Poverty, by America

Poverty, by America Plot Summary

Introduction

Poverty in America represents a profound paradox that challenges our fundamental understanding of prosperity, justice, and societal responsibility. Despite being the wealthiest nation in human history, millions of Americans continue to live in poverty—not because of insufficient resources, but because of deliberate policy choices, structural barriers, and systemic exploitation. This contradiction demands that we reconsider conventional narratives about poverty as primarily resulting from individual failings or cultural deficiencies. By examining how exploitation drives poverty despite government spending, how safety nets fail the poorest Americans, and how predatory systems extract wealth from struggling communities, we can begin to understand poverty not as a natural condition but as a manufactured crisis. This perspective shifts our focus from blaming individuals to confronting the structural forces that create and maintain poverty, ultimately recognizing our collective responsibility to dismantle these systems and build alternatives that distribute opportunity more equitably. The analysis reveals that poverty persists not because we lack solutions, but because we have designed economic and social systems that benefit some at the expense of others.

Chapter 1: The Paradox of Poverty Amid Abundance: A Manufactured Crisis

Poverty in America manifests as a complex web of interconnected challenges that trap millions in cycles of hardship. While official metrics define poverty through income thresholds—$13,590 for an individual and $27,750 for a family of four in 2022—these numbers fail to capture the multidimensional reality of being poor in one of the world's wealthiest nations. The physical toll appears in the backaches of home health aides, the feet of cashiers forced to stand for entire shifts, and the skin rashes of maids exposed to harsh cleaning chemicals. Children in impoverished neighborhoods suffer from asthma triggered by mold and cockroach allergens, while lead poisoning causes irreversible neurological damage. Despite the Affordable Care Act, thirty million Americans remain completely uninsured. Violence disproportionately impacts poor communities, with many impoverished individuals carrying physical and psychological scars from childhood trauma. Studies show that over 40 percent of formerly incarcerated individuals in Massachusetts had witnessed a murder as children, while 34 percent of parents investigated by Child Protective Services in New Jersey grew up with violence in their homes. Housing instability represents another defining feature of American poverty. With rents soaring while incomes stagnate, most impoverished families spend at least half their income on housing, with one in four spending over 70 percent on rent and utilities. This economic pressure has made eviction commonplace, with approximately 3.6 million eviction filings occurring annually. Employment offers little stability for the poor. Half of all new positions disappear within a year, and jobs once providing security have transformed into precarious arrangements. The manufacturing sector, still perceived as offering stable employment, now employs over a million temporary workers. Income volatility has doubled since 1970, with wages fluctuating dramatically month-to-month. America has embraced the proliferation of low-quality jobs offering minimal pay, no benefits, and few guarantees, with some industries experiencing workforce turnover exceeding 50 percent annually. Perhaps most devastating is how poverty diminishes human potential. It consumes mental bandwidth, forcing individuals to focus on immediate crises at the expense of long-term planning. Studies show that poverty reduces cognitive capacity more than a sleepless night, as the constant stress of scarcity taxes mental resources. This "bandwidth tax" explains why poverty can lead to decisions that appear shortsighted to those not experiencing scarcity—the urgency of present emergencies overwhelms all other concerns. The persistence of poverty amid abundance reflects a profound failure of policy rather than insufficient resources. The gap separating everyone below the poverty line from economic security amounts to approximately $177 billion annually—less than 1 percent of GDP and less than the value of food Americans throw away each year. This relatively modest sum could ensure every person in America has safe, affordable housing, could end homelessness and hunger, and could provide every child a fair shot at success. The crisis of poverty persists not because we cannot solve it, but because our economic and political systems are designed to maintain it.

