Crisis Plunges US Middle Class into Poverty

The financial crisis in the US has triggered a social crisis of historic dimensions. Soup kitchens are suddenly in great demand and tent cities are popping up in the shadow of glistening office towers. Even drug dealers are feeling the pinch.

Business is poor in the New York banking district around Wall Street these days, even for drug dealers. In the good old days, they used to supply America's moneyed elite with cocaine and crack. But now, with the good times gone, they spend their days in the Bowery Mission, a homeless shelter with a dining hall and a chapel.

Alvin, 47, is one of them. His customers are gone, as is the money he earned during better times. And when another dealer higher up the food chain decided he was entitled to a bigger cut of the profits, things became too dicey for Alvin. "I'm afraid," he says.


Alvin, who is originally from Louisiana, cleared out his apartment and moved into the oldest homeless shelter in New York City. In the drug business, a dealer who doesn't pay his bills stands to get the maximum penalty: death. But Alvin feels safe in the Bowery Mission, even though the demand for beds is so high. "Last night I slept on the floor in front of the pulpit," he says.

Like human detritus, society's disappointed and castoffs sit around in the mission every evening, waiting to be assigned their sleeping quarters -- a bed, a floor mat or an unpadded church pew -- by the shelter director.

Ironically, the mission's donations have fallen by 13 percent from last year, says outreach director, James Macklin. Macklin was once homeless himself and lived at the mission before he rose through the ranks to his current management position. "We will emerge stronger from this crisis," he says defiantly.

In the United States, the economic downturn has developed into a social crisis of a dimension the country has not experienced since the Great Depression early in the 20th century. In addition to bringing down stock prices and corporate earnings, the current crisis has deprived millions of people of their livelihood.

Poverty as a mass phenomenon is back. About 50 million Americans have no health insurance, and more people are added to their ranks every day. More than 32 million people receive food stamps, and 13 million are unemployed. The homeless population is growing in tandem with a rapid rise in the rate of foreclosures, which were 45 percent higher in March 2009 than they were in the same month of the previous year.

The effects of the crisis are even palpable in better neighborhoods. The streets are wide in Venice Beach, an upscale Los Angeles suburb near the ocean. But now they seem narrower than usual, because they are lined with parked campers and station wagons, the temporary homes of people whose lives have been put on hold. Many have covered the windows with cardboard to preserve a modicum of privacy. Some have put up signs that read "Come in if you dare," hoping to deter car thieves and other criminals.

The crisis is also making itself felt in posh Georgetown, a historic residential neighborhood in Washington D.C. which is home to many politicians, lobbyists and attorneys. Anyone who forgets to lock his car at night can expect to see unwanted guests sleeping in it by the next morning.

When one local woman, who works at a Middle Eastern embassy in Washington, opened her car door one morning, she was astonished to find a woman holding a purse and wearing a pearl necklace sitting on the seat. The humiliated woman covered her face, apologized politely and quickly left her sleeping quarters.

The loss of a job often marks the beginning of the end of a middle-class way of life. In a delirium of cost-cutting, American companies have even started to lay off parts of their core workforce. The unemployment rolls grew by about 690,000 people in March, 850,000 in February and 510,000 in January. Since the beginning of the crisis in the summer of 2007, the total number of the unemployed in the United States has swelled by 6 million.

The government's social safety net is insufficient to allow people who have lost their jobs to continue living their lives as if little or nothing had happened. After the consumption binge of recent years, the bank accounts of ordinary people are empty, and the investment accounts of the middle class have declined in value by an average of 40 percent. Because of these factors, unemployment is often followed a rapid plunge into abject poverty.

Nowadays, politicians spend as much time visiting homeless shelters as they once spent at Silicon Valley startups. People waiting in line at Miriam's Kitchen in Washington were recently pleased to see first lady Michelle Obama when she paid a surprise visit to the soup kitchen. Before he was sworn into office, President Barack Obama helped to paint a homeless shelter not far from the White House.

In a recent speech, Obama said that he envisions "a future where sustained economic growth creates good jobs and rising incomes." But these words seem empty in the current crisis.

