Chapter 6
The Poor in Developed Countries

Although the majority of the world's poor live in underdeveloped and developing countries, a fair number also live in the developed world—some in the wealthiest countries on earth. The economic gap between rich and poor nations has been widening since the 1980s, but the gap between rich and poor within developed countries has also been growing, as it has in transition economies.

CHARACTERISTICS OF POVERTY IN WEALTHY COUNTRIES

Usually in wealthy countries, poverty is not absolute. The poor in these nations do not for the most part experience famine or starvation, and although homelessness does occur, it is a multifaceted phenomenon that can have causes other than poverty. In fact, many poor people in the developed world work full time and earn more money per week than those in the developing world earn per year. However, relative poverty is poverty nonetheless, and in wealthy countries it can have harsh consequences.

Some researchers and aid workers have suggested that the poor in wealthy countries suffer more psychological problems and social isolation than those in low-income countries. In 1999 Mari Marcel-Thekaekara, a renowned international aid worker and founder of ACCORD, a nongovernmental organization that works with tribal people in Tamil Nadu, India, reported in London's Guardian ("Poor Relations," February 27, 1999) that in some respects the kind of poverty she witnessed in the Easterhouse slum in Glasgow, Scotland, was worse than anything she had seen working in India for ten years. "[W]e were hit by the reality of the poverty surrounding us in Glasgow. Most of the men in Easterhouse hadn't had a job in twenty years. They were dispirited, depressed, often alcoholic. Their self-esteem had gone. Emotionally and mentally they were far worse off than the poor where we worked in India, even though the physical trappings of poverty were less stark."

In October 2005 another article in the Guardian declared that alcoholism and poverty were the primary factors in Russia's rapid population decline ("Population Dip in Russia Blamed on Alcoholism and Poverty," October 24, 2005). According to the article, the life expectancy for Russian women is seventy-two years, but for men it is just fifty-eight years. The psychological aspects of poverty exist worldwide. In the United States poor people suffer disproportionately from mental health problems, according to the American Psychological Association, and are much less likely than their nonpoor counterparts to receive medical help. A study by the University of Alberta in Canada found that children who begin life in poverty experience higher levels of antisocial behavior ("Long-Term Poverty Affects Mental Health of Children," Science Daily, February 9, 2006). The United Nations Children's Fund (UNICEF) reported in March 2005 that forty to fifty million children in the world's wealthiest countries will grow up in poverty ("Child Poverty on the Rise in Wealthy Nations," March 1, 2005). Even Japan, known for its relatively low poverty rates, has experienced an alarming increase; the country was stunned when in January 2005 a woman and her three-year-old son were found dead in their Tokyo-area apartment, having starved to death (J. Sean Curtin, "Japan, Land of Rising Poverty," Asia Times Online, February 11, 2005).

These examples illustrate the severity of the problem. In nearly all industrialized countries—with the notable exception of those in Scandinavia—poverty is rising, particularly among children, and the depth of poverty is increasing. Reasons include stagnating wages, long-term unemployment, and rising prices of essentials such as food and fuel. More complex reasons include racism, immigration, and increasing numbers of divorces that lead to single parenthood. A decrease or total absence of social safety nets such as day care, elder care, and health care complicates the matter even further.

THE UNITED STATES

At 12.7% in 2004 (up from 12.5% in 2003), the United States has the highest poverty rate in the developed world (U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2004, August 2005). (See Table 6.1.) Poverty in the United States is strongly connected to race and ethnicity. African Americans, Hispanic Americans, and American Indians and Alaska natives were three times more likely to live in poverty than white Americans. (See Table 6.2.)

At the same time, the gap between the rich and the poor continues to grow. Income statistics from the Center on Budget and Policy Priorities show that the poor are separated from the upper class by an especially wide margin in certain U.S. states, including Arizona, New York, Tennessee, and Texas. (See Table 6.3.) The United States is home to the greatest number of billionaires: 374 of the world's 691 billionaires were from the United States, according to Forbes magazine's 2005 list of the richest people in the world. Scott Klinger addressed this disparity on the AlterNet Web site in "The Cavernous Divide" (http://www.alternet.org/story/21544 March 21, 2005). Klinger argues that low corporate taxes, government investment of public money into technology that benefits the upper classes, and a stagnant minimum wage help to explain the chasm between rich and poor in the United States, with Wal-Mart serving as a prime example:

Some billionaires' fortunes rest upon paying their employees poverty wages. Such is the case for the Walton family (numbers 10 through 14 on the Forbes list.) Wal-Mart is the largest private employer in the world. Many of its U.S. workers are so poorly paid that they must rely on food stamps and other forms of public assistance to get by. Such forms of government aid represent an indirect government subsidy to corporations whose business model does not include paying employees enough to live on.

