March 21, 2023
It seems that almost weekly I read about large groups of people who are suffering the impact of poverty or worry that they are soon to be in that position. All of these people are living in the richest country in the world.
Just last Saturday’s Washington Post ran a story telling us that “a wave of Americans has been reaching retirement age largely unprepared for the extraordinary costs of specialized care. These aging baby boomers — 73 million strong, the oldest of whom turn 77 this year — pose an unprecedented challenge to the U.S. economy, as individual families shoulder an increasingly ruinous financial burden with little help from stalemated policymakers in Washington.”
And if those policies remain just a wish, many of these people will be the subject of another story about how they were now impoverished, struggling to pay their rent, and put food on their tables.
One day earlier, The New York Times had warned of a more immediate financial threat coming from another direction.
“Earlier this year, millions of Americans got a notice: Your food budget is about to be cut, potentially by hundreds of dollars a month…The notices signaled the coming end of a federal increase in food stamps that started in the early days of the pandemic…The cuts come at a particularly bad time for low-income Americans. Grocery prices increased 10 percent over the past year, according to data released this week…
“Some experts have warned that the country is approaching a “hunger cliff,” with the number of Americans going hungry likely to spike this spring. To buy food, other families may have to use money that would otherwise have gone to rent or other bills — and fall behind on those payments.
“The stress on family food budgets represents a tangible example of how a recent rise in the nation’s poverty rate is affecting people’s lives. The poverty rate fell sharply in 2021 — to 7.8 percent by one measure, from 11.8 percent in 2019 — thanks mostly to economic relief laws that Congress passed in response to Covid. But Congress has let many provisions expire, and the poverty rate rose in 2022 as a result.”
Over the years that I have been writing this blog, stories like these have been my focus. In 2016, I wrote about a Congressional Budget Office report that documented a worsening problem as they looked at data going back to 1989. “The CBO report describes an economy that rewards wealth and punishes poverty. Between 1989 and 2007, the average household in the top 10 percent of the population saw its net worth almost double, reaching $4.1 million. For the family on the economy’s middle rung, 2013 found them just treading water with the same $80,000 they owned in 1989. But for the average family in the bottom quartile, things have gone further downhill; they went from owing $1,000 in 1989 to having a debt of $13,000 in 2013.”
The specifics have varied, but the theme has been the same. So many of us cannot, despite working full-time jobs, make it in the American economy. And for those who do not, the social safety net provides less than adequate support and leaves too many people still struggling.
In an enlightening article in the New York Times Magazine Matthew Desmond, professor of sociology at Princeton University and author of “Poverty, by America,” , presented a powerful view of the structural elements that underpin the intractable nature of American poverty. He presents a structural reality that we must face if we want to do more than chase a moving target and continue to see our efforts to shore up that safety net fail.
From Desmond’s perspective, “poverty isn’t simply the condition of not having enough money. It’s the condition of not having enough choice and being taken advantage of because of that. When we ignore the role that exploitation plays in trapping people in poverty, we end up designing policy that is weak at best and ineffective at worst.”
The structure of American Poverty is, according to his model, built on several core features that place many of us at risk no matter how hard we work and how “good” a life we live:
- The Power Imbalance between Employer and Worker ensures that working hard no longer guarantees being able to pay for the essentials of life.
“Consider how many employers now get one over on American workers. The United States offers some of the lowest wages in the industrialized world. A larger share of workers in the United States make “low pay” …than in any other country belonging to the Organization for Economic Cooperation and Development…23 percent of American workers labor in low-paying jobs, compared with roughly 17 percent in Britain, 11 percent in Japan and 5 percent in Italy. Poverty wages have swollen the ranks of the American working poor, most of whom are 35 or older.”
“Today almost all private-sector employees (94 percent) are without a union, though roughly half of nonunion workers say they would organize if given the chance…Employers have at their disposal an arsenal of tactics designed to prevent collective bargaining.
“As the sociologist Gerald Davis has put it: Our grandparents had careers. Our parents had jobs. We complete tasks. Or at least that has been the story of the American working class and working poor.”
- The Power Imbalance between Landlord and Renter ensures that stable, quality housing is expensive and unaffordable.
“National data also show that rental revenues have far outpaced property owners’ expenses in recent years, especially for multifamily properties in poor neighborhoods. Rising rents are not simply a reflection of rising operating costs. There’s another dynamic at work, one that has to do with the fact that poor people — and particularly poor Black families — don’t have much choice when it comes to where they can live. Because of that, landlords can overcharge them, and they do…Struggling families looking for a safe, affordable place to live in America usually have but one choice: to rent from private landlords and fork over at least half their income to rent and utilities. If millions of poor renters accept this state of affairs, it’s not because they can’t afford better alternatives; it’s because they often aren’t offered any.”
- The Power of the Financial Industry ensures that services and ratings are out of reach.
“According to the F.D.I.C., one in 19 U.S. households had no bank account in 2019, amounting to more than seven million families. Compared with white families, Black, and Hispanic families were nearly five times as likely to lack a bank account…thousands of check-cashing outlets now serve that market. Check-cashing stores generally charge from 1 to 10 percent of the total, depending on the type of check…In 2020, Americans spent $1.6 billion just to cash checks. If the poor had a costless way to access their own money, over a billion dollars would have remained in their pockets during the pandemic-induced recession.
“Poverty can mean missed payments, which can ruin your credit. But just as troublesome as bad credit is having no credit score at all, which is the case for 26 million adults in the United States. Another 19 million possess a credit history too thin or outdated to be scored. Having no credit (or bad credit) can prevent you from securing an apartment, buying insurance, and even landing a job, as employers are increasingly relying on credit checks during the hiring process.
“Predatory inclusion” is what the historian Keeanga-Yamahtta Taylor calls it in her book “Race for Profit,” describing the longstanding American tradition of incorporating marginalized people into housing and financial schemes through bad deals when they are denied good ones. The exclusion of poor people from traditional banking and credit systems has forced them to find alternative ways to cash checks and secure loans, which has led to a normalization of their exploitation. This is all perfectly legal, after all, and subsidized by the nation’s richest commercial banks. The fringe banking sector would not exist without lines of credit extended by the conventional one. Wells Fargo and JPMorgan Chase bankroll payday lenders like Advance America and Cash America. Everybody gets a cut.”
If Desmond is correct about the structural nature of poverty in our country, and I think he is, we need to widen our focus. Yes, in the short term, responding to the pain that exists today because we have a flaw about the real cost of living leaves us beyond the financial means of millions, leaving even those working full-time jobs struggling. And our safety net, even in the most generous states, does not close the gap. Rectifying this should be an immediate priority because those millions are being hurt right now.
But, if that is all we do and we ignore the structural elements that have placed so many in economic purgatory, we will be endlessly finding that there are new holes to be filled. And those holes will continue to suck in millions of people. When Social Security was created in 1935 it had an immediate impact on poverty. The same is true of Medicare, SNAP (Food Stamps), and the other safety net elements. But none of them deal with the root causes of why so many millions fail economically and seemed trapped in an endless financial struggle.
Systemic changes are hard. They require brave leaders to step in front of the crowd and tell them things that they do not want to hear. They require privileged people, those of us who are not living in poverty or with its threat hanging over our heads, to be willing to give up some of our privilege.
Are we as a nation ready to do that?
It will take a political battle to make it happen.
Is this a battle worth waging in these divisive political times?
I think it is.