BILL MOYERS: We turn now to some other people who don't often make the news — the missing class.

Those people we see every day — the fellow behind the coffee-and-donut counter, the day care worker, the check out lady at the grocery store, the crews cleaning the office at night or the airplanes and trains, the cabdrivers.

There's also the home healthcare aide who takes care of the elderly or disabled, the teacher's aide at school. Even that receptionist who keeps things moving at the doctor's office.

All around us every day people doing these important jobs making between 20 and 40 thousand dollars a year. They are missing from the presidential debates. Policy mavens in Washington seldom give them a thought. And unless the commercials are selling fast food or laundry detergent, advertisers ignore them. They make just a little too much to be considered poor and a lot less than what's needed to be called middle class. They're living on the edge — one sudden illness, one pink slip, one divorce away from free fall.

Katherine Newman has chronicled what it's like to work for low wages in America and to try to move up to the next rung on the ladder. She's produced a series of readable and revealing books. Here's her latest The Missing Class: Portraits of The Near Poor In America, co-authored with Victor Tan Chen. Professor Newman teaches sociology at Princeton University, where she is also director of the Institute for International and Regional Studies. Katherine Newman welcome to the Journal.

BILL MOYERS: Welcome to the Journal.

KATHERINE NEWMAN: Thank you.

BILL MOYERS: Two themes seem to run through your work with which I'm most familiar. One is the preoccupation with work. With people who are working for a living. And the second is their interior lives. You tell us what these people think. How they feel. Their desires. Their appetites. Their sense of failure. Their sense of aspiration. How do you do that?

KATHERINE NEWMAN: Well, you have to get the know them very well. The book that I published most recently — took me seven years to follow these lives. And —

BILL MOYERS: The nine families you focused on, right?

KATHERINE NEWMAN: It was nine families. We got to know them very well over those seven years. The earlier book that I published, that was over an eight year period. So some of these studies take a very long time to do. And you see their lives changing. So the person that you knew eight years ago is different eight years later. And the trajectory of their lives changes, in part, because opportunities change. The economy gets better. The economy gets worse. They're waiting there to grab the brass ring. Am and if you watch them long enough you'll see how their interior characteristics display themselves when the opportunity presents. And so I'm very interested in getting to know people very deeply. But to communicate to the people who I want to read these books, you can't just present them with a forest of numbers. You have to give them a sense of the real people behind these numbers. And I think we know very little about the real people who constitute or the near poor in our country.

BILL MOYERS: Tell me, briefly, about Tamar and Victor Guerra.

KATHERINE NEWMAN: Yes. They are a very interesting couple. So Tamar is of Puerto Rican descent. And Victor, her husband, is also — they live a very difficult life. She is the one who packs perfume bottles in —

BILL MOYERS: Oh yeah.

KATHERINE NEWMAN: New Jersey. So she — it takes her about 90 minutes to get to work, where she works for a sub minimum wage. And they only belong in the missing class because Victor works as well. And, together, they earn enough to pull just above the federal poverty line. They have three children. The oldest of whom I first met when he was about nine years old. And, at that point, he was doing reasonably well. He was never a brilliant student. He had his problems. But he was managing. And then Tamar began to get deeper and deeper into the workplace. And Omar, her son, began to go off the deep end. And, unfortunately, Omar is, today, in an upstate prison in New York. The middle child in that family was doing so well in school when I first met him that his teachers recommended he skip a grade. And this is, again, coming from a family where the parents don't speak any English at all. Could never help him with his homework. But I saw the reports from his math teacher who said, you know, "This kid is fantastic. He should skip a grade." Two years later he was getting warning notices that he would likely fail the high stakes test and was going to be held back in school because he just began running off the rails. He wasn't very well supervised during the day. And it — the family life was unraveling under the pressure of these two parents who were working so hard. The youngest child was four years old at the time that I first new him. And had been the victim of lead poisoning. They live in a neighborhood that has very heavy exposure to lead paint. They're old apartments, prewar apartments. And the lead poisoning which — with which he was diagnosed was not doing his development any good. He had attention deficit disorder. And, actually, a lot of these attention deficit problems may well reflect underlying problems of lead poisoning in poor neighborhoods. Lead poisoning is a form of brain damage, basically. So this is a family that was sort of hanging on by the threads to their position in the missing class. And, as far as the adults were concerned, earning a living was very important to them. They were working so hard because they really didn't want to be dependent on anybody else. They wanted to be a self sufficient household. But without the kinds of supports those kids would need, the gangs in the neighborhoods —

BILL MOYERS: Yeah.

