A New Kind of Crowd

The current crisis has changed the way that people think about a great many things.

Before the unraveling began, a lot of Americans were convinced that savings were irrelevant and that having a lot of debt wasn't something to be overly worried about. Many also envied and respected the movers-and-shakers on Wall Street and in corporate America. And finally, most likely believed that America was and would remain the undisputed economic, social, and political leader of the free world.

Now, though, these and other beliefs have been called into question, including, as the Financial Times reveals in "Assistance Soars in US," the demographic characteristics of today's needy Americans.

Barbecue season is at least a month away in Woodstock, a community of 20,000 people 60 miles north-west of Chicago, yet several shoppers at the checkout at Wisted’s supermarket have loaded their trolleys to the brim with meat and poultry.

“It’s the first of the month and I just got money on my Link card,” one woman customer said last week. “I’m restocking my freezer. I haven’t been grocery shopping for two weeks.”

Eric Hendricks, the store manager, explained that the first day of every month was when people on the US government’s Supplemental Nutrition Assistance Program – commonly referred to by its former name, “food stamps” – received their money, paid electronically on to a Link brand debit card.

Woodstock, in suburban Chicago’s McHenry county, might seem an unlikely place to witness the US on food aid.

The town is laid-back, middle class and predominantly white. Large, single-family homes predominate. But as the US unemployment rate rises, many in the middle class are finding themselves unable to pay bills and are seeking assistance for the first time.

Mr Hendricks said he had noticed the number of shoppers using Link cards increasing every month over the past eight months.

“The middle class is really struggling to get by here,” he said.

Over the year to January, the number of people receiving food stamps rose by 4.6m to a record 32.2m – or one in 10 US citizens. Over the past five years, almost 10m have enrolled.

In Europe, meanwhile, anecdotal evidence points to a surge in people getting food aid from charities.

Josette Sheeran, the executive director of the United Nations World Food Programme – who deals with food emergencies in some of the world’s poorest countries such as Ethiopia – has noted the spread of food problems.

“The needs are everywhere – in rich countries, food banks are being drawn down,” she said. “Hunger will greatly increase this year.”

The biggest US domestic anti-hunger scheme involves food stamps, which accounted for $37.7bn (€28.1bn, £25.5bn) in food aid last year. But other organisations, mostly from the private sector, are assisting even more people.

At the Woodstock Bible Church, Kathryn Birchfield, an administrator, said demand for the church’s weekly free lunch and food pantry was increasing steadily. Four years ago, 15 families used to come for the lunch and to collect food. Now about 85 families have been turning up.

“The crowd is getting much more middle class, including some of our own congregants,” said Ms Birchfield. “We give out three days’ worth of groceries. People reckon if they save that money, they can put it towards paying the mortgage.”

Households are eligible for food stamps if they have less than $2,000 in the bank and a collective income no more than 30 per cent above the federal poverty level. For example, a family of four must earn $2,297 a month or less to claim up to $668 a month in food stamps – an amount that was increased this month from its previous level of $588 as a result of President Barack Obama’s economic stimulus.

The proportion of people claiming food stamps in McHenry county is only 4 per cent – lower than the national average of 10.5 per cent. However, the proportion of claimants is increasing faster than anywhere else in the region – with a 25 per cent rise in the past 18 months.

While some local businesses have folded, employers in the area have also eliminated jobs, cut back on overtime and sacked workers, only to rehire them on temporary contracts to avoid paying benefits. The result is that McHenry county’s unemployment rate rose to 9.2 per cent in February, the highest since 1992.

Sue Rose, community service director at the McHenry county housing authority, suggested that the disparity between the area’s high unemployment rate and low proportion of welfare applicants might be a result of some middle-class people being unaware or unwilling to use such services.

“People here have no clue about food stamps,” she said. “Some think they’re not eligible for it because they own their homes. We’re also trying to get people over the pride and embarrassment of applying – we spend a lot of time encouraging, counselling and consoling people. We tell them it’s OK to apply for benefits.”

Ms Rose noted that the economic downturn was forcing a reassessment of ideas about the kind of people who experience poverty.

“A decade ago, most homeless people around here were single, mostly male, and many with drug and alcohol problems. Now the majority are intact families – couples with children,” she said.

Comments

[Dan]

Hungry people. Get used to it.
The world adds approximately 200,000 PER DAY.

Sure, stick your head in the sand, ignore it. After all, YOU can't have enough grandchildren. You surely don't want any restrictions applying to YOU & YOUR family. It's all about YOU, your needs.

Reap the consequences.

[DougPoretz]

This is a well-done to-the-point article. Excuse my bias as reiterated often at my own blog, but I think this makes article shows that this crisis we are experiencing is not simply an economic and capital markets crisis. It is also cultural in nature. I believe that it was a culture that gave rise to the financial meltdown, not simply AIG or the housing bubble or some particular type of debt instrument or any other single thing we wish to blame for this mess. That means that we are going to experience cultural changes as we live through this and when we come out of this. Can we really believe that once we get to the other side of this crisis the people of the middle class described in this article will re-adopt their old standards and values and preferred ways to spend money (including money they did not have)? In fact, at this point, we cannot know what "the other side" looks like because we do not know how our culture will change. We already have seen massive changes in political philosophy. We're likely to see more political changes, probably globally, plus all sorts of other changes over the next few years. If "recovery" means a return to the way things were, then we're probably not going to see a "recovery."

[Tim]

Sure. Don't have any children. Thats the ticket! I'm sure all the poor and impoverished of the world will follow your example, too. We wont have to raise those pesky little urchins. And we can all live out our days providing "healthcare services" to each other to keep our aging asses on life support till we die. Oh no! We'll just import some other immigrants to take care of us.

[michael]

Just a poor excuse to avoid the responsibility of having children, Dan!

[weinerdog43]

For those of you not familiar with Woodstock, if anyone has seen the movie, "Groundhog Day" w/Bill Murray, it was filmed in Woodstock. This is an affluent former farm town, now an outer suburb of Chicago.

[CathyG]

Doug wrote "Can we really believe that once we get to the other side of this crisis the people of the middle class described in this article will re-adopt their old standards and values"

I'm not at all certain that when we get to the other side of this that there's going to be much of a middle class left. The middle class has taken a terrible beating since the late '70s - nearly stagnant incomes coupled with a crippling burden shift of costs for health care, retirement and education from industry and the government onto families. Nothing that Obama has done will change these trends. Indeed, the results of necessary but massive government spending will likely exacerbate them.

I worked for years in Venezuela before Chavez took over. A democracy which kills its middle class tends not to stay a democracy for long.