leagues.
Feeling awkward about the differences in net worth is not just an issue for those on the bottom of the equation. Some wealthy people — especially the young — have trouble admitting that they are different.
"We are allegedly a classless society, and that's obviously completely untrue, but people don't want to acknowledge that those differences exist," said Jamie Johnson, a 26-year-old heir to the Johnson & Johnson fortune. He explored attitudes about money among his peers in his 2003 documentary, "Born Rich." His new documentary, "The One Percent," which debuted at the Tribeca Film Festival on April 29, looks at the political influence of wealthy Americans.
Mr. Johnson said that some of his moneyed friends act like they have fewer resources than they do, making a show of taking the subway and saying they can't afford a cab. "It's to avoid that awkwardness of seeing the distinction of social class," he said.
The pressure to fit in economically can be especially intense for teenagers and young adults. Marisa Gordon, a 27-year-old account executive at a midsize Manhattan advertising agency, recalled that as a student at Syracuse University, her roommate resented that Ms. Gordon had more spending money than she did. The roommate made comments when Ms. Gordon brought home a pair of Diesel sweatpants and cried because she couldn't afford the same Issey Miyake perfume.
Though she and the roommate are still friendly, Ms. Gordon said money issues contributed to the fact they aren't as close as they once were. Now it is her younger sister, a freshman at Syracuse, who is feeling the sort of competitive pressure Ms. Gordon's roommate felt. The sister recently asked their parents for a Louis Vuitton bag, Ms. Gordon said, because, "Everyone at school has a Louis bag."
Suze Orman, a financial writer and speaker whose latest book is "The Money Book for the Young, Fabulous and Broke" (Riverhead Hardcover), said young adults can go into debt trying to keep up with their friends.
"I call them 'money pods,' " she said. "Look at a group of female friends walking down the street. They're often all dressed identically: the same shoes, the same belts, the same handbag."
But what is not easily apparent, Ms. Orman said, is that one of the women may have saved for months to buy her one expensive handbag, or more likely, put it on her credit card. Her identically dressed friends, meanwhile, may have the salary or the family money to afford a closet full of designer purses.
"That is how we get in trouble," Ms. Orman said. "We think our friends are just like us, and if our friend can afford something, we fool ourselves into thinking we can afford it, too."
Mary Ochsner, a stay-at-home mother of three in San Clemente, Calif., ended a friendship after money issues came to the fore. She had befriended a woman after college when they were both, as she put it, in "very affluent periods." But their paths diverged when Ms. Ochsner married a Marine and her friend married a man whom Ms. Ochsner described as an ambitious executive. She said her friend became increasingly status-conscious and would brag about home improvements.
The final insult came, Ms. Ochsner said, when she invited the woman to a birthday party for her daughter. The woman barely socialized but tried to poach her babysitter by offering $5 more an hour than what Ms. Ochsner was paying. Ms. Ochsner decided the friendship wasn't worth it.
"It wasn't about the money," she said. "The money made me realize she had different social ambitions."
Perhaps the most fraught social ritual of all when it comes to money and friendship is the settling of a restaurant bill. "I know wealthy people who are extremely troubled by the whole idea of who's going to pay the bill," Mr. Johnson said. "They're terrified for hours before it happens."
He said he has found himself arguing over the check with a dining companion who was not as wealthy. "Sometimes people feel obligated to buy me dinner because they don't want me to think I'm expected to pay for the meal," he said. "I don't really appreciate it. If anything, I think it's unfortunate that people feel that uncertainty."
The uneasiness is also acute on the other side of the income divide. A 30-year-old book editor in Manhattan who earns less than $40,000 a year recently went to Miami for the weekend with two friends from high school who both work for hedge funds.
"We're staying at the Shore Club, in a suite they've booked; I'm sleeping on the pullout couch and they're paying for it, which is hugely generous of them," the editor wrote in an e-mail message. He has not been identified to avoid offending his friends. "However, tonight they've booked a table at Nobu, with Mansion" — an expensive night club — "to follow. I'll end up spending about a week's pay in the next two nights, probably more. It'll feel worth it while I'm hanging out with them without any of the unpleasant reminders that our lives have seriously diverged since high school, but it's going to sting when I get back."
Mike Seely, a 31-year-old journalist in Seattle, recently arranged a lunch date with a wealthier friend who works in politics. He said he suggested a diner "where nothing's over $10, right in my price range." She countered by suggesting the Dahlia Lounge, an upscale restaurant where a spinach salad costs $14.
"I said, 'Sure, as long as this is on your dime,' " he said.
It was one of the few times he has felt comfortable addressing the issue so directly, he said, because his friend was the one to press for the more expensive place.
Even those who study the topic for a living have a hard time when it comes to divvying up the check. "I have friends who are economists who are comfortable getting down to the last decimal point of who owes what when we go out," Professor Conley said. Yet he feels compelled to keep quiet when he finds himself across the table from a friend who orders three glasses of wine to his tap water, then suggests they split the tab.
"It's probably because I don't want to appear petty," he explained. "I'd be battling pretty strong social norms."
