Poverty in America is by design w/Matthew Desmond | The Chris Hedges Report

According to the Center on Poverty and Social Policy at Columbia University, 14.3% of Americans, nearly 50 million people, were living in

poverty

last December. "If America's poor founded a country," writes Matt Desmond in his book Poverty, By America, "that country would have a larger population than Australia or Venezuela." Nearly one in nine Americans, including one in eight children, lives in

poverty

. There are more than 38 million people living in the United States who cannot meet their basic needs, and more than 108 million get by on $55,000 a year or less. "Many are caught in that space," he writes, "between poverty and security." More than a million of our public school children are homeless and living in motels, cars, shelters and abandoned buildings.

More than two million Americans do not have running water or a flushing toilet at home. "These statistics," he writes, "are bad enough. But when viewed through the lens of institutionalized racism, they are even worse." In 2019, the median white household had a net worth of $188,200, compared to $24,100 for the median Black household. "And yet," as Desmond writes, "spending on the nation's 13 largest means-tested programs, aid reserved for Americans who fall below a certain income level, rose from $1,015 per person on year Ronald Reagan was elected president at $3,419 per person per year. in the administration of Donald Trump. That's a 237% increase." Why is there poverty on this scale given our wealth?

Desmond argues that poverty in America is no accident. It's by

design

. "Most Americans," he writes, " "They benefit from a system that cruelly exploits the poor." Joining me to talk about his book, Poverty, by America, is Matthew Desmond, a professor of sociology at Princeton University. Matt, you write about what you call a hard bottom layer of deprivation, a type of extreme poverty that was once thought to exist only in faraway places, with bare feet and swollen bellies. And this is one in 50 Americans who receive no cash income. I just want to start there if I can. talk about the consequences of this extreme poverty, which I must add, coming out of the New York Times, the media has made it practically invisible Well, it's good to see you, Chris.

Thank you for having me. For my last book on the evictions, I lived in two. very poor neighborhoods in Milwaukee and I saw a type of poverty that I had never seen before, that I had never experienced before. I saw grandmothers living without heat in the winter in mobile homes, just huddled under blankets and praying that the heat wouldn't turn off. It was common to see children being evicted. If you've ever been to eviction court, you'll see a lot of kids running through those courts and being thrown out onto the street every day in a city like Milwaukee.

And so I think that really sharpened and focused what I understand today as American poverty. Poverty is measured as a level of income but, of course, it is that accumulation of problems, adversities and humiliations. It's that nauseating fear of eviction. It is telling your children that they cannot repeat. It's harassment from debt collectors. It often involves physical and tooth pain, as well as being mistreated by the police, and living in slum housing conditions. And that kind of tight knot of social ills is what poverty is today in the United States for those at the bottom. Well, it's what Barbara Ehrenreich called living in poverty: a long emergency.

And I think you raised that in the book, that it has consequences. Not only social and economic consequences, but deep emotional and psychological consequences because it is a constant trauma. But this is not something I knew before reading her book. Because we have the argument that we are always in austerity programs, cutting programs. "We have to cut the military budget," which I think we do. But what you state is that we have increased spending on means-tested programs by 130% between 1980 and 2018, from $630 to $1,448 per person, but poverty has worsened. And I'll let you explain why. What happened to that money?

So this is a paradox and I'd like to spend a little time on that if that's okay. So a lot of times when people see that paradox, they say, "Okay, poverty spending has gone up," but poverty has been pretty persistent over the years. If you look at the supplemental poverty measure, which captures much of that spending, 50 years ago it was around 15%. 40 years later, it was 15%. Really stable. The supplemental poverty measure went down a little bit before COVID, and then plummeted during the pandemic because of this incredibly bold historic relief from the government. But what is happening?

And some people say, "Well, if we spend more and we don't really fix the problem, those programs won't work," and that's just false. That is empirically false. There is plenty of research showing that government programs are effective, essential, and prevent millions of families from going hungry and homeless each year. So what is going on? What explains this paradox? And what explains it is that the labor market is not really doing its part and we have failed to address the relentless exploitation of the poor in the labor market, but also in the real estate and financial markets.