Chapter 2: Exploitation as the Engine of Poverty: Labor, Housing, and Finance

Exploitation forms the bedrock of American poverty, operating through multiple interconnected systems that extract resources from vulnerable populations. This extraction occurs not because of resource scarcity but through deliberate mechanisms that transfer wealth upward. At the heart of this process lies labor exploitation—the systematic underpayment of workers relative to the value they produce. When corporations pay poverty wages, they extract maximum profit while shifting the burden of workers' basic needs onto government assistance programs and the workers themselves. Consider Julio Payes, a permanent resident from Guatemala who worked eighty hours weekly at two minimum-wage jobs in California. Despite working sixteen-hour days, seven days a week, Julio could barely afford the single unfurnished room he shared with his mother and two siblings. His exhaustion was so severe that he once fainted in a grocery store. His younger brother once asked how much it would cost to "buy one hour" of Julio's time to play together—a heartbreaking illustration of how exploitation steals not just fair compensation but also human connection. For decades, economists maintained that raising minimum wages would increase unemployment, following theories that relied on "hypothetical data" rather than empirical evidence. This assumption remained largely untested until economists conducted natural experiments comparing employment across state lines after minimum wage increases. They found no significant employment decline in states that raised wages, contradicting conventional economic wisdom. Julio didn't have to be paid poverty wages for his job to exist—if he had worked at McDonald's in Denmark, his paycheck would have been twice as large. The deterioration of labor conditions in America coincided with the decline of unions. Between the late 1940s and late 1970s, nearly a third of U.S. workers carried union cards, and their collective bargaining power ensured that economic growth benefited workers through higher wages and better conditions. Union power eroded during the stagflation crisis of the 1970s and faced direct political attacks in the 1980s. When President Reagan fired 13,000 striking air traffic controllers in 1981, he signaled that corporations could crush unions with minimal consequences. Today, only about one in ten American workers belongs to a union, with 94 percent of private sector employees lacking union representation. Housing exploitation parallels labor exploitation, with landlords in poor neighborhoods typically earning higher profits than those in affluent areas. Research examining the Rental Housing Finance Survey found that after deducting all expenses, apartments in poor neighborhoods generated approximately $100 monthly in profit, while those in rich neighborhoods yielded only $50. This pattern holds true in cities with average or below-average housing costs, where landlords in low-income areas benefit from significantly lower expenses while charging rents only slightly below market rates. Financial exploitation completes this extractive system. Banks have increasingly raised fees and minimum balance requirements, making basic banking services inaccessible to many low-income Americans. In 2019, the largest U.S. banks charged customers $11.68 billion in overdraft fees, with just 9 percent of account holders—those with average balances below $350—paying 84 percent of these charges. Meanwhile, payday lenders offer small loans with astronomical interest rates—reaching 664 percent APR in Texas and 460 percent in California. The cumulative effect is staggering: over $11 billion in overdraft fees, $1.6 billion in check cashing fees, and up to $9.8 billion in payday loan fees annually—over $61 million extracted daily from low-income Americans.

Chapter 3: The Broken Safety Net: How Aid Fails Those Most in Need

The American social safety net operates with a fundamental imbalance that fails those in deepest poverty while providing substantial benefits to middle and upper-income households. This bifurcated welfare state creates a perverse reality where the poorest Americans receive the least assistance, while affluent households benefit from invisible welfare through tax expenditures and subsidies. When the COVID-19 pandemic struck in 2020, the U.S. government responded with unprecedented relief measures that produced remarkable results: poverty actually fell during the worst economic downturn in nearly a century, with child poverty cut by more than half. This achievement demonstrated that poverty is not inevitable but a policy choice. Yet rather than celebrating this success, many Americans expressed concern that government assistance was discouraging work. Politicians and media outlets blamed expanded unemployment benefits for labor shortages, claiming the program had "demonized work so Americans would become dependent on big government." This narrative seemed intuitive but proved wrong. When 25 states ended emergency benefits early in 2021, researchers found no significant increase in employment compared to states that maintained benefits. What they did find was decreased consumer spending in states that cut aid, as residents had less money to circulate in local economies. This reflexive suspicion of government assistance has deep historical roots. Since capitalism's earliest days, elites have argued that poverty relief undermines the work ethic. In 1786, Joseph Townsend wrote that "only hunger" could motivate the poor to labor, while Daniel Defoe claimed in 1704 that almsgiving would discourage work. This ideology persists in modern political discourse, despite empirical evidence contradicting these claims. Studies tracking spending patterns show that families receiving government assistance allocate more of their budget to necessities like housing and food than other Americans, while spending less on alcohol, tobacco, and entertainment. Cash welfare for poor families has been dramatically reduced since the 1996 reforms, with states now spending only a fraction of Temporary Assistance for Needy Families funds on direct cash assistance. When Aid to Families with Dependent Children was replaced by TANF, states gained considerable discretion over fund distribution. By 2020, for every dollar budgeted for TANF, poor families directly received just 22 cents. The remaining funds were diverted to everything from juvenile justice administration to marriage promotion programs. In Mississippi, welfare dollars even paid for speeches never given by former NFL quarterback Brett Favre and events featuring a professional wrestler. Meanwhile, states accumulated nearly $6 billion in unspent welfare funds while child poverty rates remained stubbornly high. Similarly, access to disability benefits has become increasingly restricted despite rising applications. Between 1996 and 2010, disability applications increased by 130 percent, but approvals rose by only 68 percent. Today, roughly a third of applications are approved, down from about half in the mid-1990s. This process often requires multiple applications and legal representation, with attorneys collecting over $1 billion annually from Social Security funds—money that could otherwise support disabled Americans. The administrative burden placed on poor Americans seeking assistance further exacerbates these problems. Complex application processes, frequent recertification requirements, and intrusive verification procedures create substantial barriers to accessing benefits. These administrative hurdles lead to high rates of eligible individuals not receiving assistance, with participation rates for some programs falling below 70%. By contrast, tax benefits for higher-income households require minimal paperwork and face little scrutiny. This broken safety net reflects not a lack of resources but a deliberate policy choice to make assistance difficult to access for those who need it most.

