Stanford panel: economy, not war on poverty, failed

The U.S. economy’s failure to deliver jobs has left the country with persistently high rates of poverty and income and wealth inequality, a panel of experts convened at Stanford University said Monday.

Growing gaps in educational achievement and health — including life expectancy – reflect the income and wealth disparities, panelists said.

Six years after the start of the Great Recession, the proportion of 25-to-54-year-olds who hold jobs, the so-called “prime-age employed,” was nearly 5 percent lower than it was at the recession’s beginning in December 2007, New York University sociologist Michael Hout said.

“What we see is an upstream economy that’s failing to deliver jobs and then generates much poverty, which places unrealistic demands on our schools, our penal system and health-care system,” said Stanford sociologist David Grusky, who directs the university’s Center on Poverty & Inequality.

Grusky convened fellow sociologists, economists and political scientists from Stanford, New York University, University of Michigan, Columbia University and the Federal Reserve Board to present what he said is the center’s first annual report on poverty and inequality.

“It’s definitely not sexy, but what we’re committed to is making sure the general public has the data, information and facts they need to participate meaningfully in discussions about poverty and inequality,” Grusky said.

The nation’s official poverty rate increased from 12.5 percent in 2007 to 15 percent in 2012, with child poverty rising from 18 percent in 2007 to 21.8 percent in 2012, the report said. The increase would have been significantly larger had it not been for aggressive safety-net programs, the report said.

Grusky assembled a panel of experts to discuss what he called the “downstream” effects of joblessness.

Those include disparities in health outcomes and life expectancy and a widening income-related educational achievement gap even as progress is measured on the racial achievement gap.

Because the income-related educational achievement gap is already large when children enter kindergarten and grows only modestly thereafter, “there are reasons to think a lot of these trends don’t have to do with the quality of schools but with the quality of early childhood environments,” Stanford Professor of Education Sean Reardon said.

But Reardon reported that recent testing of kindergartners found some narrowing of an income-related achievement gap after a long period of widening. Reasons for the progress are not yet clear, he said.

“Vast social disparities” persist in health outcomes, including life expectancy, despite U.S. health spending that exceeds that of other developed nations, University of Michigan epidemiologist Sarah Burgard said.

Since 1960, American men have gained 10 years of life expectancy and women eight years, but most of those gains have occurred to people above median income, Burgard said. The increase in life-expectancy was greatest for higher income brackets and “stagnant for lower income brackets,” she said.

Despite continued growth in U.S. health spending, the proportion of Americans who have any health insurance has declined since 1999. As of 2012, slightly less than 85 percent of all Americans were insured, but the proportion of children with insurance increased by more than 3 percent between the late 1990s and 2012, attributable to the 1997 Children’s Health Insurance Program, Burgard said.

The Great Recession increased the amount of income inequality, but not the amount of consumption inequality or the share of total income going to the top 1 percent, the report said.

But after the recession ended in 2009, income and consumption inequality increased, “resuming what has been a nearly relentless growth in inequality over the last 30 years,” the report said.

In 2012, the bottom 20 percent secured 3.4 percent of total income.

Former University of Michigan economist Sheldon Danziger, now president of the Russell Sage Foundation, refuted the idea that safety-net programs enacted 50 years ago by President Lyndon Johnson have failed.

“We did set in motion a safety net that’s much broader than it was 50 years ago, but it’s the economy that failed,” Danziger said. “If we counted all the safety net programs, poverty would be lower – it would not have fallen from 19 percent to 15 percent, but from 19 percent to 11 percent.

“There’s been a failure of economic growth to benefit not only the poor but also the middle class,” he said.

Founded in 2006, the Stanford Center on Poverty & Inequality is one of three national research centers on poverty, said Ajay Chaudry, deputy assistant secretary in the U.S. Department of Health and Human Services. The other two are at the University of California at Davis and the University of Wisconsin at Madison.

“Diminished opportunities for economic mobility is the defining challenge of our time and the focus of President Obama’s second term,” Chaudry told the assembled Stanford crowd of more than 150 Monday.