In his article "37 Million Hidden in the Land of Plenty" (London Guardian, February 19, 2006), Paul Harris observes that the majority of America's poor do work regularly, but low wages and a lack of benefits keep them in relative poverty: "Even families with two working parents are often one slice of bad luck—a medical bill or factory closure—away from disaster. The minimum wage of $5.15 an hour has not risen since 1997 and, adjusted for inflation, is at its lowest since 1956." Harris also points to the social problems associated with being poor in the United States: "In America, to be poor is a stigma. In a country which celebrates individuality and the goal of giving everyone an equal opportunity to make it big, those in poverty are often blamed for their own situation."

Amy K. Glasmeier, a professor of economic geography at Pennsylvania State University and author of An Atlas of Poverty in America: One Nation, Pulling Apart, 1960–2003 (Routledge, 2005), calls poverty America's "dirty little secret":

The lack of concern about people who fail to make sufficient income to live above the poverty line (which is $19,157 for a family of four) "occurs" because in many ways poverty in America is all but invisible…. Poor people do not want to stand out from the general population. Instead, they make every effort to be like the rest of us by working full time and attempting to provide for themselves and their families.

According to Glasmeier, part of the problem is the way poverty is measured in the United States, and many other researchers and economists agree. In "Calculating Poverty in U.S. Fuels Debate" (Associated Press, February 21, 2006), Stephen Ohlemacher explains that because the poverty threshold measurement was created in the 1960s and has only been updated to reflect inflation, "a single parent making $13,000 a year is living above the poverty line, while someone with a $1 million house who takes a year off work to travel the world could be below it." The measurement does not take into consideration such non-cash income factors as food stamps and health and housing benefits, and the calculation is based on income before taxes, not after. Non-income assets such as houses also are not counted, nor are regional cost-of-living differences.

Glasmeier adds that the cost-of-living estimates upon which the poverty threshold depends are inaccurate to begin with. She argues that a family of four can acquire basic necessities on the $19,000 per year poverty cut-off in only a few of the country's 3,100 counties. As an example Glasmeier cites Tunica, Mississippi, considered the poorest city in the United States, claiming that a family of four would need a minimum of $27,000 per year to afford the basics there.

Reporter Anna Bernasek, writing in the New York Times ("A Poverty Line That's Out of Date and Out of Favor," March 12, 2006), contends that the main reason the U.S. poverty threshold measurement has not been updated since its inception is that presidents, not economists or statisticians, are responsible for providing the definition of poverty. Changes to the calculation of the poverty threshold being proposed by the National Academy of Sciences would likely add about five million Americans to the ranks of the poor. Bernasek suggests that this new calculation is unpopular in Washington because a rise in the official number of poor Americans may be perceived as a policy failure by the public.

What Poverty Looks Like in the United States

What does it mean to be poor in the United States? In December 2005 the conservative Economist magazine published "The Mountain Man and the Surgeon: Reflections on Relative Poverty in North America and

Africa," which compared the lives of an unemployed truck driver in the coal mining industry of eastern Kentucky's Appalachian region (which has a poverty rate of 24.5%) with a doctor in the Democratic Republic of Congo in Africa. The article noted that, with incomes of $521 and $250-$600 per month respectively, the two men are roughly in the same income bracket, yet the American truck driver is considered desperately poor while the Congolese doctor is viewed as quite well-off relative to the rest of his country. In the United States the median annual income in 2004 was $44,389, whereas in Congo the annual average income is $673, and even basic utilities like running water and electricity are rare. By contrast, more often than not, impoverished American families have at least one television in their home, their children usually attend school, they typically do not have to grow their own food to survive, and in general they may look like everyone else.

While U.S. poverty is certainly different in nature relative to poverty in the developing world, there are some similarities. For instance, some people in the United States experience persistent poverty, living without basic utilities, safe drinking water, and sanitation even in the twenty-first century. Although the majority of Americans—even many of those living below the poverty threshold—manage to afford items such as televisions, a rising number of households have trouble affording food at least once during a given year. This kind of food insecurity is a major indicator of the state of poverty in the United States. Another more visibly extreme indicator of American poverty is homelessness. As the twenty-first century progresses, both of these situations—food insecurity and homelessness—are occurring with more and more frequency throughout the United States.

