A History of Poverty in America: All Chapters

A History of Poverty in America: All Chapters

Poverty in Urban America: Its Causes and Cures by David Hilfiker introduction ¦ Chapter I ¦ Chapter II ¦ Chapter III ¦ Chapter IV ¦ Chapter V ¦ Display All
David Hilfiker

Introduction When Americans want to "do something" about poverty, we usually set about "improving poor people."1 We may

  • offer education or job training,
  • attempt to improve the parenting skills of young mothers,
  • require addiction treatment as a condition of receiving housing,
  • put a time limit on welfare benefits in order to motivate poor people to work, or
  • limit welfare benefits to discourage additional childbearing.

The practice of improving poor people ha a long history in the United States. Early reformers traced extreme poverty to intoxication, laziness, and other kinds of unacceptable behavior, so they tried to use public policy and philanthropy to elevate the character of poor people, hoping to change the unacceptable behavior. Later reformers emphasized evangelical religion, temperance legislation, punitive conditions for relief, the forced breakup of families, and threats of institutionalization … all with the purpose of "improving poor people." This approach rests in the belief that the primary causes of poverty are the individual characteristics of the poor themselves: ignorance, lack of training, addiction, laziness, poor character, sexual promiscuity, too many children, and so on. It's not surprising, of course, that a nation so strongly committed to individualism should also find the roots of poverty in individual characteristics. In this brief book I want to look from a different point of view. I want to suggest that the primary causes of poverty lie not so much in individual behavior but in social structures, in forces outside of the individual's control. This is not to deny that some poor people could use some improving (as could most of us), but it is to suggest that the primary causes of American poverty lie elsewhere: in segregation, the lack of jobs on which one might support a family, inadequate access to health care, inadequate education, non-existent vocational training, particular historical realities, and so forth. I am a physician. In 1983, after seven years as a Minnesota country doctor, I moved to Washington DC to practice medicine in the inner city. For five of those fifteen years my family and I lived in Christ House, a medical recovery shelter for homeless men. In 1990 we started Joseph's House, a community and hospice for eleven formerly homeless men dying with AIDs, where we also lived for three years. So, I am no stranger to the individual weaknesses of poor people. It is the nature of a doctor's work to see people in trouble, and it often seemed that the immediate causes of my patients' poverty lay in their own behavior. For some, addictions consumed their time and energy. Others couldn't (or wouldn't) cooperate with my medical treatment plans. Still others lacked parenting skills or had no discernible job skills. And some didn't seem to want to work. But the longer I worked with my patients the more obvious it became that virtually all of them were doing the best they could in the overwhelming environment they inhabited. The odds against which they were struggling, however, were overwhelming. In New American Blues,2 Earl Shorris writes about the "surround of force" confronting poor people. Living in the ghetto, one faces the drug trade, the problems within public housing, family violence, abuse, graffiti, landlords, criminals, illness, meanness, bad luck, guns, isolation, hunger, ethnic antagonisms, racism, and other obviously "bad" forces. But there are also some seemingly "good" forces that can make life miserable for the poor: the law, the media, government, helpers, merchandising, neighbors, police, and so on. And one has to contend with all of these forces—any one of which would be overwhelming—all at one time, without a break. When one problem is solved, three take its place. The cumulative effect of the "surround" is more than the sum of individual forces. There is no space to breathe. After fifteen years in the inner city, I no longer believe that poverty should best be attacked by improving poor people. The argument that inner-city poverty comes primarily from the individual weaknesses of poor people simply cannot be sustained. Among African-American children in this country, half live in poverty. Among African-American males between the ages of eighteen and thirty-four in the city of Washington, half are in the criminal justice system. There are only two forms of explanation for these (and many other similar) statistics. Either African-American people are genetically predisposed to poverty or something has happened to them! Charles Murray's arguments in The Bell Curve notwithstanding, the scientific consensus offers no support to genetic inferiority as a cause of poverty. In this book I will argue what should by now be obvious: something awful has been done to poor people in this country. But how does one explain, then, what appear to be significant rates of personal weaknesses among poor African Americans (and other groups of Americans in poverty)? How does one account for the extraordinarily high rates within the black ghettos of single parenthood (which is highly correlated with poverty), widespread substance abuse, poor parenting, criminal behavior? Where did it all begin? How did it perpetuate itself? Even after fifteen years of urban medical practice, I could not have said. So, I decided to find out. I volunteered to teach a course on the causes of urban poverty and began to read. I was often shocked at how little I had known. This is a brief summary of what I've learned.3 Although this book is specifically about black, urban, ghetto poverty, it is important to remember that most poor people in the United States are neither black nor urban. The poor in our country are split pretty evenly between white, black, and Latin American, and the majority lives in rural areas or, increasingly, in the suburbs. The meaning of the word "poverty," of course, is relative. For the purposes of simplicity, I will use the term "poor people" to refer to the economically poor, defined as those who live in families with incomes below the Federally determined poverty level. Although this definition of poverty is the most widely used in the United States, its history suggests that it probably understates the number of people who live in what most Americans consider poverty. The "official poverty level" first seeped into government parlance in 1961 when the Social Security Administration needed an objective measure of poverty for statistical purposes. A staff economist chose to develop a standard based on the cost of food. Since it was estimated at the time that the average American family spent about a third of its income on food, the poverty level was defined as the cost of a minimum adequate diet multiplied by three. The