The Causes of American The Causes of American PovertyPoverty

Why are People Poor in Rich Why are People Poor in Rich America?America?

Question:Question:

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

Rates would definitely decline, but Rates would definitely decline, but poverty would still be a serious and poverty would still be a serious and expensive problem.expensive problem.

Many of those employed would be Many of those employed would be very poorly educated and possess very poorly educated and possess modest job skills. modest job skills.

Many jobs would pay wages too low Many jobs would pay wages too low for millions of workers to escape for millions of workers to escape poverty. EITC and SNAP would help a poverty. EITC and SNAP would help a lot. lot.

Lack of support services such as child Lack of support services such as child care would leave many workers with care would leave many workers with modest net incomes or keep many modest net incomes or keep many from working full time. from working full time.

Some of the poor would refuse to work, Some of the poor would refuse to work, only work now and then, or would only work now and then, or would perform so poorly on the job that perform so poorly on the job that employers would reject them. employers would reject them.

Millions of American children would not Millions of American children would not be obtaining the education they need be obtaining the education they need to thrive in an increasingly to thrive in an increasingly sophisticated employment market. This sophisticated employment market. This would feed the poverty pipeline, would feed the poverty pipeline, making them the next generation of making them the next generation of low-paid, low-skill workers. low-paid, low-skill workers.

A significant percent of the adult poor A significant percent of the adult poor would not be helped because they are would not be helped because they are aged, disabled, or otherwise unsuited aged, disabled, or otherwise unsuited for employment. for employment.

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

The American PoorThe American Poor

About 15% of the American populationAbout 15% of the American population Some 46 million peopleSome 46 million people Another 35 million or more very low-Another 35 million or more very low-

income. income. Among this large low-income Among this large low-income

population, a significant percentage population, a significant percentage cycle into and out of the welfare cycle into and out of the welfare program—TANF, EITC, SNAP, Medicaid. program—TANF, EITC, SNAP, Medicaid.

The Causes of Poverty are The Causes of Poverty are different for the various different for the various groups that make up the groups that make up the

poor. poor.

The Poverty Population The Poverty Population is very Diverse and the is very Diverse and the Causes are ComplexCauses are Complex

The poor include the elderly, single The poor include the elderly, single mothers and their children, mothers and their children, employed and poorly employed employed and poorly employed adults (often heads of families), adults (often heads of families), migrant farm workers, the disabled, migrant farm workers, the disabled, the homeless, the addicted and the homeless, the addicted and many other groups. many other groups.

The reasons they are poor are The reasons they are poor are complex and diverse. complex and diverse.

The poor are also spread across the The poor are also spread across the nation: they live in all states and nation: they live in all states and regions and they live in urban, regions and they live in urban, suburban and rural communities. suburban and rural communities.

Many theories about the causes of Many theories about the causes of poverty focus on one or two groups of poverty focus on one or two groups of the poor, often homeless people, the poor, often homeless people, people who abuse drugs and/or people who abuse drugs and/or alcohol, women who have children alcohol, women who have children out-of-wedlock, or the men who out-of-wedlock, or the men who abandon their children. abandon their children.

These theories often assume that These theories often assume that everyone who is poor fits one profile, everyone who is poor fits one profile, receives welfare, and is a minority. receives welfare, and is a minority.

But these ideas are both incorrect and But these ideas are both incorrect and too narrow. Reality is more complex. too narrow. Reality is more complex.

A few facts:A few facts:

American poor tend not to be American poor tend not to be impoverished for really long periods. impoverished for really long periods.

Poverty spells generally last less than a Poverty spells generally last less than a year, often much shorter periods. year, often much shorter periods.

Most of the poor do not receive any Most of the poor do not receive any type of cash welfare. type of cash welfare.

Most of the poor are poor for too short a Most of the poor are poor for too short a period to even apply for cash welfare. period to even apply for cash welfare.

Most who receive cash welfare are on Most who receive cash welfare are on the rolls a short time. the rolls a short time.

Only about 15 percent of cash welfare Only about 15 percent of cash welfare recipients receive assistance for more recipients receive assistance for more than three years. than three years.

