>> Sheldon: And on behalf of the Ford School

and the National Poverty Center I
want to welcome you to today's talk.

It's my privilege to introduce Katherine Newman.

Katherine is a well known author and a scholar.

Her current titles are Director of the
Princeton Institute for International

and Regional Studies, the Director of the
Joint Doctoral Programs and Sociology Politics,

Psychology and Social Policy, the Malcolm Steven
Forbes class of 1941, Professor of Sociology

and Public Affairs and there's something else.

>> Katherine Newman: That'll do it.

>> Sheldon: And the Director of the
Global Network on Inequality at Princeton.

Kathy is also well known as a mentor of
young scholars in addition to setting

up the joint doctoral program at Princeton.

She set up a similar joint program at Harvard
when she was there at the Kennedy School.

While at Harvard she was also
Dean of Social Science at Radcliff

and obviously a Professor at the Kennedy School.

And before that she was a Professor
of Anthropology at Columbia.

I first met Katherine in October of 1989
at a conference that I remember well.

It was a conference that was designed

to discuss William Julius Wilson's
famous book, "The Truly Disadvantaged."

And Katherine was an Assistant
Professor who had a critique

of Bill Wilson's book that Bill didn't like.

[Laughter] And I came up to
her after her presentation

and I said, "I really enjoyed your talk.

Would you come to Michigan the next
year and give it in our seminar?"

And she did and we've been
colleagues ever since.

And that early work led to maybe Kathy's
most famous book, which is her 1999,

"No Shame in My Game: The
Working Poor in the Inner City."

That book was followed recently
by the book, "Chutes and Ladders:

Navigating the Low Wage Labor Market."

And those books focused on
inner city workers in Harlem,

who Kathy and her colleagues
have followed over many years.

Today Kathy's going to talk about her
latest published book, "The Missing Class:

Portraits of the Near Poor in America"
and there's some copies that are available

for sale afterwards in the lobby.

I should also note that Kathy
has written many other books.

One area outside of the poverty
area, a book called, "Rampage:

The Social Roots of School Shootings."

And probably a true indicative of Kathy Newman's
energy, her CV lists three books in progress,

"Brothers' Keeper: The Limits of Social
Solidarity from the New Deal to the Age

of Inequality", "Failure to Launch:
The Consequences of Delayed Departure

from the Family Home in Western Europe, Japan
and the United States" and "Risky Business:

The Causes and Consequences
of Employment in Security."

So, over the years I've tried to have
Kathy out as often as she's had new books,

but lately she has more new books
than I can get her to count.

[Laughter] So, please welcome Kathy Newman.

>> Katherine Newman: [Applause]
Well, thank you Sheldon.

That was very kind.

And I remember that conference where we met
a great deal because I was the only person

who was asked to write a
critique of Bill Wilson's book.

Everyone else was there to celebrate it

and as you might imagine it was a
bit of a daunting position to be in.

And Sheldon came to my rescue
by suggesting publicly

that this critique was actually
worth paying attention to.

So, I've been eternally grateful
to him ever since.

What I'm going to try to do today is utterly
impossible in the fifty minutes that we have.

So, I'm going to try and get as far as I
can, but I actually want to fuse all three

of the books that I've done that look at people
at the bottom of America's social structure.

So, you will see that I actually
for once had a method to my madness.

Many of you will be familiar I know, with--

with the first of these books,
which Sheldon already mentioned.

"No Shame in My Game" that was my first crack

at exploring the world of
the low wage labor market.

The working poor who were the subject of No
Shame were not a particularly visible group

in the literature on poverty when I first
began working on it in the early 1990s.

Welfare reform has pushed
them into the limelight

and so by the time I began I had already
been working on this for a few years.

The subject in a sense caught
up to-- to my own research.

What I was interested in there was the
meaning of work, often quite menial work,

in the lives of people who at that
time the country really thought

of almost entirely as welfare queens.

And they could be forgiven for feeling that way
since the social science literature and most

of the journalistic accounts about
poverty linked the concept of poverty

to joblessness, including Bill Wilson's work.

But, having long been a student of the world of
work and something of a contrary in personality

to boot, I was never really that taken
by the debates over welfare policy

and long term welfare recipients.

My concern was with the people who were working,
many of them full time and year round in jobs

that just didn't pay enough to
pull them above the poverty line.

Their world, their ambitions, fulfilled
and dashed interested me a whole lot more.

So, "No Shame in My Game" tried to examine
how they found work in the inner city,

how they battled past the stigma associated
with lousy jobs, what they learned in these

so called no skill jobs, were
these really jobs devoid of skill.

How they managed their domestic life
and shift work and most of all whether

or not they saw the world that
they live in through a racial lens,

which many people argued they
did and I thought they didn't.

But, most of all I was interested in
what would happen to people over time

who entered the work world at the very bottom.

In the kinds of jobs the modern American
economy was producing in large numbers,

minimum wage service sector jobs
with very few options for the future.

In the mid 90s when I began that research
it was a period of very high unemployment.

And in Central Harlem, the area
where I did that field work,

unemployment was really at catastrophic levels.

It was about eighteen percent
official unemployment.

Over forty percent of the
households were below poverty.

And we had very high levels of
public assistance recipiency.

But, what I was really interested in there
was in the midst of such a poor neighborhood,

what would happen to people who actually
took these crappy jobs and worked pretty hard

at them, staying more than twice the length
of the national average in jobs of that kind?

What would happen to them when
they tried to find better jobs?

Were these jobs dead ends
that didn't go anywhere?

Or were they jobs that could potentially
become the bottom rung in a job ladder?

And the initial field work that I did,
which lasted for about eighteen months,

came back with a pretty bleak answer.

They weren't going anywhere.

They were stuck not for lack of trying
by the way, because I followed them

down to the job centers, down to the Civil
Service exams as they would move from employer

to employer in search of better jobs, but, they
just couldn't get anybody to give a second look.

They were in trouble because adults were
flooding into the low wage jobs beating

out teenagers who couldn't even
compile a burger flipping track record.

They were in trouble because
as steadily employed people,

they were already at the pinnacle
of their own social networks.

That is, they were better off
than most of the people they knew.

And those who had better jobs often
would not give them the time of day

as my former student Sandra Smith's work
shows her new-- her most book, "Lone Pursuit."

So, I had a very bleak picture,
which I ended up Chutes--

"No Shame in My Game" with at the very end
about what would happen to these people.

But, when I returned for
the first follow up study,

I was absolutely stunned to
discover how wrong I was.

And that was the subject of "Chutes and
Ladders" the second book in this series.

And it basically provided all the
evidence that I was totally wrong.

So, in those first four years we saw pretty
significant wage gains in this group,

exceeding certainly my wildest expectations.

Almost thirty percent of the workers
and job seekers I studied had

over five dollars increase in real wages.

But, of course they were not the
whole universe of experience.

An equally large percentage had either
lost wages or stagnated where I left them.

The bad news was expected.

The good news surprised me.