poverty levels (which increase with increasing family size) have subsequently been updated annually for price inflation. To determine a family's poverty status, its resource—defined as cash income before taxes—are compared with the appropriate threshold for its size. In 1998, the poverty level for a single individual was an income of $8,050 per year; for a family of four, the level was $16,450. The poverty level has been criticized both for being too low and too high. Because it excludes non-cash income (most importantly food stamps and housing subsidies), it can be criticized as too high for those who receive those benefits. On the other hand, the average American family in 1999 spends closer to one-fourth of its income on food than the one-third estimated in 1961, so it would be reasonable to reset the level by multiplying the least expensive food plan by four rather than by three. From a more practical point of view, the government fair market rent of $692 for a one-bedroom apartment is over 60% of the poverty level for a family of three. If food should cost 33% of that budget, that leaves 6% or $68 a month for all other expenses, including childcare and health care. In 1998, after almost a decade of economic boom times, when unemployment was at its lowest level in decades, 13.3% of all Americans, more than one out of every eight people lived below a poverty level that underestimates what most of us would consider poverty. Almost 20% of all American children (and over 50% of African-American children) live in poverty. Why? In the next pages, we will look at some answers.
Chapter I: The Formation of the "Black Ghetto" By the early 1950s, the black, inner-city ghetto was already well formed. African Americans already lived in highly segregated, densely concentrated urban areas. These ghettos, however, differed significantly from their modern counterparts. Their levels of "social organization" were intact, that is to say, informal social networks kept neighbors in touch with one another, formal social networks (churches, fraternal organizations, and volunteer organizations) brought people together, and institutions such as businesses and schools made community viable. Most people worked. Single-parent families were a distinct minority (about 17%). Levels of violence were low. Education were "integrated vertically," meaning that affluent, middle-class, working-class, and poor people all lived in relatively close proximity. This is not to overlook the often severe poverty (with its related conditions) that existed, but the social organization still present made these ghettos vastly different from their modern counterparts. They were societies unto themselves that mirrored the larger society. The seeds of the black ghetto's current problems had, however, already been planted. Most importantly, these areas were highly segregated. It had not always been so. Prior to the late 1800s, urban rich and poor, white and black lived in relatively close proximity, (whether they wanted to or not). The poor were often servants (or, previously, slaves) of the rich and so lived close by, and the still primitive modes of transportation made living close to the centers of business and commerce necessary for everyone. With the coming of large manufacturing factories to northern cities during the industrialization of the late 1800s, however, workers were needed and wages were unprecedented, so immigrant workers flocked to the United States from Europe, Asia, and every other area of the world. At the same time, efficient modes of transportation were coming into use, so the affluent were able to avoid this onslaught of "undesirables" by moving from the central cities. It was, in some ways, the beginnings of American suburbanization. Most immigrants could not afford to move away from the places where they worked, so they lived close to the factories and tended to live together in the same neighborhoods, choosing to live in a culture familiar to them. These were the first American urban ghettos. But foreigners were not only "immigrants." African-American agricultural workers from the South also poured into the northern industrialized cities. They were not only pulled into the North by the lure of decent wages but also pushed out of the South because of the joblessness due to the mechanization of southern agriculture. Like other immigrant groups, they settled in ghettos near their jobs. Unlike other immigrant groups, however, they stayed there. As workers from the white ethnic ghettos became more affluent over the course of one or two generations, they gradually moved out from their ghettos and dispersed into the general population. We don't speak of "Finnish ghettos" or "German ghettos" anymore. Segregation, of course, did not allow black people into white areas. Even those African Americans who became affluent were confined to black ghettos. The second great migration of African Americans from the South into northern cities occurred in the 1940s or 50s. Once again, they were pushed out of the South by increasing agricultural mechanization (especially the introduction of the mechanical cotton picker), and they were pulled north by decently paying jobs in the manufacturing centers of the cities. Because of continuing segregation, however, the geographical area of the black ghetto could expand only slowly and these new immigrants had few options. Population density increased constantly. By the 1950s, black people in the least segregated cities of America were more segregated than any other ethnic or racial group had ever been in any city in the United States. The second factor that would play increasing prominence in the formation of the modern black ghetto was the relative poverty of African Americans compared to European Americans. Discrimination in education, employment, and housing was, of course, legal, but there were other, less well-known causes of the relative poverty of black Americans. Poverty had been widespread among all ethnic groups during the Great Depression, but many Federal programs had helped to alleviate that poverty. Unfortunately, African Americans were often left out of those efforts. Two of the most important elements of social insurance introduced during the Depression, for instance, were Social Security and mandatory unemployment insurance, but they specifically excluded domestics and agricultural workers. Since two-thirds of employed blacks were, at that time, either domestics or agricultural workers, most black people were not eligible for benefits. While the rest of the country was receiving significant Federal help in moving out of poverty, African Americans were left out. The Federal Housing Administration (FHA) was another important anti-poverty program developed during the Depression to guarantee mortgages for the purchase of homes. This not only allowed families to become homeowners (and thus accumulate wealth) but also created jobs and provided investment in the community. Citing concerns that the poorer black neighborhoods