Chapter 4: Opportunity Hoarding: How Privilege Perpetuates Inequality

America's vast inequality manifests not just in who receives government benefits but in how affluent Americans actively secure advantages for themselves and their children while blocking access for others. This process, known as "opportunity hoarding," involves using wealth to purchase exclusivity—in neighborhoods, schools, and social networks—creating a system where privilege reproduces itself across generations. Despite our immense national wealth, many middle and upper-class Americans experience persistent anxiety about their economic security. This anxiety drives them to protect their advantages through various means, including exclusionary zoning laws that prevent affordable housing development in their communities. Exclusionary zoning proliferated after the civil rights movement outlawed explicit racial segregation. When the Supreme Court prohibited racial zoning, cities simply renamed their districts from explicitly racial designations to facially neutral language that achieved the same segregative effect. Today, approximately 75 percent of residential land in many American cities remains zoned exclusively for single-family homes, a distinctly American approach to urban planning not found in countries like Greece, Germany, or Bulgaria. These laws effectively wall off high-opportunity neighborhoods from low-income families, concentrating poverty in specific areas and limiting access to quality schools, safe environments, and economic opportunities. Progressive cities have often built the highest walls, not because liberals have stronger segregationist tendencies but because these cities experienced larger Black population increases during the Great Migration. While Democrats are more likely than Republicans to support public housing in the abstract, liberal homeowners are no more welcoming of affordable housing in their own neighborhoods than conservatives. One study found that conservative renters were actually more likely to support apartment building proposals in their communities than liberal homeowners. This pattern reveals how economic self-interest often trumps political ideology when it comes to maintaining residential segregation. Opportunity hoarding extends to education, where affluent parents leverage their resources to secure advantages for their children. By concentrating in exclusive communities with well-funded schools, wealthy families create educational environments that function as "social status preservation machines," preparing their children for college and professional success. Economic integration would challenge this arrangement by requiring privileged students to share classrooms with disadvantaged peers who might face learning challenges or trauma from poverty. Rather than support integration that might benefit all children, affluent parents often withdraw to private schools or exclusive public districts. The historical pattern of private opulence alongside public squalor accelerated in the 1970s with California's tax revolt. Proposition 13, which capped property taxes and froze assessed values, passed with 65 percent support from both Democrats and Republicans. This measure boosted private fortunes while gutting public services, causing California to plummet from first in education funding to ninth from the bottom. The tax revolt spread nationwide, inspiring federal tax cuts that slashed revenues and reduced housing assistance by nearly 70 percent. These tax revolts were not merely responses to government overreach but reactions to racial integration. As civil rights legislation required public spaces to be shared across racial lines, white families withdrew from those spaces and resisted paying taxes they perceived as subsidizing Black Americans. This system of opportunity hoarding harms the poor not only through disinvestment in public goods but by creating private alternatives that replace public institutions as the primary sources of opportunity. As affluent citizens rely less on public services, they withdraw support further, creating a self-reinforcing cycle that commodifies opportunity itself. The best way to ensure unequal opportunity is to charge for it—and that's precisely what America has done. Breaking down these barriers requires not just policy changes but challenging the narratives that justify segregation and exclusion as natural or inevitable outcomes rather than deliberate choices.