America’s poor generally grew up in America’s poor generally grew up in low-income and poor families. low-income and poor families.

The next generation of poor and The next generation of poor and economically marginal people are not economically marginal people are not being raised in well-educated, middle-being raised in well-educated, middle-income or wealthy families.income or wealthy families.

The poor and economically marginal The poor and economically marginal are overwhelmingly poorly educated. are overwhelmingly poorly educated.

The well-educated are rarely poor. The well-educated are rarely poor. Unfortunately, a large percentage of all Unfortunately, a large percentage of all

American youth, particularly minority American youth, particularly minority youth, are poorly educated. youth, are poorly educated.

Two Basic Theories of the Two Basic Theories of the Causes of Poverty—The Public Causes of Poverty—The Public

Likes Simple AnswersLikes Simple Answers

I. Cultural/BehavioralI. Cultural/Behavioral

II. Structural/EconomicII. Structural/Economic

Cultural/Behavioral theories make the Cultural/Behavioral theories make the case that the only real cause of poverty case that the only real cause of poverty is the behavior, values, and culture of is the behavior, values, and culture of the poor.the poor.

A significant example it is argued, is the A significant example it is argued, is the contempt many of the poor have for contempt many of the poor have for education. education.

The opposite view: Structural/economic The opposite view: Structural/economic theories usually contain some behavioral theories usually contain some behavioral component, but argue that the component, but argue that the precipitating cause of poverty is a lack precipitating cause of poverty is a lack of equal opportunity for all Americans. of equal opportunity for all Americans.

Rank’s example of monopoly. Rank’s example of monopoly.

Structural/Behavioral theories point to:Structural/Behavioral theories point to: unfair or unequal economic opportunitiesunfair or unequal economic opportunities failing or failed educational systems failing or failed educational systems

(particularly for children in low-income (particularly for children in low-income neighborhoods)neighborhoods)

lack of powerful interest groups (including lack of powerful interest groups (including unions) to represent the needs of middle-unions) to represent the needs of middle-income and low-income citizensincome and low-income citizens

the ability of well-financed groups to wield the ability of well-financed groups to wield undue influence in the political system.undue influence in the political system.

The divide between conservatives, The divide between conservatives, moderates and liberals boils down to moderates and liberals boils down to this:this:

Conservatives favor Conservatives favor cultural/behavioral explanations.cultural/behavioral explanations.

Moderates and liberals favor Moderates and liberals favor structural/institutional theories with a structural/institutional theories with a behavioral component. behavioral component.

A popular behavioral/cultural theory A popular behavioral/cultural theory is represented by the writings of is represented by the writings of Myron MagnetMyron Magnet

He is employed by a the Manhattan He is employed by a the Manhattan Institute—A right-wing think tank. Institute—A right-wing think tank.

He wrote a book entitled: The Dream He wrote a book entitled: The Dream and the Nightmare. and the Nightmare.

Magnet: People become poor not Magnet: People become poor not because they lack social, political, and because they lack social, political, and economic opportunities, but because economic opportunities, but because they lack the inner resources to seize the they lack the inner resources to seize the ample opportunities that surround them. ample opportunities that surround them.

The poor represent those who have not The poor represent those who have not learned or who reject mainstream learned or who reject mainstream values.values.

Magnet: Poverty is basically a destitution Magnet: Poverty is basically a destitution

of the soul. The poor have failed of the soul. The poor have failed society’s function of soulcraft. society’s function of soulcraft.

Magnet: An individual’s values and Magnet: An individual’s values and behavior determines his/her behavior determines his/her opportunities, economic or otherwise. opportunities, economic or otherwise.

Those values come from each Those values come from each persons’ family and environment. persons’ family and environment.

The poor are the product of flawed The poor are the product of flawed cultures and dysfunctional parents.cultures and dysfunctional parents.

This is a very popular theory among This is a very popular theory among conservatives. conservatives.

It is not unequal opportunity or It is not unequal opportunity or resources that makes people poor, it resources that makes people poor, it is the flawed character of their parents is the flawed character of their parents and themselves that make them poor. and themselves that make them poor.

In a new book (Falling Apart) a well-In a new book (Falling Apart) a well-known critic of the poor (Charles known critic of the poor (Charles Murray) focuses on poor whites.Murray) focuses on poor whites.

