19/03/2023

How the United States of America Manufactures Poverty

 






The United States has a poverty problem.
 
A third of the country’s people live in households making less than $55,000. Many are not officially counted among the poor, but there is plenty of economic hardship above the poverty line. And plenty far below it as well. According to the Supplemental Poverty Measure, which accounts for government aid and living expenses, more than one in 25 people in America 65 or older lived in deep poverty in 2021, meaning that they’d have to, at minimum, double their incomes just to reach the poverty line.
 
Programs like housing assistance and food stamps are effective and essential, protecting millions of families from hunger and homelessness each year. But the United States devotes far fewer resources to these programs, as a share of its gross domestic product, than other rich democracies, which places America in a disgraced class of its own on the world stage.
 
On the eve of the Covid pandemic, in 2019, our child poverty rate was roughly double that of several peer nations, including Canada, South Korea and Germany. Anyone who has visited these countries can plainly see the difference, can experience what it might be like to live in a country without widespread public decay. When abroad, I have on several occasions heard Europeans use the phrase “American-style deprivation.”
 
Poverty is measured at different income levels, but it is experienced as an exhausting piling on of problems. Poverty is chronic pain, on top of tooth rot, on top of debt collector harassment, on top of the nauseating fear of eviction. It is the suffocation of your talents and your dreams. It is death come early and often. From 2001 to 2014, the richest women in America gained almost three years of life while the poorest gained just 15 days. Far from a line, poverty is a tight knot of humiliations and agonies, and its persistence in American life should shame us.
 
All the more so because we clearly have the resources and know-how to effectively end it. The bold relief issued by the federal government during the pandemic — especially expanded child tax credits, unemployment insurance and emergency rental assistance — plunged child poverty and evictions to record lows and powered a swift economic recovery. “I don’t think we have ever seen a policy have as much impact as quickly as the child tax credit in 2021,” Dorian Warren, a co-president of Community Change, a national organization aimed at empowering low-income people, told me. “In six months — six months — we reduced child poverty almost by half. We know how to do this.”
 
We do — but predictably, some Americans with well-fed and well-housed families complained that the country could no longer afford investing so deeply in its children. At best, this was a breathtaking failure of moral imagination; at worst, it was a selfish, harmful lie.
 
We could fund powerful antipoverty programs through sensible tax reform and enforcement. A recent study estimates that collecting all unpaid federal income taxes from the top 1 percent — not raising their taxes, mind you, just putting an end to their tax evasion — would add $175 billion a year to the public purse. That’s enough to more than double federal investment in affordable housing or to re-establish the expanded child tax credit. In fact, an additional $175 billion a year is almost enough to lift everyone out of poverty altogether.
 
The hard part isn’t designing effective antipoverty policies or figuring out how to pay for them. The hard part is ending our addiction to poverty.
 
Poverty persists in America because many of us benefit from it. We enjoy cheap goods and services and plump returns on our investments, even as they often require a kind of human sacrifice in the form of worker maltreatment. We defend lavish tax breaks that accrue to wealthy Americans, starving antipoverty initiatives. And we build and defend exclusive communities, shutting out the poor and forcing them to live in neighborhoods of concentrated disadvantage.
 
Most Americans — liberals and conservatives alike — now believe people are poor because “they have faced more obstacles in life,” not because of a moral failing. Long overdue, however, is a reckoning with the fact that many of us help to create and uphold those obstacles through the collective moral failing of enriching ourselves by impoverishing others. Poverty isn’t just a failure of public policy. It’s a failure of public virtue.
 
To break this cycle, we must commit to becoming poverty abolitionists.
 
Like abolitionist movements against slavery or mass incarceration, abolitionism views poverty not as a routine or inevitable social ill but as an abomination that can no longer be tolerated. And poverty abolitionism shares with other abolitionist movements the conviction that profiting from another’s pain corrupts us all.
 
Ending poverty in America will require both short- and long-term solutions: strategies that stem the bleeding now, alongside more enduring interventions that target the disease and don’t just treat the symptoms.
 
For example, to address the housing crisis forcing most poor renting families to dedicate at least half of their income to rent and utilities, we need to immediately expand housing vouchers that reduce the rent burden. But we also need to push for more transformative solutions like scaling up our public housing infrastructure, enlarging community land banks and providing on-ramps to homeownership for low-income families.
 
When it comes to work, we should attack labor exploitation head-on by finding ways to even the playing field between workers and bosses — supporting collective bargaining, for instance, and requiring that worker representatives be given seats on corporate boards. At the bare minimum, Congress should increase the federal minimum wage — which hasn’t been raised since July 2009 — and, like dozens of other countries, allow the federal government to routinely adjust the wage without legislative approval, ensuring that workers wouldn’t have to wait around another 13-plus years (and counting!) for a pay bump.
 
If we apply the legal scholar John A. Powell’s “targeted universalism” approach to eradicating poverty — an approach that involves setting a goal and recognizing that certain groups will need distinctive interventions for that goal to be met — then our attitude toward different antipoverty policies should be “both and.” We don’t need new solutions to this problem as much as a new mind-set, a renewed national commitment to broad prosperity.
 
The ideal poverty rate in America is zero. Why settle for anything less? Why accept the boring, pernicious best-we-can-doism that has captured the inequality debate in recent years? “We have to challenge the tragedy, the catastrophe, of compromise,” the Rev. William Barber II, one of the chairmen of the Poor People’s Campaign, told me.
 
When the Johnson administration launched “an unconditional war on poverty in America” in 1964, it wasn’t just lofty rhetoric. It set a deadline. Sargent Shriver, the director of the Office of Economic Opportunity, announced that “the target date for ending poverty in this land” would be 1976, the bicentennial. “We once had ambitions about poverty abolitionism,” Dorian Warren reminded me, and we can rekindle that sense of urgency.
 
So rather than wait around for Congress to act, we should begin to act ourselves. Poverty abolitionism isn’t just a political project, after all; it’s a personal one, too. For starters, just as many of us are now shopping and investing in ways that address climate change, we can also do so with an eye toward economic justice. If we can, we should reward companies that treat their employees well and shun those with a track record of union busting and exploitation. To do so, we can consult organizations like B Lab, which certifies companies that meet high social and environmental standards, and Union Plus, which curates lists of union-made products.
 
These everyday decisions can add up to something. If more of us adopted poverty abolitionism as a way of living — and of seeing the world and imagining a better one — that behavior would spread, which in turn could redefine what is socially acceptable and what is believed possible. If enough of us found ways to show that we will no longer stand for so much immiseration, we would put upward pressure on corporate and elected leaders, potentially creating a groundswell of political will and renewed calls for reform.
 
We need to “create a new common sense,” Jenn Stowe, the executive director of the National Domestic Workers Alliance, told me. Working on behalf of nannies, house cleaners and home care workers, the alliance is seeking to reframe our expectations around care — that it is a right, not a commodity, for instance — by “creating a pathway for people to see themselves in this movement,” as Ms. Stowe put it. “It’s going to take all of us.”
 
We can also disrupt all the quotidian ways we normalize the status quo. It is commonplace for privileged Americans to gripe about taxes. But doing so ignores how the country’s welfare state does much more to subsidize affluence — with tax breaks for college savings accounts, wealth transfers and more — than to alleviate poverty.
 
What if, the next time a co-worker brought up the topic, we talked about that instead? What if we gawked at the fact that homeowners pocket billions of dollars each year because of the mortgage interest deduction, an absurd cutout that flows primarily to well-off Americans, while most poor renting families receive no government housing assistance? What if some of those homeowners began donating a portion or even all of their mortgage deduction windfalls to eviction defense and began lobbying Congress to wind down the benefit and redirect the money to antipoverty initiatives?
 
That this straightforward, milquetoast proposal will strike some of us as audacious, even radical, shows just how constricted our moral ambitions have become and how much we’ve backslid as a nation committed to freedom and equal opportunity.
 
