Poverty, by America

Why does poverty persist in one of the wealthiest nations on Earth? The answers lie in the tangled roots of exploitation, neglect, and systemic inequality.

1. Worker Exploitation Keeps Wages Stagnant

Worker exploitation in America takes modern forms, including suppressed wages and unstable work conditions. Despite inflation, most Americans earn nearly the same as they did four decades ago, with hourly wages increasing by only 0.3 percent annually since 1979. Low-paying jobs make it impossible for workers to break free from poverty. Over one million workers in 2020 were paid below the federal minimum wage of $7.25.

Temporary work arrangements make conditions worse. Gig workers, temp staff, and independent contractors often lack benefits like sick pay, health insurance, and overtime wages. Companies like Apple, which has 750,000 workers worldwide but employs directly only 63,000, prioritize profit over employee well-being. This leaves workers with limited mobility and without the safety nets enjoyed by full-time employees.

Unions could help address such imbalance, but union membership has plummeted since the 1980s due to employer resistance. Companies threaten closure or job loss to prevent union organization, leaving 94 percent of private sector workers unrepresented. Policies to protect collective bargaining and empower sector-wide negotiations are key to restoring fairness in the workplace.

Examples

• From 1979 to 2020, real wage growth in America averaged only 0.3 percent annually.
• Apple has a global workforce of 750,000 but directly employs only a fraction to reduce its obligations.
• By 2020, only 6 percent of private sector workers belonged to a union.

2. Consumer Exploitation Happens Daily

Low-income Americans face inflated costs for essential transactions, from housing to loans. In the rental market, rents rose by 200 percent between 2000 and 2021, outpacing income growth. Yet, poor-neighborhood apartments, often old and decrepit, are not significantly cheaper than rental units in wealthier areas. Landlords in these communities often see twice the profit margin compared to affluent areas.

Predatory financial services further exploit the poor. Check cashing services strip up to 10 percent of a paycheck, while payday loans bury borrowers in exorbitant fees. By the time fees are added, a $375 loan can cost an average of $520. Turning to such services often traps people in a destructive debt cycle.

Expanding public housing, supporting tenant cooperatives, or offering first-time homebuyers favorable financing can reduce exploitation. In addition, government-backed small-dollar loans through initiatives like postal banking could replace predatory payday lending.

Examples

• Median rents soared by 200 percent from 2000 to 2021, with landlords profiting double in poorer areas.
• Payday loans charge annual interest rates as high as 664 percent.
• Tenant cooperatives turn renters into property owners, eliminating unfair landlord practices.

3. America’s Social Safety Net is Uneven and Imprecise

Government welfare programs are vast but often fail to reach the poorest Americans. With $3,500 per capita spent annually on anti-poverty efforts, programs like Medicaid and food assistance help millions. But many eligible recipients miss out due to bureaucratic hurdles or a lack of awareness.

Moreover, much of the assistance benefits wealthier households. For example, $193 billion in 2020 was allocated to homeowner subsidies, mostly helping affluent families with multiple homes. Similarly, tax leniencies often favor the top 20 percent of earners, offsetting meaningful benefits for the working poor.

Reforming tax policy, such as reinstating higher corporate and top-margin individual tax rates, would generate more resources. Ensuring wealthier Americans pay their fair share could fund struggling anti-poverty programs and expand their reach.

Examples

• In 2020, homeowner subsidies totaled $193 billion, largely helping families with six-figure incomes.
• Only a third of Social Security Disability Insurance applications are approved without legal help.
• The richest 400 Americans pay a lower average tax rate (23 percent) than many middle-class families.

4. Segregation and Exclusionary Zoning Laws Persist

Racial and economic segregation in America remains hidden but widespread due to zoning laws. These regulations dictate what types of housing can be built, often banning lower-cost apartments in affluent areas. This effectively locks low-income families out of neighborhoods with better schools, safer streets, and economic opportunities.