He documents the decline in He documents the decline in educational attainment among poor educational attainment among poor whites, declines in marriage among whites, declines in marriage among poor whites, the rising out-of-wedlock poor whites, the rising out-of-wedlock rate, the weak attachment of poorly rate, the weak attachment of poorly educated whites, particularly males, educated whites, particularly males, to the job market, drug and alcohol to the job market, drug and alcohol abuse, and rising dependence on abuse, and rising dependence on social welfare programs. social welfare programs.

Murray admits that economic Murray admits that economic opportunities for the poorly educated opportunities for the poorly educated of all races and ethnicities have of all races and ethnicities have declined sharply, but argues that this declined sharply, but argues that this is not the problem. is not the problem.

The problem he says is that the The problem he says is that the white poor are simply moral trash.white poor are simply moral trash.

It is not opportunity that limits them, It is not opportunity that limits them, it is their flawed culture. it is their flawed culture.

(The polls show that most of the (The polls show that most of the people Murray is referring to are people Murray is referring to are Republicans.)Republicans.)

Murray has long argued that one of Murray has long argued that one of the key factors in creating the wrong the key factors in creating the wrong culture for the poor is welfare. culture for the poor is welfare.

Welfare, he argues, undermines the Welfare, he argues, undermines the initiative of the poor and condemns initiative of the poor and condemns them to a life of dependency and them to a life of dependency and poverty which they pass on to their poverty which they pass on to their children. children.

His solution: Abolish these programs. His solution: Abolish these programs.

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

Murray also attacks SNAP and Murray also attacks SNAP and Medicaid. Medicaid.

A Few Other Behavioral Theories that had an A Few Other Behavioral Theories that had an influence on welfare reforminfluence on welfare reform::

Lawrence Mead - poorly designed welfare Lawrence Mead - poorly designed welfare programs (no emphasis on work for the programs (no emphasis on work for the able-bodied)able-bodied)

Katz - welfare can sustain povertyKatz - welfare can sustain poverty

James Payne - expectant giving.James Payne - expectant giving.

Structural/Economic Theories: An ExampleStructural/Economic Theories: An Example

Structural/Economic Theories: Popular with Moderates Structural/Economic Theories: Popular with Moderates and Liberalsand Liberals

1. William J. Wilson, black scholar interested in 1. William J. Wilson, black scholar interested in understanding black poverty in the inner city. understanding black poverty in the inner city.

Migration of black Americans to inner Migration of black Americans to inner cities.cities.

Changes that have taken place in the Changes that have taken place in the employment market of inner cities (skills employment market of inner cities (skills mismatch/spatial mismatch)mismatch/spatial mismatch)

We now often refer to the Midwest as the We now often refer to the Midwest as the rust beltrust belt

Impact of idleness on inner-city men, Impact of idleness on inner-city men, women and growth of welfare usewomen and growth of welfare use

Impact of civil rights laws (selective Impact of civil rights laws (selective out-migration)out-migration)

The Contagion Effect on public The Contagion Effect on public schools and all other services that schools and all other services that depended on the local tax base. depended on the local tax base.

The effect of infrastructure decline The effect of infrastructure decline on public attitudes and morale. on public attitudes and morale.

The evidence on this theory.The evidence on this theory.

Wilson most recent book “More Than Wilson most recent book “More Than Just Race” focuses on why young black Just Race” focuses on why young black men suffer high rates of unemployment men suffer high rates of unemployment and underemployment. and underemployment.

He argues that the answers are He argues that the answers are structural.structural.

The underlying cause he believes is the The underlying cause he believes is the lack of quality education for so many lack of quality education for so many young black people that leave them young black people that leave them not only uneducated, but vulnerable to not only uneducated, but vulnerable to bad values.bad values.

Yet Wilson’s data show that young Yet Wilson’s data show that young black women are often more black women are often more successful in schools and universities successful in schools and universities than young black men. than young black men.

Why are young black men more Why are young black men more likely to struggle in school? likely to struggle in school?

