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?
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