FOOD INSECURITY

In developing countries hunger is often extreme enough to cause fatal malnutrition. Although hunger in the United States is not as visible, it does result in chronic under-nutrition, which can lead to numerous physical and psychological problems as well as learning disabilities in children. According to the nonprofit organization Food Research and Action Center (FRAC), 11.9% of households (13.5 million—38.2 million people) in the United States were food insecure in 2004; 4.4 million of those were suffering from hunger. The U.S. Department of Agriculture's Economic Research Service (USDA-ERS) report Household Food Security in the United States, 2004 (Mark Nord, Margaret Andrews, and Steven Carlson, October 2005) found that 20% of households experiencing food insecurity sought emergency aid from a food pantry at some point during 2004. For about 30% of those experiencing food insecurity with hunger, the condition was chronic, meaning that it occurred in almost every month of the year.

The USDA-ERS reports that, in food-insecure households in the United States in 2004, children appear to have been protected from hunger in most cases, with adults cutting back on their own food intake in order to continue feeding their children. Nonetheless, approximately 274,000 U.S. households reported that they had at least one child who had to go hungry at least one day during the year. Although the overall rate of food insecurity and food insecurity with hunger increased between 2003 and 2004—from 11.2% to 11.9% and from 3.5% to 3.9%, respectively—the rates for children have remained in the 0.5% to 0.7% range since 1999. Still, households with children had almost twice the rate of food insecurity as households without children: 17.6% versus 8.9%. (See Table 6.4 and Table 6.5 for information on the prevalence of food security, food insecurity, and food insecurity with hunger in 2004; see Figure 6.1 for comparisons of food insecurity during 2003 and 2004.)

Overall, according to the USDA-ERS report, households made up of people older than sixty-five with no children present experienced the lowest rates of food insecurity (6.5%), and households in which all adults were younger than sixty-five and no children were present had the second lowest rate (6.7%). Several household characteristics serve as indicators of high-risk populations—populations with food insecurity and/or hunger rates well above the national average. The report indicates that families with incomes below the poverty threshold were particularly vulnerable, with 36.8% of them experiencing food insecurity and/or hunger at some point during the year. Single-parent households, especially those headed by women, also saw very high rates of food insecurity: 33% for households headed by a single female and 22.2% for households headed by a single male. African-American and Hispanic households also had rates of about twice the national average, at 23.7% and 21.7%, respectively. (See Figure 6.1.)

HOMELESSNESS

There are many factors that can lead to a person becoming homeless in the United States: unemployment or underemployment, mental illness, drug or alcohol addiction, a lack of family support, poor education, and failed social services are among the most frequent. However, the root cause is poverty. An overwhelming majority of homeless people, for whatever reason, cannot afford adequate permanent housing.

A joint study by the National Coalition on the Homeless and the National Law Center on Homelessness and Poverty (A Dream Denied: The Criminalization of Homelessness in U.S. Cities, January 2006) cites a survey from the U.S. Conference of Mayors that reported a 6% increase in requests for emergency shelter in 71% of cities from 2004 to 2005; 14% of these emergency requests could not be met because of a shortage of shelters, and 32% of requests from families were left unmet. Overall, approximately 3.5 million Americans are homeless at some point every year. Nevertheless, the study reports that the enactment of laws "criminalizing" homelessness is also on the rise, including statutes that establish curfews or that outlaw panhandling, public sleeping, loitering, or outdoor feeding (which limits the ability of churches and charities to provide meals).

The National Alliance to End Homelessness's (NAEH) report Family Homelessness in Our Nation and Community: A Problem with a Solution (2005) notes that on any given night, approximately 100,000 American families are homeless, and 600,000 families experience homelessness for at least one night every year. About 50% of homeless people live in families; 70% of them live in urban areas, 19% in suburbs, and 11% in rural areas. Characteristics of homeless families include extreme poverty (an average income of about $5,000 annually); low education levels; single parenthood; unemployment; children under the age of five; and a lack of social support from family and friends. Homeless families also tend to be headed by young parents, and nationwide 43% are estimated to be African American.

The NAEH identifies a lack of affordable housing as the primary reason families become homeless, adding that since the 1970s a low-income housing surplus has turned into a severe deficit: "In 1971 there were 300,000 more affordable units than there were low-income families who needed them; in 2001 there were 4.7 million fewer units than families. Today, for every 100 low-income or poor households that need housing, only 75 units are affordable." Higher-cost housing forces families to choose between paying rent and buying other necessities such as food, which in turn leads to food insecurity.

