The ‘new poor’
There’s little doubt in most people’s minds, however, that financial education is necessary. And while the most effective education programs start early and continue throughout a lifetime, it’s impossible to ignore the need for adult education.
After all, kids will model what they learn at home. And most teachers will tell you how difficult it is for kids to unlearn behaviors they have by the first grade.
Still, financial education isn’t getting through to many adults—those consumers who need help and who are often woefully unprepared to manage their money. A big problem in today’s economy is that the groups that need help are growing, not shrinking, as new groups join the ranks of the unprepared.
The New York Times series on “The New Poor” examines the struggle consumers have to recover from today’s Great Recession.
Starting in February and still ongoing, the series chronicles what’s happening among the 17% of the population that’s either unemployed, underemployed, or has given up the job hunt. Many of these people need help.
For example, the gap between whites and minorities is growing larger. It’s hard to ignore how rising unemployment and growing foreclosures in the recession have combined to destroy black wealth and income gains over the past 20 years.
The Institute on Assets and Social Policy at Brandeis University says that for every dollar owned by a white family, a black or Latino family owns just 16 cents.
At the end of 2009, The Economic Policy Institute reported in “The State of Working America” that median wealth for white Americans had dipped 34% to $94,600, compared with a 77% drop in median wealth for black Americans to $2,100.
“As jobs have become harder to get, so has welfare: as of 2006, 44 states cut off anyone with a household income totaling 75% of the poverty level—then limited to $1,383 a month for a family of three ($16,596 annually),” the Times reported.
At the same time, economists worry that the recovery will fail to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed. So where do the new poor turn?
Many jobs simply won’t come back. In some cases, jobs have been outsourced to less expensive workers overseas. In others, new technologies have made skill sets obsolete.
Hit hard have been administrative and clerical workers, which have lost 1.7 million jobs since the recession began. Nearly half the printing machine operators lost their jobs between 2007 and 2009. Travel agent jobs fell 40%.
Other groups that have been adversely affected include women between the ages of 46 and 64 and workers age 55 and older. In fact, more than 2.2 million workers age 55 and older are unemployed, and nearly half of them have been out of work for six months or longer.
The unemployment rate among that group is 7.3%—a record. For many, today’s stark reality is it will take years to absorb the unemployed back into the work force, and many older workers will drop out of the labor force due to their age before their fortunes change.
Forced early retirement imposes an intense financial strain, particularly for people with lower incomes. The poverty rate among this age group is nearly 10%.
Next: Far-reaching impact