And we cannot in good faith claim a commitment to poverty abolitionism — or antiracism — if we continue to embrace segregation in our neighborhoods and schools. Our values should not end where our property line begins. Poverty abolitionists oppose exclusionary zoning laws and work to create inclusive neighborhoods. This means doing the hard work of tearing down the walls so many of us have built around our communities, lobbying neighbors, sharing evidence that shows that smartly designed affordable housing doesn’t affect property values and showing up at zoning board meetings (where affordable housing proposals go to die) and voicing support for new developments.
 
In the 1960s, Dixiecrats aligned with Republicans to gum up the legislative process. Senators slept in their offices so they could filibuster liberal reforms. Governmental inertia was not only the outcome but also the goal. (Sound familiar?) And yet, in the face of all that political polarization and obstructionism, major pieces of civil and voting rights legislation were signed into law and the modern social safety net was created with the passage of the Great Society and War on Poverty.
 
These transformative initiatives lifted millions out of poverty, outlawed discrimination and protected Black Americans’ citizenship rights. If so much was accomplished despite the odds, it was because grass-roots organizers, and the civil rights and labor movements in particular, put unrelenting pressure on lawmakers.
 
Today, as then, the best hope we have of ending poverty is to bind ourselves together and demand this of our country. A mass movement for economic justice is necessary. One led by those who have had enough is stirring. We can join them, no matter our lot in life.
 
This rich country has the means to abolish poverty. Now we must find the will to do so — the will not to reduce poverty but to end it.
 
America Is in a Disgraced Class of Its Own. By Matthew Desmond. The New York Times, March 16, 2023.
 







In the past 50 years, scientists have mapped the entire human genome and eradicated smallpox. Here in the United States, infant-mortality rates and deaths from heart disease have fallen by roughly 70 percent, and the average American has gained almost a decade of life. Climate change was recognized as an existential threat. The internet was invented.
 
On the problem of poverty, though, there has been no real improvement — just a long stasis. As estimated by the federal government’s poverty line, 12.6 percent of the U.S. population was poor in 1970; two decades later, it was 13.5 percent; in 2010, it was 15.1 percent; and in 2019, it was 10.5 percent. To graph the share of Americans living in poverty over the past half-century amounts to drawing a line that resembles gently rolling hills. The line curves slightly up, then slightly down, then back up again over the years, staying steady through Democratic and Republican administrations, rising in recessions and falling in boom years.
 
What accounts for this lack of progress? It cannot be chalked up to how the poor are counted: Different measures spit out the same embarrassing result. When the government began reporting the Supplemental Poverty Measure in 2011, designed to overcome many of the flaws of the Official Poverty Measure, including not accounting for regional differences in costs of living and government benefits, the United States officially gained three million more poor people. Possible reductions in poverty from counting aid like food stamps and tax benefits were more than offset by recognizing how low-income people were burdened by rising housing and health care costs.
 
Any fair assessment of poverty must confront the breathtaking march of material progress. But the fact that standards of living have risen across the board doesn’t mean that poverty itself has fallen. Forty years ago, only the rich could afford cellphones. But cellphones have become more affordable over the past few decades, and now most Americans have one, including many poor people. This has led observers like Ron Haskins and Isabel Sawhill, senior fellows at the Brookings Institution, to assert that “access to certain consumer goods,” like TVs, microwave ovens and cellphones, shows that “the poor are not quite so poor after all.”
 
No, it doesn’t. You can’t eat a cellphone. A cellphone doesn’t grant you stable housing, affordable medical and dental care or adequate child care. In fact, as things like cellphones have become cheaper, the cost of the most necessary of life’s necessities, like health care and rent, has increased. From 2000 to 2022 in the average American city, the cost of fuel and utilities increased by 115 percent. The American poor, living as they do in the center of global capitalism, have access to cheap, mass-produced goods, as every American does. But that doesn’t mean they can access what matters most. As Michael Harrington put it 60 years ago: “It is much easier in the United States to be decently dressed than it is to be decently housed, fed or doctored.”
 
Why, then, when it comes to poverty reduction, have we had 50 years of nothing? When I first started looking into this depressing state of affairs, I assumed America’s efforts to reduce poverty had stalled because we stopped trying to solve the problem. I bought into the idea, popular among progressives, that the election of President Ronald Reagan (as well as that of Prime Minister Margaret Thatcher in the United Kingdom) marked the ascendancy of market fundamentalism, or “neoliberalism,” a time when governments cut aid to the poor, lowered taxes and slashed regulations. If American poverty persisted, I thought, it was because we had reduced our spending on the poor. But I was wrong.
 

 


Reagan expanded corporate power, deeply cut taxes on the rich and rolled back spending on some antipoverty initiatives, especially in housing. But he was unable to make large-scale, long-term cuts to many of the programs that make up the American welfare state. Throughout Reagan’s eight years as president, antipoverty spending grew, and it continued to grow after he left office. Spending on the nation’s 13 largest means-tested programs — aid reserved for Americans who fall below a certain income level — went from $1,015 a person the year Reagan was elected president to $3,419 a person one year into Donald Trump’s administration, a 237 percent increase.
 
Most of this increase was due to health care spending, and Medicaid in particular. But even if we exclude Medicaid from the calculation, we find that federal investments in means-tested programs increased by 130 percent from 1980 to 2018, from $630 to $1,448 per person.
 
“Neoliberalism” is now part of the left’s lexicon, but I looked in vain to find it in the plain print of federal budgets, at least as far as aid to the poor was concerned. There is no evidence that the United States has become stingier over time. The opposite is true.
 
This makes the country’s stalled progress on poverty even more baffling. Decade after decade, the poverty rate has remained flat even as federal relief has surged.
 
If we have more than doubled government spending on poverty and achieved so little, one reason is that the American welfare state is a leaky bucket. Take welfare, for example: When it was administered through the Aid to Families With Dependent Children program, almost all of its funds were used to provide single-parent families with cash assistance. But when President Bill Clinton reformed welfare in 1996, replacing the old model with Temporary Assistance for Needy Families (TANF), he transformed the program into a block grant that gives states considerable leeway in deciding how to distribute the money. As a result, states have come up with rather creative ways to spend TANF dollars. Arizona has used welfare money to pay for abstinence-only sex education. Pennsylvania diverted TANF funds to anti-abortion crisis-pregnancy centers. Maine used the money to support a Christian summer camp. Nationwide, for every dollar budgeted for TANF in 2020, poor families directly received just 22 cents.
 
A fair amount of government aid earmarked for the poor never reaches them. But this does not fully solve the puzzle of why poverty has been so stubbornly persistent, because many of the country’s largest social-welfare programs distribute funds directly to people. Roughly 85 percent of the Supplemental Nutrition Assistance Program budget is dedicated to funding food stamps themselves, and almost 93 percent of Medicaid dollars flow directly to beneficiaries.
 
There are, it would seem, deeper structural forces at play, ones that have to do with the way the American poor are routinely taken advantage of. The primary reason for our stalled progress on poverty reduction has to do with the fact that we have not confronted the unrelenting exploitation of the poor in the labor, housing and financial markets.
 
As a theory of poverty, “exploitation” elicits a muddled response, causing us to think of course and but, no in the same instant. The word carries a moral charge, but social scientists have a fairly coolheaded way to measure exploitation: When we are underpaid relative to the value of what we produce, we experience labor exploitation; when we are overcharged relative to the value of something we purchase, we experience consumer exploitation. For example, if a family paid $1,000 a month to rent an apartment with a market value of $20,000, that family would experience a higher level of renter exploitation than a family who paid the same amount for an apartment with a market valuation of $100,000. When we don’t own property or can’t access credit, we become dependent on people who do and can, which in turn invites exploitation, because a bad deal for you is a good deal for me.
 
Our vulnerability to exploitation grows as our liberty shrinks. Because labor laws often fail to protect undocumented workers in practice, more than a third are paid below minimum wage, and nearly 85 percent are not paid overtime. Many of us who are U.S. citizens, or who crossed borders through official checkpoints, would not work for these wages. We don’t have to. If they migrate here as adults, those undocumented workers choose the terms of their arrangement. But just because desperate people accept and even seek out exploitative conditions doesn’t make those conditions any less exploitative. Sometimes exploitation is simply the best bad option.
 
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” — earning less than two-thirds of median wages — than in any other country belonging to the Organization for Economic Cooperation and Development. According to the group, nearly 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.
 