Another possible consequence of family homelessness is that children may be placed into the state-run foster care system. According to the NAEH report, 30% of children in foster care have parents who are homeless or in an unstable housing situation; in addition, people who have spent time in the foster care system as children are more likely to become homeless as adults, meaning homeless-ness becomes a continuing cycle over generations.

The National Law Center on Homelessness and Poverty's publication Educating Homeless Children and Youth: The 2005 Guide to Their Rights notes that at least 1.35 million school-age American children (representing 10% of all poor children in the United States) are homeless every year. Homelessness presents an especially difficult problem for children, who often have a hard time attending school regularly and performing successfully if they do attend. The U.S. Department of Education reported in 2000 that only 77% of homeless children who are enrolled in school attend regularly, although 87% are enrolled.

The McKinney-Vento Homeless Assistance Act of 1987 ensures that homeless children have certain rights regarding school enrollment and attendance:

• Homeless children are permitted to stay in their school even if they move.
• They can enroll in a new school with no proof of residency, immunizations, guardianship papers, or records from former schools.
• They are entitled to transportation to and from school along with other children.
• They can receive all necessary school services.
• They have the right to challenge decisions made by schools and districts.

However, even federal legislation cannot fully protect homeless children. The National Coalition for the Homeless (NCH) fact sheet "Education of Homeless Children and Youth" (June 2005) states that about 42% of homeless children transfer schools at least once each year, and 51% transferred two or more times, resulting in an estimated three to six months of school time lost with each move. Although the McKinney-Vento Act was strengthened in 2002, the NCH maintains that the program is still underfunded by about $15 million.

Patterns of U.S. Poverty as Reported by the Census Bureau

The U.S. Census Bureau uses the poverty threshold measurement discussed above and in Chapter 1, occasionally adding alternative measurement methods as they become available. As of 2006 the Census measurements still produce the most accurate overview of poverty in the United States, although they are admittedly controversial and do not necessarily tell the whole story of American poverty.

RACE AND ETHNICITY

While overall poverty has risen in the United States, especially among working people, some demographic groups have historically experienced higher rates. According to the U.S. Census Bureau's Income, Poverty, and Health Insurance Coverage in the United States: 2004 (August 2005), the total poverty rate for all groups is almost 12.7% (thirty-seven million people), but African-Americans have the highest rate of any racial or ethnic group, at 24.7% (nine million); this remained unchanged from 2003 to 2004. (See Table 6.1.) The rate for Hispanics also saw no change during that time, holding at 21.9% (9.1 million). People of Asian descent actually saw a decrease in poverty in the United States, from 11.8% in 2003 to 9.8% (1.4 million) in 2004. The rate for non-Hispanic whites rose from 8.2% to 8.6% (16.9 million). The three-year average rate for Native American and Alaska Natives in 2002–04 was nearly as high as for African-Americans: 24.3%. For Native Hawaiians and Pacific Islanders the three-year average was 13.2%. (See Table 6.2.)

AGE

Of all age groups, children under eighteen have the highest poverty rate in America, at 17.8%. (See Table 6.1.) For people aged eighteen to sixty-four, the rate is markedly lower, at 11.3%. The Census Bureau's report notes that children make up only 25.2% of the total American population but account for 35.2% of people in poverty. Children under six living in a family with a single mother or female householder have the highest poverty rate: 52.6% of them live in poverty, versus 10.1% of children in married-couple families. From 2003 to 2004 the poverty rate for people eighteen to sixty-four increased by about one-half of 1%; for those sixty-five and older it decreased slightly, from 10.2% to 9.8%. (See Table 6.1.)

IMMIGRATION STATUS

Most people in the United States who live in poverty are American-born—87.9%—while 4.6% are foreign-born American citizens, and 7.4% are foreign-born and not citizens, according to Income, Poverty, and Health Insurance Coverage in the United States: 2004. American-born citizens experienced an increase in their poverty rate from 2003 to 2004, from 11.8% to 12.1%. The rate for foreign-born naturalized citizens was 10% in 2003 and 9.8% in 2004. Foreign-born noncitizens experienced a poverty rate of 21.6% in 2004. (See Table 6.1.)

DEPTH OF POVERTY

The Census Bureau also calculates how far Americans in poverty fall below the official poverty threshold for their individual situation. This is important information because it allows researchers and legislators to see just how poor the poor are. In 2004, according to Income, Poverty, and Health Insurance Coverage in the United States: 2004, 15.6 million Americans (5.4% of the total population) earned less than 50% of the poverty threshold, accounting for 42.3% of the total number of Americans in poverty. These numbers, which count the poorest of the poor, stayed the same from 2003 to 2004. The numbers increased, though, for people in the middle range of poverty—those who earned at least 50% but less than 100% of the poverty threshold for their situation—from 20.6 million (7.2%) in 2003 to 21.4 million (7.4%) in 2004. For the high-range category of poor people—those who earn as much as the threshold or slightly above it (between 100% and 125% of the threshold)—the numbers stayed the same: 12.7 million people, representing 4.4% of the poor.

