RACHEL AND HER CHILDREN Homeless Families in America By Jonathan Kozol Crown. 260 pp. $16.95

AS MOTORISTS stream through Manhattan's Midtown Tunnel -- many of them returning from their second homes on Long Island -- they are liable to encounter a pack of black youths swarming toward them with squeegees and rags at the ready, bent on obtaining a coin or two in exchange for a swab of the windshield.

Many drivers greet the band's advance with a grim shake of the head or an epithet hissed through clenched teeth, and even those who acquiesce often hand over their change with a dark scowl. For the transaction gives off a whiff of extortion, a hint of menace lurking behind those eyes at the window.

In Rachel and Her Children, Jonathan Kozol describes a conversation with one of those kids, a temporary resident of the Martinique Hotel, a shelter for the homeless a couple of blocks from the Midtown Tunnel.

How much can he earn that way? Kozol asks a tiny 8-year-old

" 'Couple of dollars,' " the boy replies.

" 'What do you do with it?' . . .

" 'Go to the store. Buy some juice. Loaf of bread, quart of milk . . . Get me a box of cereal.'

" 'What kind of cereal?'

" 'Cheerios!' He says it with a smile."

If God is in the details, there is a cathedral of context in that single word. Abruptly, the alien face at the windshield becomes that of small boy who dotes on doughnut-shaped oat puffs. Henceforth it is harder to regard him as a threat or a burden.

It is a technique familiar to followers of Jonathan Kozol's work. From Death at an Early Age, his 1967 account of a year as a teacher in a predominantly black Boston school, to his most recent volume, Illiterate America, Kozol has been a sympathetic observer of the poor and the dispossessed, people whom most middle-class Americans manage to keep at a distance. Through close attention and compassionate imagination, he helps his readers bridge the abyss of misunderstanding that separates the rich from the poor, the white from the black, the comfortable from the afflicted.

I have not always agreed with his judgments. At times his vast reservoir of empathy seems adulterated by dollops of sentimentality. I thought his book on the Boston schools somewhat oversimplified a complex issue. Yet, year in and year out, for more than two decades, Kozol has remained one of our most valuable social critics. If at times he sounds like a common -- an uncommon -- scold, one must admire the tenacity of his commitment to a just and humane society. Refusing to blow with the prevailing intellectual winds or the election results, he has kept his eye on the big human issues of our time -- and for that we owe him our gratitude.

THIS TIME his subject is one of the most vexing social problems of the '80s -- the legions of men, women and children who have no permanent homes, but drift from streets and subway platforms to emergency assistance units, barracks, "short-term" shelters, and "long-term" hotels where they may live for years in shockingly inadequate conditions.

As Kozol readily concedes, he has not produced a systematic analysis of this problem and its public policy implications. He labels his book simply "the description of a journey that began for me a few days after Christmas 1985 and has continued to the present time." That journey is chiefly through the dank corridors and cramped rooms of the Hotel Martinique, a once elegant New York hostelry at Sixth Avenue and 32nd street, which as of June 1987 housed 438 homeless families.

Although not the worst such hotel in New York, Kozol calls it "the saddest place that I have been in my entire life." The air of desperation which hovers over the Martinique stems less from its dismal physical facilities than from management's stolid enforcement of demeaning regulations and the welfare bureaucracy's inflexible adherence to apparently ill-conceived eligibility rules.

Most counter-productive of all, it would seem, is the arbitrary limit of $244 to $270 per month on welfare families' rent allowances. Since an adequate apartment, even in the outer boroughs, costs at least $350 per month, the net effect is to keep such families in the Martinique, with the city paying some $1,900 per month for each of them (the Martinique, Kozol reports, received at least $8 million in municipal monies last year).

A case can certainly be made that such rules are designed -- as a report from the Community Service Society of New York suggests -- as "a deterrent to potential applications for help," or, in Kozol's more telling phrase, as part of a policy of "societal retaliation on the unsuccessful."

Kozol angrily condemns those responsible for such policies, all the way up to the president himself, and in a final apocalyptic chapter he warns that we are not too far from outright "state terrorism" in which the destitute and the homeless would be herded into concentration camps.

But the most effective sections in this book are not the didactic or polemical passages -- however justified they may be -- but the poignant portraits of the people he encounters at the Martinique: Annie Harrington, who dreams of her own rooms with a pink and white canopy over the bed and a parquet floor; her son Doby who asked what he would do if he had an apartment, replies "I would make cheeseburgers!"; Mr. Allesandro, an unemployed maintenance man begging for a job to keep his self respect: "I'm somebody who's mechanically inclined. I would make beds, I would clean toilets. I would do anything if I could have a decent job."; and the Rachel of the title, so desperate to feed and clothe and house her children that she says, "If there was a place where you could sell part of your body . . . I would do it." :: J. Anthony Lukas won a Pulitzer Prize in 1986 for "Common Ground: A Turbulent Decade in the Lives of Three American Families."