The recession is going to affect everyone differently. A lot of folks are going to have to tighten their belts, but thanks to various structural advantages, whether in age, human capital or personal/family wealth, they're basically going to be fine and able to look forward to a future Obama recovery. But that fact shouldn't blind us to the knowledge that a sizable number of the people are going to be in a lot of trouble. The Center on Budget and Policy Priorities rolled out a report today highlighting the potential for deep poverty for millions of Americans and pushing for the forthcoming stimulus package to appropriate funds to lessen the impact of the recession on these families and the economy as a whole.
First, the bad news:
Goldman Sachs [ironic!] projects that the unemployment rate will rise to 9 percent by the fourth quarter of 2009 (the firm has increased its forecast for the unemployment rate a couple of times in the last month). If this holds true and the increase in poverty relative to the increase in unemployment is within the range of the last three recessions, the number of poor Americans will rise by 7.5-10.3 million, the number of poor children will rise by 2.6-3.3 million, and the number of children in deep poverty will climb by 1.5-2.0 million.
Already there are signs that the recession is hitting low-income Americans hard. Between September 2006 and October 2008, the unemployment rate for workers age 25 and over who lack a high school diploma — a heavily low-income group — increased from 6.3 percent to 10.3 percent.
... Today, only about 40 percent of families eligible for cash assistance under the Temporary Assistance for Needy Families program actually receive it. That is about half the percentage of families eligible for TANF's predecessor (the Aid to Families with Dependent Children program) that received its benefits during the recessions of earlier decades.
The prescriptions are more familiar: increase funding for the TANF contingency fund, give federal aid to states, and increase unemployment insurance, food stamps, and housing vouchers. I imagine there are people who will read this and be skeptical about increasing aid to the poor, but those aren't people who can't get a job in this economy. It's tough to say the government shouldn't have a role here when a big cause of the current recession was pernicious economic policy that allowed some very wealthy people to wreak public havoc but remain insulated from any kind of private risk, while people with, say, only high school educations who weren't doing spectacularly anyways are now deeply screwed.
--Tim Fernholz