The president must now look on as the country comes apart at the seams. With jobs disappearing and incomes shrinking, America's future seems vulnerable today.

The crisis in the lower third of society has turned into an existential threat for some Americans. Many soup kitchens are turning away the hungry, and even hastily constructed new facilities to house the homeless are often inadequate to satisfy the rising demand.

Many private corporations across America are withdrawing their funding for social welfare projects. Ironically, their generosity is ending just as mass poverty is returning to America.

The government is also contributing to a worsening of the crisis. Although the national government in Washington has made additional funds available to care for the homeless, many state governments have cut back their social budgets. One of the reasons for the cutbacks has to do with state constitutions, which prohibit states from going into debt, imposing a forced regime of frugality.


'The Land of Opportunity Is but a Cruel Joke'


In New York City, soup kitchens must make do with sharply reduced budgets, even though demand for their services has quadrupled. According to the city government, free meals were provided to 1.3 million people in 2007. From October to November 2008, the number of New Yorkers living below the poverty line suddenly jumped to 3 million.


More recently, city soup kitchens have been literally overrun by their clientele. The Church of the Holy Apostles in Manhattan currently distributes 1,250 meals a day, but even that is not enough, says Joel Berg, director of the New York City Coalition Against Hunger. "Many people leave without having received a meal."

Hunger is rarely a solitary affliction. Many of those waiting in line at soup kitchens no longer have permanent homes. Thousands of the homeless, including many families that could no longer pay their rent, have moved into inexpensive motels. These are people who were once part of America's middle class.

The Costa Mesa Motor Inn is in Orange County, an upscale area not far from Los Angeles, familiar to many TV viewers as the setting of "The O.C.," a series about the glamorous love lives of spoiled teenagers. The motel is next to an exceedingly green golf course, and a new shopping center across the street offers lattes for adults and play zones for children.

But there is nothing glamorous about the Costa Mesa Motor Inn, where strict rules are posted at the entrance: no alcohol, no panhandling. A police car is parked in front of the motel. Toy cars lined up on a windowsill in room 1108 serve as a reminder of better days.

"We were able to take the toy cars with us, but I had to throw most of the toys into the dumpster," says Sergio Gallardo. He rents a room at the motel, which is barely 100 square feet (10 square meters) in size and has a small kitchenette, for $870 (€670) a month. His children -- Raymon, 13, Sergio, 12, Alina, 8, Jacob, 5 and Lovely, 3 -- peer out of the dimly lit room.

The Gallardos, who used to live in a large, three-bedroom apartment, have been staying at the motel since November. Sergio, 33, a powerful-looking man wearing an XXL T-shirt, once earned a good living as a construction worker, while his wife raised the children. But now he has lost his job, his wife and his car. The family's German shepherd dog had to be taken to an animal shelter, because dogs are not permitted in the motel.

The only benefit of the family's new quarters is that there are many playmates for the children. A local charity estimates that more than 1,000 families are living in motels in Orange County. The face of the crisis is cheerful here at the Costa Mesa Motor Inn's playground, where children giggle and shriek as if they were at Disneyland.

As dire as their current situation is, the Gallardos are luckier than some of those in the Californian capital of Sacramento. There, not far from a railroad embankment, a tent city was, until recently, home to the poorest of the poor. The tent city had been around for several years but was in the past populated mainly by dropouts and drug addicts. But in recent months they were joined by the casualties of the economic crisis. Similar tent cities are growing all across the United States, from Seattle to Florida.

Compassion is good for TV ratings, as talk show host Oprah Winfrey demonstrated recently when she drew her viewers' attention to the Sacramento tent city. Oprah's publicity was embarrassing for Sacramento and its mayor, Kevin Johnson, and the tent city was cleared by the city last week. Johnson said that Sacramento would spend some $1 million on finding alternative shelter for those in the camp and providing more permanent housing.