One popular theory for the loss of good jobs is deindustrialization, which caused the shuttering of factories and the hollowing out of communities that had sprung up around them. Such a passive word, “deindustrialization” — leaving the impression that it just happened somehow, as if the country got deindustrialization the way a forest gets infested by bark beetles. But economic forces framed as inexorable, like deindustrialization and the acceleration of global trade, are often helped along by policy decisions like the 1994 North American Free Trade Agreement, which made it easier for companies to move their factories to Mexico and contributed to the loss of hundreds of thousands of American jobs. The world has changed, but it has changed for other economies as well. Yet Belgium and Canada and many other countries haven’t experienced the kind of wage stagnation and surge in income inequality that the United States has.
 
Those countries managed to keep their unions. We didn’t. Throughout the 1950s and 1960s, nearly a third of all U.S. workers carried union cards. These were the days of the United Automobile Workers, led by Walter Reuther, once savagely beaten by Ford’s brass-knuckle boys, and of the mighty American Federation of Labor and Congress of Industrial Organizations that together represented around 15 million workers, more than the population of California at the time.




 
In their heyday, unions put up a fight. In 1970 alone, 2.4 million union members participated in work stoppages, wildcat strikes and tense standoffs with company heads. The labor movement fought for better pay and safer working conditions and supported antipoverty policies. Their efforts paid off for both unionized and nonunionized workers, as companies like Eastman Kodak were compelled to provide generous compensation and benefits to their workers to prevent them from organizing. By one estimate, the wages of nonunionized men without a college degree would be 8 percent higher today if union strength remained what it was in the late 1970s, a time when worker pay climbed, chief-executive compensation was reined in and the country experienced the most economically equitable period in modern history.
 
It is important to note that Old Labor was often a white man’s refuge. In the 1930s, many unions outwardly discriminated against Black workers or segregated them into Jim Crow local chapters. In the 1960s, unions like the Brotherhood of Railway and Steamship Clerks and the United Brotherhood of Carpenters and Joiners of America enforced segregation within their ranks. Unions harmed themselves through their self-defeating racism and were further weakened by a changing economy. But organized labor was also attacked by political adversaries. As unions flagged, business interests sensed an opportunity. Corporate lobbyists made deep inroads in both political parties, beginning a public-relations campaign that pressured policymakers to roll back worker protections.
 
A national litmus test arrived in 1981, when 13,000 unionized air traffic controllers left their posts after contract negotiations with the Federal Aviation Administration broke down. When the workers refused to return, Reagan fired all of them. The public’s response was muted, and corporate America learned that it could crush unions with minimal blowback. And so it went, in one industry after another.
 
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. They rarely are. Employers have at their disposal an arsenal of tactics designed to prevent collective bargaining, from hiring union-busting firms to telling employees that they could lose their jobs if they vote yes. Those strategies are legal, but companies also make illegal moves to block unions, like disciplining workers for trying to organize or threatening to close facilities. In 2016 and 2017, the National Labor Relations Board charged 42 percent of employers with violating federal law during union campaigns. In nearly a third of cases, this involved illegally firing workers for organizing.
 


 


Corporate lobbyists told us that organized labor was a drag on the economy — that once the companies had cleared out all these fusty, lumbering unions, the economy would rev up, raising everyone’s fortunes. But that didn’t come to pass. The negative effects of unions have been wildly overstated, and there is now evidence that unions play a role in increasing company productivity, for example by reducing turnover. The U.S. Bureau of Labor Statistics measures productivity as how efficiently companies turn inputs (like materials and labor) into outputs (like goods and services). Historically, productivity, wages and profits rise and fall in lock step. But the American economy is less productive today than it was in the post-World War II period, when unions were at peak strength. The economies of other rich countries have slowed as well, including those with more highly unionized work forces, but it is clear that diluting labor power in America did not unleash economic growth or deliver prosperity to more people. “We were promised economic dynamism in exchange for inequality,” Eric Posner and Glen Weyl write in their book “Radical Markets.” “We got the inequality, but dynamism is actually declining.”
 
As workers lost power, their jobs got worse. For several decades after World War II, ordinary workers’ inflation-adjusted wages (known as “real wages”) increased by 2 percent each year. But since 1979, real wages have grown by only 0.3 percent a year. Astonishingly, workers with a high school diploma made 2.7 percent less in 2017 than they would have in 1979, adjusting for inflation. Workers without a diploma made nearly 10 percent less.
 
Lousy, underpaid work is not an indispensable, if regrettable, byproduct of capitalism, as some business defenders claim today. (This notion would have scandalized capitalism’s earliest defenders. John Stuart Mill, arch advocate of free people and free markets, once said that if widespread scarcity was a hallmark of capitalism, he would become a communist.) But capitalism is inherently about owners trying to give as little, and workers trying to get as much, as possible. With unions largely out of the picture, corporations have chipped away at the conventional midcentury work arrangement, which involved steady employment, opportunities for advancement and raises and decent pay with some benefits.
 
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.
 
Poor Americans aren’t just exploited in the labor market. They face consumer exploitation in the housing and financial markets as well.
 
There is a long history of slum exploitation in America. Money made slums because slums made money. Rent has more than doubled over the past two decades, rising much faster than renters’ incomes. Median rent rose from $483 in 2000 to $1,216 in 2021. Why have rents shot up so fast? Experts tend to offer the same rote answers to this question. There’s not enough housing supply, they say, and too much demand. Landlords must charge more just to earn a decent rate of return. Must they? How do we know?





 
We need more housing; no one can deny that. But rents have jumped even in cities with plenty of apartments to go around. At the end of 2021, almost 19 percent of rental units in Birmingham, Ala., sat vacant, as did 12 percent of those in Syracuse, N.Y. Yet rent in those areas increased by roughly 14 percent and 8 percent, respectively, over the previous two years. 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.
 
A study I published with Nathan Wilmers found that after accounting for all costs, landlords operating in poor neighborhoods typically take in profits that are double those of landlords operating in affluent communities. If down-market landlords make more, it’s because their regular expenses (especially their mortgages and property-tax bills) are considerably lower than those in upscale neighborhoods. But in many cities with average or below-average housing costs — think Buffalo, not Boston — rents in the poorest neighborhoods are not drastically lower than rents in the middle-class sections of town. From 2015 to 2019, median monthly rent for a two-bedroom apartment in the Indianapolis metropolitan area was $991; it was $816 in neighborhoods with poverty rates above 40 percent, just around 17 percent less. Rents are lower in extremely poor neighborhoods, but not by as much as you would think.



 
Yet where else can poor families live? They are shut out of homeownership because banks are disinclined to issue small-dollar mortgages, and they are also shut out of public housing, which now has waiting lists that stretch on for years and even decades. 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.
 
You can read injunctions against usury in the Vedic texts of ancient India, in the sutras of Buddhism and in the Torah. Aristotle and Aquinas both rebuked it. Dante sent moneylenders to the seventh circle of hell. None of these efforts did much to stem the practice, but they do reveal that the unprincipled act of trapping the poor in a cycle of debt has existed at least as long as the written word. It might be the oldest form of exploitation after slavery. Many writers have depicted America’s poor as unseen, shadowed and forgotten people: as “other” or “invisible.” But markets have never failed to notice the poor, and this has been particularly true of the market for money itself.
 
The deregulation of the banking system in the 1980s heightened competition among banks. Many responded by raising fees and requiring customers to carry minimum balances. In 1977, over a third of banks offered accounts with no service charge. By the early 1990s, only 5 percent did. Big banks grew bigger as community banks shuttered, and in 2021, the largest banks in America charged customers almost $11 billion in overdraft fees. Just 9 percent of account holders paid 84 percent of these fees. Who were the unlucky 9 percent? Customers who carried an average balance of less than $350. The poor were made to pay for their poverty.
 
In 2021, the average fee for overdrawing your account was $33.58. Because banks often issue multiple charges a day, it’s not uncommon to overdraw your account by $20 and end up paying $200 for it. Banks could (and do) deny accounts to people who have a history of overextending their money, but those customers also provide a steady revenue stream for some of the most powerful financial institutions in the world.
 