were not good financial risks, however, the FHA "redlined" almost all black areas, refusing to guarantee mortgages there. Private lenders followed suit. These FHA policies lasted well into the 1960, and redlining by private institutions is still in unofficial practice today. Finally, cities had frequently used zoning requirements (first initiated in the United States in the early 1900s) to zone poor neighborhoods as "industrial," prohibiting not only new residential construction but also frequently the improvement of old residential buildings. The quality of life in these areas was already lower because of neighboring industry, and the housing stock tended to deteriorate easily. Other poor people could move out to other areas, but the reality of segregation forced African Americans to stay in these increasingly industrialized areas of the cities. Despite the segregation, crowding and poverty, however, the black ghettos of the early 1950s were viable neighborhoods, primarily because of the intact social organization. A series of events over the next three decades, however, was to change that situation markedly. The first event was the wholesale destruction of black neighborhoods by the Federal Urban Renewal and Federal Interstate Highway programs. Urban renewal was an attempt to improve decaying center cities by transforming them into new, architecturally pleasing areas. Because of the minimal political power held by African Americans at that time, black ghettos (and other poor areas) were usually chosen as sites for urban renewal. Large, inner-city black ghettos were razed. Some of the poorer people from the "renewed" areas were moved into public housing, but these were usually large apartment buildings reserved only for the poor. But the rest simply squeezed into remaining ghettos areas. The same phenomenon occurred when the Interstate Highway Program started during the Eisenhower administration. When these superhighways went through cities, poor black areas were usually the ones disrupted. Either the area was simply razed and the former inhabitants moved into public housing or the highway was placed so as to create a physical boundary between the black ghetto and other areas of the city, effectively isolating the inhabitants. A second event facilitating the disintegration of the ghettos was the gradual loss of jobs that paid a living wage. The major structural changes in the American economy over the last four decades have almost all been detrimental to poor people. By the middle of the 20th century, the United States had become the overwhelming leader in worldwide manufacturing, and many of these factories were located in the large cities of the North. They offered good employment for workers who entered the job market with little education and few skills. High levels of unionization meant that the jobs were secure, wages were relatively high, and the chances for advancement were good if one stayed with the company. Blue-collar jobs were a primary way out of poverty for many African Americans. But soon Europe and Japan had rebuilt themselves after the destruction of World War II, and their manufacturing competed, often quite successfully, with American companies. Later on, less developed countries, such as Korea and Taiwan, expanded their manufacturing, too. More recently, the globalization of the economy and the development of large, multinational companies have led to the loss of manufacturing in the United States as plants have moved to the Third World, where salaries are lower, environmental regulations are few, and expensive regulations for worker protection almost non-existent. With the increasing computerization and mechanization of manufacturing worldwide, moreover, the well-paying jobs that remained wen to those whom William Julius Wilson calls the "symbol manipulators," those who analyzed data, wrote computer programs, managed people, administered organizations, or performed other tasks for which higher degrees of formal education were required. Increasingly, the only jobs remaining for poorly trained or educated people were in the service sector—as domestics, janitors, clerks, salespeople, nursing aides, and so on—where wages had historically been low and benefits poor. To make matters worse, the wages in the service sector were declining even further relative to other sectors of the economy, so even full-time workers were finding it difficult to stay out of poverty. Segregation, of course, made it difficult to find well-paying jobs outside of black areas. The third event was integration itself. With the coming of integration, affluent and middle-class African Americans could now find housing outside the crowding of the black ghetto. Only those who could not afford to move out—that is, the poorest—were left, often crowded together in high-rise public housing. What had been poor but vertically integrated neighborhoods—where most people worked, social networks were intact, and institutions functioned—were now extremely poor areas where only poor people lived with few or no social networks, no institutions of support, no jobs, and large numbers of people who did not work. Under such conditions, the results are predictable. The "surround of force" that people experience leads to despair, inertia, and increasing anti-social behavior. By the 1960s, the wider society had begun to notice the changes occurring in the inner city. As always, there were analysts eager to blame the poor themselves for their poverty, but the political tenor of the times (as a society, we believed much more strongly then in structural causes of poverty than we do now) made it unfashionable to criticize poor people, and the structuralist view dominated. Due in part to the publication of Michael Harrington's The Other America, the country was rediscovering poverty and wanted to do something about it. In 1964, Daniel Patrick Moynihan, then a young advisor to President Johnson, wrote what was supposed to be a confidential memo to the President. Although the report, The Negro Family: The Case for National Action, stressed male unemployment as the primary cause of black poverty, Moynihan also documented dramatic increases in single-parenthood among black families4 and expressed concern about its impact on black poverty. The report was leaked, circulated widely, and the issue of single-parenthood was sensationalized by the press, causing a firestorm among liberals.5 Black activists (their influence nearing its apex in the liberal community) interpreted the report as humiliating to blacks at a time when they were trying to support black strength and identity. More radical Black Power advocates condemned the report as another racist attempt to discredit black people. What right did this white man have even to write such a report about black people? Other (white) liberals didn't like it either, since it seemed to blame black people for their plight. The condemnation of the Moynihan Report was so severe that liberals, sociologists and researchers responded by