Wilson examines Patterson’s Cool Wilson examines Patterson’s Cool Pose Culture argumentPose Culture argument

Wilson then turns to why the Wilson then turns to why the unemployment rate is so high for unemployment rate is so high for poorly educated black men. poorly educated black men.

Less educated and skilled than Less educated and skilled than unemployed white malesunemployed white males

Physical and social isolation from Physical and social isolation from workwork

Change in types of jobs—more Change in types of jobs—more service rather than manufacturingservice rather than manufacturing

Wage and status reservationsWage and status reservations Subculture of defeatismSubculture of defeatism

Attraction to crime (glamorization of Attraction to crime (glamorization of crime)crime)

Criminal backgrounds become one Criminal backgrounds become one more barrier for many black males. more barrier for many black males.

The issues Wilson deals with relate The issues Wilson deals with relate primarily to the changes that have primarily to the changes that have taken place in the types of jobs our taken place in the types of jobs our society offers, where they are (often society offers, where they are (often in suburbs and other countries), the in suburbs and other countries), the skills one has to have to obtain those skills one has to have to obtain those jobs, and how poorly the jobs pay jobs, and how poorly the jobs pay that they can obtain. that they can obtain.

They also involve the role that They also involve the role that education plays in success these education plays in success these days, and various liabilities anyone days, and various liabilities anyone suffers if they are poorly educated. suffers if they are poorly educated.

The role of culture in misdirecting the The role of culture in misdirecting the aspirations of so many young people. aspirations of so many young people.

He is very critical of the majority of He is very critical of the majority of rap music because he finds most of it rap music because he finds most of it hostile to women, children, honest hostile to women, children, honest labor and the straight life. labor and the straight life.

Wilson concludes that culture is Wilson concludes that culture is important and that a flawed culture can important and that a flawed culture can damage people and their opportunities. damage people and their opportunities.

Wilson believes that to break this cycle Wilson believes that to break this cycle you have to teach the poor a more you have to teach the poor a more successful culture and to do so you successful culture and to do so you must start early –aged three or even must start early –aged three or even younger. younger.

But, Wilson emphasizes that But, Wilson emphasizes that disadvantaged environments set off disadvantaged environments set off the whole chain of misfortune for poor the whole chain of misfortune for poor and low-income children and low-income children

2. 2. James TobinJames Tobin

a. A well-known scholar who documented the a. A well-known scholar who documented the relationship between the health of the economy relationship between the health of the economy and the poverty rate.and the poverty rate.

b. He also found that a healthy economy does not b. He also found that a healthy economy does not work as well today because:work as well today because:

Many people lack the skills required by our Many people lack the skills required by our

increasingly sophisticated economyincreasingly sophisticated economy So many jobs pay a poverty-level wageSo many jobs pay a poverty-level wage Changes in welfare population—more single Changes in welfare population—more single

parents who face challenges in working full-parents who face challenges in working full-time. time.

So many poor quality jobs.So many poor quality jobs.

What do the theories tell us about poverty and welfare What do the theories tell us about poverty and welfare reform?reform?

Poverty is not a single problem and dealing with Poverty is not a single problem and dealing with it takes a complex set of policies.it takes a complex set of policies.

Have to take into consideration the problems Have to take into consideration the problems caused by old age, illness, injury, high caused by old age, illness, injury, high unemployment and subemployment, and many unemployment and subemployment, and many other issues. other issues.

Education is now critical. People need more Education is now critical. People need more education today than at any other time in our education today than at any other time in our history and many Americans are not getting the history and many Americans are not getting the education they need to be competitive. education they need to be competitive.

The economy is important, but so is behavior, The economy is important, but so is behavior, culture, and attitudes toward education. culture, and attitudes toward education.

There is a subgroup within every ethnic and There is a subgroup within every ethnic and racial group that engages in behavior that is racial group that engages in behavior that is self-destructive. self-destructive.

Opportunity is not equal and one of the best Opportunity is not equal and one of the best ways to improve the playing field is through ways to improve the playing field is through quality education for all young Americans.quality education for all young Americans.

May not be able to help all adults but the May not be able to help all adults but the evidence that we will cover later strongly evidence that we will cover later strongly suggest that most children can be helped. suggest that most children can be helped.