Every third child is poor

For poverty to triumph, it is sufficient for good people to do nothing.

By SHLOMO MAITAL
A woman searches through a garbage container in central Jerusalem (photo credit: NATI SHOHAT / FLASH 90)
A woman searches through a garbage container in central Jerusalem
(photo credit: NATI SHOHAT / FLASH 90)
A sad, familiar ritual marks the end of each calendar year, when reports documenting the extent and depth of poverty in Israel are released. For over a decade, the story has always been the same: Every third child and every fifth person lives in poverty.
And there is little sign of change.
The three key reports on poverty are those compiled by the National Insurance Institute (NII), the Latet NGO and the National Council for the Child. They reveal the extent of poverty in Israel, and, to some degree, the causes. They also point to some simple remedies.
According to the NII, 1.75 million Israelis live below the poverty line – nearly one person in every five, including 860,000 children, or one child in every three. The poverty line is half of the median after-tax family income – 2,820 shekels ($705) per month for individuals and 4,513 shekels ($1,128) for couples, measured in purchasing-power exchange rates; and 8,500 shekels ($2,125) for a family of five. In many poor households, there are two people or more who are working.
An even bleaker picture emerges from the Alternative Poverty Report of Latet, a large NGO that assists the poor. The report surveys the realities of the hungry people Latet and other organizations feed, clothe and support. Some 40 percent of those they assist have jobs and earn wages – a steep rise over the past five years. Nearly half of those surveyed said their children had gone whole days without eating. One person in five surveyed suffered from diabetes, partly because a majority of their calories comes from cheap carbohydrates; the principal food of three children in eight is bread. Latet’s report claims that one family in four on welfare assistance has two working members.
Finally, Yitzhak Kadman, chairman of the National Council for the Child, noted in his annual report that in the last 30 years, the number of children living in poverty has risen almost fivefold. When Dr. Kadman presented his annual report to President Shimon Peres, Peres made an unusually emotional statement. Usually cool and measured, Peres had a biting edge of anger in his voice, deploring the unacceptable extent of hunger among children and demanding action.
Against this bleak backdrop come the false assertions of leaders and officials whose job it is to fight poverty. Yossi Silman, director general of the Social Welfare Ministry, claims that “there are no hungry children in Israel”; and Finance Minister Yair Lapid said several times in 2013 that “the only way to fight poverty is to transform the culture of handouts to the culture of work.”
Lapid, however, blithely ignores the facts: In many poor families, both parents have jobs; Israel’s unemployment rate of 6.1 percent is at a 30-year low; and Israel spends only one-sixth of its Gross Domestic Product on social services, compared with one-fifth in the developed OECD nations.
According to Latet, 83 percent of those on welfare would prefer to work, even if they earned no more than the welfare payment they now receive. The proportion of the poor who are working has doubled in a decade.
SOME 10 years ago, Lapid, then a journalist and media star, visited the poverty-stricken Zahal neighborhood in the city of Safed. He wrote eloquently about what he saw for the Latet website, describing crumbling apartments, children whose hands were calloused from physical labor, and unlocked doors because “there was nothing inside to steal.”
Lapid has since grown wealthy and powerful – and unpopular, with a recent Jerusalem Post poll showing that of the 23 cabinet ministers, he scored lowest in terms of “job performance.” I urge him to revisit Safed and its poorest neighborhoods, and think twice before he again cuts family allowances, as he did in 2013.
The depth and persistence of poverty is a social blight Israel shares with America. In a major speech in Washington on December 3, US President Barack Obama said he would make upward mobility and lower inequality in wealth and income distribution “the main goal” of the remainder of his presidency. He noted that in America, “the top 10 percent of income earners gets half of all national income, up from only a third in 1979,” a level of inequality equal to that of Jamaica.
Last June, the influential US monthly, The New Yorker, published an article by Ruth Margalit under the headline “Israel’s Surprising Poverty.” In it, Margalit observed that Israel “has a higher percentage of poor people than Mexico, Turkey or debt-ridden Spain and Greece.”
Greece and Spain have unemployment rates of 27 percent, over four times that of Israel.
The shocking figures on the extent of poverty in Israel underplay the problem. A Central Bureau of Statistics survey shows that 31 percent of Israelis are close to the poverty line and hence are at risk of sinking into poverty. In the European Union, the comparable average is half that, or 17 percent. It only takes one person in the household to lose their job, or to fall ill, for that to happen. When over half the country is either poor or afraid of becoming poor, the situation cannot be tolerated or overlooked.
Some argue that because the poverty line is always changing relative to the median income, the definition of poverty itself perpetuates it. This is false. In theory, everyone could have after-tax income of at least 55 percent of the median and thus escape poverty. And in Scandinavia most do.
The Bible says, “You will always have the poor in your midst.” The sages interpret this as mobility: Some of the poor will grow wealthy, while some of the wealthy will become poor, echoing a Yom Kippur prayer. They are not saying we should accept poverty as inevitable. It is not.
Why are there so many poor people? Both the poor and the non-poor agree on this. According to Latet, over 70 percent of both groups think that there are two causes – inadequate support payments and low wages. And only one non-poor person in every seven thinks that the poor are poor because they choose to be.
