Poverty, by America

Introduction

In "Poverty, by America," Matthew Desmond takes a deep dive into one of the most pressing issues facing the United States today: poverty. Despite being one of the wealthiest nations in the world, the US struggles with a persistent poverty problem that affects millions of its citizens. This book explores the root causes of poverty, the systems that perpetuate it, and potential solutions to address this complex issue.

Desmond, a sociologist and Pulitzer Prize-winning author, presents a compelling argument that poverty in America is not just a result of individual circumstances or choices, but rather a systemic problem deeply embedded in the country's economic and social structures. He challenges readers to consider how poverty affects not only those experiencing it directly but also the entire fabric of American society.

The Scale of Poverty in America

To understand the gravity of the situation, Desmond presents some startling statistics:

• One in nine Americans lives in poverty
• 38 million people struggle to secure basic necessities
• Over one million public school children are homeless
• At least 30 million people lack basic health insurance

These numbers are particularly shocking when considering the immense wealth of the United States. The country's gross domestic product (GDP) is so large that it surpasses the combined economies of the next six wealthiest nations in the world. This stark contrast between the nation's overall wealth and the struggles of its poorest citizens raises important questions about the distribution of resources and opportunities in America.

The Persistence of Poverty

One of the most troubling aspects of poverty in the United States is its persistence over time. Desmond points out that in 1970, nearly 13 percent of the population was considered poor. Five decades later, that figure has only marginally improved to 10.5 percent. This lack of significant progress in reducing poverty rates suggests that current approaches to addressing the issue have been largely ineffective.

The Multifaceted Nature of Poverty

Desmond emphasizes that poverty is not simply a matter of low income. Instead, it's a complex interplay of various factors, including:

1. Material scarcity
2. Housing insecurity
3. Health challenges
4. Educational disparities

Understanding these interconnected issues is crucial for developing effective strategies to combat poverty. The book delves into each of these areas, exploring how they contribute to the cycle of poverty and examining potential solutions.

Worker Exploitation: A Key Driver of Poverty

Stagnant Wages

One of the primary factors contributing to poverty in America is the exploitation of workers, particularly through low wages. Desmond highlights that when adjusted for inflation, wages for most Americans have remained virtually unchanged for four decades. The annual increase in inflation-adjusted wages since 1979 has been a mere 0.3 percent. Even in 2020, at least one million workers were earning hourly wages at or below the federal minimum wage of $7.25.

Corporate Reluctance to Raise Wages

Corporations often resist increasing wages, fearing that higher labor costs will impact their profits and market value. To address this issue, Desmond argues that Congress should take a more active role in setting and regularly adjusting the minimum wage. He suggests that the authority to set the minimum wage could be delegated to the central government or a specific appointee, such as the Secretary of Labor. Alternatively, employees and employers could be empowered to negotiate and amend the minimum wage through collaborative bargaining agreements.

The Rise of Temporary Work

Another form of worker exploitation is the increasing reliance on temporary workers and independent contractors. This trend allows corporations to reduce their obligations to workers and cut costs. For example, tech giant Apple has a global workforce of about 750,000 individuals, but only 63,000 are directly employed by the company.

Temporary workers and independent contractors often lack essential benefits such as:

• Employee benefits
• Minimum wage protections
• Sick days
• Overtime pay
• Unemployment insurance

Additionally, these workers can't pursue promotions within the companies they work for, as they're not officially employed by them.

The Decline of Union Power

Historically, labor unions have played a crucial role in advocating for fair working conditions and compensation. However, organized labor has been in decline since the early 1980s, when corporations realized they could easily replace striking unionized workers with new hires. Today, employers continue to obstruct union formation, often threatening workers with business closure and job loss. As a result, a staggering 94 percent of private sector workers lack union representation.

Proposed Solutions

To address these issues, Desmond suggests:

1. Implementing new labor laws that streamline the process of organizing unions
2. Promoting sectoral bargaining, which aims to organize workers across entire industries rather than just within individual companies
3. Empowering a broader range of workers, including both independent contractors and full-time employees

Consumer Exploitation: Another Face of Poverty

The Rental Housing Industry

Consumer exploitation occurs when people pay more than something is worth, and this is particularly evident in the rental housing industry. Desmond points out that median rents across America have increased by at least 200 percent from 2000 to 2021, far outpacing renters' income growth. Surprisingly, rents in poor neighborhoods are often not significantly lower than those in more affluent areas, despite the properties being older and in worse condition. Landlords in low-income areas can often earn double the profits of those in wealthier neighborhoods, clearly exploiting their tenants.

Strategies to Combat Housing Exploitation

Desmond proposes several strategies to address exploitation in the housing sector:

1. Increase funding for public housing to meet the overwhelming demand
2. Provide more financing options for first-time homebuyers, especially for low-cost homes that banks are often reluctant to finance
3. Support tenant-owned and operated apartments, where tenants purchase properties from landlords and transform them into cooperatives
4. Encourage local authorities to support tenant rights organizations and cooperatives

Fringe Financial Institutions

Low-income individuals are also often exploited by fringe financial institutions such as check cashers and payday lenders. Check cashing services can take up to 10 percent of a worker's paycheck, while payday lenders impose exorbitant annual percentage rates, sometimes reaching 664 percent for short-term loans.

Proposed Solutions for Financial Exploitation

To address these issues, Desmond suggests:

1. Providing more credit alternatives for low-income individuals
2. Encouraging the Federal Reserve or the US Postal Service to offer small-dollar loans
3. Modifying regulations to incentivize commercial banks to offer similar solutions

The key to combating exploitation, Desmond argues, is providing more choices. The more options available to individuals, the less likely they are to fall victim to exploitative practices.