The television images from Oprah's report were reminiscent of pictures in a history book. Like some bitter reminder of the past, pictures of adults with empty eyes and neglected children looked like a caricature of the American dream. Criminologist James Alan Fox, who has long warned of a rise in crisis-related crime, says that more and more Americans are struggling today. "The American dream to them is a nightmare, and the land of opportunity is but a cruel joke," Fox recently told the Washington Post.

Recent statistics confirm his predictions, as America begins to turn into a brutal place once again. April has already gone down as one of the bloodier months in American criminal history. A week before Easter, a 22-year-old man killed three police officers in Pittsburgh. On the same day, a 34-year-old man in Washington State shot his five children before turning his gun on himself. A day earlier, a man killed 13 people at an immigrant resource center and then took his own life. During the same month, a man from Priceville, Alabama shot his wife, his sister, her 11-year-old son, his own 16-year-old daughter and, finally, himself.

"This is the American way," New York Times columnist Bob Herbert writes cynically. He points out that Americans have killed about 120,000 of their fellow Americans since the terrorist attacks of Sept. 11, 2001 -- nearly 25 times the number of Americans killed to date in the conflicts in Iraq and Afghanistan.

More and more experts attribute the rise in crime in recent months to the dire state of the economy. "I've never seen such a large number (of killings) over such a short period of time involving so many victims," Jack Levin, a professor of criminology at Northeastern University in Boston, told the Washington Post.

Once again, a generation of children are growing up in America whose daily lives are marked by violence and hopelessness. Education often suffers among the new underclass. Children who are homeless or live in motels are less likely to do their homework or even go to school.

Rhonda Haramis is in charge of the student outreach program at the Mary Bethune Transitional Center in Long Beach, California. On one day, she received calls from 18 parents, many of them saying that they were about to be evicted and could no longer guarantee that their children could attend school or that they could help them with their homework. Haramis and her fellow teachers don't know what to tell the parents. In an interview with a local newspaper, they likened the impact of the crisis on them to the effects of Hurricane Katrina on New Orleans.

The social crisis is especially hard on those who were already struggling before, such as illegal immigrants working as day laborers. A group of them congregates every morning in the large parking lot of a Home Depot home improvement store in Los Angeles, directly on the city's world-famous Sunset Boulevard.

These day laborers no longer have any illusions. By 11 a.m., hundreds of men are still sitting on the small stone walls surrounding the parking lot, and whenever a car pulls up, a throng of men surround the vehicle, hoping for work. They rattle off the few bits of English they have picked up: "painting," "cleaning," "do everything," "cheap." Hardly any of the men is successful.

The crisis can disrupt everything, including Americans' faith in the beneficial actions of their own government. The Obama administration has already pumped billions into the banking system, and additional billions have been earmarked for road and bridge construction. Nevertheless, the social situation has steadily deteriorated.

The euphoria over the country's first black president, a man who won the election with catchwords like "change" and "hope," has ebbed away considerably. Obama's appealing words still sound appealing, but his listeners have recently starting paying more attention to what he does than to what he says.

When the president discusses the economic situation nowadays, the euphoria has given way to disenchantment in many places. When Obama stepped up to the microphone at Washington's Georgetown University last week, he warned his audience that his speech would be "prose and not poetry." But those words seemed superfluous, since these days no one would think of calling out: "Yes, we can!"

Most of all, a pensive Obama asked his audience for patience. He noted that although there are initial rays of hope that the situation could be improving, "we cannot rebuild this economy on the same pile of sand. We must build our house upon a rock." But this, he said, could not be done in a short period of time.

He continues to point his finger at his predecessor, the unpopular George W. Bush, to remind people how it all began. We have inherited a budget disaster, a real mess, he has said time and time again. But his words are no longer capable of igniting passions, because Bush is now history.

The former president now spends his days doing things like throwing out the first pitch at baseball games, as he did recently in Texas. On those occasions, he likes to smile for the cameras.

But whenever he is asked to comment on Obama's policies and his handling of the crisis, he tactfully declines to answer the question. "He deserves my silence," says Bush. The crisis has become Obama's crisis.

Translated from the German by Christopher Sultan

http://www.spiegel.de/international/world/0,1518,druck-620754,00.html