And of course, we find here that it's not
easy to know how representative they are,

but nonetheless and I'm-- I'm going to
get to the question of what I tried to do

to answer the question of
representativeness in a moment.

But, these findings that
there was a significant group

of people who've done quite well
were quite surprising to me.

And they didn't just do well in terms of wages.

You probably can't see this chart,

but there were other important
changes that occurred in their lives.

Over half the people that I began studying

in the mid 90s were over--
over the age of twenty five.

So, this is beyond the period in which you
would expect to see a lot of gains in education.

Nonetheless, I saw significant
increases in their education.

So, at first-- the first time I contacted them

about forty six percent had
completed their GEDs.

Among those who were working in 1993
by the time I caught up with them

in 97 eighty two percent
had completed their GEDs.

An additional twenty percent had
gotten some college education.

About twenty three percent had gotten
job training or vocational education.

And a similar kind of track record among
those who were what I called, "The rejects",

the people who tried to get these entry
level minimum wage jobs and did not succeed.

I was very worried at the time
I first began studying them

that they would never be
able to live on their own.

They would not be able to move out
their parent's households because one

of the consequences of having a minimum wage
job is you simply couldn't amass the resources

necessary to live independently,
but partly because of aging,

partly because they were
doing better economically.

In fact, a much larger proportion were
living on their own than I expected to find.

And as they did better, the mean number of
workers in their household grew and the number

of people on AFDC declined a bit.

So, there were other changes
besides wage increases that looked

to me like a smattering of good news.

Now, when we-- when I went back for the third
follow up, which is sort of what you can see

on the far right hand side here, now
you see the period that, you know,

we think of as the Rubin era
or the Clinton era depending

on who you're rooting for these days after 1997.

And you see even more substantial
wage increases.

You know, this didn't make these
people rich, but it was not a--

again, not really what I expected.

So, what you see here is-- in the pink
line are those workers who started off

on the shop floor of what I called Burger Barn.

But, all of you will recognize as
McDonalds who did not get more education

in the succeeding eight years, but found
their way into skilled, semi skilled--

and semi skilled jobs that were often unionized.

So, their wages went up because
they landed union jobs.

And this is the group that experienced
the greatest wage growth over time.

The blue line represents people
who also didn't get more education,

but moved up often inside the
firm where I first found them.

And the yellow line represents the group
that we all as traditional economists

if I can include myself momentarily in
that category would think would do better.

These are people who got more education
and left Burger Barn altogether

for professional sales and
clerical and service jobs.

And they actually didn't do as well as--

in terms of wages as the--
those who found unionized jobs.

But, in general, you know, this group was still
moving up in ways that I found quite surprising.

But, how representative, you know, is this?

What can you do with this small sample I mean

for a qualitative field worker
it was a huge sample.

But, for a sociologist or economist it's very
small and hard to know how representative it is.

We're talking about people living in
the inner city in a poor neighborhood,

an entirely minority population
with these entry level jobs.

To try and answer that question I persuaded
a colleague of Sheldon's, Petter Gottschalk

and his student Helen Connolly to
help me with a study of the SIPP,

which you're all more familiar
with probably than I am.

But, the SIPP survey has huge advantages for
asking questions about whether or not a pattern

like the one I discovered in my
field work sample has any resemblance

to national patterns of this kind.

The SIPP survey is a representative longitudinal
panel of about thirty thousand respondents,

each of the panels last for
about two to four years.

There's a new panel that was started
every year between 1984 and 1993.

And respondents are interviewed
every four months so their recall

of the wage data is more likely
to be accurate than people I had--

was contacting where four years
went in between the contact.

So, we used this SIPP survey
to try and see whether

or not the patterns I had seen
were at all representative.

And we did that by creating four SIPP
samples and I'm not going to take time

to describe how they were configured, but I
should just tell you that everyone who fell

into our sample was eighteen to forty
years old when they were first observed.

They lived in families that were one point
five times the poverty line and below.

So, they are all people who were in poor
and near poor households to begin with.

The jobs they held were hourly
jobs and non managerial

and the first observation
of them comes after 1993.

So, this is a nationally representative
survey of people who were working

in exactly the kinds of jobs I was looking at.

These are food service workers in these
poor households, minorities in cities.

This is basically how we configured the sample.

I'm not going to go through this.

And here's what we found.

And you can see the green line, it looks
at the wage increases of my Harlem sample,

the blue and the pink lines look at men
and women nationally in the same kinds

of occupations from very
similar sorts of families.

And just to make a long story short, the
Harlem sample looks much better off in many,

but the general trajectory's pretty similar.

Workers like this from families like those
were doing much better over this period of time

in terms of annual wage growth than we expected.

So, what-- how did they manage that?

What was it that they-- especially those who
were really moving up, how did they do that?

And the reason I'm going through
all this is to tell you how you end

up in the condition of near poverty.

Not poverty, but near poverty.

What were the pathways toward
a degree of upward mobility?

At the highest levels of which you wouldn't
be in the category, the near poor either.

Well, there were four pathways
that I'm going to talk about.

The first is to land a unionized job
that is a fairly still low skill,

but much higher pay than
the non-unionized version.

And here for example, within the
private sector we could talk about Adam,

who was rejected for a job at Burger Barn
when I first went to look for people.

He got no education beyond high school, but
he landed a job in a major shipping firm

where he'd worked for five years by the
time of our follow up and he topped put

at about thirty five thousand dollars a year.

And on that income he could support his family.

Not in wealth by any means, but certainly
better than one might have thought.

And that was because it was a unionized job, or
Pedro, who was a high school dropout who worked

for Burger Barn when he first entered my study.

He landed a job as a forklift
driver in a warehouse,

a sturdy blue collar job
that again was unionized.

And by the time I found him again was
earning thirty three thousand dollars a year

and had bought his first house in an outer
suburb in an outer borough of New York.

Those were private sector examples.

A public sector example, if you
remember, "No Shame in My Game" Kaiesha,

one of my favorite characters in that book.

Again, when I first met her she was operating
the drive through window at Burger Barn.

She was earning about five seventy five
an hour after four years on the job,

so virtually no reward for
sticking with that job.

She was a twenty two year old single mother
whose own mother was a twenty six veteran

of the public assistance system.

She lived in a three generation
household with a mother who looked

after her son during her shift job.

At the four year follow up in 1997, Kaeisha
was still in the same space occupationally.

She had not changed in terms of employment
at all, but had finally climbed to the top

of a wait list in the public housing system.

But, she wasn't able to make use of it because
by that time her mother had contracted a series

of deadly illnesses and she was stuck having
to take care of her mom and take care for--

take care of her child and work for a living.

But, he was by now-- the child that
is, enrolled in elementary school,

which gave her some flexibility
in terms of her work world.

The interesting thing about Kaeisha

and the reason why she represents a
public sector success story is she took

on a second job, which her mother helped her
find, working around the public housing project

where she grew up basically
just doing janitorial work.

But, eventually a real Civil Service job, the
Holy Grail of almost every poor person I've met

in the inner city opened
up in her housing project.

