The Causes of American Poverty

1. The Causes of American Poverty • Why are People Poor in Rich America?

2. Question: • If the unemployment rate could be lowered to 4% forever and everyone who wanted a job could find one, would poverty be significantly and permanently lowered in America?

3. Rates would definitely decline, but poverty would still be a serious and expensive problem. • Many of those employed would be very poorly educated and possess modest job skills. • Many jobs would pay wages too low for millions of workers to escape poverty. EITC and SNAP would help a lot. • Lack of support services such as child care would leave many workers with modest net incomes or keep many from working full time.

4. Some of the poor would refuse to work, only work now and then, or would perform so poorly on the job that employers would reject them. • Millions of American children would not be obtaining the education they need to thrive in an increasingly sophisticated employment market. This would feed the poverty pipeline, making them the next generation of low-paid, low-skill workers. • A significant percent of the adult poor would not be helped because they are aged, disabled, or otherwise unsuited for employment.

5. The bottom line: full employment is critical to reducing poverty, but it would not solve all of the problems or confront some of the basic causes of American poverty.

6. The American Poor • About 15% of the American population • Some 46 million people • Another 35 million or more very low-income. • Among this large low-income population, a significant percentage cycle into and out of the welfare program—TANF, EITC, SNAP, Medicaid.

7. The Poverty Population is very Diverse and the Causes are Complex The Causes of Poverty are different for the various groups that make up the poor.

8. The poor include the elderly, single mothers and their children, employed and poorly employed adults (often heads of families), migrant farm workers, the disabled, the homeless, the addicted and many other groups. • The reasons they are poor are complex and diverse. • The poor are also spread across the nation: they live in all states and regions and they live in urban, suburban and rural communities.

9. Many theories about the causes of poverty focus on one or two groups of the poor, often homeless people, people who abuse drugs and/or alcohol, women who have children out-of-wedlock, or the men who abandon their children. • These theories often assume that everyone who is poor fits one profile, receives welfare, and is a minority. • But these ideas are both incorrect and too narrow. Reality is more complex. • A few facts:

10. American poor tend not to be impoverished for really long periods. • Poverty spells generally last less than a year, often much shorter periods. • Most of the poor do not receive any type of cash welfare. • Most of the poor are poor for too short a period to even apply for cash welfare. • Most who receive cash welfare are on the rolls a short time. • Only about 15 percent of cash welfare recipients receive assistance for more than three years.

11. America’s poor generally grew up in low-income and poor families. • The next generation of poor and economically marginal people are not being raised in well-educated, middle-income or wealthy families. • The poor and economically marginal are overwhelmingly poorly educated. • The well-educated are rarely poor. • Unfortunately, a large percentage of all American youth, particularly minority youth, are poorly educated.

12. Two Basic Theories of the Causes of Poverty—The Public Likes Simple Answers • I. Cultural/Behavioral • II. Structural/Economic

13. Cultural/Behavioral theories make the case that the only real cause of poverty is the behavior, values, and culture of the poor. • A significant example it is argued, is the contempt many of the poor have for education. • The opposite view: Structural/economic theories usually contain some behavioral component, but argue that the precipitating cause of poverty is a lack of equal opportunity for all Americans. • Rank’s example of monopoly.

14. Structural/Behavioral theories point to: • unfair or unequal economic opportunities • failing or failed educational systems (particularly for children in low-income neighborhoods) • lack of powerful interest groups (including unions) to represent the needs of middle-income and low-income citizens • the ability of well-financed groups to wield undue influence in the political system.

15. The divide between conservatives, moderates and liberals boils down to this: • Conservatives favor cultural/behavioral explanations. • Moderates and liberals favor structural/institutional theories with a behavioral component.

16. A popular behavioral/cultural theory is represented by the writings of Myron Magnet • He is employed by a the Manhattan Institute—A right-wing think tank. • He wrote a book entitled: The Dream and the Nightmare.

17. Magnet: People become poor not because they lack social, political, and economic opportunities, but because they lack the inner resources to seize the ample opportunities that surround them. • The poor represent those who have not learned or who reject mainstream values. • Magnet: Poverty is basically a destitution of the soul. The poor have failed society’s function of soulcraft.

18. Magnet: An individual’s values and behavior determines his/her opportunities, economic or otherwise. • Those values come from each persons’ family and environment. • The poor are the product of flawed cultures and dysfunctional parents. • This is a very popular theory among conservatives. • It is not unequal opportunity or resources that makes people poor, it is the flawed character of their parents and themselves that make them poor.