WESTERN EUROPE: POVERTY IN THE UNITED KINGDOM AND GERMANY

Germany and the United Kingdom (UK) are the two largest economies in the European Union (EU). The United Kingdom has the EU's highest rate of relative poverty and the highest level of income inequality. In Germany unemployment is increasing rapidly, and child poverty in particular is on the rise. According to economics reporter Steve Schifferes of BBC News Online ("Is the UK a Model Welfare State?," August 4, 2005), the Western countries of the European Union address the problems of the poor with three different models of social welfare programs: social democratic, liberal, and corporatist.

The social democratic model exists mainly in Scandinavian countries (Norway, Sweden, Denmark) and is paid for mostly through taxes, which allows it to provide a high level of services for all. The liberal model of the United Kingdom provides a low level of benefits but also lower taxes; it relies on the private sector to aid the poor and encourages the unemployed to take whatever work is available. (This model is similar to the welfare system of the United States.) The corporatist model is used in most other countries in continental Europe, including France and Germany, with benefits coming through employers from individual contributions.

Schifferes emphasizes that the main difference among the three models and the countries in which they are implemented lies in their differing views of poverty and the poor. In the United Kingdom, as in the United States, the poor are considered "deserving" or "undeserving" of government aid depending on their lifestyle. In both the social democratic and corporatist models of welfare, poverty is viewed as either a result of inequality and injustice or a circumstance that can happen to nearly anyone. It is believed, therefore, that everyone deserves the opportunity to receive aid if necessary.

Poverty is a global issue: it exists everywhere to some degree, regardless of what welfare model a country uses. According to Schifferes, about one in five UK households and one in eight German households are poor. Rates of child poverty are even higher, affecting one in four children in Britain and as many as 35% of children in parts of the former East Germany. Even Scandinavian countries have not eradicated poverty entirely, but they do have the lowest poverty rates in the European Union and some of the lowest in the world, averaging around 5% overall and less than 5% for children.

The United Kingdom

By the middle to late 1990s the United Kingdom had one of the highest poverty rates in Europe and among developed countries. An estimated 4.6 million children—one out of every three—were poor. The overall poverty rate was double what it had been in the late 1970s. According to the United Nations Development Program's Human Development Report 2005, this was the result of government policies of the 1980s that caused income inequality to increase at a remarkable rate: the wealthiest 20% of British society saw their annual incomes increase ten times more than those of the poorest 20%. In Making a Difference. Tackling Poverty—A Progress Report (2006), the United Kingdom's Department for Work and Pensions (DPW) reported that the number of people receiving unemployment benefits had risen 50% between 1979 and 1997; in addition, the number of single parent and disability benefits claims had tripled.

In response, the government initiated a radical anti-poverty campaign in 1999, the main goal of which was to eradicate child poverty in Britain entirely by 2020. The results have been encouraging. As part of the BBC News Online's special series on poverty in the United Kingdom, "Breadline Britain: The Welfare State Sixty Years On," Evan Davis reported in his article "UK Poverty Line Is Moving Target" (March 9, 2006) that the program had successfully moved about 100,000 British children per year out of poverty. However, Britain's relative method of calculating its poverty line meant that if incomes increased across all levels of society the line would likewise rise, resulting in even more people living in relative poverty. The answer, and the challenge for the government, suggests Davis, lies in increasing the incomes of poor people at a faster rate than the incomes of the wealthier members of the society.

Twelve million people—about one in five—in Britain are poor, according to a joint report from the New Policy Institute and the Joseph Rowntree Foundation (Guy Palmer, Jane Carr, and Peter Kenway, Monitoring Poverty and Social Exclusion 2005, 2005). Britain's Department for Work and Pensions reports that families with children make up the greatest proportion of poor people in the United Kingdom (33%), and married couples without children represent 11%. Nineteen percent are unmarried people without children, while 18% are single people with children. The remaining number of those living in poverty in the United Kingdom are elderly people, 12% of whom are married and 7% of whom are single. The Luxembourg Income Study, an international cooperative research project that tracks income in thirty countries, reports that in all, 21.8% of British people live below 60% of median income (the typical European poverty measurement), which contrasts sharply with 14.1% in France, 13.1% in Germany, and 12.3% in Sweden.