And she managed to land a Civil Service
job, first doing just the same kind

of janitorial work, but this is
unionized with full benefits.

And she was able to ride that job toward an
income she never thought she would be able

to boast of.

So, by 2002 this woman who
had been earning five dollars

and forty five cents an hour only three years
before was earning thirty eight thousand a year,

living in her own apartment with her now ten
year old son because that second job turned

into a real unionized public sector job.

So, one set of examples has to
do with landing unionized jobs.

A second kind of pathway to upward
mobility involves internal mobility

in a high growth firm.

So, this is a prosperous period of time.

We had very low unemployment.

We had very high growth levels.

And even firms like McDonalds were expanding.

And as they expanded they were
pulling people off the shop floor,

people they knew and trusted.

People like Latoya, who had worked on the
line in the stores owned by the same guy

who was expanding to other parts of Harlem.

And when he wanted a manager,
he picked her off the shop floor

because there was an internal job
chain developing in a high growth firm.

Now, this is good news for someone like Latoya.

It was really bad news in a sense for people who
lived in the neighborhood of his firms opening

up because he wouldn't take a chance
on hiring somebody he didn't know

in this new neighborhood for his firm.

He was going to take somebody off the shop
floor in another firm that he already knew,

in another restaurant where he already knew her.

So, it was good new for her,
an internal chain opened up.

It wasn't particularly good news for
other residents in the area who--

who wouldn't be given the
chance that she had been given.

Finally we-- well, we have the sort of
traditional version of upward mobility

in which a human capital increase
leads to a higher wage job.

Laura, who was a single mother, age nineteen
when I first met her, but who came along

at a period in time in which the city of
New York still permitted welfare recipients

to go back to school and use that welfare
stipend to invest in their own human capital.

Who-- she had a daughter out of wedlock.

She went back to school.

She got some training in accounting.

And by the time I found her at the first
follow up she was working as a bookkeeper

in the foundation that funded this research,
quite amazing to me because we looked high

and low for her and found her
at the Russell Sage Foundation.

Today she has a Masters degree and she works for
the state of New York in the foster care system.

But, she is an example of a human
capital increase, in this case,

that was funded by the welfare system.

And by virtue of her training and the
experience she got on the job she ends

up with a much better job
and a much more stable life.

We have other examples of people
who were able to do the same thing,

but their funding so to speak for their human
capital improvement comes not from the state,

but from the resources of their own families.

So, David was a-- a Haitian immigrant
who came to New York who worked night

and day in these lousy jobs in Burger Barn.

But, because his family, his aunt
and uncle were willing to pay

for his upkeep he took every
dimensional he earned and put it into a--

a certificate for refrigeration
and air conditioning repair.

And it took him three years and five
thousand dollars to get that certificate,

but by the time he had it he was able to
land a job that paid three times as much

as what he'd been earning in Burger Barn.

So, that was a kind of family funded
form of human capital increase.

Finally, we have cases of upward mobility
that don't involve any real change at all

in the target workers status,
but involve changes

that effect the composition of a household.

So, we have workers who remained in their
low wage jobs, but they married someone else

who brought in income into the household or
were in long term cohabitation relationships

or they changed the mix of workers to dependents
by sending their children into the labor market,

often a strategy for immigrant workers.

Then there were finally people who I will--
I won't take the time to describe in detail

who did exit the market, but
found stable high wage partners.

And so this is-- these are strategies
that increase the economic standing and--

and stability of the households, but
didn't advantage them particularly.

These people are success stories.

Some of them would be regarded as
approximating the blue collar middle class,

but most of them are not.

Most of them are people who are above the
poverty line, but in a group that suddenly came

into visibility for me that
I had never thought about

and I would submit nobody
has given much thought to,

the people who in this third
book I call the missing class.

The missing class are the nations near poor.

There are over fifty million of them.

They are much larger in number than the
nation's poor at thirty seven million.

The over fifty million near poor
households are those who earn twenty

to forty thousand dollars a year
or up to two hundred percent

of the poverty line for a family of four.

We don't think about these people very much.

We don't think about them because they aren't
part of the tracking system that we've used

for decades now to understand whether we're
doing better or worse on the poverty front.

They don't belong in that category
because they're not technically poor.

Nor do we pay much attention to them

because they're using public
benefits because actually they don't.

So, we-- when we get worried, when the nation
gets worried about public benefit programs

and their cost, these people don't factor in
very much either because they earn to much

for the most part to qualify for the public
benefit programs that we think about.

They're also working every hour
that we've managed to invent

and so they're not claiming very
much of the public conversation.

They're really to busy working and
they often work more than one job

so they're earnings rarely reflect-- or
their income rarely reflects higher earnings.

They are just putting in an enormous amount
of time into the labor market in order

to have the household incomes that they have.

I'm going to try and run very quickly through
these slides, but I wanted you just see--

if you look at that top line,
these are the near poor.

These are the one hundred
to-- to two hundred percent

of the nation's population
who fall into this group.

And you can see that they have long been
a much larger group than anybody else.

What are some of their characteristics?

I just wanted to talk a little bit about the
demography of the near poor and then conclude

with some comments about
their social experience.

Well, first of all the elderly are-- so,
when you look at this slide you can see

on the left hand side the total
population and then the next bar

over are what we would call the very poor, those
who are below fifty percent of the poverty line.

Then, the next group over is fifty to hundred
percent more or less to the poverty line

and then the far right hand
side are the nation's near poor,

those who are between one hundred and
two hundred percent of the poverty line.

So, what can we say about the demography of that
group and how it differs from the other groups

that we sociologists think about when
we talk about low income populations.

Well, first of all the elderly are relatively
unlikely to be among the poorest of the poor

and that reflects the Social Security system.

For all three groups the largest share of
members are those who are the prime working age,

eighteen to sixty four years old.

Children are as you won't be surprised
to hear because you study this a lot here

in the Ford School, likely to be among the
poorest rather than in the missing class.

Nonetheless, about twenty percent
of the nation's children are

in this category of the near poor.

And that is not a trivial number of people.

In terms of race, what we see here is that
poverty rates among Hispanics declined a bit

over the ten year period that I
was interested in this question.

While the rates of Hispanic near
poverty didn't change very much,

it's just worth noting how large a proportion of
the near poor are Hispanic or more to the point,

how-- what-- how large a proportion of
Hispanics are in this near poor category.

African American rates of near poverty hover
around fifteen percent, which is actually lower

than I expected but not trivial either.

You won't be surprised to discover that female
headed households are hugely represented among

the nation's poor population, but they are
not a trivial proportion of the near poor.

They-- they range around thirty
percent of the near poor population.

Labor force participation,
among the poorer subgroup,

that is those who are below the poverty
line, full time year round work is--

runs at about fifteen to eighteen
percent, something like that.

It's far more common, full time year round
work is far more common among the near poor

or the missing class.

About thirty five to forty five percent

of missing class households are headed
by full time year round workers.