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. Where there is exclusion, there is exploitation. Unbanked Americans have created a market, and 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. That means that a worker who is paid $10 an hour and takes a $1,000 check to a check-cashing outlet will pay $10 to $100 just to receive the money he has earned, effectively losing one to 10 hours of work. (For many, this is preferable to the less-predictable exploitation by traditional banks, with their automatic overdraft fees. It’s the devil you know.) 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. And when the inevitable happens — when you lose hours at work or when the car refuses to start — the payday-loan industry steps in.
 
For most of American history, regulators prohibited lending institutions from charging exorbitant interest on loans. Because of these limits, banks kept interest rates between 6 and 12 percent and didn’t do much business with the poor, who in a pinch took their valuables to the pawnbroker or the loan shark. But the deregulation of the banking sector in the 1980s ushered the money changers back into the temple by removing strict usury limits. Interest rates soon reached 300 percent, then 500 percent, then 700 percent. Suddenly, some people were very interested in starting businesses that lent to the poor. In recent years, 17 states have brought back strong usury limits, capping interest rates and effectively prohibiting payday lending. But the trade thrives in most places. The annual percentage rate for a two-week $300 loan can reach 460 percent in California, 516 percent in Wisconsin and 664 percent in Texas.
 
Roughly a third of all payday loans are now issued online, and almost half of borrowers who have taken out online loans have had lenders overdraw their bank accounts. The average borrower stays indebted for five months, paying $520 in fees to borrow $375. Keeping people indebted is, of course, the ideal outcome for the payday lender. It’s how they turn a $15 profit into a $150 one. Payday lenders do not charge high fees because lending to the poor is risky — even after multiple extensions, most borrowers pay up. Lenders extort because they can.
 
Every year: almost $11 billion in overdraft fees, $1.6 billion in check-cashing fees and up to $8.2 billion in payday-loan fees. That’s more than $55 million in fees collected predominantly from low-income Americans each day — not even counting the annual revenue collected by pawnshops and title loan services and rent-to-own schemes. When James Baldwin remarked in 1961 how “extremely expensive it is to be poor,” he couldn’t have imagined these receipts.
 
“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.
 
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. For example, when legislation lifts incomes at the bottom without addressing the housing crisis, those gains are often realized instead by landlords, not wholly by the families the legislation was intended to help. A 2019 study conducted by the Federal Reserve Bank of Philadelphia found that when states raised minimum wages, families initially found it easier to pay rent. But landlords quickly responded to the wage bumps by increasing rents, which diluted the effect of the policy. This happened after the pandemic rescue packages, too: When wages began to rise in 2021 after worker shortages, rents rose as well, and soon people found themselves back where they started or worse.

 

 


Antipoverty programs work. Each year, millions of families are spared the indignities and hardships of severe deprivation because of these government investments. But our current antipoverty programs cannot abolish poverty by themselves. The Johnson administration started the War on Poverty and the Great Society in 1964. These initiatives constituted a bundle of domestic programs that included the Food Stamp Act, which made food aid permanent; the Economic Opportunity Act, which created Job Corps and Head Start; and the Social Security Amendments of 1965, which founded Medicare and Medicaid and expanded Social Security benefits. Nearly 200 pieces of legislation were signed into law in President Lyndon B. Johnson’s first five years in office, a breathtaking level of activity. And the result? Ten years after the first of these programs were rolled out in 1964, the share of Americans living in poverty was half what it was in 1960.
 
But the War on Poverty and the Great Society were started during a time when organized labor was strong, incomes were climbing, rents were modest and the fringe banking industry as we know it today didn’t exist. Today multiple forms of exploitation have turned antipoverty programs into something like dialysis, a treatment designed to make poverty less lethal, not to make it disappear.
 
This means we don’t just need deeper antipoverty investments. We need different ones, policies that refuse to partner with poverty, policies that threaten its very survival. We need to ensure that aid directed at poor people stays in their pockets, instead of being captured by companies whose low wages are subsidized by government benefits, or by landlords who raise the rents as their tenants’ wages rise, or by banks and payday-loan outlets who issue exorbitant fines and fees. Unless we confront the many forms of exploitation that poor families face, we risk increasing government spending only to experience another 50 years of sclerosis in the fight against poverty.
 
The best way to address labor exploitation is to empower workers. A renewed contract with American workers should make organizing easy. As things currently stand, unionizing a workplace is incredibly difficult. Under current labor law, workers who want to organize must do so one Amazon warehouse or one Starbucks location at a time. We have little chance of empowering the nation’s warehouse workers and baristas this way. This is why many new labor movements are trying to organize entire sectors. The Fight for $15 campaign, led by the Service Employees International Union, doesn’t focus on a single franchise (a specific McDonald’s store) or even a single company (McDonald’s) but brings together workers from several fast-food chains. It’s a new kind of labor power, and one that could be expanded: If enough workers in a specific economic sector — retail, hotel services, nursing — voted for the measure, the secretary of labor could establish a bargaining panel made up of representatives elected by the workers. The panel could negotiate with companies to secure the best terms for workers across the industry. This is a way to organize all Amazon warehouses and all Starbucks locations in a single go.
 
Sectoral bargaining, as it’s called, would affect tens of millions of Americans who have never benefited from a union of their own, just as it has improved the lives of workers in Europe and Latin America. The idea has been criticized by members of the business community, like the U.S. Chamber of Commerce, which has raised concerns about the inflexibility and even the constitutionality of sectoral bargaining, as well as by labor advocates, who fear that industrywide policies could nullify gains that existing unions have made or could be achieved only if workers make other sacrifices. Proponents of the idea counter that sectoral bargaining could even the playing field, not only between workers and bosses, but also between companies in the same sector that would no longer be locked into a race to the bottom, with an incentive to shortchange their work force to gain a competitive edge. Instead, the companies would be forced to compete over the quality of the goods and services they offer. Maybe we would finally reap the benefits of all that economic productivity we were promised.
 
We must also expand the housing options for low-income families. There isn’t a single right way to do this, but there is clearly a wrong way: the way we’re doing it now. One straightforward approach is to strengthen our commitment to the housing programs we already have. Public housing provides affordable homes to millions of Americans, but it’s drastically underfunded relative to the need. When the wealthy township of Cherry Hill, N.J., opened applications for 29 affordable apartments in 2021, 9,309 people applied. The sky-high demand should tell us something, though: that affordable housing is a life changer, and families are desperate for it.




 
We could also pave the way for more Americans to become homeowners, an initiative that could benefit poor, working-class and middle-class families alike — as well as scores of young people. Banks generally avoid issuing small-dollar mortgages, not because they’re riskier — these mortgages have the same delinquency rates as larger mortgages — but because they’re less profitable. Over the life of a mortgage, interest on $1 million brings in a lot more money than interest on $75,000. This is where the federal government could step in, providing extra financing to build on-ramps to first-time homeownership. In fact, it already does so in rural America through the 502 Direct Loan Program, which has moved more than two million families into their own homes. These loans, fully guaranteed and serviced by the Department of Agriculture, come with low interest rates and, for very poor families, cover the entire cost of the mortgage, nullifying the need for a down payment. Last year, the average 502 Direct Loan was for $222,300 but cost the government only $10,370 per loan, chump change for such a durable intervention. Expanding a program like this into urban communities would provide even more low- and moderate-income families with homes of their own.
 
We should also ensure fair access to capital. Banks should stop robbing the poor and near-poor of billions of dollars each year, immediately ending exorbitant overdraft fees. As the legal scholar Mehrsa Baradaran has pointed out, when someone overdraws an account, banks could simply freeze the transaction or could clear a check with insufficient funds, providing customers a kind of short-term loan with a low interest rate of, say, 1 percent a day.
 
States should rein in payday-lending institutions and insist that lenders make it clear to potential borrowers what a loan is ultimately likely to cost them. Just as fast-food restaurants must now publish calorie counts next to their burgers and shakes, payday-loan stores should publish the average overall cost of different loans. When Texas adopted disclosure rules, residents took out considerably fewer bad loans. If Texas can do this, why not California or Wisconsin? Yet to stop financial exploitation, we need to expand, not limit, low-income Americans’ access to credit. Some have suggested that the government get involved by having the U.S. Postal Service or the Federal Reserve issue small-dollar loans. Others have argued that we should revise government regulations to entice commercial banks to pitch in. Whatever our approach, solutions should offer low-income Americans more choice, a way to end their reliance on predatory lending institutions that can get away with robbery because they are the only option available.
 