Chapter 5: Consumer Exploitation: Why the Poor Pay More for Less

Exploitation extends beyond the workplace into consumer markets, where the poor systematically pay more for basic necessities and services than their more affluent counterparts. This consumer exploitation thrives when people have limited choices due to discrimination, lack of resources, or structural barriers—a reality that disproportionately affects low-income Americans. The paradox of poverty is that those with the least resources often face the highest prices and fees for essential goods and services, creating a "poverty premium" that further depletes limited budgets. In the rental housing market, landlords in poor neighborhoods typically earn higher profits than those in affluent areas. Research examining the Rental Housing Finance Survey found that after deducting all expenses—both routine costs like taxes and insurance and irregular expenses like repairs—apartments in poor neighborhoods generated approximately $100 monthly in profit, while those in rich neighborhoods yielded only $50. This pattern holds true in cities with average or below-average housing costs, where landlords in low-income areas benefit from significantly lower expenses while charging rents only slightly below market rates. Why don't poor families simply move to better neighborhoods if the rent difference is minimal? Because moving requires resources they often lack. Poor renters frequently have eviction records, bad credit, or no credit history, making it difficult to secure housing in better areas. Discrimination further limits options, particularly for non-white families and those with children. Housing audit studies consistently show that Black renters face routine discrimination when searching for apartments. Even when affordable homes exist in better neighborhoods, poor families are systematically excluded from accessing them through application fees, security deposit requirements, and screening criteria that effectively serve as barriers to entry. Financial exploitation follows similar patterns. Banks have increasingly raised fees and minimum balance requirements, making basic banking services inaccessible to many low-income Americans. In 2019, the largest U.S. banks charged customers $11.68 billion in overdraft fees, with just 9 percent of account holders—those with average balances below $350—paying 84 percent of these charges. A single overdraft might cost $33.58, and multiple charges can quickly accumulate, turning a $20 shortfall into $200 in fees. This banking environment has created a market for alternative financial services that extract even more from those with the least. Check cashing outlets charge between 1 and 10 percent of a check's value, meaning a worker earning $10 hourly might lose one to ten hours' worth of wages just to access their money. In 2020, Americans spent $1.6 billion solely on check cashing fees. Payday lenders offer small loans with astronomical interest rates—reaching 664 percent APR in Texas and 460 percent in California. Though marketed as short-term solutions, these loans typically trap borrowers in cycles of debt, with four in five payday loans being rolled over or renewed. The average borrower remains indebted for five months, paying $520 in fees to borrow $375. These exploitative practices persist because they target customers with few alternatives. Payday lenders compete on location and processing speed—not cost—knowing their desperate clients cannot comparison shop. Commercial banks could offer similar short-term loans at much lower rates and still profit, but they avoid serving low-income customers. Meanwhile, conventional banks like Wells Fargo and JPMorgan Chase bankroll the payday lending industry, creating a system where everyone profits except the poor themselves. This "predatory inclusion," as historian Keeanga-Yamahtta Taylor calls it, incorporates marginalized people into financial systems through exploitative terms when fair ones are denied, creating a dual system where the same institutions that create wealth for some systematically drain resources from others.