In terms of public assistance
we see very large differences

and I don't just mean public assistance in
terms of welfare, but public benefit programs.

Here's where we start to see a big difference
in how social policy provides or doesn't provide

for the nation's low income families.

Missing class kids are far, far less likely to
live in households where someone was covered

by Medicaid, they are fewer than one
fifth of missing class kids receive--

are in households that receive food stamps.

Less than one tenth are in households where
means tested cash assistance is received.

And less of-- less than fifty percent
of missing class kids live in households

that receive public assistance of
any kind excluding school lunches.

And so, there is a huge divide and when I say
we don't think about these people very much,

this is one of the ways in which we don't
think about them or don't include them.

In terms of educational attainment, members
of the missing class are more likely

to have completed high school and some college
than those who are below the poverty line.

And that's an important reason why they are
missing class rather than absolutely poor.

Okay with that, that's a like
run through of the demography.

Let me talk about some of the
sociological features of the missing class

and why I find them interesting
and important to think about.

The-- the field work for this book took place
in a series of four New York neighborhoods,

Clinton Hill, Fort Green and Sunset Park in
Brooklyn and Washington Heights in Manhattan

for those of you who know
the New York landscape.

These neighborhoods have experienced very
dramatic changes in the last thirty years or so.

Like many other urban areas in the United States
they saw rising rates of drug use and crime

in the 70s and 80s and a
period of really rapid decline.

And the middle class tended to flee from
those neighborhoods during this time.

So, they were in pretty dire states by the mid
1990s, but the boom years that began to pick

up in the late 90s brought a different
panorama of people to near poor neighborhoods.

Real estate investment coming back into
the cities, the economy is growing;

it's overheating in the highest rent
districts of place like Manhattan and spilling

over to these outer borough neighborhoods
where the near poor lived in large numbers.

So, what we tended to see in
these neighborhoods is a kind

of rising integration drawn
by two different forces.

The first is integration by gentrification.

So, as these overheated real estate markets
are spilling out into these neighborhoods,

young urban professionals who can't afford
the highest rent neighborhoods start looking

for spots in [Inaudible].

And this leads to a very
pronounced socioeconomic

and sometimes racial integration
in these neighborhoods.

But, it's an uncertain kind of integration
because the near poor families if they're not

in secure housing, if they're not in public
housing or rent stabilized housing are in--

at great risk of being displaced altogether

because they can't compete
against these richer newcomers.

And we saw this trend in the
Brooklyn neighborhood of Clinton Hill

and the Northern Manhattan neighborhood
of Washington Heights, which as I said,

"Were once real epicenters
of drug selling and crime."

By the late 1990s these are becoming
really hard neighborhoods to afford

and many low income residents
are being pushed out of them.

Now, this means that for the near poor who can
stay in those neighborhoods, who are not ejected

because they do have secure housing the
problem is less absolute deprivation

and more the specter of relative deprivation,
which is not an issue we think about very much

when we're talking about poverty.

The near poor were doing better than
they had before, but they're doing worse

in comparison to these newcomers.

They feel the distance between their neighbors
in more pronounced ways than they did before.

So, gentrification has many positive aspects
to it, but it also has some negatives.

On the positive side the near
poor are seeing politicians

and the police pay a lot more
attention to their neighborhoods.

Safety suddenly becomes an
issue that everybody's thinking

about because those new richer people who've
moved in are making demands that the powers

that be are listening to more than they
did when those neighborhoods were inhabited

by the poor who were victimized by crime.

The schools are getting better, there's a
greater investment in transportation structures

and other forms of infrastructure.

So, if you're able to stay in that neighborhood
as a near poor family you are now living

in a better neighborhood than you've ever
lived in before, if you're still there.

But, it also leads to some degree
of resentment and a certain kind

of psychological uneasiness among
the old timers who don't really feel

like that neighborhood belongs to
them in the same way that it did

when they knew everyone on the block.

So, they're sort of geographically
stuck between richer and poorer areas,

close enough for yuppies to
move in, but close enough also

for the poorer neighborhoods adjacent to
them to still cause problems that spill

over into their lives so,
integration through gentrification.

We also saw in the neighborhoods
integration through immigration.

Near poor neighborhoods that were previously
dominated by one ethnic group became integrated

by virtue of the arrival of new immigrants.

The newcomers here are coming
from Mexico for example,

which was not a big source of
immigration to New York City.

The increasing new generations of Dominicans,

the Puerto Rican immigration
wasn't by that time quite mature.

And these ethnic enclaves that need more
space to grow because more people are headed

into the area, starts staking out
territories and turfs that become rather tense

because there's a lot of
competition over this space.

This is a situation that we
saw in Sunset Park in Brooklyn,

which used to be Irish, Polish and Scandinavian.

Those folks moved out to the suburbs
and were replaced by Puerto Ricans

who were in the majority by the 1980s.

Now, the Puerto Ricans are being replaced by
Mexicans, by Chinese immigrants, Dominicans,

Hasidic Jews, Pakistanis and others.

So, Sunset Park has become
a magnet of new immigrants

and that makes it a much more vital place
in many ways, but it also makes it a place

in which there's tension over-- over
not only employment opportunities,

but over actual physical space.

Another-- so, we see a kind of
decline in neighborhood segregation,

but a certain degree of tension
that goes with it.

Another problem that I found interesting
and if not unique by any means to the--

to the near poor, a problem we tend not
to think about in their-- in their lives.

And that is increased consumption
financed by debt.

The near poor, many of whom used to be
really poor and are basically upwardly mobile

from that state of existence
want a higher standard of living.

And they think they should be
able to live a better life.

They don't want to sit on a
couch shot through with holes,

not when they're working fantastic hours
every week to try and keep their families

above that poverty line, but their incomes have
not risen as high as their tastes and there--

it's just insufficient to finance a better life.

At the same time, the deregulation of the credit
card industry means that they are being besieged

by offers for what appear to
be free money practically.

They're also very unlikely to be served
by conventional financial institutions,

so the credit cards arriving on the doorstep

and the traditional bank is
certainly no where to be found.

Twenty eight million Americans
do not have bank accounts

and those people are almost entirely
poor and near poor households.

More than forty million Americans have low
credit scores or no credit score and again,

they just proportionately fall into
the group that I'm talking about today.

The near poor stay away from banks in
part because they don't trust them.

Immigrants stay away because they're
accustomed to private sources

of capital including rotating
savings pools and the like.

But, banks also tend to discourage
near poor customers.

Major banks have closed entirely their brick
and mortar branches in near poor neighborhoods.

They encourage people to move into online
banking, but you only get online banking

if you know how to use computers and
have them easily accessible to you.

To give you an example of the
mismatch, the near poor neighborhood

of Washington Heights has fifteen bank branches.

East mid town has more than three hundred.

And the number of bank branches in
Washington Heights has just dwindled

down to nearly nothing over the years.

When that happens, banks are not
particularly eager to attract these customers,

they've now got very high costs of doing
business if they're not doing very much of it.