So if you look at the time when the Great Society War on Poverty was launched in 1964, it was about deep investments in America's poorest families, right? It was about making food aid permanent, expanding social security and founding Medicaid. And those programs, 10 years after they were launched, cut the poverty rate in half, but they weren't fighting poverty alone. One in three workers at that time belonged to a union. Real wages were rising. There was some prosperity in the labor market and the labor movement was strong. But as workers lost power, the labor market got much worse, wages stagnated, so now we have to spend more to stay in the same place.

And I think this is critical for those of us who care about ending poverty in America today because it means we don't just need greater investments. We need different policies, that really go to the roots of poverty. Well, he also points out that the way this money is distributed has changed dramatically. Clinton's destruction of the welfare system meant that money was sent to the states. And you noted in the book not only how difficult and complicated it is to apply for assistance, but you had to calculate that more than a billion dollars of social security funds are spent not on getting people disabled, but on getting lawyers so they can obtain disability. .

Good. I learned this when my friend Wu was going through the process. Wu and I were living together in Milwaukee and he stepped on a nail in this run-down apartment we shared in a boarding house and his leg got infected. And he has diabetes and that infection was accelerated by that, and the doctors finally amputated his leg. He was one of the hardest working guys he knew. He was a security guard. He often worked double shifts, he was out all hours of the night, but he couldn't work after his leg was removed. So we applied for disability together and the application was rejected.

And for Wu, this was normal. He said, "Well, now I have to hire a lawyer." And so, working on contingency, the lawyer fought for Wu. And if they win, they will receive a portion of the back pay. That's what happened to my friend. Wu received about $3,600 in back pay. He used it to buy a wheelchair-accessible van that ran for a few years and then caught fire. And his lawyer took $400. Wu never lost sleep over it, but it was hard for me to get over the fact that every year, a billion dollars, a billion with a B, doesn't go to people like Wu, does it?

Lawyers are called on to help people like Wu overcome disability. And so part of the mystery, part of the paradox, is that a dollar in the federal budget does not necessarily mean a dollar in the hands of a family. Well, you also write in the book how money that is supposed to go to the poor is diverted by states in particular. Yes that's how it is. So if you look at cash assistance, Temporary Assistance for Needy Families or TANF, this is a big program. It's about $32 billion a year and it's a block grant, which is just a fancy, clumsy way of saying, "Okay, states.

Here's the money, you can decide how to spend it." And man, states are very creative when it comes to spending those welfare dollars. Maine uses them to fund Christian summer camps. Other states use those funds to fund anti-abortion education, abstinence-only programs, marriage initiatives, things that really have nothing to do with helping the poorest children and the poorest parents. And some states don't even spend the money. So last time I checked, Tennessee had over $700 million in unused welfare funds. Hawaii had so much money that they could give every poor child in their state $10,000. And then you are right.

Because we've allocated this money in a way that doesn't give the government, at least the federal government, any oversight, states have actually used it in ways that don't directly impact the poorest families and their borders. Do you have a theory why? Why keep $700 million that should go to the poor? That is a good question. I mean, it's hard to think this is by accident, right? Every state does this except Kentucky. Kentucky is the only state in the country that spends the majority of its welfare cash dollars on direct assistance to families in need. But in most other states, it turns out that for every dollar budgeted for cash welfare, only 22 cents end up in the pockets of the poor, and it's hard to interpret that as an accident.

It's difficult to interpret that as anything other than

design

and a kind of state-sponsored callousness and neglect to alleviate the suffering of the country's poorest families. I want to go to the American Enterprise Institute. They have their three steps to avoid poverty and they are: graduate from high school, get a full-time job, wait until you get married to have children, and then these steps are called the Success Sequence. And then one of his studies found that only 2% of people who completed the sequence were poor in 2007, compared to 76% of people who violated his three rules. I mean, you just trashed the data, but this is the classic kind of subterfuge.

It's right up there with the wellness queens. But explain what they are doing and what the reality is. I wish it were that simple. I really do. If only all we had to do was follow these three steps. It's a little confusing because this is what we tell our children. "Work hard, study hard, graduate high school, put off having kids for a while," and I think that's good parenting advice. But good parenting advice is not necessarily good social theory. And when you look at the data, you realize that most of that benefit is simply due to getting a full-time job.