  • avoiding even mentioning race when discussing behavioral problems among the poor,
  • emphasizing racism as the cause of any such behavior,
  • denying that the behavior (e.g., decreased labor-force attachment, increase in single-parenthood, even the increase in drug use) was inappropriate, or even
  • denying that the behavior existed.

Anyone who dared talk about a "culture of poverty"6 was so viciously attacked that research simply stopped. Lyndon B. Johnson declared a "War on Poverty" early in his presidency, significantly increasing public spending on poverty, availability of services, and growth in benefits available to the poor, especially to the elderly poor. In today's political climate, the War on Poverty is vilified as an utter failure, but many of its programs—Headstart, food stamps, Medicaid, Medicare, higher social security benefits, increases in disability benefits, Legal Aid, the Job Corps and others—were much more successful than is commonly realized. Between 1959 and 1979, the poverty rate among fully employed blacks went through 43% to 16%. The War on Poverty was especially successful among the elderly as their poverty rate was cut by two-thirds. But the War on Poverty was stunted and ultimately cut short by the War in Vietnam. Few poverty programs were fully implemented and funding was curtailed in almost all programs. Despite the success with the elderly, overall poverty increased during the next two decades, primarily due to the major economic changes occurring worldwide. During the seventies, the forces within the now-fully-formed black ghetto intensified. Since there were no jobs, the illicit drug industry found a fertile field in which to grow new employees. And with the drugs came the violence, especially with the rise of gun sales in the 1980s. Liberals were in denial, refusing even to notice this new phenomenon in the cities for fear of criticizing African Americans. Middle America, of course, was watching television and reading the newspapers, and the behavior changes in the black ghetto were not only obvious but also frightening. Since liberals wouldn't acknowledge those changes, they were marginalized in the debate and the only voices average Americans heard were those who blamed the poor for their poverty. So, the conservative view (that focused almost exclusively on individual characteristics as a cause of poverty) was essentially unopposed until the black sociologist William Julius Wilson began writing in the mid-80s. The conservatives (most importantly, Charles Murray in Losing Ground7 in 1983) also added the new argument that the liberal welfare policies of the Great Society programs had worsened poverty. Given that one couldn't do much about cultural traditions, family structures, or individual character, their arguments strongly bolstered the conservative attack of social spending in the 1980s, which has continued in the 90s as "welfare reform." The mood of the country hardened against the ghetto. Poverty was increasing and the War on Poverty was declared a failure, forgetting that it had been more a skirmish than a war. By the 1980s, government programs for the poor were being drastically curtailed, and society was moving toward controlling the ghetto rather than helping it. The "black ghetto" that we know today had been found.
Chapter II: Specific Causes" Causes of poverty are always multiple, interrelated, and mutually reinforcing. As we examine some of the other forces that have shaped the black, inner-city ghetto, it is important to remember that a written description cannot adequately convey the full impact of the multiple forces, for each affects the other, increases the complexity, multiplies the difficulty, pulls the web tighter, adds to the surround of force. It is the combined, intertwined effect of these various factors that is so intractable. Racial Discrimination Discrimination based on skin color is still widespread in the United States. While there has undoubtedly been progress in the last half century, discrimination against African Americans remains a persistent cause of inner-city poverty. Until relatively recently in our history there has been little effort to treat African Americans equally. Well into the middle of this century, federal government policies made social security, FHA loans, and unemployment insurance virtually impossible for most blacks to obtain. Job and housing discrimination have been both legal and overt. Educational opportunities have been restricted. Some of these conditions have improved, but the history of discrimination helped to create the ghetto environment. Even past discrimination, therefore, remains a potent cause of contemporary inner-city poverty. And discrimination itself persists, most notably in housing and employment. In study after study, when paired couples, similar to one another in every respect except color, are sent out to purchase homes or rent housing, white couples will be shown housing that black couples were told was unavailable, black couples will be steered to black neighborhoods. It is still more difficult for African Americans—especially those living in the city—to obtain mortgage loans. William Julius Wilson has studied the attitudes of employers toward young, black men in the city of Chicago.8 It is quite clear that employers are more reluctant to hire young, black men9 from the inner city. It is hard to determine, however, whether this results from racial bias or an objective assessment of worker qualifications, a point underscored by the fact that black employers viewed young men from the ghetto just as harshly as white employers, tending to view them as uneducated, unstable, uncooperative, and dishonest. Many employers screen out black, inner-city applicants by