So, they charge these customers huge
amounts to operate these services.

So, without bank accounts
near poor families have

to spend a few bucks every time they
want to pay a bill by a money order.

To get the money out of their
paychecks, near poor workers often turn

to check cashing outlets, which charge fees.

In New York those fees are limited to one and
a half percent of the face value of the check,

but in nineteen other states there are no
limits whatsoever to what an institute--

a payday lender can charge to cash a check.

Besides the higher fees from cashing checks,

the problem with not having a bank account is
you don't establish any kind of credit rating

and you can't apply for a
conventional loan and that pushes you

into the predatory lending market about
which we have heard so much in recent months.

It's also very difficult to accumulate assets.

And assets are incredibly
important to all American families.

For most American families
there key asset is their home.

Forty four percent of all U.S.
wealth comes from housing equity.

Owning a home provides financial
stability by allowing families to borrow

against its value as long as it's increasing.

Of course that's-- it's not in many
parts of the country at the moment,

but in general it's a very vital
bank account of its own kind.

But, the near poor tend not
to be in that market.

If they are, they're the elderly near poor
who've owned these homes for a long time

and whose incomes have declined to the
level that places them in near poverty.

But, if they're going to own a
home at all they're probably forced

into the sub prime lending market and the family
who I begin to book with is a text book case

of a family that lost the home due

to the predatory lending practices
in the sub prime lending market.

And of course this is-- goes hand and
hand with lack of financial literacy.

The near poor families that we
studied don't really understand

as many Americans don't understand what
the paperwork is that they have signed

when they've signed on to these loans.

They don't realize that they've
signed away their rights to hold

on to this equity if they miss a single payment.

And the story of the Floyd family, which
opens this book, is the story of a family

that lost its one most important asset.

The only thing they would have been
able to pass down to the next generation

because they signed paperwork
because they couldn't afford

to repair the roof of that house.

And they thought they were going
to be able to repair that roof

and instead the first missed payment
and they lost the house altogether.

So, today the Floyd family lives, nine of them,
in a one bedroom apartment and they can look

across the street and see that house that
they lost, the only asset in their family.

Or I can speak about Julia Coronado, one of
the most successful of my interview subjects

who was also once a welfare recipient, but who--
smart woman, went back to school again funded

by the welfare system, managed
to get herself a job

in a doctors office redesigned the
entire system for booking patients.

She's now an absolutely crucial part
of this doctor's office and she earns

about thirty five thousand dollars a
year, which for the family of five she has

to support puts them pretty
squarely inside the missing class.

Julia got really tired of being poor
and not being able to show any--

show for any kind of creature
comforts to her family.

So, she racked up nine thousand
dollars in credit card debt

and was just paying minimum balances
through the entire time that I--

six years in which I was doing
field work for this book.

And those of you who know
anything about credit cards know

that is the most expensive way
you can possibly buy anything.

And so, this is not uncommon
among near poor households

to increase consumption financed by debt.

Another important problem of the near poor,
which happens to many other families as well,

is horrendous work family time binds.

Again as I mentioned, these are people
who are working many hours a week

in order to stay above the poverty line.

This may well lead-- and
this is a point I wanted

to make more generally for
the policy audience school.

What drove these people into the labor market
was primarily the rising wages of the late 1990s

and the early part of the decade we're still in.

And this most definitely benefited these
households in terms of their economic stability,

they are in far better shape than they
were in before, but it has come at the cost

of the time they had with their children.

At the very same point in our
history another crowd of policy wonks

and conservatives brought us
the No Child Left Behind Act,

which has ramped up the pressure
on young children in school.

And that pressure cannot be absorbed
by the schools they go to alone.

The-- the schools are depending on parents
including these kinds of parents to try

and help these kids over those high
sticks-- stakes testing hurdles.

So, in the households we studied
constant notices are coming home

from the elementary schools, be
sure you take Johnny to the library.

We want to see the six books you had him read.

You need to check over his spelling.

Basically parents are being asked to
be an auxiliary teaching labor force

because the schools can't pull kids
over these hurdles by themselves.

But, these parents are in the labor market.

They're commuting ninety minutes to
New Jersey to pack perfume bottles.

They don't get home till seven thirty at night

and they're completely exhausted
by the time they get there.

They're also not high in
human capital themselves.

The truth of the matter is before their
kids were put under these pressures

about the most they could have done was
to be sure the kids had their books open,

were actually doing their homework,
but now they can't even do that.

They wouldn't have known whether or not
the homework was being done adequately,

but they would have been able to
see that it was being done at all.

This is not possible so much anymore.

So, we see in our study young children
who are starting to be held back.

If you're held back in third grade, the chances

that you will become a high
school dropout skyrocket.

And this is at least in part, not wholly by any
means, but at least in part due to this strain

between managing your life as an adult
worker and needing to work that many hours

and the inadequacies of the school system
in these neighborhoods to rise to the level

that is demanded by No Child Left Behind.

That is what is happening increasingly in near
poor neighborhoods we see skyrocketing rates

of kids being held back in school.

Their older siblings are experiencing something
equally devastating, possibly even worse.

Now, it's not so much about
No Child Left Behind,

it's about unsupervised teenagers whose parents
aren't around in the afternoon after school lets

out and who don't have after school programs
to keep them occupied and off the streets.

And because they are adjacent to
poor neighborhoods there's a lot

of trouble that they can get into.

So, the book chronicles the story
of several teenagers who we followed

through this six year period who were doing
reasonably well when their parents were around

and end up on Rikers Island by the end
of the book having gone off the deep end.

So, what worries me about this is as follows.

If we solve the poverty problem by
making it possible for people to pull

above the poverty line through their
own hard work in their adult lives,

then there is something to
celebrate and they feel that way.

The working-- the near poor
actually feel quite optimistic

in general about their own adult lives.

But, if we see a repetition of the
poverty trajectory in their kids

because they've fallen behind in school,
because they've been unsupervised

in the afternoon we may have solved
this problem if we want to call it that,

just for one generation only to see it
reappear in the lives of their children.

And that is going to continue to be
the case if we don't invest as a nation

in the infrastructure it takes to level
the playing field between families

and not make the fate of those children
so heavily dependant as it is now

on what their parents alone can do for them.

Well, I know that I need to
wrap up and I've got, you know,

probably another half an hours worth of things
I wanted to tell you about these people.

So, let me just try and speed through this.

Context matters a lot.

Extremely tight labor markets, unprecedented
growth is part of what produced the near poor

and pulled people off the
floor below the poverty line

up into the group I'm talking about,

which despite all the problems I've
mentioned are vastly better off.

And they would tell you them--
themselves that if they were here.

Vastly better off than they were before.

And that was made possible by very tight
labor markets and unprecedented growth.

It was made possible by the fact that
unionized jobs were still available.

It was made possible by socialized
investment in the form of welfare policies

that permitted people to meet their
work requirements by going to school.

All of these things can change,
many of them already have.

