Why Poverty Persists in America

A Pulitzer Prize-winning sociologist offers a new explanation for an intractable problem.

By Matthew Desmond
New York Times Magazine, March 9, 2023

[nytimes.com]

Gift article: [nytimes.com]

EXCERPTS

The American poor have access to cheap, mass-produced goods, as every American does. But that doesn’t mean they can access what matters most.

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.

We’ve approached the poverty question by pointing to poor people themselves, when we should have been focusing on exploitation.

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.

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.

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.

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.

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.

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.

Rent has more than doubled over the past two decades.

We need more housing; no one can deny that. But rents have jumped even in cities with plenty of apartments to go around.

National data also show that rental revenues have far outpaced property owners’ expenses in recent years, especially for multifamily properties in poor neighborhoods.

After accounting for all costs, landlords operating in poor neighborhoods typically take in profits that are double those of landlords operating in affluent communities.

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.

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.

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.

Poverty in America

• A Persistent Problem: Over the past 50 years, there has been no real progress on how to address poverty in the United States.

• A Sharp Drop in Child Poverty: America’s children have become much less poor. An expanded government safety net has played a critical role.

• Teen Births: Teen pregnancies have plummeted. Combined with the drop in child poverty, this has caused a profound change in the forces that bring opportunity between generations.

• Elder Poverty Rises: The poverty rate for older Americans increased in 2021, even as it sank for everyone else. Experts worry it may signal a broader setback in seniors’ financial security.