Wealth and Poverty
The quaint expression, “The faster I go, the behinder I get” seems to plague almost every one of us from time to time. Similar phrases with which many people can also probably identify include, “There are not enough hours in the day” or “There’s always too much month left at the end of my money.” I particularly like the joke in which a person, upon receiving an overdrawn notice from the bank replied, “This can’t be right. I know I have money in the bank because I still have checks left.” When I was a part-time bank teller back in my college days, I actually did have a couple of people send me a check when I informed them they were overdrawn.
Managing money for many people is easy, for others it’s quite difficult, and for some, it might even be considered a mystery. Regardless of where you fall in the mix, the fact is that money is essential to our daily lives. The amount we have does not determine our happiness, of course, but it does play a key role in deciding what things we are able to purchase and what things we can do without.
Recent studies and reports indicate that the total net worth of US households is continuing to rise, and the nation’s employment picture is getting brighter. In spite of these positives, however, the number of people living in poverty is climbing.
Measuring poverty, of course, can be fairly complex as various government assistance programs have different eligibility criteria in relation to the size of a family and level of annual income. Additionally, the amount of funds on hand or lack thereof is the determining factor in receiving goods and services from myriad religious organizations, food banks, and clothes closets.
Federal 2005 guidelines place the poverty level for a family of four at an annual income of $19,350. According to the US Census Bureau, there are about 37 million Americans living in poverty. That number represents some 12.7% of the nation’s population and approximately 7.9 million families.
Poverty rates are different from region to region, but the South continues to have the highest poverty rate, with just over one third classified as living in that condition. Poverty rates also vary widely among ethnic groups and are much higher for Hispanics and African-Americans.
Some 3.6 million Texans live below the poverty level. Approximately half of them fall into about 560,000 family groups in which at least one member is employed. There are more than 954,000 children in these working-poor families. More than a half million people in Houston are classified as below the poverty level; the Houston Independent School District, one of the largest school districts in the nation, reports that about 30% of the students or 138,000 are living in poverty.
For most people, the word “poverty” conjures up images of destitution and an inability to meet basic needs of food, clothing, and shelter. That certainly is an accurate description in a small number of cases, but for the most part, it’s not quite that severe.
According to recent research, the per person expenditures of the lowest 20% of our population today are nearly equal to those of the median American household in the early 1970s, after adjusting for inflation. Various government reports note that 46% of persons defined as “poor” today own their homes, and 76% have air conditioning. Three decades ago, just a little over one-third of the entire US population enjoyed air conditioning.
Other revealing facts gathered by the Census Bureau show that 97% of poor households have color television, and more than three-quarters of the homes have VCR or DVD players, while 62% have cable or satellite TV reception. Moreover, 73% have microwave ovens, and a third of them have an automatic dishwasher.
I am certainly not arguing that poverty is a pleasant condition. While most have sufficient sustenance and basic conveniences, the Department of Agriculture reports that 13% of poor families experience hunger at some point during the year, and about 2% are often without adequate food supplies. Moreover, some 25% of Texans do not have health insurance, the highest proportion of uninsured people in the US.
While strides have been made in improving the circumstances for poor families, there is clearly work to be done. Governmental services are essential and private charities have an important role to play. In addition, economic growth can help alleviate the situation by creating more and better employment opportunities, although it must be accompanied by training opportunities. We have not yet solved the fundamental societal problems that engender poverty; until we do, an increasingly technological society is likely to drive the numbers upward.
posted @ 08:07 AM CST [link]
Friday, January 20, 2006
Continuing the Legacy
Over the past several days, we have been reminded of the dreams and objectives of Dr. Martin Luther King, Jr., particularly those relating to reducing poverty and inequality of opportunity among various racial, ethnic, and socioeconomic groups. Through the years, people from all walks of life have affirmed the value of the lofty goals he proclaimed, and numerous endeavors have been undertaken to reach them. Much, however, remains to be done.
No single factor is more critical to the success in furthering Dr. King’s legacy than enhancing educational attainment and opportunities across a broad spectrum. Education, of course, is universally lauded for its importance in creating opportunities for individuals to move ahead and become contributing members of society.
Many of the jobs of tomorrow, and even of today, require much higher levels of education and preparation than a generation ago. In order to sustain and enrich our economy in the future, it is imperative that we have a workforce with the knowledge and training to make the strides necessary to forge ahead. Indeed, accomplishing ambitious educational goals may well determine the level of success we have in advancing our economy in the years to come. Failing to do so will no doubt limit our potential.
Given the underlying demographic realities of the Lone Star State, this issue is entirely critical to our well-being. The Closing the Gaps in 2015 initiative was adopted in October 2000 by the Texas Higher Education Coordinating Board with supporters including educational, business, and political leaders across the state. The main purpose of the plan was to increase student participation and educational success. Particular emphasis was placed on encouraging minority enrollments.
