Reagan Years: As Some Suffer, Others Prosper : The Working Poor Losing Ground in Fight for Survival

President Reagan’s economic policies, now entering their fifth year with the submission of his new budget to Congress Monday, have brought mixed results to America’s 80 million families: better times for most who were already prosperous, little relief for most at the bottom of the ladder. In these two stories, The Times examines the impact of the Reagan program on a well-to-do family in Dallas and on a working-poor family in North Carolina.

After a long day’s work stripping insulation from factory steam pipes, still wearing his faded overalls and sweat shirt, Gary Hilton sits in his living room and muses about a luxury he and his family have never known.

“I heard some people on TV the other night say they never had to worry about paying a light bill or a grocery bill or a heating bill,” Hilton said, sipping coffee and running his fingers through his thinning brown hair. “I just wonder how that would be.”

The Hilton family, which in recent years has earned about $5,000 annually--less than half the poverty level--from odd jobs and other largely low-skilled work, does not expect to find out any time soon.

Behind in Mortgage Payments

Hilton, 41, his wife, Patricia, and their three school-age children live in a small, $17,000 three-bedroom house. They are months behind on their $88-a-month mortgage payments. They cannot pay the annual $135 real estate tax. The electric, water and telephone bills are far in arrears, and they have $1,000 in unpaid medical bills.

They have a 1966 Plymouth in the driveway and a 1969 Dodge truck in the backyard. Neither will run.

“Sometime, I’ve just went to bed and cried,” Patricia said.

According to the Census Bureau, there are more than 4 million such families in the United States, most of them white like the Hiltons--families with children in which both parents work but together earn so little that they still qualify for some form of public assistance.

They are the working poor. In many ways, they are also the forgotten poor--those who have borne the brunt of the domestic spending cuts enacted during the first four years of the Reagan Administration.

“The working poor are getting lost,” said Gail Withers, the Hiltons’ social worker at the Stokes County Social Services Department. “There’s no ground for them. They’re just stuck.”

“Intact families,” as Withers called them, often fail to qualify for Medicaid or Aid to Families with Dependent Children because two able-bodied adults are in the home. Food stamps are about the only public assistance the Hiltons receive--and their allotment of food stamps was cut by a 1981 law aimed at concentrating benefits on the very poorest of the poor.

Tax Cuts Don’t Help

At the same time, President Reagan’s across-the-board income tax cuts have done the Hiltons no good because they pay no income taxes anyway. However, because they work, they do pay several hundred dollars a year in Social Security taxes, a burden that is continuing to mount.

Gary Hilton, a high school graduate, and Patricia Hilton, who finished 10th grade, married 13 years ago and bought their home in Timberline, a sprawling development of small, single-family houses, a year later. Two of their children--Denise Jones, 17, and Charles Jones, 15--are from Mrs. Hilton’s previous marriage. They have another son, Terry Hilton, 10.

In this town of about 3,900 and in many others like it across the nation, such families find themselves on a treadmill of odd jobs, working for a few weeks or months, then enduring long periods of unemployment. Like the Hiltons, many of these families get no health insurance while they are working--and no unemployment benefits while they are not working because the jobs do not last long enough.

Gary Hilton, a short, soft-spoken man with long gray-brown sideburns who loves carpentry, has not held a permanent job since 1980, when he worked at a plant that made batteries. He quit that job, he said, after supervisors harassed him over a five-week absence because of illness.

Since then, he has regularly applied for work at the area’s textile, tobacco and construction facilities. But, like millions of other low-skilled persons who do not belong to trade unions, he has had no luck landing a permanent job.

Job Not Expected to Last

For now, he has a job replacing asbestos insulation with fiberglass on the steam pipes of a tobacco factory. While the job lasts, he is working seven days a week, 10 to 12 hours a day, earning $4.50 an hour. But he expects the job to end in April.

And, while the work lasts, it will reduce the family’s allotment of food stamps, to $151 a month from $313.

But Gary and Patricia have no intention of giving up the good feeling they get when their income comes from a paycheck instead of a handout. When Gary is not replacing insulation, he drives trucks for whatever he can earn or works occasionally during the summer at local tobacco factories.

Patricia, 35, a tall woman with bright blue eyes and long brown hair, works as a seamstress or a baby sitter whenever she can. “I don’t care what kind of work it is,” she said, “I’ll go for it.” Sometimes the whole family picks berries and sells them.

Gary has harsh words for welfare cheats--and for those who confuse his family with them--the Hiltons did not even apply for food stamps until May, 1983.

“People see these bums on the street, drinking and trying to get everything they can from the government, and they think everybody is like that,” he said. “Well, we’re not.”

No ‘Safety Net’

Because they have some income of their own, families like the Hiltons have not landed in what Reagan calls the federal “safety net”--the assistance of last resort for persons who cannot support themselves.

“The working poor have been hit the hardest of all,” said Isabel Sawhill, an economist at the Washington-based Urban Institute. “The social safety net for the non-working poor is reasonably intact.”

Sawhill helped edit “The Reagan Record,” a 1984 Urban Institute book on the impact of Reagan’s economic, spending and tax policies. The study found that, as a result of Reagan’s economic and budget policies, families earning less than $12,000 a year lost 4.1% of their income between 1980 and 1984. Those making more than $45,000 gained 1.6% during the same period, the study said.

Despite the tax cuts of the Reagan years, the Hiltons are now worse off, as far as federal taxes go, than they were when Reagan took office because Social Security taxes have been raised to keep the system solvent.

During 1983, they earned $5,716.82 and received $1,047 worth of food stamps, leaving them far below the poverty line of $12,042 for a family of five. Employers withheld $203.83 from their earnings.

The entire $203.83 was refunded the next year--as it would have been without the Reagan tax cuts. “But we could have used the money in 1983,” said Patricia, who regularly writes $20 checks to the federal Farmers Home Administration as partial payment toward the $88 monthly mortgage payment.

Tax Credit Helps

On top of the tax refund, the Hiltons received $500 from the “earned income tax credit,” a sort of a negative income tax for families with earnings of less than $10,000. The social service volunteer who filled out their 1983 tax form had failed to request the tax credit, but the Internal Revenue Service provided it anyway.

Regardless, the tax credit has been available to families in the Hiltons’ income bracket since 1975. In fact, inflation, although sharply curtailed during the first Reagan Administration, has eroded the value of the tax credit, despite two modest adjustments in the way the credit is computed. And personal exemptions and the standard deduction, the biggest tax breaks for poor persons, have not been increased enough to keep pace with inflation.

For families in the Hiltons’ bracket, the income tax is the least of their worries. But, in their bracket, they must pay a 7.05% Social Security tax (up from 6.65% in 1981) on every dollar of income, and that means the Hiltons have been contributing several hundred dollars a year to the Social Security system.

Realities of Life

At the Hiltons’ house, such figures are just another part of the uncomfortable realities of everyday life.

Although the Hiltons are religious, they do not attend church. “People look down on you about what you wear,” Patricia said, “and we don’t have the very best.” Most of the family’s clothes, like its furniture, come from yard sales.

As for food, Patricia divides hamburger and mixed chicken parts into weekly portions, hoping to stretch them to the next monthly food stamp allotment. There are no steak bones for the family dogs, Brochet and Puddles.

That kind of life leaves the Hiltons with modest expectations. And their children dream very simple dreams about their own futures.

Denise, the oldest, wants to “work in an office.” Terry aspires to becoming a mechanic, as does Charles, his older brother, who intends to join the Army because “I ain’t got the money for college.”