America's Poor: Caught in a Perfect Economic Storm

By Hugh B. Price
National Urban League

Did you notice the news story in the New York Times the other day? The one about higher education?

It told of a sharp increase in the numbers of middle- and upper-income families who've found that the economic recession has so damaged their finances they can't meet the current schedule of tuition payments for their children's secondary school or college.

Some are asking the schools for extensions on their tuition payments. Others are asking the schools, or banks or private loan agencies for low-interest loans so that their children can continue attending school.

One situation the Times described involved a New York-area couple whose fifth and last child is now in college. Their combined annual income of nearly $250,000 had been enough to completely pay for the college educations of their first four children.

But, since September 11th, the husband lost his job at a major Wall Street investment bank, and the wife had to close her business, which had supplied temporary employees to many companies in the World Trade Center complex. Now, they're scrambling for help.

Officials at one private company that helps parents re-arrange their tuition payments or get loans said they got 17,000 more calls from parents in December than they did in December 2000, an increase of 25 percent. And a financial aid official at Boston College said that he'd been called by "several dozen" parents of undergraduates to say that they'd been thrown out of work and needed help to make sure their children were able to complete school.

You might be wondering why I'd spend so much time talking about this striking indication of the economic difficulties biting at middle- and upper-income people.

But my point is this: If the economic recession is blowing this hard among those who were well-off and had resources, what is happening to those who even in the best of times were at or near the bottom of the economic ladder.

The answer is that they now find themselves caught in a perfect storm.

That particular phrase, of course, comes from the recent movie (and the earlier book), "The Perfect Storm," about some New England fishermen who perished at sea in a "perfect storm," a convergence of several ferocious weather systems.

That imagery reminded me of the terrible jam America's working people have been trapped in since the terrorist attacks sent the nation's economy, which was already ensnared in a recession, into a deeper tailspin.

Just think of all the hostile forces that have converged on the poor.

The stiff recession which has thrown millions of low-wage workers out of jobs, especially in the hotel and travel industry.

The looming federal deficit that's due in part to the tax cuts that favored the wealthy but sent nary a dime to low-wage workers.

The financial squeeze on states faced with declining tax revenues and rising bills for unemployment compensation. Do you know that two-thirds of jobless people in Georgia, for example, aren't even eligible for unemployment compensation because they work part-time, or haven't worked long enough to qualify?

To make matters worse, looming federal time limits are tossing people off the welfare rolls and into a very soft labor market.

One study, released last month by the Milken Institute, a private research group, said that the September 11th attacks alone had resulted in the loss of 248,000 jobs thus far, and would eliminate another 1.6 million by the end of 2002.

The nation's overall unemployment rate reached 5.8 percent in December, and many economists expect it to peak at 6.5 percent in the early summer.

That means that the unemployment rate will be significantly higher among particular groups, such as blacks (among whom it's already nearly 10 percent) and those with few skills.

President Bush forcefully declared in the State of the Union address that America won't tolerate the trafficking in terrorism, either by nations or groups.

But his laying out a domestic agenda was muddier.

I've saluted his determination to push the achievement levels of all children; and to his credit, he endorsed then, and now in the $2.13-trillion budget he's submitted to Congress, making it easier for jobless workers to qualify for unemployment benefits and hold on to their health coverage.

Unfortunately, the President is also holding on to his intention to let wealthy people keep the tax cuts they're slated to receive.

That's wrong at a time when the federal deficit is soaring, when his budget cuts deeply at job-training programs and other programs for the needy, and when states face the financial burden of soaring welfare rolls.

The Congressional debate over the budget is sure to be sharp. But both Congress and the Bush Administration ought to remember that while they debate, the painful convergence of forces among the poor is spreading.

President Bush and Congress need to call an immediate truce in the ideological wars, and enact legislation that helps America's working people ride out the perfect economic storm.

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