KATHERINE NEWMAN: The failing schools. The lead poisoning. These are problems that can unravel a family.

BILL MOYERS: And the moral of their story?

KATHERINE NEWMAN: Well, the moral of this story is if we could do better in terms of the kind of public supports we provide, better schools, better healthcare, so that we didn't wait four years to find out this kid had lead poisoning problems, maybe he wouldn't have lead poisoning. Maybe he wouldn't be in so much trouble. We don't want to stop these parents from working. You know, we just want to level the playing field so that their children have a shot at a better future. Instead of being condemned to perhaps repeat the parent's early experience in poverty. Which is what I fear will happen to them.

BILL MOYERS: You described them as very productive people, but also very fragile.

KATHERINE NEWMAN: They are very fragile because $20,000 to $40,000 a year for a family of four is not very much money. And if you have only one such earner in the household you're really very vulnerable. But, even when you have two, putting together two poverty level incomes in order to create this missing class, it's a fragile existence.

BILL MOYERS: So one accident, one illness, one unexpected —

KATHERINE NEWMAN: One kid who gets sick.

BILL MOYERS: Yeah.

KATHERINE NEWMAN: One parent who gets sick. A health insurance plan that fails you, or no health insurance at all, which is true for many of these families. And you end up in trouble. And you could fall down below the missing class back into poverty. Which is what no one wants. They're absolutely desperate to stay out of that category. And if the economy's strong, they often do. And, in fact, can move up from the missing class up to the middle class if they get more education. But it's a fragile existence because they don't really have the security that comes with owning a home, for example. Or having a savings account. Or any of the other buffers the rest of us have. And they don't qualify for federal benefits for the most part. So they don't have that safety net that we put in whatever patchwork ways underneath the poor.

BILL MOYERS: How many people are we talking about in this country?

KATHERINE NEWMAN: There are over 50 million Americans —

BILL MOYERS: Okay.

KATHERINE NEWMAN: —who are in the missing class or the near poor. And that's quite a bit more than the 37 million who are officially poor. And about whom we worry a lot more in terms of policy. And we should. That the missing class is a very large number of people. And it's over 20 percent of the nation's children as well.

BILL MOYERS: And, yet, you write that they are off the radar screen.

KATHERINE NEWMAN: That's right.

BILL MOYERS: Why?

KATHERINE NEWMAN: Well, they're too busy to cause trouble for the rest of us. They don't agitate. They're not politically organized. They tend not to be heavy voters. And they're not as desperately poor as those below the poverty line whom we correctly direct address a lot of our attention to. They're not on the welfare system. So we don't worry about them from that point of view. But they can't get Medicaid, 'cause they're too wealthy for that. They don't get food stamps. They don't get subsidized housing, for the most part. So we don't really think about them very much. We don't even track how many of them we have. I had to do some fancy footwork with census even to figure out how many people we have.

BILL MOYERS: They are missing, aren't they?

KATHERINE NEWMAN: They are totally missing.

BILL MOYERS: But you talk candidly about how unlikely it is that the children of the missing class will, in fact, do as well if not better than their parents. Why is that? Why are they so vulnerable?

KATHERINE NEWMAN: Well, they're vulnerable because the conditions of their family lives, and the resources their parents can bring to bear, don't give them a very big leg up. And we don't equalize the leg up either, by providing them with really high quality early childhood education or by enriching their schools. Which would help correct for the things their parents can't do for them. Their parents cannot be there to take them to the library all the time, or teach them their multiplication tables. Even if they had the time, they might not have the skill. But we expect all children to learn as if they came from equally well endowed families, and they don't. My children have had many privileges that the children in these families really don't have. And, evermore — you're for — your fortunes depend on how well you do in the labor market — by function of your education. If you don't do well in school, and you don't get a college degree, it's very difficult to become part of the middle class today.