One report found that only 12 percent of land in median US cities is zoned for apartments. Another analysis showed that in several cities, 75 percent of residential areas only allow detached single-family homes. This housing rigidity keeps opportunity hoarded by the wealthy, perpetuating inequality.

Ending exclusionary zoning and promoting inclusionary policies is vital. Requiring developers to include affordable housing and incentivizing communities to embrace socioeconomic diversity are pathways to reducing segregation.

Examples

• A 2021 study found that just 12 percent of central city areas allow apartments.
• In 2019, The New York Times reported that many cities reserve 75 percent of residential land for single-family homes.
• Inclusionary incentives, like property tax breaks, encourage neighborhoods to accept affordable housing development.

5. Tax Avoidance Harms Anti-Poverty Efforts

Affluent individuals and corporations exploit loopholes to avoid billions in taxes each year. This missing revenue, estimated at $1 trillion annually, could transform anti-poverty programs. Current corporate tax rates (21 percent) are the lowest in decades, and diminishing IRS resources prevent meaningful enforcement.

Raising corporate taxes and reinstating a higher top tax margin could redistribute wealth more effectively. Allocating these funds to welfare expansion can address shortcomings in housing, education, and food programs.

Examples

• Corporate tax rates fell to 21 percent, compared to 35 percent in past decades.
• The US loses an estimated $1 trillion annually to tax evasion by wealthy households and corporations.
• Additional IRS funding could capture unpaid taxes and redirect them to programs like food stamps or Medicaid.

6. Temporary Jobs Deny Basic Worker Rights

Dependency on temporary and gig workers allows corporations to minimize their obligations. These workers don’t receive benefits like health insurance, don’t qualify for minimum wage protections, and are ineligible for promotions or job security.

To address this, laws must redefine "employee" to include gig and temp workers, expanding their access to basic job rights like overtime pay, sick leave, and pensions. Strengthening union negotiations across entire sectors can also help these groups advocate together.

Examples

• Gig workers are excluded from basics like unemployment insurance and sick leave.
• Companies increasingly classify full-time roles as contract work to minimize costs.
• Sectoral bargaining could create industry-wide wage and benefit standards for all workers.

7. Poverty is Tied to Housing Instability

Affordable housing is scarce, leaving millions struggling to find secure residences. Public housing funding has fallen behind demand, while banks refuse to finance low-cost homes due to limited profitability.

Solutions include increasing public housing investment, offering first-time homebuyer support, and fostering tenant cooperatives. These alternatives give low-income individuals greater autonomy and affordability.

Examples

• Public housing waitlists are notoriously long across the US.
• Banks often reject affordable mortgage loans, discouraging home ownership.
• Tenant-operated cooperatives remove exploitative landlords while building long-term stability.

8. Public and Private Sectors Must Be Held Accountable

Both the government and corporations have roles in poverty abolition. Ensuring businesses uphold fair labor standards, providing robust regulatory frameworks, and holding the wealthy accountable can shift systemic barriers.

Tax reform, workplace reforms, and housing policies need both legislative enforcement and public support to create sustained impact.

Examples

• Reinforcing IRS audits can uncover unpaid taxes.
• Raising the federal minimum wage would significantly alleviate poverty wages.
• Incentivizing ethical business practices can reduce exploitation.

9. Individual Action Drives Broader Change

Everyday decisions—where you shop, how you vote, and which organizations you support—impact poverty. Encourage integration in your community and support businesses that treat workers fairly. Grassroots movements and collective responsibility can reshape norms and reduce inequality.

Examples

• Neighbor-led initiatives bridge divides through local engagement.
• Consumer choices encourage ethical corporate behavior.
• Collective organizing influences policy reform over time.

Takeaways

1. Direct support toward local businesses and cooperatives that prioritize worker well-being and fair wages.
2. Advocate for inclusive zoning policies in your community to increase access to opportunities for low-income families.
3. Educate yourself about poverty programs, vote on relevant issues, and support grassroots organizations driving systemic change.