  • not using employment ads in city-wide newspapers (when ads are used, they appear in ethnic, neighborhood, or suburban newspapers),
  • screening out applicants from urban public schools,
  • avoiding welfare programs or state employment services as sources of referral, and
  • relying on informal job networks. Employers are especially likely to hire their unskilled workers by getting recommendations from current employees, which means that job hunters who live in areas of high poverty where few people work face an almost insuperable barrier in simply getting an interview.

Wilson writes,

Inner-city black job seekers with limited work experience and little familiarity with the white, middle-class world are also likely to have difficulty in the typical job interview. A spotty work record will have to be justified; misunderstanding and suspicion may undermine rapport and hamper communication. However qualified they are for the job, inner-city black applicants are more likely to fail subjective "tests" of productivity during the interview.10

The dialect of the black ghetto, "Black English Vernacular," can also lead to problems. Not only is the ability to speak, write, and communicate effectively in standard English essential for employment in most white-collar jobs (meaning that most ghetto residents will be considered only for the blue-collar jobs) but even blue-collar employers also make frequent use of language as a screening device. Prospective employees may fail the "telephone test" because they do not speak Standard English well, never even making it to the initial interview. While it may be easy to sympathize with employers looking for qualified applicants, from the point of view of the man looking for a job, this form of discrimination is just as virulent as if it were due purely to prejudice against African Americans. Segregation Continuing, imposed, severe segregation of African Americans from the rest of society is the single most important cause of urban black poverty.11 The ghetto itself is the problem. The effect of segregation on black well-being is structural, not individual. Residential segregation lies beyond the ability of any individual to change; it constrains black life chances irrespective of personal traits, individual motivations, or private achievements.12 Although the degree of black segregation has declined somewhat in the last decade, African Americans today are still far more segregated than any ethnic group has ever been segregated in America, excluding Native Americans living on reservations. The history of the American segregation of African Americans is complex, and it does not make for pleasant reading. Although this century's use of violence as a means of maintaining the color line crested in the 1920s, its use declined only gradually and the fear of violence is still, according to polls, a major deterrent keeping black people from moving into white neighborhoods. Earlier in this century violence against black people occurred regularly at the borders between white and black neighborhoods, keeping black areas from expanding. Although overt violence is less common, its threat—especially the threat that one's children will be harassed or harmed—remains important. Earlier in the century, groups of white neighbors sometimes organized themselves to keep their neighborhoods white. Forming as "Neighborhood Improvement Associations," these groups:

  • lobbied for local zoning restrictions to close hotels and rooming houses that attracted African Americans,
  • gave cash bonuses to black renters as incentives to leave the area,
  • boycotted real estate agents who sold to blacks,
  • boycotted white establishments that catered to blacks,
  • lobbied for public investments in the area to keep property values up and thus create economic barriers to African Americans, and
  • created funds to buy property back from black buyers or to buy vacant houses to prevent them from being sold to black homebuyers.