We abandoned the policy that permitted the
people to go to school on welfare and put them

into work first programs, which made
the kind of mobility that say Laura,

experienced almost impossible to achieve.

Unionized jobs are shrinking, you know,
everyday especially in the private sector

and that pathway, which-- that
pathway to mobility will be closed off

if workers have less clout in bargaining.

And extremely tight labor markets,
I don't need to tell you in Michigan

that that too is highly contextual.

It-- it doesn't exist everywhere.

It didn't exist everywhere even in good times

and it's certainly not a permanent
feature of our lives even now.

So, that context can change.

Labor markets can become lax,
unions can be busted or closed down

and welfare policy can move
in a different direction.

Let me just conclude with a few
thoughts about the kinds of policy--

this is the obligatory final policy
chapter of every book of this kind.

Some of the policies that I think are
particularly important for the near poor

as opposed to those below the poverty line,
first asset development and protection.

The near poor need to be part of
what all the rest of us need too,

which is a re-regulation of credit markets.

The kind of deregulation that we've experienced,
which made credit widely available to people

who really couldn't afford it at quite
this level has been pretty devastating.

And we're going to see a big
shrinkage in the proportion

of the nation's minority
households that are homeowners.

We've seen it already, in the next
year it's going to fall even lower

because they are the victims
of predatory lending.

So, consumer education is important as well.

Low income home ownership, not always a
good idea and not always for everybody, but,

in general if we are choosing between leaving
people at the mercy of private landlords and--

or even the public housing system and offering
them what the sixty eight percent of the rest

of the country has, which is an asset that in
general most of the time is growing investing

in low income home ownership possibility strikes
me as an important way of providing a safety net

and asset for near poor families.

Education, early childhood
education is far-- is--

is clearly an important feature for
both the near poor and the real poor

because their families alone are not going to
be able to protect them from the difficulties

in the education system; academic, after school
and summer school to prevent this falling behind

and to provide more wholesome if you will
opportunities for engagement in the hours

when their parents cannot supervise them.

Affordability of higher education
as I showed you before,

people were funding their own higher
education if they could by working in places

like Burger Barn, but they could only do that
if someone else could cover their expenses

because higher education is becoming
less and less affordable all the time.

Environmental investment, I
did not get a chance to talk

about the healthcare issues, but they're legion.

And they're legion in part because these people
live in neighborhoods that are crumbling.

They're not crumbling as badly by any means
as the solidly, densely poor neighborhoods,

but they too are living in
apartments infested with lead paint.

Asthma is a serious problem in these
neighborhoods and there are examples

in this book of kids whose educational
trajectories have been derailed

by asthma, which is not being treated.

They do tend to be outside entirely of the
Federal Low Income health care coverage.

If they have private healthcare,
it tends to be poor healthcare.

It's not zero healthcare, but it's what I call
weakly insured, which means they're covered

for catastrophic illnesses, but not for
the kind of medical access that's needed

to prevent a catastrophe from getting
much, much worse therefore more expensive

to treat and much harder to cure.

This is the group for whom the SCHIP
Bill would have been of enormous benefit

and I don't think we've heard the last of it.

I hope not.

If the elections go to the way they--

the way they should, hopefully
this will come thundering back.

But this is the group that needed SCHIP
more than anyone, because they earn too much

to qualify for Medicaid and
they don't work for employers

that provide very much health insurance
or high quality health insurance

and the parents are uncovered altogether.

So, they have zero assets to health care for
the most part, unless they impoverish themselves

and become eligible for Medicaid.

And finally job ladders, we need to
find in tight economic circumstances

like the ones I described before, job ladders
develop because employers are searching

for workers and they do what this employer
did for Latoya, moved her off the shop floor

into a new managerial position
when they were expanding.

So expansion and tight labor markets really
helps to produce job ladders is a sort

of natural way if you will, but lacking that,
returning to the question of how we help

to engineer job ladders would be
hugely important for the missing class.

Let me stop there and take any
questions that I can manage to answer.

Thank you for your interest.

[ Applause ]

Sheldon:

>> If anyone has a question would you go
to the mike because this is being taped?

[ Mic adjusting noise ]

>> Not a one?

I've solved the whole problem?

[ Silence ]

>> Thank you for coming and
embracing us with your passion.

It was a pleasure.

>> Katherine Newman: My pleasure.

Thank you for having me.

>> Your presence.

My question for you, to what extent-- this
microphone is too low, to what extent?

>> Katherine Newman: Or you're too tall.

[Laughter]

>> I'm too tall.

To what extent does our conversation
that you're trying to start and--

and push us towards thinking about-- to
what extent does this change the obligations

that we have towards the
poor-- kind of what do we--

what are our goals here when we
talk about reducing poverty and--

and I think you're book raises
some questions on that.

Should we be asking more of
ourselves, of government to not stop

at just the poor, to do something else?

>> Katherine Newman: That is an excellent
question and it's one you know that we need

to answer as a society, not
just as social scientists.

And I have several views on this.

One is that I think policy successes
are very helpful in inspiring confidence

that we can do something about
problems for low income households

and we are probably more likely to be able
to do impressive things for this group.

It's-- this is not to diminish in any way
the needs of those below the poverty line.

It is to say that if we're able to insure the
mobility of the near poor and keep them moving

up or at least not falling back down we set
some examples of successes that are sadly rare

and I think successes are terribly
important in inspiring a sense of efficacy

by the general public in the capacity of
government and private industry to do anything

about the problems of those at the
bottom of the social structure.

I certainly don't think it in any way removes
our obligations to addressing the problems

of those below the poverty line, like having
written a great deal about the real poor.

I feel just as strongly about our obligations
to the real poor, but I also think one way

to help fulfill them is by moving people
off that floor, by opening up new spaces

up above them in the food chain, so that there
is some reason for those below the poverty line

as most of these people were at one time,
to think they have options for the future

that aren't just more of the same.

These are hugely consequential
political questions.

So, I think we need to change the way we
talk about this issue and whenever I do radio

or television programs I try and-- and do
this by speaking about this is investment.

This is investment in the
nation's human capital.

This is not government charity.

This is about-- this is as powerful and
important as building roads or building bridges.

It's investment in the nation's
human capital and productivity.

And, we refuse to do so at our peril.

No country can afford to have-- if you add this
up we're talking about nearly 90 million people

who are below the near poverty line.

That's a big drag on our economy not

to mention a very difficult time
for those families themselves.

But, this is a matter of national priority for
investment and infrastructure in human capital.

That's the way I think about it.

I also think as I said, we're more likely
to see success stories aiming at this group.

[ Silence ]

>> Luckily for me this is the
right height for me, so...

[Laughter] what I was going to ask
I have kind of a two part question.

The first part of it was we're
talking about this economic structure,

this system that we have in place
not only in America but in most

of the western industrialized
countries I suppose.

And this is a capitalistic system whereby
five to seven percent is assumed unemployed

and the best of-- the best hopes that we
have for this system are creating more

and more low wage jobs rather
than better jobs in that sense.

