Poverty, by America (2023) delves into the paradoxical issue of poverty in the abundant country of the United States. It explores potential solutions to this pervasive issue, based on extensive research.
Introduction: Find out what can be done to end poverty in the United States.
Table of Contents
One in nine Americans. That’s how many people in the United States grapple with poverty. A whopping 38 million struggle to secure fundamental necessities; no less than one million public school kids are homeless, and at least 30 million people don’t have basic health insurance.
These figures become even more alarming when you take into account just how affluent the United States is. The country’s gross domestic product is so colossal that you could combine the economies of the third, fourth, fifth, sixth, seventh, and eighth wealthiest countries in the world, and the result would still fall short of the US’ economic prowess.
In a country that’s such a massive powerhouse, it’s puzzling why people continue to experience poverty. In 1970, just under 13 percent of the population was poor. Five decades later, that figure has only dropped marginally, to 10.5 percent.
Why is that so?
Well, what most people don’t realize is that poverty extends far beyond the issue of limited income. It’s a complex tapestry of material scarcity, interlinked with multiple social challenges, including housing, health and education.
In the summary ahead, we’ll delve into how these factors contribute to poverty, and what the government and community can do to abolish it.
End the exploitation of workers
If you think of worker exploitation, what comes to mind? Child laborers from former times, perhaps, or factory personnel in inhumane conditions? In some places, these atrocities still exist. But there are also modern-day versions of labor exploitation that many people are unaware of.
Firstly, there’s low wages. When you account for inflation, the wages earned by most Americans today are nearly the same as they were four decades ago. In fact, the annual increase in inflation-adjusted wages since 1979 has barely scratched the surface, edging up by a mere 0.3 percent. Even in 2020, at least one million workers were compensated with hourly wages that sat at or below the minimum of $7.25.
Unfortunately, corporations are reluctant to initiate wage increases themselves, fearing that increased labor costs might impact profits and, subsequently, their market value. To tackle this, Congress should take matters into its own hands. It needs to raise the minimum wage and prioritize it in the same way that it prioritized workplace safety regulations.
However, it’s crucial that the minimum wage is also reviewed and adjusted regularly, to keep pace with economic changes. Rather than depending exclusively on Congress, the authority to set the minimum wage should be delegated to the central government or a specifically appointed individual, such as the Secretary of Labor. Another more favorable strategy could involve empowering employees and employers to jointly negotiate and amend the minimum wage through collaborative bargaining agreements.
In addition to the concern over inadequate wages, temporary work also impacts economic well-being. Using temp agencies to fulfill their manpower requirements allows corporations to reduce their obligations to workers and increase their cost savings. For instance, tech company Apple boasts a global workforce of approximately 750,000 individuals. But a mere 63,000 of these are directly employed by the company itself.
Being an independent contractor or temp worker impacts an individual’s work benefits and compensation. These workers aren’t covered by employee benefits and minimum wage laws. They don’t get sick days, overtime pay, or even unemployment insurance. Additionally, temp workers can’t pursue promotions because they aren’t employed by the company in the first place.
How can independent contractors have a voice then? The answer lies in union power. Historically, unions have been instrumental in advocating for fair working conditions and compensation. Regrettably, organized labor saw its downfall in the early 1980s, when corporations realized they could easily onboard new hires to replace unionized workers who went on strike. Employers continue to obstruct unions today, threatening workers with business closure and job loss, and leaving a significant 94 percent of private sector workers without union representation.
Implementing new labor laws that streamline the process of organizing and promoting sectoral bargaining would address these disparities. An approach like this aims to organize workers not only within a single store or company but also across an entire sector. By doing so, a broader range of workers – encompassing both independent contractors and full-time employees – can gain empowerment.
Eradicate consumer exploitation
Exploitation doesn’t end when the poor clock out of work – it persists in their daily lives through so-called consumer exploitation.
Put simply, consumer exploitation happens when you pay more than something is worth. For instance, if a handmade bag is worth $25 but the vendor sold it to you for $100, you’re being exploited as a consumer.
Consumer exploitation takes on various forms in the lives of poor people, with one of the most evident examples arising within the rental housing industry. Across America, median rents have climbed at least 200 percent from 2000 to 2021, much faster than renters’ incomes. The worst part, however, is that rents in poor neighborhoods are not notably lower than those in more affluent communities. This is perplexing, since residences in poverty-stricken locations are often run-down and aging. And yet landlords in such communities can yield around double the profits compared to their counterparts in rich areas – a clear indication of them unfairly capitalizing on their properties.