One of the most effective methods used by the improvement associations was the Restrictive Covenant, a legal agreement forbidding signers to sell their property to African Americans. Although Restrictive Covenants were declared unconstitutional by the Supreme Court in 1948, the Federal Housing Administration—claiming an interest in maintaining the economic viability of neighborhoods in which it was guaranteeing mortgages—continued to recommend their use until 1950. Restrictive covenants continued to be used covertly for decades until the Federal government began enforcing the law in the 1980s. As more African Americans moved into northern ghettos, the fixed size of the areas in which they were allowed to live naturally increased property prices within them, leading to pressure for expansion. Since whites would ultimately move out of neighborhoods if enough (or any) black people moved in, unscrupulous realtors developed the practice of "block busting." As middle-class blacks began to move in, property values would fall as whites hurried to sell and leave. Often spreading rumors about the "invasion," "developers" bought up property, divided it up, and rented to poorer blacks from the ghettos at inflated rates. It was often true both that property values fell and that poverty developed when black people moved into an area, but these changes had to do with white flight and realty practices, not any inherent characteristic of African Americans. The intensification of the black ghetto in the middle of this century caused a breakdown in the politics of integration. Traditionally, immigrants have almost always been in the minority even in the political districts in which they lived. If they were to succeed politically, therefore, they had to develop coalitions across ethnic lines. These coalitions led to other kinds of mutual cooperation and increased the pace of their integration into the mainstream. By the 1940s, however, black people had been highly segregated. As opposed to other minorities, therefore, their political power came from their ability to vote as a block, under the leadership of powerful black politicians (who then had a stake in the area remaining segregated). In effect, if African Americans wanted political power, they had to "take over" a particular area and dominate its politics. Even today, much of African American political power lies in black segregation. Rather than lead to coalitions, this side effect of segregation leads to mistrust and, ultimately, political marginalization of African Americans. In the 50s and 60s, the federal government subsidized suburbanization in various ways. Road construction made easy commuting from suburban residence to urban jobs possible. FHA policies guaranteed mortgages and made owning homes in the suburbs possible while (until the mid-60s) discouraging mortgages to inner-city areas. Tax breaks on home mortgages made home owning even easier. While this relieved housing pressure in the cities and therefore allowed for physical expansion of ghettos, the color line was maintained despite massive population shifts to the suburbs. At each point between 1940 and 1970, whites and blacks lived in essentially separate worlds. Due in part to FHA policies and in part to racism, discrimination by realtors and bankers was institutionalized and—as mentioned above—continues into the present (although there has been some improvement in the 1990s). Finally, of course, white people just move out. Studies have shown that while the vast majority of African Americans desire to live in integrated neighborhoods, they would not choose to be the only black family or one of very few black residents in an otherwise white neighborhood. There is still a very real fear of harassment and violence. African Americans tend to see the most desirable mix, therefore, as something approximating 50-50. Most whites, on the other hand, will not choose to move into integrated neighborhoods. Studies have shown, in fact, that whites begin to move out of their own neighborhoods once the percentage of black residents grows above 10%. To over-simplify, once the percentage of black residents is enough that blacks can feel comfortable living there, white people move out. The consequences of segregation are insidious. Because of their history, the persistent discrimination, and the fewer opportunities, African Americans are, as a group, poorer than other Americans. Segregation then forces African Americans to live in neighborhoods that are more likely to have higher than average concentrations of poor people. Segregation concentrates poverty,13 thus intensifying its force. To take only a single example of the deleterious effect of concentrated poverty, the physical appearance of a neighborhood is thereby threatened. Individuals have fewer resources to maintain their property, and buildings will begin to show signs of physical disrepair. But, "studies suggest that property owners are extremely sensitive to [these small signs]" and will view them as a "signal that the neighborhood is going 'downhill,'"14 leading to more disinvestment, further physical deterioration, and so on in a vicious cycle. Poverty tends to be self-reinforcing, so people born into poorer neighborhoods have a higher probability of becoming poor themselves. Education Segregation and the concentrating of poverty have especially pernicious effects on education. Because elementary and secondary schools are primarily funded through local taxes, cities with large numbers of poor people have fewer resources per child and are therefore less able to fund decent education. Further, because the ghettos are politically marginalized even within the city, education in the ghetto can easily be neglected. As Jonathan Kozol graphically describes in Savage Inequalities, the physical state of inner-city schools, the equipment and supplies available, the level of instruction, class size, expectations of the students and so on are markedly inferior when compared to their non-ghetto counterparts. Concentrating poor African Americans into the ghetto, of course, means that ghetto schools will be completely black and predominantly poor. The other problems these children bring to school (hunger, homelessness, exposure to violence, and so on) demand resources that have to be pulled away from the already meager educational resources allotted. Ghetto schools should be getting far more money than suburban schools because the problems they have to deal with are worse. Instead, they get less. One current approach to improving urban education is the "magnet school," which takes students from the districts of many schools, often to emphasize a particular area of study, such as science or the arts. These schools are better funded and have better teachers, more access to supplies, and better physical plants. They are of very significant benefit … to the children who qualify. Unfortunately, by creaming the best students, the most committed parents, the more assertive parents, and (often) a higher-than-average proportion of the school district's budget, they also weaken the schools that remain. This creaming and consequent weakening of the remaining school system is the primary danger of the proposed educational voucher system for education. Vouchers represent a determined amount of money (usually the average that the public school system spends per student) that parents can use to pay the tuition at any school (including private schools) to which the child can be accepted. Private schools (although not all parochial schools) usually cost more than the average public school cost, so poor families that can't afford another expense will not benefit, nor will the children of parents who are not actively involved nor children who for any reason can't get accepted at a private or parochial school. Since the voucher money is withdrawn from public education (with large fixed costs in buildings, maintenance, teacher contracts, and so on), the danger is that the public schools that remain (which will have to educate many of the most difficult students who require the highest level of resources) will have even less adequate funding than they do today. In their 1886 Plessy vs Ferguson decision, the Supreme Court created the doctrine of "separate but equal." Schools could thus be segregated as long as the education provided to black students was equal to that provided white students. In their 1954 decision, Brown vs School Board of Topeka, the Supreme Court went further to demand the integration of schools. As Jonathan Kozol has pointed out, we have not only failed to meet the conditions of the 1954 decision, we have also failed to meet the conditions of the 1886 decision. In Washington DC approximately half of the black children will drop out of school before they graduate. Those who do graduate will, on the average, be two years behind national norms. Without a decent education, a child is handicapped for life. Health Care In 1999, 43 million Americans—most of them poor—do not have health insurance. We tend to assume that if people are poor enough, they are eligible for some kind of governmental health coverage. Our assumption is wrong. Less than one-third of people living in poverty are eligible for Medicaid, the primary form of health insurance available to the poor. The low-paying jobs available to poor people rarely pay for health insurance. A family policy currently costs more than $500 a month or half the total income of a family of three living at the poverty level. Poor people, therefore, cannot afford to purchase insurance on their own, so they remain uncovered, spending significant percentages of their income on doctor or emergency room visits, especially if they have young children. Even those few who do qualify for Medicaid can find themselves in trouble. Although patterns vary from state to state, fewer and fewer doctors and hospitals accept Medicaid, so poor people must usually go to hospital emergency rooms or public clinics for their care. Emergency rooms handle emergencies well (even for the poor), but they cannot offer much in the way of continuing care, preventive medicine, or help in routine medical problems. In fact, patients with routine problems are increasingly triaged out of emergency rooms. Public clinics can be good, but they rarely have the staff or other resources to provide good care to all who need it. Waits are usually long, one usually sees a different doctor each time, charges are made and bills are sent anyway, and there is usually no special provision for paying for other needed services—x-ray, special lab, hospitalization-which can be enormously expensive. So, cost prevents the appropriate use of health care and drives the poor further into poverty. We sometimes forget the other side of the equation: poor health is not only a complication of poverty but also among its causes. The health of poor people is measurably worse than average, which in turn aggravates their poverty. Poor prenatal care, inappropriate maternal drug use, and maternal malnutrition, for example, can all lead to significant learning disabilities and decreased cognitive abilities (which can lead to poor educational achievement, which further complicates poverty). Congenital disease and infant AIDS are far more common among the poor. The chronic diseases of childhood are far more common among the poor. Asthma, lead poisoning, various anemias, malnutrition, chronic middle-ear infections are not only expensive to diagnose and treat, they can also lead to adult impairment, sometimes in surprising ways. Consider chronic middle-ear infections (otitis media). The usual acute ear infections cause pain and lead to emergency doctor visits. If these infections are (as often happens) insufficiently treated, chronic otitis media can develop which may have few noticeable symptoms. For financial reasons, a poor child is less likely to return to the doctor after her acute ear infection seems to have gotten better, so chronic otitis media remains often undiagnosed. Otitis media causes a temporary loss of hearing, which often persists through early childhood. Undiagnosed hearing loss can lead to poor school performance and permanent educational deficiencies, making it that much harder to escape poverty as an adult. Similar stories can be told about lead poisoning, malnutrition, and many other childhood health problems. The "surround of force" seems inescapable. The poor are much more likely to live in environmental conditions and work in conditions that are detrimental to health. A friend of mine cannot afford to move out of her damp basement apartment although the mold spores severely aggravate her daughter's asthma. Finally, the stress of simply being poor has been documented to be a real health risk. The poor get it coming and going.