Yes. If you get a full-time job, sometimes it is a clear path out of poverty. But if you look at the data, more people who were poor followed the Success Sequence than did not. And the difference between the black Americans who followed the rules and the white Americans who followed the rules is that there are big differences. Blacks are much less likely to escape poverty, even when they check those three boxes. And I also think as someone who spends a lot of time in poor neighborhoods who have dear family and friends who are struggling with poverty, for people who have faced serious adversity since birth, asking them to just get a good job and just delay having children, to Sometimes it is like asking them to have a different life.

And I don't think we devalue the importance of work, education, or marriage when we simply say, "This isn't going to be enough." And I think the international comparison for me is really revealing. We have much more poverty than many of our peer nations. And it's not because people in Germany, South Korea or Canada are working harder or following the rules better than we are. There is something deeper in our system that needs to be addressed. There was an interesting point that you raised in the book about or challenging this orthodoxy, this economic orthodoxy that says raising the minimum wage leads to higher unemployment, and it kind of imploded that theory.

Explain. This has been a concern for many of us for a long time and it started in the '40s. There was an economist named George Stigler who said, "Look, we can't raise the minimum wage because that's going to cost jobs. If you're an employer and you have to pay more to yourworkers, you're going to hire fewer of them." And he wrote a paper about it and it became somewhat canonical in economics. But if you read the paper, you realize there's no data in it. It was just an elegant theory and it makes sense. When you hear it, you say, "Okay, that makes sense." But in 1994, a couple of Princeton economists realized that there was a natural experiment going on that New Jersey was going to raise its minimum wage and Pennsylvania wasn't. , and they said, "Okay, let's test Stigler's hypothesis.

Let's see if he's right," and it turns out he was wrong. It turns out that there was actually a lot of job growth in New Jersey and not in Pennsylvania. So in that case, it wasn't that New Jersey lost a lot of jobs. It gained them. And since then... and that article came out in 1994, which is an explosive article... economists have done many studies analyzing the effects of increasing the minimum wage on employment And the best studies have shown that the effect is actually true. We absolutely cannot raise the minimum wage without costing jobs in this country.

And again, if you look at Denmark, the guy who makes hamburgers there gets paid twice as much as the guy who makes hamburgers here, and in some ways his country. has not fallen into ruin. That's why I also think it's important to ask another empirical question about the minimum wage: what happens when we don't do it? How much do we cost people their lives, their families, and their health? We cost them a kind of full existence in the richest country on the planet. I think that's another question worth exploring as well. Well, you have character. I mean, you juxtapose what happens when you raise your minimum wage in terms of your lifestyle, in terms of stress, the ability to be with family, all of that as you point out.

The book talks a lot about the importance of raising wages, but also unions. And, of course, the majority of those unionized are firefighters, nurses, police officers and other public sector workers. Almost all private sector employees, that is, 94%, are not unionized. And I was wondering if you could address what that has meant for the working class and the working poor, and then also this idea that non-union companies, as anti-union advocates claim, are somehow more productive. So if we look at modern history and ask, "When was the most economically equitable time in our country? When did CEO salaries reign and worker salaries rise?" That was in the '70s, and that was when worker power was at its greatest, when unions were at their greatest strength in the United States.

And that wasn't a perfect moment by any means. I mean, we have to address the fact that many unions were racist. They excluded blacks and Latinos from their ranks, but they also did a lot of good by raising wages for the rank and file, including the lowest-paid workers and people in non-union shop floors, right? Because if you were working in a union shop and across the street there was a non-union shop, the non-union guys were like, "Man, Chris is coming. There's no way I'm going to get my workers to work for me if I'm not up to the task." up to those union standards.

But when workers lost power, when unions came under attack, when manufacturing left the country and unions lost their traditional power base, worker power stumbled, and that's when you saw this massive wage increase for Americans. richest in the country, and that was when the salaries were seen. starting to stagnate. Thus, between 1945 and 1979, real wages, that is, wages adjusted for inflation, increased by approximately 2% each year. So you had a job. You had some room to move forward. Your salary increased every year. You had some benefits. But since 1979, real wages have only increased by about 0.3% a year. And for men without a college degree, their inflation-adjusted wages today are lower than they were 50 years ago.