In Tommy Orange’s novel, “There There,” a man trying to describe the problem of suicides on Native American reservations says: “Kids are jumping out the windows of burning buildings, falling to their deaths. And we think the problem is that they’re jumping.” The poverty debate has suffered from a similar kind of myopia. For the past half-century, we’ve approached the poverty question by pointing to poor people themselves — posing questions about their work ethic, say, or their welfare benefits — when we should have been focusing on the fire. The question that should serve as a looping incantation, the one we should ask every time we drive past a tent encampment, those tarped American slums smelling of asphalt and bodies, or every time we see someone asleep on the bus, slumped over in work clothes, is simply: Who benefits? Not: Why don’t you find a better job? Or: Why don’t you move? Or: Why don’t you stop taking out payday loans? But: Who is feeding off this?



 
Those who have amassed the most power and capital bear the most responsibility for America’s vast poverty: political elites who have utterly failed low-income Americans over the past half-century; corporate bosses who have spent and schemed to prioritize profits over families; lobbyists blocking the will of the American people with their self-serving interests; property owners who have exiled the poor from entire cities and fueled the affordable-housing crisis. Acknowledging this is both crucial and deliciously absolving; it directs our attention upward and distracts us from all the ways (many unintentional) that we — we the secure, the insured, the housed, the college-educated, the protected, the lucky — also contribute to the problem.
 
Corporations benefit from worker exploitation, sure, but so do consumers, who buy the cheap goods and services the working poor produce, and so do those of us directly or indirectly invested in the stock market. Landlords are not the only ones who benefit from housing exploitation; many homeowners do, too, their property values propped up by the collective effort to make housing scarce and expensive. The banking and payday-lending industries profit from the financial exploitation of the poor, but so do those of us with free checking accounts, as those accounts are subsidized by billions of dollars in overdraft fees.
 
Living our daily lives in ways that express solidarity with the poor could mean we pay more; anti-exploitative investing could dampen our stock portfolios. By acknowledging those costs, we acknowledge our complicity. Unwinding ourselves from our neighbors’ deprivation and refusing to live as enemies of the poor will require us to pay a price. It’s the price of our restored humanity and renewed country.
 
Matthew Desmond is a professor of sociology at Princeton University and a contributing writer for the magazine. His latest book, “Poverty, by America,” from which this article is adapted, is being published on March 21 by Crown.
 
Why Poverty Persists in America. By Matthew Desmond. The New York Times, March 13, 2023.




In this discussion, Matthew Desmond presents his new book and is joined by leading UK experts to discuss what can be done to eradicate poverty in both the UK and United States, in the historic Toynbee Hall.
 
Panellists: Chaired by Dr Omar Khan, Director, TASO and incoming chair of Trust for London,
Matthew Desmond, sociologist and the Maurice P. During Professor of Sociology at Princeton University,  Shami Chakrabarti, Labour Peer, former shadow AG and former director of Liberty, and human rights campaigner, Peter Brierley, assistant director, Citizens UK
 
Poverty, by America - In conversation with Matthew Desmond. Trust For London, March 13, 2023. 



What if we told you socialism does exist - but only for rich people? The acclaimed Pulitzer Prize-winning author Matthew Desmond has a new book - Poverty, by America - and it answers big questions. Why do we spend lots on dealing with poverty, but without solving it? How has poverty become a profitable industry? Why is it so expensive to be poor? And can we really abolish poverty?


Owen Jones, March 17, 2023. 





 

Books about poverty tend to be books about the poor,” the sociologist Matthew Desmond writes in “Poverty, by America” (Crown). That’s true whether the motivation is to blame the poor for their lot—chronicling the supposed pathologies creating a “culture of poverty”—or, more commonly nowadays, to generate empathy via detailed ethnographies of survival and agency amid deprivation. It was true of the first books that set out to systematically map and measure poverty, such as the Victorian reformer Charles Booth’s seventeen-volume “Life and Labour of the People in London,” and of Progressive Era attempts to rattle the consciences of the well-off, like Jacob Riis’s document of New York tenement life, “How the Other Half Lives.”
 
When Michael Harrington wrote his 1962 classic, “The Other America,” a work of morally charged narrative nonfiction often credited with helping to inspire the War on Poverty, his aim was to reveal the “socially invisible” poor to the rest of America. A cocoon of postwar prosperity and complacency, he wrote, blinkered “middle-class women coming in from Suburbia on a rare trip,” who might “catch the merest glimpse of the other America on the way to an evening at the theater”; it also blinkered “the business or professional man,” who might “drive along the fringes of slums in a car or bus” without regarding it as “an important experience.” The book’s dominant rhetorical modes, as Harrington’s biographer Maurice Isserman notes, were paradox and revelation. If the scales were pulled from the eyes of his well-meaning readers, they would see, in the shadows of American plenty, tens of millions of poor people, whom Harrington catalogued and described: rural poor, city-dwelling slum poor, alcoholic skid-row poor, and so on—all of them urgently needing the help of the government and liberal élites. Even a book like Charles Murray’s “Losing Ground,” an influential neocon attack on “welfare dependency,” from 1984, focussed on the poor themselves, if only so that Murray might make an argument about how they had immiserated themselves by adapting to anti-poverty policies.
 
Desmond’s terrific previous book, “Evicted” (2016), is emphatically about the lives of the poor. It followed eight struggling families trying to stay housed in Milwaukee, where, in the poorest neighborhoods, “median rent for a two-bedroom apartment was only $50 less than the citywide median.” Families were spending up to seventy per cent of their monthly incomes on housing that might have stopped-up plumbing, broken windows, filthy carpets, and front doors that wouldn’t lock. And when they fell behind on rent for any of the multitude of reasons that people living precariously do—a trip to the emergency room, an unexpected car repair, a steep utility bill paid to keep the lights or the heat on—they faced the chaos and humiliation of eviction.
 
“Evicted” illuminated big and sometimes novel themes: the outsized role of housing costs in the creation and perpetuation of poverty across the nation, the fact that evictions had become so common that businesses found ways to profit from them (moving companies, for instance, would extract the last of a tenant’s belongings, down to the shower curtain in the bathroom, and place them in storage, which would cost more than many tenants had to reclaim them). But the book’s power resided in its stories, which Desmond told with a keen eye for detail and scene-setting drama. His reporting was intimate and particular. “Jori and his cousin were cutting up, tossing snowballs at passing cars,” reads the first line of the book’s prologue, evocatively named “Cold City.” One of those snowballs proved fateful: the driver of the car it hit got mad, and kicked in the door of Jori’s mom’s apartment; the landlord evicted the family.
 
 “Evicted,” which won the Pulitzer Prize for general nonfiction, was almost universally acclaimed, praised especially for the vividness of its portraiture. So it’s brave, in a way, that Desmond has chosen such a different approach for his bracing new book. Books about the poor are vital, he says; they do the important work of “bearing witness.” But “Poverty, by America,” he explains, is a book about how and why the rest of us abide poverty and are complicit in it. Why do many of us seem to accept that the problem is one of scarcity—that there is simply not enough to go around in our very rich country? Where there is exploitation, there are exploiters, and this time Desmond sees many more of them, including most of his prospective readers. Corporations batten on low-wage labor, but so do consumers, who have come to expect the cheap goods and services—the illusorily frictionless food deliveries, the Amazon orders that arrive like conjuring tricks the afternoon you place them—that poorly paid, nonunionized, often temporary workers provide.
 
“Landlords are not the only ones who benefit from housing exploitation; many homeowners do, too, their property values propped up by the collective effort to make housing scarce and expensive,” Desmond writes, noting that most homeowners receive federal aid in the form of mortgage-interest deductions and other subsidies. (The payout to homeowners in 2020—a hundred and ninety-three billion dollars—far exceeded the fifty-three billion dollars in direct housing assistance that the government gave to low-income families.) “We need not be debt collectors or private prison wardens to play a role in producing poverty in America,” Desmond goes on. “We need only to vote yes on policies that lead to private opulence and public squalor and, with that opulence, build a life behind a wall that we tend and maintain.”
 