Criminal Justice System African Americans compose approximately 12% of the American population, yet they are 45% of the combined local, state, and Federal prison population, a percentage that has approximately doubled since 1930. 40% of all prisoners awaiting a death sentence in the United States are black. One out of every five black men in the country spends some time in jail during his life. According to the Washington Post, in 1998 over half of the black males residents of the District of Columbia between the ages of 18 and 34 are in the criminal justice system: awaiting trial, awaiting sentencing, in prison, or on parole. Given the statistics, our recent decisions to fight crime by "getting the criminal off the street" mean that increasing numbers of poor black men will be in jail. One can certainly argue that the increase in safety that should result from "getting the criminal off the street" makes current policies appropriate, especially for the inner-city poor who are much more often the victims of such street crime. At the same time, removing tens of thousands of young men from the cities takes potential breadwinners from their families. Since ex-cons find it much harder to get jobs, the impact of the criminal justice system on poverty is doubly harsh. It is important to remember, too, that in computing the unemployment rates, those who are in jail are not counted as "unemployed;" they are removed from the denominator altogether, effectively lowering the real unemployment rate. The reasons for the high numbers of African Americans in the criminal justice system are debatable and complex. Certainly, as we will see in the next chapter, proportionately higher percentages of poor black people commit crimes for which we ordinarily send people to jail (especially drug offenses but also burglary, robbery, murder, etc).15 It is also undeniable that our system of criminal justice is more willing to prosecute poor African Americans than others, especially since these prosecutions are usually resolved through plea-bargaining. The few resources at the disposal of public defenders relative to those available to private attorneys mean a further tilt toward conviction of the poor. Whatever the reason, the result is the same: the criminal justice system impacts African Americans, especially poor African Americans, far more harshly than average. Conclusion Each of these factors is exacerbated by the others. The segregation of poor African Americans into ghettos is the linchpin holding it all together. As long as ghettos exist, most of the people who live there will be poor.
Chapter III: Ghetto-Related Behavior Poverty, of course, is a result not only of societal structures but also of individual shortcomings. Poor persons can make poor choices and those choices can aggravate poverty. Living in the highly individualistic American culture, most of us tend to lay the blame for poverty on those individual choices. "Well, that person who is still stuck in poverty came from the same social background as this person who made it out," we think to ourselves, "so individual differences must be more important!" It's easy to slide over the structural causes of poverty. But there are important relationships between structural and individual causes. Certainly many, usually most, residents of ghetto neighborhoods continue to work steadily at whatever work is available despite the disadvantages of their environments. They have high aspirations and substantial initiative. Most poor people are not addicted to alcohol or other substances, they do not engage in criminal behavior or drug trafficking. Most poor people are not on welfare. They take good care of themselves, their families and their property. They ascribe to the same values as the rest of us: hard work, self-reliance, sacrifice, and respect for others. They are simply poor. At the same time, one finds in the ghetto disturbingly high rates of unemployment and welfare dependence, addiction and poor motivation, drug trafficking and other forms of criminal behavior. These behaviors seem to be so self-reinforcing that observers have talked of an "underclass" existing in the ghetto, a group of people whose behavior is virtually incorrigible; neither they nor their children have much chance of escaping poverty. It is tempting to look at these behaviors, shrug, and say to ourselves, "Well, no wonder they're poor!" But where do these behaviors come from? Why do we find them more frequently in the ghetto than in other places? As mentioned above, the behaviors that we commonly associate with the contemporary black ghetto (which sociologist William Julius Wilson has named "ghetto-related behaviors") were not part of black ghetto life through the first century after Emancipation. (Even single-parenthood-which has always been higher among African Americans than European Americans-was "only" 17% among blacks in 1950, less than the current rate of single-parenthood among whites.) And, as we have seen, forces far beyond the control of individual African Americans led to high rates of joblessness, high concentrations of poor people living in close proximity, inferior education, poor health, and discrimination against poor black people. In this context, ghetto-related behaviors can be seen as understandable behavioral responses to environmental conditions, some of which evolve into cultural patterns. "This is not to argue," writes Wilson,