A few strategies are available to eliminate exploitation in the housing sector. Firstly, the poor need to have more choices when it comes to deciding where to live. They could opt for public housing in complexes that come complete with fitness centers and swimming pools. However, for this welfare program to be effective, the government must first increase its existing funding to accommodate the overwhelming demand it already faces.
Secondly, low-income individuals could choose to own a home. Mortgage payments are often more affordable than rent, but unfortunately, banks refuse to finance inexpensive homes due to their lower profitability. Given these circumstances, the government can provide first-time homebuyers with expanded financing alternatives instead.
Finally, there’s the option to move into tenant-owned and operated apartments. These are housing units that tenants have purchased from their landlords and subsequently transformed into cooperatives. In doing so, negligent property owners are taken out of the equation, giving more power to the tenants themselves. Local authorities should get behind such efforts and support more tenant rights organizations and cooperatives.
Besides private property landlords, low-income people also fall victim to fringe institutions like check cashers and payday lenders. Check cashing services eat up one to ten percent of the total amount, resulting in workers losing a significant portion of their income. Conversely, payday lenders impose excessively high annual percentage rates, sometimes reaching 664 percent for a two-week $300 loan. While the rate doesn’t appear to be that absurd at first glance, an average borrower actually ends up with $520 in fees for a loan of $375, when extension fees are factored in.
Solving these fringe institution issues doesn’t necessarily entail eliminating them altogether. Instead, the poor should be provided with more credit alternatives to choose from. One viable approach could involve the Federal Reserve or the US Postal Service offering small-dollar loans. The government could also modify regulations to encourage commercial banks to offer such solutions as well.
Essentially, the antidote to exploitation is the provision of choices. The greater the range of options available to individuals, the lower the likelihood of them falling prey to exploitation.
With the prevailing poverty in the US, you’d think the government wasn’t doing anything to help. But in reality, there are a host of social safety net policies already in place, ranking the US as the country with the second largest welfare state system next to France.
Between the years 1980 and 2018, expenditures on antipoverty initiatives grew substantially by over 230 percent, to almost $3,500 per person. For the health coverage program Medicaid alone, federal government spending reached over $520 billion in 2021. Then, there’s the food stamps program that provides assistance to nine million Americans, and the unemployment insurance that supported over three million people throughout the COVID-19 pandemic. Income-boosting tax credits, like the Earned Income Tax Credit and Child Tax Credit, are two of the biggest antipoverty initiatives helping those in need today.
Unfortunately, there are a few concerns surrounding federal welfare programs. To begin with, many people are unaware that they’re eligible for government aid. And even if they are aware, the application process tends to be cumbersome. A telling example is Social Security Disability Insurance where merely a third of applications are granted approval. This compels individuals to resort to hiring a disability lawyer just to get approved. To combat this, the government should work on raising awareness and providing application assistance to increase enrollment rates.
On top of the uninformed masses and tedious application process, an even more pressing concern is that federal welfare programs often disproportionately benefit the upper classes more than the poor. Take homeowner subsidies, for instance. The initiative racked up spending of $193 billion in 2020, the majority of which went to families with six-figure incomes and those buying their second or third homes.
Tax breaks far exceeded this figure at $1.8 trillion in 2021, but around half of the benefits were enjoyed by the top 20 percent. Sure, income taxes are reduced for lower-income individuals, but not every kind of tax follows suit. With all taxes considered, there isn’t a remarkable disparity between the 25 percent that the poor pay in taxes, and the 28 percent that the rich do. Interestingly, the 400 wealthiest Americans pay the lowest rate – just 23 percent.
Raising the top marginal tax rate seems like the obvious solution. This could involve reinstating the 1986 rate of 50 percent. Corporate tax rates should go up, as well. Currently, they’re at their lowest in over eight decades – a mere 21 percent. They could instead follow the 35 percent of previous decades.
In addition to changing current tax laws, the government should intensify its efforts to address tax avoidance. Affluent households and multinational corporations utilize devious strategies to evade their tax obligations, costing the US at least a trillion dollars in unpaid taxes every year.