BILL MOYERS: Right.

KATHERINE NEWMAN: These kids don't have the money.

BILL MOYERS: You say in here that it's clear that if that parent has an education the child benefits from being in a house with a single parent who is educated.

KATHERINE NEWMAN: Absolutely. We know that this pays off, not only in the lives of the adults who earn more when they get a college degree, but in the way they raise their children and the skills they can give their children, because they are better educated themselves. It's a huge boon. And it breaks the cycle of intergenerational poverty when we educate one generation and let them help educate the next one. Parents are hugely important in how children turn out. That's no great shock is it?

BILL MOYERS: I mean it's marvelous how you're able, in — as a writer, to put a human face on people. I remember George Bernard Shaw said, "It's the mark of a truly educated person to be deeply moved by statistics." But you go beyond the statistics and actually draw profiles and words of these people. Tell me, for example, about Julia Coronado from the Dominican Republic. A woman with big dreams.

KATHERINE NEWMAN: Julia Coronado came to the mainland U.S. when she was about 19 years old. And she didn't speak any English at all. And was — pretty desperate straits. Had some difficult times with her husband. Found a job working in a factory where she cut her fingers everyday because it was a leather working factory. And had two children that she was then responsible for almost entirely, because her husband turned out to be not such a good egg. She was on welfare for a time with her children — who were dependent on it. But Julia had tremendous determination. She went back to school. At a time when we allowed people on welfare to go back to school, and we helped — to cover their expenses that way. She got some training in computer programming. And eventually landed her dream job, a white collar job working at a doctor's office here in Manhattan. And these doctors were apparently not so good at scheduling their patients. So it wasn't a very efficiently run office. But Julia is very efficient. So she organized an entirely new system for booking these patients and organizing that doctor's office. And she became the most valued employee they have. And they have promoted her. And she knows she's valuable. So she, every so often, threatens to walk, and they pay her a little bit more. So today she earns about $32,000 a year. She speaks English fairly well. She's the master or mistress of this computer system. And they wouldn't let her go for love or money. And so she's doing better than she ever thought she would. But, at $32,000 a year, and five people to support, her two kids, her mom and herself, $32,000 actually doesn't stretch all that far. What's more, Julia has higher ambitions for her standard of living. She doesn't really want to sit on a couch shot full of holes, you know.

BILL MOYERS: Right.

KATHERINE NEWMAN: She's working so many hours. She wants something to show for it. She'd like a new dress occasionally. And so all those credit card applications that roll into her mailbox every week, she tends to exercise them in ways she really shouldn't. So Julia is a mixture of someone with tremendous drive and discipline without a completely clear understanding of what credit cards really mean, and what it means to pile up debt. So she has significant debts that could be very undermining in the long run. But that's just one small piece of the financial problems the near poor run into. They also pay over the mark for just about everything they purchase.

BILL MOYERS: Everything.

KATHERINE NEWMAN: Because the big box stores don't operate in their neighborhood. So everything they buy — whether it's a car or a grapefruit — costs more in their neighborhood than it does in my neighborhood. So they're served poorly by stores. They are often the victims of this subprime lending system, or predatory lending. So when they try to purchase something — either through credit cards or if they're just trying to buy a house like the rest of us would try, they are likely to sign paperwork that's going to obligate them to usurious mortgage rates. They're not very well-educated consumers. And there are firms out there that are going to benefit from that ignorance.

BILL MOYERS: So it is accurate and fair to say the system's stacked against them?

