By Laura D'Andrea Tyson
Just days before Hurricane Katrina devastated New Orleans, the U.S. Census Bureau published its annual report on income in America. The poverty rate increased in 2004 for the fourth year in a row, and 37 million Americans (12.7% of the population) were living in poverty -- 4 million more than in 2001, despite three years of economic recovery. Sadly, more than 15 million of these impoverished Americans, many of them children, lived in households headed by full-time workers.
Not surprisingly, the Census results received scant media coverage. After all, it's certainly not news that many very poor people (often people of color) live in the richest nation on earth. Besides, mind-numbing statistics can't portray what a life of poverty means, anyway. But what the Census report could not convey, the pictures from flood-ravaged New Orleans did in graphic and heartrending ways.
Those scenes confirmed the inescapable conclusion of recent series in The New York Times, The Wall Street Journal, and the Los Angeles Times: Class, defined by economic and social status and often linked with race, largely determines how one fares in modern America. This nation may be based on egalitarian principles enshrined in the Declaration of Independence, but an individual's access to educational opportunities, health care, transportation, decent housing, and even disaster relief services depends on income and class.
INCOME IS A MAJOR DETERMINANT of health and longevity in the U.S. Poor Americans are less apt to have health insurance, more apt to have untreated medical conditions, and much more likely to have and die of heart disease, diabetes, or cancer. Infant mortality is higher and longevity rates are lower in some of America's inner-city neighborhoods than in many developing countries -- not because of crime and drug abuse, but because of lack of adequate medical care.
Moreover, poverty, as distinct from such factors as family structure, race, and parental education, has a significant adverse effect on educational achievement. Poor children are more likely than children from middle- and upper-income households to drop out of high school, less likely to enroll in college, and less likely to graduate if they enroll. And income and racial disparities in educational attainment are growing at a time when a college education is becoming a necessity for obtaining a job that can support a middle-class life. If these trends continue, more and more children born into poverty will remain poor, and economic mobility will continue its downward trend.
Katrina revealed other disturbing aspects of what it means to be poor in America. The majority of those trapped in New Orleans could not escape because they had no car, no cash reserves for the proverbial rainy day, and no financially secure extended family to turn to for help -- all common problems for America's poor. Like most Americans, they thought they could turn to the government to supply their immediate needs in the wake of a natural disaster. They were wrong.
Are President George W. Bush and his Republican allies in Congress concerned about the growing income, class, and race cleavages exposed by Katrina? Even after the hurricane killed estimated hundreds of impoverished Americans and sent tens of thousands more into unemployment, homelessness, and despair, Republican leaders remain firm in their support of permanent repeal of the estate tax. The big beneficiaries would be the very rich -- the top 1% of the income distribution who receive more pretax income than the bottom 40% combined, who own more household wealth than the bottom 90% combined, and who pay two-thirds of the estate levy. Estate tax repeal would reduce government revenues by an estimated $745 billion over 10 years. The forgone revenues would be more than enough to cover the costs of relief and reconstruction after Katrina and to increase funding for programs for those of modest means such as Medicaid, Head Start, and Pell grants for college.
Even the greatest natural disaster in the nation's history may not be enough to change the Republican leadership's budgetary priorities: slashing taxes for the rich, cutting spending on the poor, and underinvesting in services like emergency response or flood control in Louisiana. But perhaps American voters, dismayed by what they have learned about income and race in America in Katrina's aftermath, will want a change. According to surveys, most Americans value a "fair" society defined as one in which "no one is left behind." Scenes from New Orleans reveal this is definitely not the society in which they live today.
Laura D'Andrea Tyson is dean of London Business School