Putting a stop to this corrupt practice calls for Congress to provide the Internal Revenue Service with ample resources to actively pursue cheaters. The revenue generated from these efforts could be redirected to antipoverty initiatives, like ensuring safer and more affordable housing for the underprivileged, eradicating hunger in the country, and mitigating health-related challenges.
Integrate, not segregate
From the outside, it looks like modern-day America has significantly moved past the deep-seated racial divide that marked the 1900s. However, while the overt signs of segregation may have been diminished, a subtler, less visible form of segregation endures beneath the surface. This comes in the form of exclusionary zoning laws.
Exclusionary zoning laws dictate the types of properties allowed in residential areas. While they might appear to be reasonable regulations, a closer examination of these ordinances reveals that they’re actually designed to shut out specific groups of individuals. That’s because people from various socio-economic backgrounds tend to inhabit different types of properties, as seen with the affluent living in expansive mansions and the less privileged occupying apartment complexes. By prohibiting the construction of certain kinds of housing in communities, exclusionary zoning laws are effectively saying to the poor, “You’re not welcome here.”
In 2021, a study across 100 cities in the US reported that the median central city allocated just 12 percent of its residential land for apartment buildings. The New York Times also noted in 2019 that in numerous cities, 75 percent of residential property is zoned exclusively for single-family detached dwellings.
This ushers in a multitude of problems for low-income individuals. Exclusive communities hoard opportunities within their walls – they have secure streets, superior educational institutions, and a higher quality of life overall. But because of exclusionary zoning ordinances, the poor can’t access this prosperity and are left at a disadvantage outside the figurative wall.
For this very reason, it’s imperative that the government dismantles the wall. Do away with exclusionary zoning ordinances and promote inclusionary ones instead. This, however, will take not one but two steps. First, eliminate the regulations that hinder the construction of more affordable housing options. Second, require developers to build these housing options as part of the residential neighborhood. This guarantees that the poor can readily get into these prosperous areas, should they wish to do so.
Additionally, Congress could work on providing incentives to communities that agree to affordable housing. For instance, homeowners could qualify for property tax breaks, or their local public school or sewer system could receive more funding. On the other hand, those who advocate for exclusionary zoning could be denied federal financial support for the maintenance or enhancement of local public services.
Inclusionary zoning policies aim to integrate the prosperous with the less privileged. And while it may be a tall order to fill, its benefits to low-income families would make the efforts worthwhile.
Participate in the fight against poverty
It’s no secret that the government and huge businesses play a pivotal role in abolishing poverty. However, this responsibility doesn’t rest solely on their shoulders. You – in your own small or big way – can also contribute to the cause of poverty eradication.
Start with changing the way you do certain things. For instance, champion integration in your neighborhood. When you get to know the underprivileged, you become exposed to their personal challenges and concerned for their well-being. This will ultimately push you and your peers to care more about antipoverty initiatives and public services.
Where you shop and invest also matters. Stop putting your money in the wallets of businesses that engage in labor exploitation and instead, opt to support those that prioritize their employees. Buy their products, use their services, invest in their stocks, and proudly recommend them. This will inspire others to make similar conscientious choices.
When enough people get behind the idea of poverty abolishment, it can lead to a mass movement that sparks change. Such a demanding movement is exactly what the United States needs to uplift marginalized communities and reshape societal norms.
Poverty is a complex web of problems far beyond material scarcity. It encompasses issues of labor and consumer exploitation, imbalanced social safety net policies, and invisible segregation. By bolstering efforts to solve these issues from the root, the government, private businesses, and the community hold the potential to disassemble this intricate web and eliminate poverty. Doing so can move the nation closer to realizing an economically secure future for all.
About the Author
Politics, Corporate Culture, Society Culture
The book Poverty, by America is a groundbreaking and provocative analysis of why poverty persists in the United States, the richest country on earth. The author, Matthew Desmond, is a sociologist and a Pulitzer Prize-winning author of Evicted, a book that exposed the devastating effects of housing insecurity on low-income families. In this book, Desmond argues that poverty is not only a result of individual failures or systemic flaws, but also a consequence of how the rest of us benefit from it. He shows how affluent Americans exploit the poor, driving down their wages, forcing them to overpay for housing and access to cash and credit, and designing a welfare state that gives the most to those who need the least. He also reveals how we stockpile opportunity in exclusive communities, creating zones of concentrated riches alongside those of concentrated despair. He calls this phenomenon “poverty by America”, meaning that poverty is made and maintained by American society.