This needs to be addressed. We have to address exploitation in the labor market. And if we don't do that, we'll be in this place where we'll spend more to stay in the same place. And this raises a point that you make in the book that when workers are not paid even a subsistence wage, it is not the work that keeps low-paid workers out of poverty, but the state. And then I was wondering if you could explain what you call the new cracked workplace. Yes. It's not my term. It's been around for a while in the social sciences.

But it basically means that there was a time when if you worked for Ford, you worked for Ford. Ford signed your paycheck and you were a Ford employee. But today, if you look at Apple and Google and many of our largest corporations, most of the people who work for those corporations do not work for Apple and Google. They are independent contractors and there is a sort of two-tier work system. There are software engineers, corporate bosses and lawyers, who work for Google and receive great benefits and good salaries. But there are many independent contractors for whom the headroom is really difficult, sometimes almost impossible.

Wages are often stagnant. The benefits really aren't there. And this is a way to have a very profitable work environment, but it has a cost for all those people who are really our workers. And I think when we think about the gig economy, we typically think about Uber, Lyft, TaskRabbit, and DoorDash, places where we really engage with the gig economy. But there are workers in universities and hospitals and jobs with helmets. It's an incredibly large and growing part of our economy now. And we must be clear: a self-employed worker has no benefits. You don't have job protection.

You don't have health insurance. I was just part of the adjunct strike at Rutgers. There are people who teach entire courses and try to live on $28,000 a year. One of the things that I found really interesting in the book, that I didn't know, applied to low-wage workers, and that is how employers make it difficult for workers to go to other jobs, better jobs, by making them sign these contracts. of confidentiality. Yes. This was also really shocking to me. So, let's say you're working at Subway Sandwiches, you've been working there for a couple of years and you have a lot of skills in that type of work, and you want to take your skills to Jimmy Johns. the highway or other delicatessen and the type of use that workers have of this power.

The power to quit to get better jobs. A lot of companies are making these low-level, low-paying, low-paying agreements, I should say, workers signing these confidentiality agreements and non-compete agreements that say, "You can't go look for another job for six months after you've quit." . "And apparently, this is to protect intellectual property. But many times, corporations use it only to deceive and overthrow the power of workers. And so, again, we cannot abolish poverty in this country if we do not find a way of increasing the power of workers in all areas. Algorithms. You say that they have proven to be more demanding bosses than people, which I suppose anyone who has read anything about Amazon will understand, and stress. algorithms and low-wage work One of the things we're seeing is how algorithms and other AI technologies are actually used to measure worker productivity by measuring the number of mouse clicks and keystrokes, including usage. of heat sensors and other types of technology to really have a demanding experience and never resting, that is an eye that never blinks, looks at the workers.

And you might think, "Well, this only affects workers at the bottom of the pay scale," but that's not true. The New York Times published a stimulating

report

showing that hospice chaplains and therapists are also under these regimes. And so workers have lost power, but companies have become productive, and that is the classic definition of exploitation. You have a chapter called How We Force the Poor to Pay More, and I was wondering if you could explain how it works, including what you call mortgage deserts, the effects of overdraft fees, check cashing stores, denial of credit, Payday loans, this type of predatory inclusion.

Yes. That's why I used the word exploitation several times in our conversation. And for some, that's a bit of a scary word. But to me it just means that when you don't have many options, people can take advantage of you. And we've all been there, regardless of our position in life. We've been in a situation where we're on the hook and we just have to pay for it. But for poor families, that is their existence. And when you look at housing, for example, most poor families only have one choice about where to live. They are excluded from homeownership, not because they can't pay a mortgage, but because banks don't want to do business with them, and they are excluded from public housing because we simply don't have enough profit. go around.

And the waiting list for public housing now doesn't number in years. It is counted in decades. So they have a choice. They rent from a private landlord and, if they are below the poverty line, spend most of their income on housing expenses. And if we look at the profit margins of landlords across the country, we realize that those who work in poor neighborhoods not only earn more, but often earn twice as much. Rich homeowners and neighborhoods, and the reason is pretty clear. Operating costs in poor neighborhoods are much lower than in rich neighborhoods, but rent is not much lower.