Rebalancing Social Safety Net Policies

Current Welfare Programs

Contrary to popular belief, the United States has an extensive welfare system, ranking second only to France in terms of size. Between 1980 and 2018, spending on antipoverty initiatives grew by over 230 percent, reaching nearly $3,500 per person. Some of the major programs include:

• Medicaid: Federal government spending reached over $520 billion in 2021
• Food stamps: Assists nine million Americans
• Unemployment insurance: Supported over three million people during the COVID-19 pandemic
• Income-boosting tax credits: The Earned Income Tax Credit and Child Tax Credit are two of the largest antipoverty initiatives

Challenges with Existing Programs

Despite the significant spending on welfare programs, several issues persist:

1. Lack of awareness: Many eligible individuals are unaware of the assistance available to them
2. Complicated application processes: For example, only a third of Social Security Disability Insurance applications are approved, often requiring applicants to hire lawyers
3. Disproportionate benefits to upper classes: Many programs, such as homeowner subsidies, primarily benefit higher-income families

Tax System Inequities

Desmond highlights the inequities in the current tax system:

• Tax breaks totaled $1.8 trillion in 2021, with about half of the benefits going to the top 20 percent of earners
• When all taxes are considered, there's little difference between the 25 percent paid by the poor and the 28 percent paid by the rich
• The 400 wealthiest Americans pay the lowest rate at just 23 percent

Proposed Solutions

To address these issues, Desmond suggests:

1. Raising awareness and providing application assistance for welfare programs
2. Increasing the top marginal tax rate, possibly returning to the 1986 rate of 50 percent
3. Raising corporate tax rates from the current 21 percent to the previous 35 percent
4. Intensifying efforts to address tax avoidance by wealthy individuals and corporations
5. Providing the Internal Revenue Service with more resources to pursue tax cheaters
6. Redirecting recovered tax revenue to antipoverty initiatives

Breaking Down Invisible Segregation

Exclusionary Zoning Laws

While overt racial segregation may have diminished in modern America, Desmond argues that a subtler form of segregation persists through exclusionary zoning laws. These laws dictate the types of properties allowed in residential areas and often serve to exclude specific groups of people, particularly those with lower incomes.

The Impact of Exclusionary Zoning

Exclusionary zoning creates numerous problems for low-income individuals:

• Limited access to safe neighborhoods
• Reduced opportunities for quality education
• Overall lower quality of life

A 2021 study across 100 US cities found that the median central city allocated just 12 percent of its residential land for apartment buildings. In many cities, 75 percent of residential property is zoned exclusively for single-family detached dwellings.

Proposed Solutions

To address this invisible segregation, Desmond recommends:

1. Dismantling exclusionary zoning ordinances
2. Promoting inclusionary zoning policies
3. Requiring developers to include affordable housing options in residential neighborhoods
4. Providing incentives to communities that agree to affordable housing, such as property tax breaks or increased funding for local services
5. Denying federal financial support to communities that maintain exclusionary zoning practices

The Role of Individual Action in Fighting Poverty

While government and big businesses play a crucial role in addressing poverty, Desmond emphasizes that individuals can also contribute to the cause. He suggests several ways for people to get involved:

1. Champion integration in your neighborhood
2. Get to know underprivileged individuals to better understand their challenges
3. Support businesses that prioritize their employees
4. Make conscientious choices about where to shop and invest
5. Participate in and support antipoverty initiatives

Desmond argues that when enough people get behind the idea of poverty abolishment, it can lead to a mass movement that sparks real change.

Conclusion: A Call to Action

In "Poverty, by America," Matthew Desmond presents a comprehensive analysis of the complex web of issues that contribute to and perpetuate poverty in the United States. He argues that poverty is not simply a result of individual circumstances but a systemic problem deeply rooted in the country's economic and social structures.

The book highlights several key areas that need to be addressed to combat poverty effectively:

1. Worker exploitation through low wages and the rise of temporary work
2. Consumer exploitation, particularly in the housing and financial sectors
3. Imbalanced social safety net policies that often benefit the wealthy more than the poor
4. Invisible segregation through exclusionary zoning laws

Desmond proposes a range of solutions, from policy changes and increased regulation to individual actions and community involvement. He emphasizes that addressing poverty requires a multifaceted approach involving government, businesses, and individuals working together to create lasting change.

By presenting these ideas and potential solutions, Desmond challenges readers to reconsider their understanding of poverty in America and their role in perpetuating or combating it. He argues that by addressing the root causes of poverty and working collectively to implement effective solutions, the United States can move closer to realizing an economically secure future for all its citizens.

Ultimately, "Poverty, by America" serves as both a wake-up call and a roadmap for addressing one of the most pressing issues facing the nation today. It encourages readers to look beyond surface-level explanations of poverty and consider the complex systems and structures that contribute to its persistence. By doing so, Desmond hopes to inspire a new wave of activism and policy change that can finally make significant progress in reducing poverty rates and improving the lives of millions of Americans.

The book's message is clear: poverty in America is not an unsolvable problem, but addressing it will require a concerted effort from all sectors of society. From government policies and corporate practices to individual actions and community initiatives, every aspect of American life has a role to play in combating poverty. By working together and implementing the strategies outlined in this book, Desmond argues that it is possible to create a more equitable and prosperous society for all.

As readers finish "Poverty, by America," they are left with a deeper understanding of the challenges facing low-income Americans and a sense of urgency to take action. Whether through supporting policy changes, making more conscious consumer choices, or getting involved in local antipoverty initiatives, Desmond's work empowers individuals to become part of the solution. In doing so, he offers hope that with collective effort and determination, the United States can finally make meaningful progress in its long-standing battle against poverty.