KATHERINE NEWMAN: I wouldn't exactly put it that way. I would say, at some point in our history, especially the late '90s and the early part of this decade, the system, meaning the economy, worked very well for them. It permitted a degree of upward mobility that was really unprecedented — in many respects. And it allowed people like Julia Coronado and the — some of the other families I profiled, the make that move up. But the commercial system, the sort of mercantile system, that doesn't work very well for them. And the educational system is marginal for them also. Because they don't understand things like credit and they can get into trouble as a result. And I'm not at all sure that our infrastructure for their children is going to work very well. If we really, really wanted to be sure that Julia Coronado's children were going to exceed her standard of living, or just match it, we would make sure they went to schools where we were certain they would be learning what they need to learn. Where we would give them after school academic assistance. So the fact that she's not around wouldn't hurt them so much. But we actually don't. We don't even really invest in a solid system of daycare, much less early childhood education. And when we look at our competitors, in Western Europe, for example, they all do. They all do this. They offer early childhood education more or less from the cradle onward. In Italy. In countries that are much poorer than ours. And, as a result, their children start school with much more skill than our children do if they come from poor and near poor households. So I do worry about whether their kids will be able to follow behind them. Not because they wouldn't be capable. But because if their parents are not there to do what you did for your kids and what I do for mine everyday.

BILL MOYERS: But you do make it clear, I mean, one cannot finish The Missing Class without realizing that that old American cliché, you know, "get a job," is not the last word.

KATHERINE NEWMAN: A job alone is not enough if it only pays you $20,000 a year. Then you need more earners in your household, or a higher income, or more education so you can qualify for a better job. Or living wage bills that will increase the earnings that you have. Or —

BILL MOYERS: Making work pay.

KATHERINE NEWMAN: Making work pay better, certainly. You know, I — this is a mantra that goes back to the Clinton administration. But nobody should be working and still poor in the United States. That's a travesty. These people are not poor. Technically speaking.

BILL MOYERS: Right.

KATHERINE NEWMAN: But they are quite vulnerable because it's not enough.

BILL MOYERS: I even remember Ronald Reagan making a speech saying, "Nobody in America should be taxed into poverty." And, yet, as you make clear, in The Missing Class, a lot of these hard working people are taxed.

KATHERINE NEWMAN: Oh.

BILL MOYERS: Almost back or if not back into poverty.

KATHERINE NEWMAN: If you live in the deep South, the chances that you will be paying income tax, even if you have a family and you earn less than $5,000 a year, are quite high. And I have to say some courageous Republican governors in the South tried to change this by lowering that tax burden and trying to inject more resources into the school system. And they were defeated roundly. Which is a tragedy for our southern states. Because they're not going to pull into the modern world where education is critical for the future if they don't educate that vast majority of poor people in those states who need it. But I think that until you have people who are better educated and able to follow the political debates themselves instead of being handed a spin version, they won't even understand. Even the poor in Alabama didn't vote very solidly for that bill. Which is, really, too bad. So I think this lie — this is part of the story of inequality in our country. If people don't have the education it takes to read the newspapers and absorb these debates for themselves, and make their own considered judgment about political options out there, they will be more easily swayed by the spin that comes across, and ads. And that's not a very intelligent way to exercise the vote. But it's what many people end up — dwelling on, unfortunately.

BILL MOYERS: I'm intrigued that — that you give us these human portraits of the missing class, the near poor. But you also advocate some policies that you think would make a difference in their lives that are not welfare.

KATHERINE NEWMAN: I'd like to see these people have a crack at — low income home ownership, where it's sensible. It's not sensible for everyone. But it can be a very, very important resource. Sixty-eight percent of Americans are homeowners. But these people tend not to be for the most part. And home ownership is a critical aspect of savings. Most of us don't save out of our paychecks. We pile up money in our bank accounts because the equity that we hold is increasing in value, most of the time. Not this year, but most of the time.

BILL MOYERS: Right. Right.

KATHERINE NEWMAN: And, but if you're in a near poor household the chances are that you won't be able to do that. Or, if you do, you're going to be a victim of predatory lending. But they need the same kind of opportunity to build equity that everyone else does. They need the opportunity to save. And that means they need banks in their neighborhoods. They don't have banks in these neighborhoods for the most part. So they go to payday lending. They go to check cashing, which takes a huge whack out of their paychecks. They need to be able to go to college. Their children need to be able to go to college, and adults need to be able to come back to college for more skill.