And so I guess what I'm wondering is how
much of this conversation that we're having

within the system, within the
parameters of the system create,

that we currently have is
beneficial in the sense

that it's not changing, the
basic system that we have.

>> Katherine Newman: That is a very
fair question and it's one on which many

of my dear friends and colleagues who were
further to the left than I am disagree with me.

Not because I wouldn't share those goals,
but because I don't think it's realistic.

I mean I've never seen the benefit for
social scientists, at least not for me

to predicate improvement
on revolution-- it's not--

I don't see it happening and its certainly
not going to happen in the lifetimes

of people I've been studying
who really need solutions now,

not major transformations whose likelihood
is almost infinitesimal, I'm afraid.

So, it's not that I don't think it would be
beneficial if we weren't running an economy

that in a sense depending on having a
significant proportion of people unemployed,

but it's the sense that our-- that the best way
we can manage right now is incremental reform

of the kind that will have more
immediate benefits to these people,

and they're the people that I worry about.

Maybe that's short sighted of me, but
having come to know them as well as I did,

telling them that someday maybe there would
be a totally different economic structure

that would be better for their families,
really doesn't cut much ice with them.

They need to know tomorrow how are
they going to be able to do better?

So, I am really talking about
and advocating changes in reforms

that are genuinely incremental and reformist.

They are not a total overhaul of the economic
system and I certainly recognize that.

That said there are real variations over
time and what that system can produce.

When we look at states like Massachusetts
in the late 1990's or even New York City

in the early part of this decade,
we had record low unemployment.

We had record high growth.

We had virtually no inflation.

It is-- I mean it was such an
extraordinary period that many

of my economist friends are sort of scratching
their heads because their theories told them

that this should be a hugely inflationary period
with such tight labor markets, and it wasn't.

This tells us there are possibilities
beyond accepting the limits

that you were just spelling out.

There are real possibilities; maybe
they only happen in extraordinary times

but actually are SIPP analysis shows that
even in periods not as roaring high growth

as the late 90's we still saw significant
movement upward from these kinds of low--

low wage jobs, significant
wage increases even in periods

that were troughs in the economic system.

Not as high as when you have
tight unemployment markets,

but much better than even I
expected, so that's the best I can do.

And it is a philosophical debate that I have
all the time with people who are in my end

of the social sciences who also
think that we should dwell much more

on what would a massive transformation
really look like.

I'm just too worried about
these people tomorrow.

Uh huh?

>> The question was--

[ Silence ]

>> You know I thought that the-- the
examples you gave about how people advance,

that you wrote up in Chutes and Ladders
hit on a couple of interesting things

about regional differences
and what you would have seen

if you were looking someplace besides New York,

which has a very high unionization
rate, fairly liberal policies.

I wanted to ask a question about what you
thought might stimulate job ladders within--

within companies because that's a major problem
at Burger Barn and a lot of other things

and it's the one area where
I'm not sure where you see--

unless you're talking on incentives
for training and that sort of thing.

I'd like to also-- you might want to have
something in terms of the policies dealing

with the problems of unionization
in this country and the restrictions

and the way it's kind of tilted-- tilted away
from creating new unions that could be viable.

In the book I go into that into great
length but you're absolutely right,

with a little extra time I would
have talked about that more.

Because you're right, we took the playing
field in exactly the opposite direction.

We make it-- all you have
to do-- if you have a chance

to read my former student's book Dan
Zuberi's book, "Differences That Matter",

what Dan does is look at low wage
workers in exactly the same firms

who straddle the U.S. Canadian Border.

So, they have the same jobs for the same firms
and the only-- and in Seattle and in Vancouver,

which are very similar cities in terms of
immigration, racial composition and so on

and what you see is a completely different
standard of living for people at the bottom

of the hotel industry in
Vancouver compared to Seattle

and the social policy regime
is what's make a difference

and unionization rates are vastly higher,

even in Canada that's more
conservative then it used to be.

So, I-- I do accept your point.

So, what can we do about job ladders?

Well, the first point I would make is one that
I think often gets lost or that I tried to make

in Chutes and Ladders and that is jobs widely
identified as dead-ends aren't always dead ends.

The economy really matters.

If you're in a tight labor market the
same job that looks like a dead end

in a lax labor market can
become a stepping stone,

because employers just have to search harder.

And they will accept that experience when
they can't find the people who look more

like the ones they used to look for
when filling up those job queues.

So, I think we-- we've been mistaken in thinking
from the dual labor market tradition onward

that we know what a dead end job
looks like, because it isn't always.

It is often, but it isn't always the
kind of jobs where I found these people.

They can become stepping stones
under certain economic conditions,

but obviously they were extraordinary
conditions.

So, what can we do about job ladders?

Here, as a shorthand, I would recommend
reading Joan Fitzgerald's most recent book,

because she deals with this
in some-- some detail.

And basically what she argues is that industries
with labor shortages, for example nursing,

that's where we have the greatest
potential for on-the-job training

that will create internal labor markets and
job ladders where its to the employer's benefit

to invest in worker training,
because there's a shortage of labor.

So, it obviously is not going

to attract employer investment unless there
are somewhat extraordinary circumstances,

but there are.

There are such pockets and
in high growth biotech

in you now teaching the new basic
skills were named in Levy's book,

there were examples there too where
internal investment in the creation

of job ladders is facilitated by
internal investment in training.

What I do that I tried to articulate in the
very first book in, "No Shame in my Game."

It had to do with employer consortium.

So, the idea here was that most
employers who have better jobs to offer,

obviously they're better
jobs that require more skill

and therefore they represent a bigger investment
on the part of the firm in that worker.

So, if you've made a mistake,
you hired the wrong person,

you've now wasted resources
that actually hurt the firm.

How do you know if you've made a mistake?

Well, when I interview employers who
have jobs that really do require this,

they actually don't have very good ways
of looking who's coming in the door

and saying, "Is this a good bet, or not?"

Supposing they actually knew
the employers who were

in a sense handing off those
workers at the entry level?

Supposing there actually was
kind of like a hiring haul system

in which you could connect the employer with a
better job to the employer with the worst job

and remunerate that employer with the
worst job for losing their best labor.

You'd have remunerated them to some degree by
letting-- you know to let go of that worker.

But for the employer with
a better job or an offer,

you've got more information that's reliable
because they know this employer down below them.

And they've got a better way of assessing
whether or not choosing this person is going

to merit that six month investment in I
don't know, boiler technician training.

This came to me because when I finished
up no shame in my game, some of the people

that I studied you know came to me
and asked could I help them find work,

and I suddenly realized I
was one of those nodes.

So, I went to at that time Columbia's huge
massive bureaucracy that runs this apartment--

the third largest landlord in the city of New
York where there are boilers, there are doormen,

there are all kinds of jobs that
require relatively minimal training,

but they're not zero and making
a mistake is costly in many ways.

And I asked Columbia administration
what would you do--

how would it improve things if you had
better ways of judging who you were hiring,

if you actually knew the employers who were in
a sense recommending people up this food chain

and they jumped at the idea and actually created
a local employer consortium to try and do that.