More manifesto than narrative, “Poverty, by America” is urgent and accessible. It’s also austere. There aren’t many stories about individuals; Desmond seems to dole these out with purposeful spareness, perhaps so that we won’t get distracted by them. But the one he tells about himself is affecting. Before he went to graduate school at the University of Wisconsin, or won a MacArthur, or became a professor at Princeton, Desmond grew up outside a little town near Flagstaff, Arizona, living with his family in a modest wood-panelled house that he loved. Then his father, a pastor, lost his job, and the bank took the family’s home. “Mostly I blamed Dad,” he writes. “But a part of me also wondered why this was our country’s answer when a family fell on hard times.” He kept wondering while he was in college, using scholarships and loans, at Arizona State University, supporting himself as a barista, a telemarketer, and a wildland firefighter. The question compelled him to write “Evicted.” Behind that question, always, were the bigger questions that animate this new book: How is it that the United States, a country with a gross domestic product “larger than the combined economies of Japan, Germany, the United Kingdom, India, France, and Italy,” has a higher relative poverty rate than those other advanced democracies? Why do one in eight Americans, and one in six children, live in poverty—a rate about the same as it was in 1970? Why do we put up with it?
 
The short answer, Desmond argues, is that as a society we have made a priority of other things: maximal wealth accumulation for the few and cheap stuff for the many. At the same time, we’ve either ignored or enabled the gouging of the poor—by big banks that charge them stiff overdraft fees, by predatory payday lenders and check-cashing outlets of what Desmond calls the “fringe banking industry,” by landlords who squeeze their tenants because the side hustle of rent collecting has turned into their main hustle, by companies that underpay their workers or deny them benefits by confining them to gig status or that keep them perpetually off balance with “just-in-time scheduling” of shifts. To the extent that middle- and upper-class people unthinkingly buy products from such companies and invest in their stock, or park their money in those banks, or oppose public housing in their neighborhoods despite a professed commitment to it, or bid up the prices of fixer-uppers in Austin or San Francisco or Washington, D.C., they, too, are helping to buttress the system.
 
You might assume that government action would do more to help, maybe even to lower the poverty rate. Programs like food stamps, the Earned Income Tax Credit, and Temporary Assistance for Needy Families are lifelines for many. Recent research suggests that even public housing, much maligned, is strikingly beneficial for the families that can get a spot, which can involve a years-long wait. The intimidating towers are now far outnumbered by more dispersed and approachable low-rises. Children who grow up in public housing show lower lead levels in their bloodstreams, more robust mental health, and better results in school than those whose families are scraping by in the private housing market, according to a trio of recent studies; a fourth study, published last year in the American Economic Journal, found that kids who’d lived in public housing had higher incomes and lower rates of incarceration as young adults. Moreover, it turns out that the United States is not all that tightfisted when it comes to social spending. “If you count all public benefits offered by the federal government, America’s welfare state (as a share of its gross domestic product) is the second biggest in the world, after France’s,” Desmond tells us. Why doesn’t this largesse accomplish more?
 
For one thing, it unduly assists the affluent. That statistic about the U.S. spending almost as much as France on social welfare, he explains, is accurate only “if you include things like government-subsidized retirement benefits provided by employers, student loans and 529 college savings plans, child tax credits, and homeowner subsidies: benefits disproportionately flowing to Americans well above the poverty line.” To enjoy most of these, you need to have a well-paying job, a home that you own, and probably an accountant (and, if you’re really in clover, a money manager).
 
 
 
“The American government gives the most help to those who need it least,” Desmond argues. “This is the true nature of our welfare state, and it has far-reaching implications, not only for our bank accounts and poverty levels, but also for our psychology and civic spirit.” Americans who benefit from social spending in the form of, say, a mortgage-interest tax deduction don’t see themselves as recipients of governmental generosity. The boon it offers them may be as hard for them to recognize and acknowledge as the persistence of poverty once was to Harrington’s suburban housewives and professional men. These Americans may be anti-government and vote that way. They may picture other people, poor people, as weak and dependent and themselves as hardworking and upstanding. Desmond allows that one reason for this is that tax breaks don’t feel the same as direct payments. Although they may amount to the same thing for household incomes and for the federal budget—“You can benefit a family by lowering its tax burden or by increasing its benefits, same difference”—they are associated with an obligation and a procedure that Americans, in particular, find onerous. Tax-cutting Republican lawmakers want the process to be both difficult and Swiss-cheesed with loopholes. (“Taxes should hurt,” Ronald Reagan once said.) But that’s not the only reason. What Desmond calls the “rudest explanation” is that if, for whatever reason, we get a tax break, most of us like it. That’s the case for people affluent and lucky enough to take advantage of the legitimate breaks designed for their benefit, and for the wily super-rich who game the system with expensive lawyering and ingenious use of tax shelters.
 
And there are other ways, Desmond points out, that government help gets thwarted or misdirected. When President Clinton instituted welfare reform, in 1996, pledging to “transform a broken system that traps too many people in a cycle of dependence,” an older model, Aid to Families with Dependent Children, or A.F.D.C., was replaced by Temporary Assistance for Needy Families, or TANF. Where most funds administered by A.F.D.C. went straight to families in the form of cash aid, TANF gave grants to states with the added directive to promote two-parent families and discourage out-of-wedlock childbirth, and let the states fund programs to achieve those goals as they saw fit. As a result, “states have come up with rather creative ways to spend TANF dollars,” Desmond writes. “Nationwide, for every dollar budgeted for TANF in 2020, poor families directly received just 22 cents. Only Kentucky and the District of Columbia spent over half of their TANF funds on basic cash assistance.” Between 1999 and 2016, Oklahoma directed more than seventy million dollars toward initiatives to promote marriage, offering couples counselling and workshops that were mostly open to people of all income levels. Arizona used some of the funds to pay for abstinence education; Pennsylvania gave some of its TANF money to anti-abortion programs. Mississippi treated its TANF funds as an unexpected Christmas present, hiring a Christian-rock singer to perform at concerts, for instance, and a former professional wrestler—the author of an autobiography titled “Every Man Has His Price”—to deliver inspirational speeches. (Much of this was revealed by assiduous investigative reporters, and by a 2020 audit of Mississippi’s Department of Human Services.) Moreover, because states don’t have to spend all their TANF funds each year, many carry over big sums. In 2020, Tennessee, which has one of the highest child-poverty rates in the nation, left seven hundred and ninety million dollars in TANF funds unspent.
 
“Poverty, by America” is a slim book, at fewer than three hundred pages of text, but it’s packed with revelations like these—and with statistics and studies, though, fortunately, a reader need never find herself stranded in a thicket of them. (Seventy-odd pages of endnotes help take care of that problem.) Desmond writes particularly well about the ways in which the poor—though they’re said to be hidden from the rest of us—have never escaped the notice of the markets. For years, big banks treated overdraft fees as a reliable stream of income, extracted from the chronically overdrawn. In 2020, the average fee for overdrawing your account was $33.58, and, because banks can charge these fees multiple times a day, a tiny overdraft can rack up fees of more than a hundred dollars in a matter of hours. Payday-loan stores and check-cashing outlets step in where banks fear to tread, and make good money off the venture. (Unlike traditional banks, they are more common in low-poverty Black neighborhoods than in high-poverty white ones. Black and Hispanic families are five times as likely to have no bank account as white families are.) The reason these lenders charge extortionate fees is, Desmond says, not that the poor are such risky prospects—most payday borrowers ultimately pay back the loans—but that, in a market where the poor have little choice, it’s easy to make money off them. Desmond quotes an observation of James Baldwin’s to this point: “Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”
 
And Desmond offers solutions as well, scattered throughout the book and exhibiting varying levels of ambition. The relatively simple ones include helping people claim the aid owed to them. Less than a quarter of families eligible for TANF cash receive it; less than half of elderly Americans who could apply for food stamps do. The phenomenon is so widespread across social programs that Desmond maintains it’s more appropriate to speak of welfare avoidance than of welfare dependency. Yet there are small fixes that have been shown to make a difference, including better-designed applications and targeted assistance with filling out forms. The harder goals include raising the federal minimum wage from $7.25 an hour, a rate at which it has been lodged since 2009, and having the Secretary of Labor oversee its regular resetting—a method closer to what many other countries do—rather than waiting for Congress to act. Other measures: supporting unions, still the best way to empower workers; calling on states to better regulate payday lending; making sure that people have access to contraception and abortion (a little tricky these days), since these are proven ways of keeping women and children out of poverty; making it easier for the poor to become homeowners—monthly mortgage payments are generally far less than rent—by getting the government to provide additional backing for small mortgages when banks won’t offer them (a program that encourages rural homeownership in this way already exists); creating more public housing so that people don’t have to languish on waiting lists; eliminating exclusionary zoning policies that ban apartments or other multifamily dwellings in higher-income neighborhoods; making sure that developers are then given incentives—through tax relief, for example—to set aside percentages of the housing for low-income families.
 