BILL MOYERS: And look what's happening to the college tuition.

KATHERINE NEWMAN: College tuition is out of sight. Every time the City University of New York, which is our main public university here in New York, raises tuition by $1,000, 40,000 students drop out.

BILL MOYERS: Wow.

KATHERINE NEWMAN: Now many of those people eventually finish their college degrees. But it could take them 10 years, 15 years. And that's lost earnings to them. Because they don't have the credentials to use in finding a better job. So anything we could do to increase the likelihood that people in the missing class would be able to go to college and finish their college degrees will help them. Retirement is important for them, just like it's retire — you know, for the rest of us. Healthcare. The S-chip bill would have been —

BILL MOYERS: Yeah.

KATHERINE NEWMAN: —a godsend for these people.

BILL MOYERS: So these are the kids who are affected adversely by the president's veto a couple weeks ago?

KATHERINE NEWMAN: Absolutely. Because these are the people who don't qualify for Medicaid. But tend not to work for employers who are either able to or willing to give them first class health insurance. So either they have something approximating catastrophic health insurance, which means they don't get preventative care.

BILL MOYERS: Right.

KATHERINE NEWMAN: Or they have no health insurance at all for themselves or for their kid. If you have a kid who gets sick and you don't have health insurance, you lose days from work. If you lose days from work, you lose your job. And so it sets into motion a cycle of withdrawal from the labor market. So it's just bad policy all the way around. And I don't think we've seen the end of this.

BILL MOYERS: How do you explain that we seem to have written off, or seem not to think of, you know, 50 to 60 million people who are vital to our economy, vital to our communities, and yet are not part of our thinking as a society. Or the policies that we enact in Washington. How do you explain that?

KATHERINE NEWMAN: The reason I wrote this book was to try to put these people on the radar screen so everyone would understand that we have a huge number of people in this kind of vulnerable situation. And I've been amazed, as I've done interviews around the country, and people call into radio stations, at the desperate cry for recognition from people who call in to say, "Hey, that's me."

BILL MOYERS: Me.

KATHERINE NEWMAN: "That's my family. That's my life. My children are — I'm worried about them. I don't know what's going to become of them. I don't think I can send them to college. I'm not sure where the next rental bill, you know, payment is going to come from." There's a lot of vulnerability out there, even with unemployment being relatively low. So I think we need to put these people back on the radar screen. And understand that if we invest in them, we invest in the prosperity of the nation. This is not about welfare. This is not about handouts. We built the modern middle class on investments. The GI Bill. The social security system. Those were pri—

BILL MOYERS: Home ownership.

KATHERINE NEWMAN: Home ownership.

BILL MOYERS: Low cost.

KATHERINE NEWMAN: Low cost tax deductible mortgages.

BILL MOYERS: Right.

KATHERINE NEWMAN: These were investments in the prosperity of the nation. These people are just waiting for those investments. And, in the meantime, they're going to work themselves to death to — in order to do what they can for themselves.

BILL MOYERS: Is it because they have no political muscle? Or have we lost the moral compass?

KATHERINE NEWMAN: Well, they don't have a lot of political muscle. I mean, I'm hoping that candidates who focus attention on them will actually gain traction. But it's not clear that you can win an election focusing on the dispossessed in our country. I hope you can. That would certainly reassure me about the moral fiber of the nation. We have a lot of unfinished business here. And it's understandable why we focused on our foreign policy in Iraq, and so on. All of which is absolutely critical. But all we had to do is see those pictures from Katrina to know that we have massive amounts of unfinished business. And these people are unfinished business.

BILL MOYERS: It's a very important book.

KATHERINE NEWMAN: Thank you.

BILL MOYERS: The Missing Class: Portraits of the New Poor In America. Real people. Katherine Newman, and your collaborator Victor Tan Chen. Thank you very much —

KATHERINE NEWMAN: Thank you.

BILL MOYERS: —Katherine, for being with me.

KATHERINE NEWMAN: Thank you, Bill. It's a pleasure.