The Texas program was not the first adopted along these lines, but it is among the most ambitious. Some programs have had greater success than others, but in most cases, the endeavors have already demonstrated that educational attainment levels can be improved with the proper support. Along with such positive conclusions are congruent studies that indicate much greater effort must continually be put forth for student populations to reach the desired levels.
The Texas plan had remarkable early success. The initial target was to increase 2005 enrollment in Texas institutions of higher learning by 150,000 over the 2000 levels. Incorporated into the overall enrollment goals were African-American growth of 22,200, Hispanic increase of 101,600, and White gain of 24,100 students. Within four years, the aggregate 2005 enrollment objective had been surpassed by nearly 38,900. Whites and African-Americans exceeded their individual goals a year early, but Hispanics fell short by significant numbers.
Preliminary enrollment data for Texas colleges and universities last fall presented a new challenge. The percentage of growth had dropped. While total enrollment increased by more than 19,100 over the 2004 enrollment figures, the gain was less than two-thirds as much as the increase between 2003 and 2004.
Forecasts for growth in the state population over the next decade have added another imperative to the statewide educational plan. Instead of the 1.5 million additional students anticipated in order to meet the Closing the Gaps by 2015 goal for the percentage of population in higher education programs, some 1.63 million students are now considered to be required.
While this challenge is not insurmountable, it is a daunting task, especially when the Hispanic expansion is predicted to far exceed that of any other ethnic group over the next decade, and the percentage of Hispanics currently enrolling in college is lower than other groups.
Hispanics will inevitably account for a large number of workers in the future across the Lone Star State. Unless significant improvement is made in reinforcing their educational opportunities and in encouraging and enabling greater numbers to gain additional knowledge in higher learning institutions, Hispanics might have to endure lower-paying jobs and have fewer opportunities for advancements. In such a scenario, the entire state could be dramatically affected.
While the amount of money required to attend colleges and universities is high and continuing to grow, there are significant government assistance programs as well as institution and private scholarships accessible for those with financial needs. Numerous loan programs are also available for this purpose. The first step, however, is in qualifying for admission, and that takes proper preparation. The earlier it begins, the greater the chances for success. In some cases, even realizing that higher education is a viable option is a notable hurdle.
Dr. King’s vision was for greater economic equality and increased opportunities for all people. The effectiveness of our responses to what he dreamed for our nation will in many ways determine his legacy. It will also impact the economic potential of Texas in fundamental ways.
posted @ 08:14 AM CST [link]
Friday, January 13, 2006
The Texas Drought
Some people are talking about the Texas drought being over. Those making this kind of statement are usually ardent football fans who are referring to the ending of the state’s national championship drought with the University of Texas’ victory in the Rose Bowl.
True, prior to last week the Lone Star State hadn’t had a national collegiate football champion in some 35 years and thus, in that respect, the drought could be considered ended. However, the drought that is on the minds of most Texans relates to water. A lack of significant rainfall over the past several months has resulted in a substantial drought in vast areas of the state. Prospects for better conditions any time soon are not highly favorable as the National Weather Service’s outlook is for continued dry weather across much of Texas until early spring.
The lack of rainfall over the past few months has not only affected Texas, but much of the US as well. In addition to the economic impact to some areas of the state and nation, the dry conditions have sparked fires that have caused extensive loss of property and timber.
Last week, there were 767 fires reported across America that covered approximately 485,000 acres. A great amount of this destruction has been in Louisiana, Arkansas, Oklahoma, and Eastern Texas.
Droughts in Texas are not new, of course. It seems like they occur frequently and are primary topics of conversation practically every year. Since 1996, much of the west-central part of Texas has seen brutal droughts. An exception occurred in 2004, when the state averaged 39 inches of rain and faced extensive flood damage in several central and northern communities. Last year, 28 counties were declared disaster areas because of the drought. Requests for drought designation and the related federal disaster relief are still pending in many other counties.
Annual rainfall in the Lone Star State varies from a total of about eight inches in El Paso to approximately 56 inches along the Texas-Louisiana border. During the first 11 months of 2005, Texas averaged 21.5 inches of rain, substantially less than the normal 26 inches. Despite Hurricane Rita, the total rainfall for the Houston area, for example, was about nine inches less than its usual 44 inch January-November total.
Although weather conditions have placed unusual burdens on many people, for some crops there was just enough rain at just the right time, and last year’s results are predicted to approach that of 2004. High cattle and calf prices were helpful in boosting the total agricultural income, and irrigation, especially in Southwest Texas, contributed to the near record cotton yields.