And this is how the poor pay more for housing. If you look at financial exploitation, every year, $11 billion in overdraft fees, $1.6 billion in check cashing fees, and almost $10 billion in payday loan fees are taken out of the pockets of the poor. This amounts to $61 million in fines and fees every day. So when James Baldwin commented on how incredibly expensive it is to be poor, he couldn't have imagined this income. And I want to take this on a personal level with us. Who benefits from this? Who benefits? So if you look at financial exploitation, some banks and payday loan companies benefit, but many of us also do because our free checking accounts are not.

Turns out they are subsidized by all those fines and fees piled up on the backs of the poor. Only 9% of bank customers pay 84% of overdraft fees. They are the poor forced to pay for their poverty. This is another step I try to take in this book. It's about politics, about movements, about politics, but it's also personal. It's about many of the decisions we make every day and how we are connected to the problem and the solution. Well, this gets to the tax breaks for the middle class and the wealthy. $1.8 trillion in tax breaks. That's the mortgage interest deduction.

That allows 13 million Americans to keep $24.7 million, and this is called the invisible welfare state. And that gets to the point you just made: those who have the means are the ones who benefit and profit from this system. Because if those tax breaks didn't exist and that money was directed to the vulnerable, it would go a long way toward alleviating poverty in America. Yes. I mean, many of us don't think of a tax break as a government program, and I understand that. "Taxes should hurt," Reagan said, and so it does in the country. But if you think about it, a tax cut and a housing assistance bonus are the same thing.

Both cost the government money. They both put money in our pockets. Both benefit a family. And so, both a 15-story public housing project and a mortgaged suburban home are subsidized by the government, but only one looks and feels that way. And this really surprised me when I calculated the bottom line of what the government does for us. If you add up all the tax breaks and all the social security programs, and all the means-tested programs like food stamps and Medicaid, you learn that every year, the average family in the bottom 20% of the income distribution, our Poorest families receive around $26,000 from the government.

But the average family in the top 20%, our richest families, receives about $35,000 each year from the government. That's almost a 40% difference. That is the true nature of our welfare state. We give most of it to families who already have enough, and then we have the audacity to look for a program that reduces child poverty, or ensures that everyone can have a doctor, and we simply ask: "How could weafford it?" Which to me is a sinful and dishonest question because the answer stares us right in the face. We could afford it if the richest received less from the government.

Good. And you are very clear that both political parties are not willing to apply these types of tax exemptions in this invisible welfare state due to the political reaction. And you have called for a campaign to abolish poverty in the face of this type of rigged system. What do you propose? How do you think we can get out of this monstrosity? ? Good. That's why we need greater investments in the fight against poverty and one clear way to finance those greater investments is through tax equity A study published a few years ago found that if the richest 1% of Americans simply paid. taxes you owe, no longer pay taxes, and simply stop evading taxes so successfully, we as a country could collect an additional $175 billion a year.

That's enough to restore the child tax credit we had during COVID that cut child poverty almost in half in six months. $175 billion is almost enough to lift everyone above the official poverty line. So we have the resources. We could do this. And it's not just deeper resources we need. We need different programs. We need policies that cut poverty at its roots. So it's about finding ways to increase worker empowerment and expand options for families so that they don't have this best and bad choice when it comes to where they live and how they can access their money and credit.

That is why we must address exploitation in the labor, real estate and financial markets. And then the third step is to tear down our walls. Many of us still live in incredibly segregated societies. We build walls around our communities made up of laws and we treasure opportunities behind those walls. And that concentrates wealth, but it also concentrates poverty. That is why we have to strive and work for more inclusive and open communities. That is the third step we have to do. And this is a political project. It is a political project, but also a personal one.

Poverty abolitionists strive to achieve this in their consumption choices and investment decisions. They do things like compete and fight for a government that makes big investments in America's poorest families, and they are anti-segregationist and anti-exploitation. And that is something personal that we can all address on a daily basis to begin to generate political will to really make the pressure felt at the highest levels of government. Excellent. That was Matt Desmond in his book, Poverty in America. I want to thank Real News Network and their production team, Cameron Granadino, Adam Coley, David Hebden and Kayla Rivara. You can find me at

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