Being Poor in America

Recently, I was asked to join Credit Slips as a guest blogger.  I am a social scientist, and my work has focused for many years on the broad issues of poverty and inequality.  Everyone in our society is affected by credit in many ways.  The poor are especially affected because of the kinds of credit to which they have access - especially predatory lenders who prey on the disadvantaged.  I include so-called "payday" services among these predatory lenders. I'd like to begin by taking a look at the nature of poverty and inequality in the United States.  Since the beginning of the Reagan era, far too many people in this society - especially politicians and media figures - have become very hard-hearted and mean-spirited, working long and hard to demonize the poor.  What is popularly known as "welfare reform" - the Personal Responsibility and Work Opportunity Reconciliation  Act (PRWORA) of 1996 was the final outcome of these efforts.  This law changed public assistance from an entitlement to a privilege and has put many of the most disadvantaged individuals and families in our society in dire circumstances.  My colleague Elizabeth A. Segal and I recently edited a book titled The Promise of Welfare Reform:  Political Rhetoric and the Reality of Poverty in the Twenty-First Century (Haworth, 2006) that documents just how draconian welfare reform has been and how ruthless it has been on those at the bottom of our society. But there is a bigger problem:  during the past quarter century poverty and public assistance have come to be seen as one and the same.  The reality is different.  The poor in our society have never received much help from the government, whether at the federal, state, or local level.  But that doesn't seem to matter.  It has been easy for politicians to use the poor as a whipping post and to blame them for their own problems.  And much of the public has bought into that viewpoint, perhaps as a way of separating themselves from the poor – from being seen as even having the possibility of being among the poor.

I'm one of the first of the baby boomers, born in February of 1946.  When I grew up, my family did not have a lot, which was probably pretty typical of many post-World War II families.  We didn’t think of ourselves as poor, but my parents were working class, albeit with aspirations to be middle class.  That meant owning a home and a car.  In those days, the differences between people at the bottom and the middle and the top were probably not as great as now.  There were fewer things to own, and credit was not something that most middle class folks wanted to use.  Instead, the middle class liked to pay cash.  That’s a far cry from today where the middle class is dependent on credit to simply maintain the appearance of being middle class. I grew up in a small town in northern Indiana, and the first house my parents owned did not have an indoor toilet when we first moved in.  I used to spend quite a bit of time on a nearby farm worked by an uncle, who had no electricity or indoor plumbing, and there was a water pump in the kitchen.  Having hot water meant boiling water on the stove.  When my uncle’s farm was electrified, the barn got electricity first, so that he could put milking machines in for his dairy cows. The point is that, in the middle of the twentieth century, the gap between top and bottom was much narrower than now.  In those days, there were political figures who had grown up in poverty and so knew first hand what it meant to be poor.  In fact, some of the important architects of the Social Security Act of 1935 grew up poor. Well, the times have really changed here in the first decade of the twenty-first century.  The gap between rich and poor has grown sharply since the beginning of the Reagan/Bush era, as Too Much (http://www.cipa-apex.org/toomuch/) and many others have documented extensively. We as a nation often forget that social problems have existed throughout our history.  This “historic amnesia” includes poverty:  now meaning the unacknowledged fact that millions of Americans are mired in poverty, far too many in “deep poverty” (defined as half the poverty threshold). Every year the U. S. Department of Commerce publishes a report titled “Income, Poverty, and Health Insurance Coverage in the United States.”  The report for 2005 was released in August, 2006 (P60-231) and is available on the Census Bureau web site (www.census.gov).  What does that tell us about the gap between top and bottom? Median household income in 2005 was $46,326 – a figure that has been stagnant for five years now.  Even so, that means that half of all households in the U. S. had incomes at or below that level.  That statistic, though, does not really portray the situation for many American families.  If we break the household income distribution into five equal parts (or quintiles), we find that the upper limit for the bottom quintile was $19,178, while the lower limit for the top quintile was $91,705. One of every five households in this country had an income of $19,178 or less in 2005, and the mean for this quintile was $10,655 – compared to a mean of $159,583 for the top quintile.  For the bottom fifth, that $10,655 dollars translates into a household income of $29.19 per day – or $11.36 per person per day.  For the top quintile, the mean of $159,583 comes to $437.21 per household per day – or $170.12 per person per day.  That’s a staggering ration of nearly 15 to 1. If we look at the top 5% of households (with a lower limit of $166,000), we find a household mean of $281,155 – some $770.29 per household per day, or $299.72 per person per day.  Please note that all members of Congress earned at least $162,100 in 2005, nearly enough to put each one into the top 5% of household income solely on their personal congressional salaries.  It should not be a big surprise that Congress spends much more time working on tax cuts for the rich than attending to the needs of the poor. Being poor has never been easy, but the conditions of poverty are now much harsher in many ways than in the past – not the least because of public sentiment and rejection of the poor.  The poor are often seen as personal failures, people who just don’t have the right attitudes about work or fail to apply themselves hard enough.  Far too many people who are not poor seem to have lost their capacity to imagine themselves in the shoes of those families at the bottom of our society – most of whom are working long and hard for a pittance.  Just how do the poor deal with taking care of their families when that $29.19 for their household disappears long before the end of the month?  Need a “payday” loan to tide you over?  Well, enjoy usurious interest rates.