That last part is important: you don’t want a scenario in which rich developers get richer off industrial-chic condos designed for moneyed singles, while city officials congratulate themselves on their commitment to urban density. And it’s tough to pull off. Desmond cites New Jersey as having become a leader in this regard, ever since its Supreme Court issued a series of rulings, in the nineteen-seventies and eighties, that produced what’s known as the Mount Laurel doctrine, requiring municipalities to offer a “fair share” of affordable housing—the fair share varying by a town’s income distribution. He says that the policy has forced hundreds of towns in New Jersey to “break ground on affordable housing developments.” (Unfortunately, as he doesn’t say, the Mount Laurel doctrine has also been somewhat undercut by elected officials, cleverly exploited by developers, including the Kushner family, and slowed by litigation. Still, it’s a start.)
 
Finally, Desmond wants us to think of ourselves as “poverty abolitionists.” He wants us to bear in mind a company’s labor policies when we make decisions about where to invest and what to buy; to conquer nimby-ish instincts and welcome true economic diversity in our neighborhoods and schools; to think about and act on our own roles in perpetuating income inequality. “The goal is singular—to end the exploitation of the poor—but the means are many,” he writes. It’s an appealingly ad-hoc and flexible approach.
 
In part because this book is aimed at the hearts and minds of the widest possible swath of readers, it doesn’t have much to say about politics. To be a poverty abolitionist means avoiding businesses that don’t treat their workers fairly, as some people shun businesses that contribute to global warming or promote tobacco products or engage in animal cruelty. But, in the absence of politically organized public boycotts, such actions won’t be legible to companies. If, on my own, I stop mailing packages by FedEx and switch to UPS—FedEx employees generally aren’t unionized, Desmond points out, while UPS employees generally are—will anybody notice? Perhaps because Congress and many state governments are in the hands of a Republican Party that sees the mildest adjustments of pure market forces as redistributive pit stops on the road to socialist hell, it’s discouraging to talk about electoral or legislative politics. Activists and elected officials who want to take up his proposals will have to devise their own strategy.
 
In this book, anyway, Desmond mostly sets aside the kind of systemic explanations—deindustrialization, globalization, neoliberal ideology, even capitalism itself—that have held sway in progressive circles for a long time now. “We typically don’t talk about poverty as a condition that benefits some of us,” he writes. “It seems we prefer more absolving theories of the problem. There is, of course, the old habit of blaming the poor for their own miseries, as if Americans were made of lesser stuff than people in countries with far less poverty. But structural explanations are more in fashion these days, explanations that trace widespread poverty back to broken institutions and seismic economic transformations.” At times, Desmond’s dismissal of such analysis seems too quick. He complains about the passivity of a word like “deindustrialization,” the way it can make the phenomenon sound like an unintentional calamity. Fair enough, but it’s still a useful term (and one that he relied on in “Evicted,” to discuss the loss of manufacturing jobs in Milwaukee).
 
In fact, one of the more encouraging findings Desmond cites is a 2020 Pew survey showing that a large majority of Americans have come to blame structural obstacles, not personal failings, for poverty, and to believe that most of the rich got that way not through hard work but through advantages. That’s a big shift in a country that has long been enamored of bootstrap mythology. It seems like a precondition for taking poverty abolition seriously and believing it to be possible. And presumably some of that shift can be attributed to structural analysis of inequality and the way it has trickled down into familiar talk about the one per cent. Moreover, even if, as he notes, “systemic” racism and poverty are “made up of untold numbers of individual decisions motivated by real or imagined self-interest,” some kinds of self-interest—that of international corporations, for example—are a lot more powerful than other kinds.
 
Still, Desmond is right to warn us that a dependence on such buzzwords can have the effect of excusing us, soothing away the apprehension that those of us who abhor such forces are getting something out of their machinations nonetheless. And it’s refreshing to read a work of social criticism that eschews the easy and often smug allure of abstraction, in favor of plainspoken practicality. “Poverty, by America” deserves to be one of those books you see people reading on the subway, or handing around at organizing meetings, or citing in congressional hearings. Its moral force is a gut punch.
 
How America Manufactures Poverty. By Margaret Talbot. The New Yorker, March 13, 2023. 



By viewer request, I am responding to this NYT opinion piece, which is also an excerpt of a book, from Matthew Desmond. As the title suggest, Desmond lays out his view on why poverty persists in America. I think the piece is a bit of a mess and Desmond has mostly gone down the wrong path when it comes to understanding poverty.

 
Response to Matthew Desmond's "Why Poverty Persists in America". Matt Bruenig, March 14, 2023. 







After Matthew Desmond won the Pulitzer for Evicted, about families struggling to stay housed, the Princeton sociologist realized he still didn't understand why the U.S. has more poverty than any other advanced democracy.
 
His new book Poverty, By America, provides a provocative and compelling answer: It's because the rest of us benefit from it, and act to keep it that way.
 
Desmond admits it feels rude to accuse ordinary people of exploiting others, especially as many don't even realize they're doing it. But he says to understand poverty requires examining not just the relentlessly demonized 1% but "ourselves ... we the secure, the insured, the housed, the college educated, the protected, the lucky."
 
This means Poverty, By America is not an immersive attempt to bear witness to suffering like Evicted. Instead, Desmond lays out public policies, laws, and tax breaks to show how the U.S. actually spends big on social programs — second only to France! — but gives the most to those who need it the least. Welfare dependency? Yes indeed, for the richer half.
 
He packs in a sweeping array of examples and numbers to support his thesis and it can be overwhelming to absorb. But the accumulation has the effect of shifting one's brain ever so slightly to change the entire frame of reference.
 
One example among many he offers: In 2020, the federal government spent more than $193 billion on subsidies for homeowners — "most families who enjoy this benefit have six-figure incomes and are white" — but just $53 billion on direct housing assistance for low-income families. That's not for lack of need. Because of chronic federal underinvestment, only 1 in 4 extremely low-income Americans who qualify for housing aid get it.
 
Desmond notes that more affluent Americans also disproportionately benefit from subsidized retirement and college savings plans. Exclusionary zoning laws keep their segregated neighborhoods prosperous with well-funded schools, while concentrating poverty elsewhere.
 
Meanwhile, lower-income families locked out of those neighborhoods — disproportionately Black and Latinx — pay more at every turn. Higher interest rates on mortgages when they can get one — and higher rent when they can't. Desmond's analysis finds U.S. landlords in poor neighborhoods typically make double the profit as those in richer ones. Poor people are also hit with billions in bank overdraft fees every year, a policy that became more widespread after banking deregulation in the 1980s.
 
These inequities and others are self-perpetuating. The wealthy have more political power, Desmond says, and wield it by lobbying for lower taxes, lower wages, and other laws that give them even more money and power.
 
When it comes to solutions, Poverty, By America first offers its own reality check.
 
Two of the biggest U.S. anti-poverty programs are the Earned Income Tax Credit and housing vouchers to subsidize rent. But Desmond says writing this book has forced him to see how they "rescue millions of families from a social ill, but they do nothing to address its root causes." The tax credit allows companies to keep wages low, he says, and housing vouchers don't keep landlords from raising rent when their tenants' wages go up.
 