Chapter 6: The Welfare Paradox: How We Subsidize the Affluent

When Americans think of welfare, they typically envision programs targeting the poor—food stamps, housing vouchers, cash assistance. Yet the largest welfare programs in America primarily benefit middle and upper-income households through tax expenditures, subsidies, and benefits that remain largely invisible to their recipients. In 2020, the federal government spent $193 billion on homeowner subsidies—far exceeding the $53 billion allocated for low-income housing assistance. The mortgage interest deduction primarily benefits high-income families, who can claim it for up to thirty years, while cash welfare for poor parents is limited to five years lifetime maximum. When all public benefits are counted, America's welfare state ranks among the world's largest, but this generosity disproportionately flows to those well above the poverty line. Nearly all Americans benefit from some form of government assistance. The political scientist Suzanne Mettler reports that 96 percent of American adults have relied on major government programs during their lives. Student loans appear to come from private banks but are guaranteed by the federal government. Health insurance seems provided by employers, but this arrangement receives one of the largest tax breaks in the federal budget—estimated to cost $316 billion in 2022 and projected to exceed $600 billion by 2032. In total, the United States spent $1.8 trillion on tax breaks in 2021, exceeding all discretionary spending combined. These invisible benefits create a perverse political dynamic. Americans who benefit most from government largesse—generally white, affluent families—harbor the strongest anti-government sentiments and vote accordingly. They support politicians who promise to cut "government spending," knowing their own benefits won't be targeted. Meanwhile, the poor, who recognize government's positive role in their lives, vote at lower rates. This paradox helps explain why America continues to subsidize affluence while neglecting poverty, despite spending more than enough to eliminate it entirely. The COVID-19 pandemic demonstrated that bold government action can dramatically reduce poverty when political will exists. Emergency measures like expanded unemployment benefits, stimulus payments, and rental assistance cut child poverty by more than half and prevented an eviction crisis even as the economy contracted. Yet rather than celebrating this achievement, many Americans expressed concern that government assistance was discouraging work. Politicians and media outlets blamed expanded unemployment benefits for labor shortages, despite research showing that states that ended emergency benefits early saw no significant increase in employment compared to states that maintained benefits. This reflexive suspicion of government assistance has deep historical roots. Since capitalism's earliest days, elites have argued that poverty relief undermines the work ethic. In 1786, Joseph Townsend wrote that "only hunger" could motivate the poor to labor, while Daniel Defoe claimed in 1704 that almsgiving would discourage work. This ideology persists in modern political discourse, from Franklin Roosevelt calling welfare a "subtle destroyer of the human spirit" to Ronald Reagan's anecdotes about welfare queens to Bill Clinton's promise to "end welfare as we know it" because it created a "cycle of dependency." These narratives persist despite empirical evidence showing that families receiving government assistance allocate more of their budget to necessities like housing and food than other Americans, while spending less on alcohol, tobacco, and entertainment. The welfare paradox reveals a fundamental hypocrisy in American social policy—we generously subsidize the affluent while imposing strict conditions, time limits, and stigma on assistance to the poor. This arrangement reflects and reinforces existing power structures, ensuring that government benefits flow primarily to those with political influence rather than those with the greatest need. Addressing this paradox requires making visible the full range of government benefits and applying consistent standards across programs, regardless of who benefits.