Comments

[Mahlon]

Same song. Same dance. Different mouthpiece.

[Robert]

While I have a sympathy for the ideas expressed here, I think that some things are left out.

1. Some people are in that bottom quintile due to business reasons. My family was negative income for a couple of years. We are not poor.
2. Unlimited immigration (which is essentially what we have) limits negotiating power and wages for low skill people.
3. A lot of those immigrants are in the bottom quintile on their way through to higher quintiles. I saw something on the decade by decade change in the composition of the bottom and top quintiles. Interesting reading.
4. Not being familiar with the details of the income study, I'm not sure how it handles the following:
-- The afflicted homeless: mentally ill or addicted people who used to be institutionalized.
-- Social welfare benefits like early social security disability payments.
-- Extended family, friends and non-government community support.
-- Incarcerated population.
-- Senior citizens and the non-financial social fabric that exists for them.

Finally, I think that one thing that we have learned is that treating public assistance as an entitlement seems to create as many problems as it solves. Huge public programs to eliminate poverty by creating new entitlements have very low credibility with me and many others. Not because we don’t want to help the poor, but because we have no faith in an entitlement based solution to poverty.

The challenge is what do you want people like me (who help poor people) to believe: statistical summaries like what you present or my own non-trivial experience with several very poor households. I have a number of other anecdotal observations, but will restrain myself.

Poverty is a real problem and that there is a government role (I have some ideas). But we know that the government alone cannot cure poverty. We also know that the poor will always be with us.

[OkieLawyer]

I know what it is like to struggle with poverty. Click on my name with the link and read Seven Years of Bad Luck.

[Jacqueline]

There is a point that needs to be addressed that I believe the article missed entirely. The issue of deeply entrenched classism in our society. An example would be to deny adequate health & dental care for the poor and uninsured, and then belittling those without teeth and using their toothless appearance as a reason to deny them chances for jobs so that they can afford to take care of themselves properly.

When there isn't enough jobs to go around for everyone needing and wanting to work, those who get left out are not able to "pull themselves up by their bootstraps" and improve their lots in life. Yet, those who are disadvantaged and hence, unable to compete for jobs because of age, sex, race, disability or appearance discrimination are always blamed for their situations somehow. Now add socio-economic class discrimination to the mix: Being sent home without a chance for a job because you're "not a good fit" (which runs the gamut of having poor credit, being middle-aged, being overweight, not having a nice smile, or lacking the ability to fit in socially with middle class co-workers). In order to get a job in the first place, the employers have to be willing to give you a chance and hire you. If nobody hires you, you cannot "just get a job". Without someone giving you a chance and hiring you, you won't be able to work unless you can access the necessary funds and capital to "create your own job" - not a reasonable likelihood if you are poor and have bad credit.

Long before welfare reform, many poor and disadvantaged adults struggled and sacrificed to get educations and training thinking that an education would be their ticket out of poverty (because that's what all the upper-middle class "experts" told them) - only to see their job applications thrown in the trash by HR people because the applicants lacked a work history. One HR manager for a local big bix store confessed to me over lunch that any job seeker whose application indicates that they live in the poorer part of town is automatically rejected for jobs because "poor people are more likely to steal and don't want to work."

Yes, it's true that the government can only do so much to help the poor. But claiming government can do nothing for the poor anyway so it should not provide adequate safety nets is fundamentally wrong. Especialy when so many non-poor in society are directly to blame for the poor not even getting a chance for jobs in the first place because of classism. So justifying cuts in social programs by spouting glib cliches like "the poor are always going to be with us anyway" is simply a cop-out and a crutch.

What it boils down to is that if society is working just fine for me and I've got mine, but you don't have yours - it is all your fault and not my problem. It is saying that if we acknowledge that there are systemic problems that need to be corrected, it may mean the non-poor lose some social privileges and they don't want to so they're going to blame the poor - just because they can.