"We need to ensure that aid directed at poor people stays in their pockets," he says.
 
To that end, Desmond calls for policies that give the poor more power in the workplace and housing market, and sees hope in the growing push for unions and a resurgent tenants rights movement.
 
He also wants a return to bigger investments in the general welfare, which he says would amount to "more poor aid and less rich aid" and less segregation. How to pay? "We could just about fill the entire poverty gap in America if the richest among us simply paid all the taxes they owed," he says.
 
The IRS recently did get more money to go after rich tax dodgers. Maybe it's a start.
 
But by this point in the book, Desmond has made crystal clear just how difficult it is to change policies that keep so many cozy in their relative prosperity. In 2015, President Obama proposed ending the tax credits in 529 college savings plan; the uproar from his own party was so intense that it was quashed the next day.
 
Then Desmond suggests something that felt contrived at first, but stuck with me and seems smart for this moment. Taking a cue from the anti-racist push and consumer movements, he says Americans can join to create change by being "poverty abolitionists."
 
"Poverty in America is not simply the result of actions taken by Congress and corporate boards," he says, "but the millions of decisions we make each day when going about our business."
 
Changing those decisions can be simple, like choosing UPS over FedEx because their drivers are unionized. Or more disruptive, like examining whether your company exploits workers or your stock market portfolio includes some that do.
 
Of course, for those who are able, investing and buying to counter poverty can be time consuming and even costly. But Desmond says it's precisely in understanding those costs that we acknowledge our shared complicity.
 
'Poverty, By America' shows how the rest of us benefit by keeping others poor. By Jennifer Ludden. NPR, March 17, 2023. 




Matthew Desmond, a MacArthur “genius grant” recipient and Pulitzer winner, is at a restaurant at the corner of Ninth Avenue and 25th Street in Manhattan. He has taken the train up from Princeton University, where he teaches sociology and runs a data lab, for this interview—something he didn’t need to do.
 
Smiling easily in a light gray sweater that matches his silvering hair, Desmond says offhand that he’s been on so many video calls over the past year that he was eager to meet face-to-face. It’s a simple enough statement, but in this case it offers a clue as to what makes Desmond tick: he seems to possess a powerful intuition that the best way to understand anything is to encounter it firsthand.
 
Desmond was catapulted from promising young professor (he won his MacArthur in 2015) to one of the country’s leading authorities on poverty with the 2016 publication of his bestselling Evicted: Poverty and Profit in the American City.
 
In March, Crown will release his next book, Poverty, by America, in which Desmond takes a big swing at diagnosing why poverty exists in this country. His conclusion: we could, as a society, alleviate poverty—if only we had the stomach to give up benefitting from poverty ourselves.
 
Why is there poverty in the first place? It’s a question that has animated Desmond’s work since graduate school. “There was something about the poverty debate that was bugging me,” he says. “There are all these books about poverty, and I started asking, Where’s the tension in the story? Who is the bad guy? Is there a bad guy? Are there really 38 million people in this country who are poor, and it’s no one’s fault?”
 
For Evicted, which grew out of the ethnographic research he did in Milwaukee while working on his PhD at the University of Wisconsin–Madison, Desmond realized he needed to ground this abstract question in a relationship between two real human beings. “That’s how I came upon writing about eviction,” he says. “That’s an ethnographic scene, where I can have landlords and tenants in the same room. And it turned out that eviction—unbeknownst to me—was something we just didn’t know a lot about.” He moved into a Milwaukee trailer park, and later an urban rooming house, and followed 10 tenants and landlords (eight made it into the final book) as they navigated poverty and eviction.
 
Writing about landlords and tenants came out of a need to see a problem firsthand, but it also reflected a keen writerly instinct for character and narrative tension. Desmond’s academic adviser had long encouraged him to write for an audience beyond the academy (years earlier, Desmond had turned his master’s thesis into a book titled On the Firelines), and soon Desmond was looking to turn his fieldwork in Milwaukee into a book for the trade.
 
“I met a lot of agents,” he recalls, “and a lot of the conversations went like this: ‘Let’s trim this paragraph and we’ll go to market. Let’s fix this thing and we’ll go to market.’ Power lunch agents.” Then he met Jill Kneerim, at what was then Kneerim, Williams, & Bloom. “Jill was just like, ‘This is crap. This doesn’t make any sense. This just isn’t working at all.’ She was like another dissertation adviser. She just handed me my ass all the time.”
 
Kneerim sold Evicted to Crown at auction, but Desmond’s work was far from over. The field work itself had been grueling—long days with his subjects, followed by long nights typing up his notes—and the process of writing the book wasn’t any easier.
 
“I got invited to give a talk in Paris,” Desmond says, “and I brought all this butcher paper there, and I had a coding mechanism for ‘this is exactly where this is in the field notes.’ I wrote all these themes, and then I had this other piece of butcher paper where I wrote all the ideas: Where am I going to talk about domestic violence? Where am I going to tell you about the racial disparities in eviction? And then I just connected the people to the ideas, and that’s how the book took shape.”
 
After Evicted came out, Desmond’s life changed dramatically. The attention, praise, and awards were gratifying, but he kept thinking of the relationships he’d formed with his subjects in Milwaukee. A Pulitzer was great, but how was it going to help Arleen—perhaps the most memorable character in Evicted—get out of poverty?
 
Desmond channeled his discomfort into action. “Publishing a book is step three of making a difference,” he says. “There’s all this follow-through work that was new to me.” That work brought him into a bigger national conversation about how to alleviate poverty, this time with policymakers who were actually in positions to effect change. He also started the Eviction Lab at Princeton, which compiled the first comprehensive data set of evictions in the U.S.
 
But eventually Desmond found himself thinking back to graduate school, and the question he used to ask himself about the origins of poverty: “I remember in my dissertation defense there was a scholar who asked this question, ‘What’s your theory of poverty?’ I should have an answer to that.” Perhaps this time he could try to tackle the question not as an ethnographer and sociologist, but as a public intellectual.
 
Poverty, by America is his answer. A departure from the narrative approach of Evicted, Poverty is as direct as a manifesto, with a message as damning as its title: Desmond argues that the problem of poverty in the richest country in the world isn’t unsolvable—it’s just that a bloc of highly entrenched, privileged citizens live comfortable lives that are enabled and
preserved by the systematic exploitation of the poor and powerless. Who are these people? Look in the mirror, Desmond argues; they’re us.
 
“I have a deep suspicion of theories of poverty that are just letting us off the hook,” he says. “The progressives have them, and the conservatives have them.” Abolishing poverty, he argues, will only be possible if we can face our own complicity in its existence.
 
Desmond points to recent changes in the national conversation around race as evidence that there’s a real opportunity for middle- and upper-middle-class people to begin examining that complicity critically. “I’ve given talks all over the country,” he says, “and America is ready for a different poverty conversation.” He hopes that Poverty will help launch it.
 
Kneerim died last year. Desmond visited her in a sunbathed hospice room, where she asked him what he was working on next. “She loved her work,” he says, moved by her singular focus even on her deathbed. “She really did believe ideas can change the world.”
 
Desmond believes that, too. When asked if he thinks his work will become more policy focused in the future, he says that the experience of Evicted helped clarify for him how he can best make a difference. “The last time I testified in front of Congress, I said we’ve got to have someone who was evicted testify. We brought this gentleman from Virginia who had stayed up all night working security, who then came to the House to testify. He didn’t have a jacket, so one of the staff let him borrow a jacket. And of course, he’s the one that everyone remembers. He took the air out of the room.”
 
“I want my writing to be read by policymakers,” Desmond adds. “I want to be in the meetings, but I’m getting to this place in my career where I think I’m a writer.” By elevating people like that security guard from Virginia—so that readers and policymakers alike can encounter the problem of poverty firsthand—he has realized that perhaps the most powerful thing someone in his position can do is get out of the way and let the powerless speak for themselves.
 

Poverty Could End. Matthew Desmond Doesn't Think America Wants It To. By Andy Kifer. Publishers Weekly, January 27, 2023




















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