Chapter 7: Beyond Individual Solutions: The Case for Structural Reform

Meaningful progress toward poverty abolition requires moving beyond individual-focused solutions to address the structural forces that create and maintain poverty. While personal responsibility narratives dominate public discourse about poverty, they fail to acknowledge how economic and social systems constrain individual choices and systematically disadvantage certain groups. Structural reforms that change the rules of the economic game are therefore essential for creating a society where poverty is truly abolished rather than merely managed. The COVID-19 pandemic demonstrated that bold government action can dramatically reduce poverty when political will exists. Emergency measures like expanded unemployment benefits, stimulus payments, and rental assistance cut child poverty by more than half and prevented an eviction crisis even as the economy contracted. These achievements prove that poverty is not inevitable but a policy choice—one we can choose differently. The gap separating everyone below the poverty line from economic security amounts to approximately $177 billion annually—less than 1 percent of GDP and less than the value of food Americans throw away each year. This relatively modest sum could ensure every person in America has safe, affordable housing, could end homelessness and hunger, and could provide every child a fair shot at success. Where would this money come from? The most obvious source is tax enforcement. The IRS estimates that the United States loses over $1 trillion annually in unpaid taxes, primarily due to avoidance by wealthy families and corporations. Companies like Facebook report billions in profits in tax havens like Ireland, while ultra-rich Americans pay only about 75 percent of taxes they legally owe, compared to 90 percent for most Americans. Congress should empower the IRS to pursue these tax cheats and implement a minimum corporate tax rate regardless of where profits are registered. Beyond enforcement, tax policy itself requires reform. Since 1962, effective tax rates have increased for poor, working-class, and middle-class Americans while decreasing for the wealthiest. The top marginal tax rate could be restored to 50 percent (as it was in 1986) or 70 percent (as in 1975), while the corporate tax rate could return to 35 percent (where it stood from 1993 through 2017) or 46 percent (its level from 1979 through 1986). Labor market reforms represent another essential component of structural change. Strengthening labor protections through increased minimum wages, expanded collective bargaining rights, and robust enforcement of workplace standards would immediately improve conditions for millions of workers. Between the late 1940s and late 1970s, nearly a third of U.S. workers carried union cards, and their collective bargaining power ensured that economic growth benefited workers through higher wages and better conditions. Restoring worker power through union revitalization and new forms of collective representation would help ensure that productivity gains translate into shared prosperity rather than concentrated wealth. Housing reform must address both affordability and segregation. Expanding tenant protections through just-cause eviction requirements, rent stabilization policies, and right-to-counsel in housing court would immediately reduce housing instability. Simultaneously, increasing the supply of affordable housing through expanded public housing, community land trusts, and inclusionary zoning requirements would address the fundamental shortage that drives exploitation. Breaking down exclusionary zoning laws that prevent affordable housing development in affluent communities would reduce segregation and expand access to opportunity-rich neighborhoods. Financial reform must address both predatory practices targeting poor communities and the broader financialization of the economy that prioritizes shareholder returns over worker compensation. Interest rate caps on consumer loans, expanded postal banking services, and requirements for low-cost basic banking accounts would reduce financial exploitation. Meanwhile, corporate governance reforms that give workers greater voice in company decisions could help redirect resources from executive compensation and shareholder returns toward wages and benefits. These structural reforms require political mobilization that brings together diverse constituencies around shared economic interests. Labor unions, tenant organizations, faith communities, and civil rights groups all play crucial roles in building the political power necessary to challenge entrenched interests. By connecting individual experiences of economic hardship to systemic causes, these movements can overcome the divide-and-conquer strategies that have historically undermined economic justice efforts. The path to poverty abolition ultimately requires recognizing that poverty is fundamentally about power—the power to shape economic rules, allocate resources, and determine who benefits from growth. By building collective power through organizing, coalition-building, and strategic advocacy, we can create the political conditions necessary for transformative change.

Summary

The persistence of poverty amid abundance in America represents not a failure of resources but a failure of moral imagination and political will. By examining the exploitative systems that extract wealth from vulnerable communities, the imbalanced safety net that provides least to those most in need, and the segregation that hoards opportunity for the privileged, we can understand poverty as a preventable injustice rather than an inevitable condition. This understanding shifts our focus from blaming individuals to transforming the structures that create and maintain poverty. Moving from understanding to action requires engagement at multiple levels—from consumer choices that align with our values to structural reforms that change the rules of our economic system. It means challenging the narratives that justify exploitation and segregation while building the political power necessary to implement alternatives. Most fundamentally, poverty abolition requires embracing our collective responsibility for creating a society where prosperity is truly shared, where opportunity is genuinely accessible to all, and where the dignity of every person is respected. This vision represents not merely a more just distribution of resources but a more complete realization of our shared humanity and democratic ideals.

About Author

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Matthew Desmond

Matthew Desmond is social scientist and urban ethnographer. He is the Maurice P. During Professor of Sociology and the Director of the Eviction Lab at Princeton University. He is also a Contributing Writer for The New York Times Magazine.Desmond is the author of over fifty academic studies and several books, including "Evicted: Poverty and Profit in the American City," which won the Pulitzer Prize for General Nonfiction, National Book Critics Circle Award, Carnegie Medal, and PEN / John Kenneth Galbraith Award for Nonfiction."Evicted" was listed as one of the Best Books of 2016 by The New York Times, New Yorker, Washington Post, National Public Radio, and several other outlets. It has been named one of the Best 50 Nonfiction Books of the Last 100 Years and was included in the 100 Best Social Policy Books of All Time.Desmond's research and reporting focuses on American poverty and public policy. He is the recipient of a MacArthur Fellowship, the American Bar Association’s Silver Gavel Award, and is an elected member of the American Philosophical Society. He has been listed among the Politico 50, as one of “fifty people across the country who are most influencing the national political debate.”

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