A Katrina for the Entire Nation

The Recession Has Inflicted Widespread Economic Hardship

The Great Recession struck like an economic hurricane across the country, writes Melissa Boteach. We need to combat its effects and rebuild our economy.

La Gran Recesión impactó al país como un huracán económico. En New Orleans, la casa en la foto permanece evacuada y ruinosa cinco años despues del Huracán Katrina.
La Gran Recesión impactó al país como un huracán económico. En New Orleans, la casa en la foto permanece evacuada y ruinosa cinco años despues del Huracán Katrina.

Americans watched their televisions in horror as Hurricane Katrina ripped through the Gulf Coast on August 29, 2005. We saw thousands of our fellow citizens left at the Super Dome without sufficient water or food. Images of children wandering half-naked and dazed through the streets in the storm’s aftermath burned into our brains. We did a double take: Was this the United States?

The disaster robbed millions of Gulf Coast residents of their homes and livelihoods. But it also ripped the veil off the entrenched racial and economic inequalities that determined who had the resources to leave New Orleans and who didn’t. It sparked a national conversation on poverty in America.

We need to reignite that conversation. The Great Recession has been a Katrina for the entire nation, forcing millions of formerly middle-class Americans to encounter our tattered safety net for the first time and laying bare the structural poverty that already existed long before the financial markets collapsed in September 2008. We had a “recovery” between 2003 and 2007 that squeezed the middle class as low-wage jobs proliferated and decent work diminished. Incomes fell while profits rose.

The Center for American Progress pulled together a taskforce of experts in Katrina’s wake to examine U.S. poverty’s causes and consequences and make recommendations for national action. Their efforts culminated in a landmark 2007 report, “From Poverty to Prosperity,” which outlined a comprehensive plan to cut the U.S. poverty rate in half over the next 10 years.

That plan is now more relevant than ever in the wake of the Great Recession to help us rebuild our economy and restore the middle class. It’s worth taking a second look at some of the major findings of CAP’s report on the fifth anniversary of the storm that sparked it.

  • Poverty is costly. The report quantified that child poverty alone costs the United States $500 billion a year, or 4 percent of GDP, in lost productivity, higher health costs, and increased criminal justice expenditures. Inaction makes America less competitive, less healthy, and less secure.
  • Poverty affects the middle class. The report showed that the poor are not a stagnant group living off government assistance. One-third of all Americans will spend at least one year of their lives in poverty. The investments that we make in our safety net, therefore, are for all of us who fall on hard times whether it be through job loss, divorce, or a medical crisis.
  • Poverty is a problem we can solve. Poverty is not intractable despite the despair many feel. The report revealed that just four recommendations would cut poverty by 26 percent in 10 years and cost approximately $90 billion a year. These include raising the minimum wage, rewarding work in the tax code through improvements to the Earned Income Credit and Child Tax Credit, and making child care more broadly available for working families Compare this investment to the $500 billion a year that child poverty alone costs us.

These findings may be old news, but they’ve never been more relevant. The Census will report poverty statistics next month for 2009—the first year where we’re able to see the Great Recession’s significant impacts. We expect the data to show that nearly one in four children lived in poverty last year while the middle class suffered enormous income losses that put any modicum of economic security out of their reach.

We need to revive the outrage we felt five years ago as Katrina revealed the scourge of poverty in our nation. We have solutions to solve this problem, including permanent improvements to the tax code to help working families, creating jobs in clean energy and healthcare, and investing in childcare and early education. Let’s get to it.

Melissa Boteach is Manager of Half in Ten: The Campaign to Cut Poverty in Half in Ten Years at the Center for American Progress Action Fund

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Melissa Boteach

Senior Vice President, Poverty to Prosperity Program