With a huge majority in favor of boosting payments to the poor, it is a mystery why the government and the finance minister are doing the precise opposite, while expanding the defense budget at the same time. Polls show a majority of Israelis believe that dealing with poverty is more important than national defense. The logic here is that a divided, rich vs. poor society is far more threatened by internal dissension than by external foes.
In December, the government authorized an additional five billion shekels ($1.43 billion) in defense spending for 2014, with little debate, and despite the poverty data.
According to Haaretz columnist Meirav Arlosoroff , less than 20 percent of private - sector workers who earn 5,000 shekels ($1,4 4 0) per month or less are unionized, while only half of the public-sector workers who earn likewise are part of a union.
Most are so-called contract workers, with no social benefits or pension rights. Lacking unions to fight for them, the working poor are doomed.
AND THE Histadrut, the national labor organization, has so far represented mainly the tough union members in high-paid jobs in the ports and in electricity and water production, precisely the workers who are far from poor. A major effort should be made to unionize the lowest-paid workers in jobs like cleaning and security.
According to the NII, more than one worker in 10 is paid less than the minimum wage. To diminish poverty, the minimum wage should be gradually but significantly increased. The current hourly minimum wage is very low, 23.12 s h e kel s ($6.6 0) per hour.
Employers will protest and argue that raising the minimum wage will bring unemployment.
It won’t.
Some 23 years ago, during the 1990/1 US recession, New Jersey raised its mini mu m wa ge f r o m $ 4. 25 t o $5.05 a n hour, while neighboring Pennsylvania chose not to. Two Princeton University researchers, Alan B. Krueger and David Card, saw this as a natural experiment that helped resolve whether higher minimum wages cause lower demand for labor.
Card and Krueger surveyed fast-food restaurants along the New Jersey-Pennsylvania border twice over a period of 11 months to see how many people they employed.
Economic theory says when labor gets more expensive, you buy less. But to their surprise, there was no change in employment numbers in the New Jersey restaurants in relation to the Pennsylvania ones. Low-wage work went up in price, but demand for it stayed the same. And why? Employers simply needed the low-wage labor and had no alternative.
Israel should study Scandinavia, where fiercely progressive tax- and-transfer systems mitigate poverty. In the 1990s , Finland had a higher percentage of poor than Israel, measured in pre-tax and pre-transfer income. But tax-and-transfers slashed poverty to only 4 percent of the population.
If we despair of Lapid’s Finance Ministry taking effective anti-poverty action, perhaps there is hope at the Bank of Israel.
Newly appointed Governor Karnit Flug has made poverty one of her research specialties. In a 2003 paper published in the Israel Economic Review, she and colleague Nitsa Kasir (Kaliner) find that “the education system is the key to solving the problem of poverty in the long run.”
Israel, the startup nation, leads the world in many measures of innovation and entrepreneurship. But it ranks 26th out of 60 globally competitive nations in productivity (output per hour), and 58th in the rate of growth of productivity. Low productivity brings low wages, and hence, for many, poverty.
Israel should reverse the hugely damaging decision to shut down vocational high schools and reopen them at once. Germany uses such schools as the foundation of its precision manufacturing, which generates the world’s largest export surplus. High skills can offer high wages for working people who are able to acquire them . We have to create more paths whereby working people can gain skills that lift them out of poverty.
IN ONE key measure, capital formation as a percent of GDP, Israel ranks only 93rd out of 150 nations.  No wonder workers are unproductive – if corporate profits are not invested in technology and modern equipment.
Only one worker in 11 in Israel works in hi-tech. The dynamic innovation and entrepreneurial energy in hi-tech must be spread more widely throughout the economy, including non-tech sectors. Hi-tech must accept some responsibility for battling poverty, rather than simply ignore it.
Tel Aviv University Prof. Dan Ben- David told New Yorker reporter Margalit, “The primary problem is… that a large proportion of Israelis are not given the tools to work in a modern society. If things continue as they are, we are heading to a thirdworld economy.”
Indeed, according to the extent of poverty, we may already be there.
Prime Minister Benjamin Netanyahu incessantly demands that the Palestinians recognize Israel as a Jewish state. Perhaps we should first create a Jewish state. A Jewish state true to its Jewish values would never tolerate abysmal poverty in a fifth of its population and a third of its children.
The fact that much of the poverty is concentrated among the ultra-Orthodox and Arab populations is not relevant; they, too, are citizens.
“Poverty is the worst form of violence,” former Indian leader Mahatma Gandhi once said. Violence is willfully harming others. Most people in Israel condemn violence of all kinds; most would not think of raising their hand to harm another person.
Yet most of us remain deafeningly silent, apathetic and indifferent in the face of the worst violence – abysmal poverty and all that it entails.
Poverty deeply wounds those who live in it, especially children. Yet the annual litany of political speeches decrying poverty ends as quickly as it begins, and we again sink into inaction. To paraphrase Edmund Burke, for poverty to triumph, it is sufficient for good people to do nothing.
The writer is senior research fellow at the S. Neaman Institute, Technion