Still, the drought has had a huge impact on the hay crop and pastures. Much of the hay produced has not been of the best quality because of the lack of soil moisture. In addition, statewide reservoir storage levels have dropped dramatically.
Water played a unique role in the state’s development and economic growth. In fact, some say that water (and the lack thereof) defines Texas and gives it the mystique so often romanticized in stories of the “wild west.” There may be some truth to that concept as I well remember the expression I often heard growing up: “Whiskey is for drinking; water is for fighting.”
As the current drought continues, the pressure to find long-term solutions to the problem of growing need for water will undoubtedly rise. The drought conditions in the early 1960s caused the Legislature to pass a Weather Modification Act in 1967 to promote “cloud seeding.” The success of that measure was never accurately determined, but it led to the institution of water monitoring and better planning efforts across the state. Many aspects of Texas water law have evolved through litigation and legislation following major droughts.
The current drought is already causing problems and has the potential to affect the state’s economy to some degree, but we are well aware that there have been many droughts much greater than the one we are now experiencing. In all likelihood, there will also be some much worse in the future. Even so, as the dry days persist, let it be a reminder that ensuring the adequacy of crucial water resources to meet future needs is of paramount importance to the future prosperity of the state.
posted @ 08:12 AM CST [link]
Friday, January 6, 2006
Resolutions and Reflections
Is it too late to make a New Year’s resolution? Probably not. Is it too early to begin breaking those we have already made? The answer is the same—probably not. In fact, reality teaches us that often resolutions are made and then broken almost simultaneously.
There are no valid statistics related to the kinds of resolutions Americans make each year, but I would be willing to guess that a resolution ranking high on the lists of many folks this year is one concerning getting out of debt. Or at least, trying to avoid getting further in debt.
As the credit card bills from our holiday spending sprees arrive this month, those who have not already made such a resolution will probably want to give this plan due consideration.
Receiving monthly notices from the myriad credit card companies reminds many of us that plastic purchases have become a way of life. Such transactions seem to be as American as Mom and apple pie. Indeed, if you’re under 50, you may not even remember a time when credit cards weren’t available.
The days of the “piggy bank,” when funds were saved up to the level necessary to make purchases, have given way to the “shop ’til you drop” syndrome that seems to be affecting a large percentage of our population. I wonder if Leo Hendrik Baekeland, the New York chemist who is credited with developing the first all-synthetic plastic, had any inkling of where his blending of the resin of two chemicals and heating them under pressure would eventually lead. Probably not.
The answer would undoubtedly be the same for the Diners’ Club, which issued the first credit card in 1950 in the US (for restaurant bills only—at first). By the 1960s, credit cards were becoming prolific—as a timesaving device, rather than as a form of credit. Plastic was on the road to replace paper currency which had first become legal tender in 1862. There is no question that credit cards and subsequent related technologies have helped to make the financial system more efficient, thus promoting economic growth on a global perspective. The difficulty arises, of course, when we have too much of a good thing.
Currently, the number of credit cards in circulation exceeds 785 million, and the use of them accounts for over $1.5 trillion of annual consumer spending. More than three-quarters of all US households have at least one credit card. Reports vary on the amount of credit card debt the average American has racked up; many people and businesses have huge “plastic debts,” but the situation has not reached epidemic proportions—yet.
A Washington, DC research firm recently studied the findings of a federal survey of household debt and found that only about 29% owe $1,000 or more on their credit cards. Another study that reviewed millions of credit reports indicates that about half of all people with credit cards use less than 30% of their limit. The report also notes that some one in eight people use 80% or more of their credit card limits.
It is estimated that around 115 million Americans carry some monthly credit card debt, and some reports suggest that the average person has approximately 17 credit cards. Over half of those with this kind of “plastic debt” have been living with it for two or more years. Making monthly payments to credit card companies has almost become as natural as making regular rent or mortgage payments—and many of these are accomplished with plastic!
Using credit cards has also become a convenient way to shop and pay bills. While they are continually proving helpful in many ways to most of us, overuse can cause difficulties. The “Field of Dreams” adage that “build it and they will come” has been translated into another “Field of Dreams” slogan—“as long as the card clears, use it.” It is all too easy for the spending cycle to spiral out of control. Many companies offer services designed to aid in ridding ourselves of credit card debt. Will all the proffered techniques work? Probably not, but some may prove advantageous for those in dire straits.
If you haven’t made your final New Year’s resolution, you might want to consider one like this: “In 2006, I resolve to use my credit card more responsibly.” Will we be able to make such a promise? Better yet, will we be able to honor that kind of pledge throughout the year? It can be difficult, but making sincere efforts in that direction is definitely a worthy objective for most of us in 2006.
posted @ 08:03 AM CST [link]