Now, that's not a solution that
many economists find attractive

because it requires coordination, but it's not
very costly really, when you think about it.

It-- it saves a lot for the employer up the
food chain not to be making those mistakes.

Better school to work transition systems
will help with the job ladder system,

because if workers have skills,
are being trained in skills

that are actually useful instead of
obsolete, which is what happens in many

of our cheap training programs, it will
facilitate their ability to move up internally.

It's a complicated issue.

I-- I don't pretend to have all the
solutions and I think what was most striking

to me was how job ladders
appeared naturally so to speak

when you had these record
low unemployment levels.

Yea?

>> So, [Inaudible] in your poor people
that you did your ethnographic work with,

were they frustrated and burned out?

Were they proud or--

>> Katherine Newman: They were very proud.

And that's part of what I
found so striking about them.

They were very proud of their accomplishments.

They really saw themselves as significantly
better off than they had been before.

In terms of their own adult lives,

they were worried about what was
going to become of their kids.

They could see their kids going off the rails.

But, I will tell you one ethnographic example,
a woman named Danielle who really stands

out in my mind in answer to your question.

When I first met her, she was a
clinically depressed Welfare recipient

with three children having tried
to escape an abusive marriage.

I mean it was a terrible situation.

She was cooped up with kids all the
time and had no confidence in herself

or her ability to do anything for her family.

She was a very dedicated mother.

She was heavily involved in her kids' school.

She did take them to the library every day and
she used to show me these racks of gold stars

that her kids, everytime they read a book the
librarians would certify that they had done so.

So, the advantage of being around the home
was that she could monitor her kids' education

and make sure they go the best teachers.

She was volunteering for the PTA all the time.

But, in terms of her own
sense of her self-efficacy,

it was about as low as it could go.

She was pushed into the work
world by virtual Welfare reform.

She is definitely one of those cases

who probably would not have changed the
parameters very much, had she not had no choice.

But over the six years that I studied
that family, she landed this job.

First it was a WEP job, then she was hired

by the Human Resources Administration
by the City of New York.

By the time I ended this book, she was glowing.

She had a job she was proud of.

It was-- she had pictures
of her kids on her desk.

She would get up every morning, dress,
get on the subway like every other adult

in New York City with that sense of
self-respect that comes with working.

Now what about her kids?

Her youngest child who she put in family
daycare had a vocabulary of about two words

by the age of three, "No" and "Shut up."

That's literally all this child could say
every time I came, "No, shut up" and you had

to ask yourself what was
she hearing all day long?

In this childcare setting that I visited
with drug addicts wandering in and out,

that was the most this mother could afford.

Being a near poor mother means
your kids are going to be subjected

to a crappy childcare system
which will not advantage them.

When that child entered kindergarten
she didn't know her numbers.

She didn't know her letters.

She was way behind and that certainly
was not going to help her very much.

The older kids in that family who had benefitted
from their mother's presence and vigilance

in the schools were doing much, much better,

but we'll see as they enter
teenagehood and she's not there for them.

We tend to think, I think in the
policy world that a policy that seems

to have benefits is good for everyone,
but that really may not be the case.

A policy that worked for the adult

in the household may well have condemned
the next generation in that household

to a very different trajectory than
the one the mother has experienced.

But in terms of her mood and optimism and
sense of self-efficacy there was no comparison.

>> Hi. Thank you.

>> Katherine Newman: Hi.

My pleasure.

>> I was just wondering what you thought
about the tougher bankruptcy laws?

>> Katherine Newman: That's a good question
and I-- again I discuss that in the book.

The tougher bankruptcy laws have definitely
made life harder for these families

because they can't shelter any assets at all.

The bankruptcy transformation basically stripped
consumers of most of the rights they had before

to protect any assets under
conditions of bankruptcy.

And again, that's sort of a close
cousin of the predatory lending system.

All the way around this is an attack on
the assets of poor and near poor households

and its-- its going to really
wreck havoc with these families.

Now, that said you know a lot of conservatives
when they hear this story say, "Well,

they need to learn to live on their means."

But, one of the things being near poor
does it makes it very difficult to do that.

There means are not very, they're better
than being poor, but they're not much better.

They're not vastly better.

They're still extremely vulnerable, especially
if one income disappears from that household.

That alone can plunge them
down below the poverty line

and if the credit card is sitting there as
a possible instrument of rescue or it looks

like an instrument of rescue, especially
for medical bills, which is the prime--

the prime reason that American consumers are
pushed into bankruptcy is not buying a Lexus.

It's by paying a medical bill.

That's actually the biggest
reason for people going

into bankruptcy is medical bills they can't pay.

So, you know those protections were
important to the near poor and that--

as I said they're flooded with
opportunities to take out credit cards.

The woman that I mentioned had nine thousand--

had eighteen credit cards and no real
understanding of what it was costing her

to buy things this way to pay that minimum
payment and she will undoubtedly find herself

in bankruptcy trouble at
some point if that continued.

>> [Inaudible background comment]

>> Oh man.

>> Katherine Newman: Also too tall.

[Laughter] I just wanted to pick up on a
couple of things here, the sort of the mood

and pride issue and also sort of the,
I don't know financial literacy issues.

To what extent are the low numbers that you put

up about public benefit receipt
for these near poor folks?

Is that a matter of ineligibility or--

>> Katherine Newman: Or uptake?

>> Or not take up but also just I wonder

to what extent those figures
reflect their income tax credit,

which would seem to be focused
on these folks directly.

>> Katherine Newman: It does to
some degree, by the way hi Dan.

It's good to see you again.

And I owe Dan a note of gratitude here, because
there's a long section at the end of the book

that is about things like individual
development accounts, which I first was exposed

to when Dan wrote his master's thesis at
the Kennedy School under my supervision.

I'm very proud of the work he
did, which won a big prize.

This is ancient history for
him now, but in any case.

So, it partly reflects ineligibility.

They just exceed those income limits and
they are remarkably low limits really.

Even the earned income tax credit is
phasing out when you get into this group.

I mean toward the higher reaches
of this group and increasing

and enriching the earned income tax credit is
probably the most efficient thing we could do

to put more money in the hands of these people.

They did-- there are take up problems, however.

Those who are eligible for SCHIP
weren't always registered for it.

And this reflects a certain kind
of fear that they have of bureau--

most of them have had experience-- really
unpleasant experience with the welfare system

with intrusive forms of bureaucracy and also if
you're working hours and hours around the clock,

you don't have time for the bureaucracy that it
requires to sign up if it would be beneficial,

and also ignorant of what is
out there and available to you.

So, it is-- it is a combination of these--

of these things ineligibility and
ignorance sometimes of what's out there.

>> Sheldon: Thank you very much.

There's a reception and book
signing in the lobby.

>> Katherine Newman: Thank you everyone.

[Applause]

>> Sheldon: Dan was a student of yours.

>> Katherine Newman: Yea.