America is the richest country in the world yet has greater poverty than any other advanced democracy. Why is this? In his new book “Poverty, By America,” Pulitzer Prize-winning author Matthew Desmond sets out to answer why there is “so much hardship in this land of abundance.”
More than 38 million Americans live in poverty. Someone is defined as “poor” when they can’t afford life’s necessities, like food and shelter. In 2022, the U.S. government set the poverty line in America at an annual income of $13,590 for a single person and $27,750 for a family of four. “Deep poverty” is when Americans earn just half those amounts. More than 18 million Americans, including 5 million children, live in deep poverty. More than 2 million Americans live without running water or flush toilets. Homelessness is at an all-time high. How can such a rich country have such extreme poverty?
Poverty is about more than just a lack of money. Poverty is also physical pain and trauma, instability, eviction, job insecurity and the loss of liberty, often through incarceration. Poverty is embarrassing and shameful and results in a diminished life and sense of personhood. Poverty drains someone’s mental energy and reduces their cognitive capacity. Poverty is a “relentless piling on of problems” and is connected to every other social problem, including crime, poor health and education, and lack of housing. Regarding government programs for the poor, only $0.22 of every $1 allocated actually reaches the poor; in 2020, $6 billion in state welfare funds went unspent.
Since 1980, American workers have experienced a decline in earning power, which is a key factor in the expansion of American poverty. Unions have significantly declined, resulting in wage stagnation not seen in other developed countries. Combined with large tax cuts for the wealthy, the result has been a massive increase in inequality. Desmond declares that underpayment of workers is labor exploitation.
Being poor in America is expensive. America’s poor are constantly overcharged, resulting in consumer exploitation. This is especially true with housing, where Desmond points out “racism and exploitation feed on each other.” Poor Black families often have minimal choice on where they can live, facing routine discrimination and overcharging. In America, rent increases have far outpaced owner expenses. Desmond writes, “There exists a long history of slum exploitation in America.”
Poor people have long been excluded from traditional banking and credit systems. “Banks didn’t do business in poor and Black communities because the federal government refused to insure mortgages there.” Put succinctly, “banking while Black can be a harrowing experience.” Discrimination results in denial of mortgages, higher interest rates and exorbitant fees. The poor are forced to use check cashing outlets, which exploit people who are borrowing to keep the lights on and food in their kids’ mouths. “Lenders extort because they can.”
Desmond provides a history of capitalism’s propaganda, which says that aid to the poor is “poison.” This propaganda has worked: Half of Americans believe that government benefits make people lazy. Most Americans also wrongly believe that most welfare recipients are Black. “Anti-Black racism hardens Americans’ antagonism toward social benefits.” Additionally, only about a quarter of families that qualify for welfare apply for it; Desmond states that “welfare avoidance” is a bigger problem than “welfare dependency.”
Here’s the thing: “We’re all on the dole,” Desmond writes. “We members of the protected class have grown increasingly dependent on our welfare programs.” Like $193 billion annually in homeowner subsidies and government-subsidized health and retirement benefits. In 2021, the U.S. spent $1.8 trillion on tax breaks, with most going to the richest families. Yet rich folks “are the least likely to believe that the government [has] given them a leg up” and often decry programs that help the poor as evil socialism!
Why does America’s poverty crisis continue? Per Desmond, it’s because Americans like this system. “Poverty wages allow rock-bottom prices.” Of course, most Americans refuse to see themselves as “authors of inequality.” Racism — seen in white people’s fear of sharing public goods with Black people — continues to drive public resentment against alleviating poverty. Desmond writes how “you can learn a lot about a town from its walls” and “progressive cities have built the highest walls, passing a tangle of exclusionary zoning policies.” Desmond calls this “circumscribed liberalism,” or when one’s liberalism ends at one’s own property line. He even mentions Seattle as an example.
Desmond summarizes America’s poverty crisis in this way: First, we exploit the poor. We constrain their choice and power in the labor, housing and financial markets. Those of us who are not poor benefit from this. “Second, we prioritize the subsidization of affluence over the alleviation of poverty. The United States could effectively end poverty in America tomorrow without increasing the deficit if it cracked down on corporations and families [that] cheat on their taxes.” Desmond shows how America could end poverty if we just “allowed the IRS to do its job.” Third, America has isolated affluence to exclusive communities, outside of which we concentrate poverty and despair.
How do we end poverty in America? We start by empowering the poor. “Choice is the antidote for exploitation.” We change our policies, including providing a higher minimum wage, governmental support of unions and funding for low-income housing. We rein in payday lenders. We provide preferred choices of birth control to best fit someone’s needs and comprehensive family planning. The low-hanging fruit is to “make sure low-income Americans get connected to the aid for which they qualify” by offering registration assistance.
Desmond calculates the cost to end poverty in America at $177 billion. Can we afford this? Yes. Each year, the IRS loses over $1 trillion to unpaid taxes, mostly from multinational corporations and wealthy individuals. We need to close tax loopholes, or better still, we could return to the higher tax rates we had just a few decades ago. Desmond is not calling for a “redistribution of wealth,” but only for the rich to pay their taxes.
To force these changes, Desmond calls for Americans to become “poverty abolitionists, unwinding ourselves from our neighbors’ deprivation and refusing to live as unwitting enemies of the poor.” We must quit allowing elites to frame the story. He calls for us to vote with our wallets and not support exploitive companies just because they are convenient and cheap. We must oppose segregation and “replace exclusionary zoning policies with inclusionary ordinances,” or even better, inclusionary zoning mandates. As with most change, the key is organizing.
America has always blamed the poor for their miseries. Desmond’s main point is this: It’s time for affluent Americans to accept their own responsibility for American poverty and step up to end it. That means doing something, not just saying something.
Read more of the Jan. 31–Feb. 6, 2024 issue.