19. In a new book (Falling Apart) a well-known critic of the poor (Charles Murray) focuses on poor whites. • He documents the decline in educational attainment among poor whites, declines in marriage among poor whites, the rising out-of-wedlock rate, the weak attachment of poorly educated whites, particularly males, to the job market, drug and alcohol abuse, and rising dependence on social welfare programs.

20. Murray admits that economic opportunities for the poorly educated of all races and ethnicities have declined sharply, but argues that this is not the problem. • The problem he says is that the white poor are simply moral trash. • It is not opportunity that limits them, it is their flawed culture. • (The polls show that most of the people Murray is referring to are Republicans.)

21. Murray has long argued that one of the key factors in creating the wrong culture for the poor is welfare. • Welfare, he argues, undermines the initiative of the poor and condemns them to a life of dependency and poverty which they pass on to their children. • His solution: Abolish these programs.

22. Murray argues, for example, that if our society gave no assistance to teenagers who have children out-of-wedlock, we would see a major decline in this type of birth. • Murray also attacks SNAP and Medicaid.

23. A Few Other Behavioral Theories that had an influence on welfare reform: Lawrence Mead - poorly designed welfare programs (no emphasis on work for the able-bodied) Katz - welfare can sustain poverty James Payne - expectant giving.

24. Structural/Economic Theories: An Example Structural/Economic Theories: Popular with Moderates and Liberals 1. William J. Wilson, black scholar interested in understanding black poverty in the inner city. • Migration of black Americans to inner cities. • Changes that have taken place in the employment market of inner cities (skills mismatch/spatial mismatch) • We now often refer to the Midwest as the rust belt • Impact of idleness on inner-city men, women and growth of welfare use • Impact of civil rights laws (selective out-migration)

25. The Contagion Effect on public schools and all other services that depended on the local tax base. • The effect of infrastructure decline on public attitudes and morale. • The evidence on this theory.

26. Wilson most recent book “More Than Just Race” focuses on why young black men suffer high rates of unemployment and underemployment. • He argues that the answers are structural. • The underlying cause he believes is the lack of quality education for so many young black people that leave them not only uneducated, but vulnerable to bad values.

27. Yet Wilson’s data show that young black women are often more successful in schools and universities than young black men. • Why are young black men more likely to struggle in school? • Wilson examines Patterson’s Cool Pose Culture argument

28. Wilson then turns to why the unemployment rate is so high for poorly educated black men. • Less educated and skilled than unemployed white males • Physical and social isolation from work • Change in types of jobs—more service rather than manufacturing • Wage and status reservations • Subculture of defeatism

29. Attraction to crime (glamorization of crime) • Criminal backgrounds become one more barrier for many black males.

30. The issues Wilson deals with relate primarily to the changes that have taken place in the types of jobs our society offers, where they are (often in suburbs and other countries), the skills one has to have to obtain those jobs, and how poorly the jobs pay that they can obtain. • They also involve the role that education plays in success these days, and various liabilities anyone suffers if they are poorly educated.

31. The role of culture in misdirecting the aspirations of so many young people. • He is very critical of the majority of rap music because he finds most of it hostile to women, children, honest labor and the straight life.

32. Wilson concludes that culture is important and that a flawed culture can damage people and their opportunities. • Wilson believes that to break this cycle you have to teach the poor a more successful culture and to do so you must start early –aged three or even younger. • But, Wilson emphasizes that disadvantaged environments set off the whole chain of misfortune for poor and low-income children

33. 2. James Tobin a. A well-known scholar who documented the relationship between the health of the economy and the poverty rate. b. He also found that a healthy economy does not work as well today because: • Many people lack the skills required by our increasingly sophisticated economy • So many jobs pay a poverty-level wage • Changes in welfare population—more single parents who face challenges in working full-time. • So many poor quality jobs.

34. What do the theories tell us about poverty and welfare reform? • Poverty is not a single problem and dealing with it takes a complex set of policies. Have to take into consideration the problems caused by old age, illness, injury, high unemployment and subemployment, and many other issues. Education is now critical. People need more education today than at any other time in our history and many Americans are not getting the education they need to be competitive.

35. The economy is important, but so is behavior, culture, and attitudes toward education. • There is a subgroup within every ethnic and racial group that engages in behavior that is self-destructive. • Opportunity is not equal and one of the best ways to improve the playing field is through quality education for all young Americans. • May not be able to help all adults but the evidence that we will cover later strongly suggest that most children can be helped.