Germany

Although Germany is one of the largest economies in the world and was extraordinarily successful in recovering from the economic, infrastructural, and social disasters wrought by World War II and the Nazi Party's control, the country fell into economic stagnation in the early 2000s. By early 2005 the unemployment rate was the highest it had been since the 1930s, according to BBC News Online ("German Jobless Rate at New Record," March 1, 2005). In December 2005 the unemployment rate had dropped, from 12.6% to 11.2%, before rising again to 12.2% in February 2006. The country's weak economy caused not only joblessness but, increasingly, outright poverty, especially among families with children.

In September 2005 Sabine Dobel reported on Expatica.com ("Going without in Wealthy Germany") that more and more Germans—the poor, the elderly, children, and the disabled—are suffering from malnutrition as a result of unemployment and cutbacks in government aid. Incidences of middle-class people removing food from dumpsters for their own consumption are on the rise in German cities, according to Dobel. Perhaps most alarming are reports that as many as 20% to 30% of people admitted to hospitals in Germany are malnourished, particularly sick children. In an ironic twist indicative of the urgency of the German situation, in March 2006 the Tawfiq Hospital in Malindi, Kenya—the twenty-sixth poorest country in the world—sent volunteer aid workers to Berlin to distribute coffee and tea to hungry Germans waiting in breadlines during Germany's unusually cold winter. The group Medical Direct Help in Africa was "shocked into action after discovering that even people in a rich country like Germany could lack sustenance" ("Kenya Offers Aid to Third World Germany," Deutsche Welle, March 6, 2006).

The Cologne Institute for the German Economy argued that the high unemployment rate had resulted in a drop in the German standard of living, but that relative unemployment was not really rising ("German Think Tank Says Joblessness behind Poverty," Deutsche Welle, March 7, 2006). In fact, the Institute maintained that the German method of measuring poverty—setting the poverty line at 60% or less of average monthly income—was the real problem, for much the same reason that British researchers criticize the United Kingdom's poverty line calculation: across-the-board income increases cause the poverty line to rise, meaning that more people fall below it. At the same time, with incomes in the highest economic category rising faster than those in the middle and low categories, income inequality has grown in Germany as it has in other developed countries.

As of March 2006, 16% of Germans lived below the nation's poverty line. Deutsche Welle reported in February 2006 ("Germany Serious about Minimum Wage," February 24, 2006) that two million poor Germans have full-time jobs. As of 2006 Germany did not have a minimum wage law—an issue that has stirred up a heated debate across the country. Other European Union countries have a minimum wage, but the idea instituting one in Germany has the nation split: many union leaders are calling for a high minimum wage, while others argue that this would result in the loss of more jobs.

The minimum wage issue is part of a larger controversy across the country regarding the government's proposed labor and social welfare reforms, known as Hartz IV. These reforms would increase the workweek from its traditional thirty-five hours with no pay increase. In addition, Germany's generous unemployment benefits would be strictly limited, and the power of labor unions would be curtailed. Proponents of the reforms argue that the long history of Germany's brand of capitalism—characterized by an extremely high level of social welfare programs—is over, and government guidance of economic markets must give way to an entirely free market system. Opponents of the reforms believe they will only increase the country's rapidly rising poverty rate.

Child poverty in Germany is an especially serious issue. Miles Corak, Michael Fertig, and Marcus Tamm reported in A Portrait of Child Poverty in Germany (Institute for the Study of Labor, March 2005) that the overall child poverty rate in Germany was 10.2% in 2001. However, the rate in the former East Germany was considerably higher than in the West: 12.6% versus 9.8%. Figure 6.2 shows that, since 1994 and with the brief exception of 1999, child poverty in Germany was significantly higher than either overall German poverty or poverty in German households without children. Likewise, Figure 6.3 demonstrates that, between 1991 and 2001, children residing in Germany without German citizenship had a much higher poverty rate than children who were citizens in West Germany. Finally, in Figure 6.4 it is evident that children in single-parent households throughout Germany have suffered from a far higher rate of poverty (approximately 32% or more) since 1991 than those in two-parent households.

