How is the poverty line calculated?

The Official Poverty Measure is based on the cost of food necessary to support a given family size. The cost of food is considered to require one-third of a family budget. The Department of Health and Human Services sets the poverty line by multiplying the cost of a specific set of foods by three, assuming that a family earning less than that amount does not have the means to afford basic necessities. The calculations take inflation into account but do not consider other factors affecting the cost of living, including price variation by region. Desmond asserts that the poverty line is an important but imperfect measure of poverty in the United States.

How did the change from ADFC to TANF affect poverty?

In 1996, Aid for Families with Dependent Children (ADFC) was replaced by Temporary Aid for Needy Families (TANF). While ADFC provided funds directly to poor families, TANF instead sends grants to states and lets the states decide how to spend the money. As a result, only 22 percent of the funds go directly to poor people as cash benefits, and many of the programs that states spend money on do not help people out of poverty. In addition, states are allowed to carry over unused funds, so much of the money has not been spent at all. Desmond argues that the change in programs has led to poor people receiving far less aid.

Why hasn’t increased social welfare spending decreased poverty?

Although government spending on social welfare programs has increased, there are two important reasons this has not decreased poverty. One is that most of the increase has gone to health care programs like Medicaid, in an era when health care costs have ballooned. The other is that less and less of the money reaches the poor as direct aid, Desmond says. Some programs that used to give cash benefits directly to poor Americans now send the money to states to use as they see fit. Desmond argues that other programs, like Social Security Disability Insurance, are so difficult to access that poor people end up spending significant funds on lawyers to help them qualify.

Does immigration increase poverty for native-born people?

Contrary to popular belief, immigration does not increase poverty for native-born Americans, Desmond says. Statistics show that poverty rates in states with immigration booms either remain steady or actually decrease, indicating that greater immigration can lead to prosperity, Desmond asserts. Immigrants tend to compete with other immigrants for jobs, says Desmond, so they do not push native-born Americans out of work. Finally, since the poorest immigrants are undocumented, they are not eligible for government aid such as welfare. Therefore, they do not keep aid from reaching native-born Americans. Immigration has no negative effect on poverty rates.

Does increasing the minimum also increase unemployment?

Although many people assume raising the minimum wage could cause higher unemployment, since labor costs would increase for businesses, in fact that has been shown to be untrue. When New Jersey raised its state minimum wage in 1992 and adjacent Pennsylvania did not, minimum-wage employment remained steady on both sides of the state border. Desmond asserts that raising the minimum wage has no effect on unemployment.

How does banking cost more for poor people?

Banking frequently costs the poor more because of the fee structures of conventional banks and the predatory lending practices of payday lenders. Overdraft fees and minimum balance requirements at conventional banks cost low-income customers more than affluent ones. When low-income people cannot access conventional banks, they are often forced to get loans from payday lenders, who can charge ultra-high interest rates the law forbids at conventional banks. These loans cost far more than loans at conventional banks.

What happens when the affluent use private versions of public services?

As people with higher incomes seek private versions of public services, they tend to withdraw their political support from efforts to fund public services, for instance, by advocating for tax cuts. With decreased funding, the quality of public services degrades. Soon people come to see the public version as inferior to the privately funded version, as if this were a natural quality of public goods rather than a result of affluent people taking money away from public systems.

How do zoning laws contribute to poverty?

Zoning laws, which limit the kinds of residential properties that can be built in a given area, effectively keep poor people from integrating into wealthier communities, Desmond asserts. Towns and neighborhoods with affluent residents often favor zoning laws that restrict the building of apartments or small houses, seeking to keep population density low. Since these are the kinds of residences more likely to house poor people, these zoning laws keep poor people away from the advantages of more affluent communities, such as better-funded schools and access to conventional banks.

How do corporations contribute to poverty?

Corporations use many tactics to lower their labor costs so as to inflate stock value while selling products at low prices. Over the past five decades, companies have worked to push unions out of many major industries, Desmond argues, leaving workers without the collective bargaining power that once protected their wages. Corporations increasingly rely on contract employees and gig workers for labor, forcing workers to compete to work for the lowest price. Noncompete agreements for even entry-level workers make it harder for people to move to higher-paying jobs. Workers are more productive than ever, for lower wages.

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