The book consists of three parts:
- Part I: The Tragic Science. This part introduces the main thesis of the book, which is that poverty is a tragic science, meaning that it involves trade-offs, uncertainties, and unintended effects that can harm people and societies. The author criticizes the prevailing attitude of economists, which he calls economic paternalism, which assumes that economists know what is best for others and can impose their solutions without regard for their preferences or values. The author also explains the concept of econogenic harm, which is the harm caused by economists or economic agents through their actions or inactions.
- Part II: The Origins of Econogenic Harm. This part examines the various sources and forms of econogenic harm, such as the unevenness of econogenic impact, which means that some people benefit more than others from economic interventions; the irreparable ignorance of economists, which means that they cannot know or predict all the relevant factors and outcomes of their interventions; and the complexity of harm, which means that harm can be direct or indirect, short-term or long-term, visible or invisible, and reversible or irreversible.
- Part III: Adapting to Econogenic Harm. This part proposes some ways to reduce or prevent econogenic harm, such as adopting a code of ethics for economists, developing a culture of professional humility and responsibility, fostering a pluralistic and democratic approach to economics, and cultivating a genuine respect for those who stand to be harmed by economics.
Desmond draws on history, research, and original reporting to illustrate his argument. He traces the origins of poverty by America to the colonial era, when slavery and dispossession created a racialized and unequal system of labor and land. He examines how the New Deal and the War on Poverty failed to address the root causes of poverty, and instead reinforced the power of corporations and elites. He exposes how the financialization of the economy and the deregulation of markets have increased the vulnerability and exploitation of the poor. He also documents how the criminal justice system and the immigration system have criminalized and marginalized the poor, depriving them of their rights and dignity. He tells the stories of people who struggle to survive in poverty by America, such as a homeless veteran who sleeps in his car, a single mother who works three jobs but can’t afford rent, a factory worker who gets injured on the job but can’t get compensation, and a young man who dreams of college but can’t escape his neighborhood.
Desmond does not only diagnose the problem, but also proposes solutions. He challenges us to rethink our assumptions and values about poverty, and to recognize our complicity and responsibility in creating and sustaining it. He calls on us to become poverty abolitionists, engaged in a politics of collective belonging that aims to end poverty by America. He outlines a bold and ambitious agenda for reforming our institutions and policies, such as raising the minimum wage, expanding social security, providing universal health care, investing in public education, reforming the tax system, regulating the financial sector, decriminalizing poverty, and creating more inclusive and diverse communities. He argues that these changes are not only morally necessary, but also economically beneficial and politically feasible. He urges us to imagine a new age of shared prosperity and true freedom for all Americans.
Poverty, by America is a powerful and persuasive book that exposes the hidden realities and injustices of poverty in America. It is written with clarity, compassion, and courage, combining rigorous scholarship with compelling storytelling. It is both an eye-opening critique of American society and a hopeful vision of a better future. It is a book that challenges us to confront our own biases and privileges, and to act with empathy and solidarity towards our fellow citizens. It is a book that deserves to be widely read and discussed by anyone who cares about social justice and human dignity.
This book is a must-read for anyone who wants to understand the true extent and nature of poverty in America. It is not a dry academic study, but a vivid and compelling narrative that brings to life the stories and voices of the people who suffer from poverty every day. Desmond writes with empathy, compassion, and honesty, without romanticizing or demonizing his subjects. He also backs up his claims with rigorous data and analysis, making his arguments convincing and credible. The book is well-written, well-researched, and well-organized, with clear and accessible language and style. It is a book that will challenge your assumptions, educate your mind, and touch your heart.
In conclusion, “Poverty, by America” is an essential read for anyone seeking to understand the complex and deeply ingrained issues surrounding poverty in America. It is a call to action, urging readers to challenge their assumptions and biases, and to work towards creating a more just and equitable society for all. Highly recommended.
Desmond’s book is particularly timely given the current political climate. In recent years, there has been a growing movement to dismantle the social safety net and reduce taxes on the wealthy. These policies would only exacerbate the problem of poverty in the United States.
Desmond’s book is a call to action. He argues that we need to fundamentally rethink the way we approach poverty in the United States. We need to invest in affordable housing, raise the minimum wage, and reform the welfare system. We also need to create a more just and equitable society where everyone has the opportunity to succeed.