EASTERN EUROPE: THE RUSSIAN FEDERATION

The Russian Federation is the largest country by land area in the world, at almost 6.6 million square miles. It is a loose federation of eighty-eight separate republics, territories, and other political subdivisions, each of which has two delegates in the Russian parliament and varying degrees of political and economic autonomy. The Russian Federation's 142.9 million people are extremely diverse culturally and ethnically: there are believed to be about 160 distinct ethnic groups throughout the country. This diversity has fueled violent conflicts at times since the dissolution of the Soviet Union in 1991. The Russian Federation is more commonly referred to as Russia, but Russia was actually the largest of the republics that made up the Soviet Union. Both as a part of the Soviet Union and as a member of the Russian Federation, Russia accounts for more than half of the country's population and at least 60% of its gross domestic product (GDP).

The Transition from Soviet Control to Free Market

The Russian Federation emerged as an independent nation late in 1991, when the Union of Soviet Socialist Republics (USSR, or Soviet Union) of which it had been a major component collapsed. The Soviet Union was a communist country with a centrally planned and tightly controlled economy. In theory, this system ensured that all citizens received the basic necessities of life, and as such there was no poverty. In reality, however, the Soviet system had been struggling to meet the basic needs of its citizens for years prior to its downfall. Mikhail Gorbachev, who led the Soviet Union from 1985 to 1991, introduced the concepts of glasnost (openness) and perestroika (reconstruction) in an attempt to reform and repair the Soviet system.

The pace of reform under Gorbachev proved too slow to satisfy critics of the Soviet system, and too fast to be satisfactory to its defenders. Communist hard-liners launched a coup in August 1991 in an attempt to remove Gorbachev and end his reforms. They were resisted and defeated by reformers, most notably Boris Yeltsin, the president of the Russian state within the Soviet Union. Having defeated the hard-line Communists the reformers were left as the most powerful force in the country, and they moved quickly to end the Soviet Union.

The Soviet Union was officially dissolved on December 21, 1991. Boris Yeltsin was now the president of an independent Russia. Yeltsin had already embarked on a program of radical economic reforms, known as "shock therapy," to end the Communist economic system and force the country into a Western-style free-market economy. The result of these major changes, implemented quickly, was massive economic disruption. Inflation soared, wages for average Russians fell, manufacturing output declined, and many Russians became unemployed. Some Russians were able to take advantage of the new system to become quite wealthy, but many more sunk into poverty. In subsequent years the economy recovered somewhat, but poverty remains a serious problem.

Russian Poverty since the 1990s

According to the World Bank report Russian Federation: Reducing Poverty through Growth and Social Policy Reform (February 8, 2005), poverty in

Russia was reduced by approximately 50% between 1999 (when it was at 41.5%) and 2002 (when it was 19.6%), with an estimated thirty million people lifted above the poverty line during this time. (See Table 6.6.) The unemployment rate has also dropped dramatically, from a high of 13.2% in 1998 to 8.6% in 2002. The report notes that poverty in Russia is "shallow," meaning that most of the poor have incomes somewhere around the poverty line, with many people living just above it. While this makes for less depth of poverty, it also means that a greater number of people are vulnerable to economic fluctuations: the risk of falling into, or deeper into, poverty is greater for far more people.

Certain segments of the Russian population are more likely to be poor than others—in other words, they have more poverty risk factors than others. For children younger than sixteen the poverty rate is quite high, at 26.7%. (See Table 6.7.) People living in rural areas in the central and eastern parts of the Russian Federation have a poverty rate of 30.4%, versus 15.7% for urban dwellers. (See Table 6.8.) However, because there are so many more people living in the western, urban areas of the federation (around Russia's capital city of Moscow), 15.7% of this much greater number actually translates into more people than 30.4% of the smaller population living in rural areas. It makes sense, then, that the majority of impoverished Russians are members of urban households with children. Figure 6.5 shows the geographic distribution of poverty in the Russian Federation, with the highest concentration in the most populous, western areas. In fact, 58.5% of the poor live

in large cities, and—perhaps more surprisingly—89% live in a household in which at least one person is regularly employed. (See Table 6.9.)

The states of the Russian Federation also experience greater disparities in regional income, in part because the country is so large and has such a diversity of geographical features and varying degrees of remoteness, ranging from the huge metropolitan city of Moscow to the most isolated, inhospitable parts of southern Siberia. As Figure 6.6 shows, urban and rural Russians live with very different basic services—an indicator of poverty and standards of living. While at least 60% of all five income categories in urban areas have access to most infrastruc-tural and utilities services, in rural areas access ranges from less than 20% of the poorest with access to hot water to just over 60% of the richest with running water.

The Russian Federation in the post-Soviet years has seen a decline in education equity across income groups. During the Soviet years, literacy was near 100%, and free, compulsory education was open to all. With increasing competition in more recent years, however, the poor have been largely left out of preschool and post-compulsory education. Furthermore, government spending on education has fallen behind that of most other former-Soviet countries in Central and Eastern Europe: in 2002 Russia spent just 3% of its gross domestic product on education, whereas Estonia had the highest GDP education spending, at more than 7%; the Central and Eastern European average was about 4.5%; and the European Union/North American average was about 5.5%. The World Bank's Russian Federation: Reducing Poverty through Growth and Social Policy Reform reports that about 8% of poor children in Russia complete higher education, versus 21% of nonpoor children.

Perhaps most troubling is the decline in overall Russian health and its link to poverty since the economic transition. According to the World Health Organization, life expectancy in the Russian Federation in 2003 was fifty-eight years for men and seventy-two for women. Healthy life expectancy was 52.8 years for men and 64.3 for women. According to Oleksiy Ivaschenko in Longevity in Russia's Regions: Do Poverty and Low Public Health Spending Kill? (United Nations University, World Institute for Development Economic Research, June 2004), life expectancy throughout the Russian Federation declined substantially between 1990 and 2000, by as much as seven years in some of the regions hit hardest by the depression of the 1990s. Working-age men accounted for the majority of premature deaths—an estimated 1.3 to 1.6 million between

1990 and 1995. Ivaschenko cites studies linking the rise in premature deaths to stress related to unemployment, low wages, poor diet, increased crime rates, and a dramatic rise in alcoholism, all associated with low income.

Furthermore, Russia has experienced an increase in the incidence of infectious diseases since 1990. In 2004 there were 126 new cases of tuberculosis per 100,000 people, according to the World Health Organization's GlobalTuberculosis Control. The emergence of drug-resistant strains in particular has caused concern among health care professionals worldwide. These strains accounted for about 8.3% of new cases in 2003. The incidence of HIV and AIDS has also increased since 1990, rising from 10,000 or fewer cases in 1997 to more than 250,000 in 2003. Analysts point to the breakdown of the health care and social services system, along with an increase in stress-related risky behavior, in the post-Soviet era.

ALCOHOLISM IN RUSSIA

Vodka has played an important role in Russian culture for centuries. Even prior to the economic crash of the 1990s and the shaky recovery of the early 2000s, alcoholism was common throughout the country. However, according to the World Health Organization, annual per capita alcohol consumption has increased more or less steadily from 1990, when it was 7.08 liters (6.22 quarts), to 2001, when it was 10.58 liters (9.31 quarts). The Australian Broadcasting Corporation's foreign correspondent Michael Brissenden reported on August 26, 2003, that beer consumption was increasing by 30% per year, largely due to government encouragement because taxes on beer generate much-needed income, and beer is marketed as more of a soft drink than an alcoholic beverage. Periodically the governments of Russian states attempt to curb alcohol consumption by implementing legislation, but these attempts have backfired. Mikhail Gorbachev's anti-alcohol campaign resulted in a huge black market, and a 2000 attempt to raise taxes on vodka by 40% ended in public rioting.

Beer and vodka are not the only threats to Russians' health. Cheap counterfeit alcohol, homemade moonshine, and even de-icing solvent and cologne contribute to the problem. In December 2005 Alex Rodriguez of the Chicago Tribune reported in "Alcohol Destroying Rural Russia" that as many as 40,000 Russians die of alcohol poisoning each year, and one-third of all deaths in the country are related in some way to alcohol abuse. By comparison, U.S. deaths directly attributable to alcohol poisoning alone averaged 317 annually between 1996 and 1998, according to the National Institute of Alcohol Abuse and Alcoholism; about 1,000 more fatalities each year in the United States had alcohol poisoning as a contributing factor, most often in a death that included poisoning from another drug.

In his Chicago Tribune article Rodriguez illustrated some of the reasons rural-dwelling Russians turn so often to alcohol:

Fifteen years of post-Soviet capitalism has left rural Russia straggling far behind. Russians in collective farms across the country's eleven time zones could count on a safety net of free housing and health care—and on regular paychecks—during the Soviet era. In today's Russia, those same villagers live day-to-day, shivering through stretches of winter without heat, cringing at the sight of their children in tattered school clothes.

In the extremely harsh winter of 2005–06, with temperatures exceeding twenty degrees below zero, the combination of poverty and alcoholism was particularly deadly. As of January 2006, 123 homeless people and alcoholics had frozen to death on the streets of Moscow, with the number expected to rise before winter's end (Andrew E. Kramer, "In Frozen Moscow, City Rescues the Homeless and the Drunk," New York Times, January 21, 2006).