that individuals and groups lack the freedom to make their own choices, engage in certain conduct, and develop certain styles and orientations, but it is to say that these decisions and actions occur within a context of constraints and opportunities that are drastically different from those present in middle-class society.16

Unfortunately, these responses also perpetuate and aggravate the poverty of the poor in a vicious cycle that currently shows few signs of abating. Single-Parenthood The "feminization of poverty" refers to the increasing proportion of poor people (especially children) living in households headed by a single woman. Single-parenthood is an important variable because it is deeply associated with poverty. While only one out of ten married-couple families live below the poverty line, more than two-thirds of families headed by never-married women (of any race or ethnicity) live in poverty. The rate of single-parenthood among black inner-city families has grown alarmingly in the last forty years. In Chicago's ghetto areas, for instance, more than five out of six parents (aged 18-44) are single. Nationally, more than two-thirds of African Americans babies are now born to single mothers. Over half of all black families are now headed by women, half of whom have never been married. Single-parenthood is both a cause and an effect of poverty.

  • Most obviously, single-parenthood means that there is only one breadwinner in the family.
  • That one breadwinner is usually a woman, and women's work pays less well than men's work.
  • Among black women, single-parenthood is associated with lower levels of education, which results in even poorer paying jobs.
  • Childcare becomes an overwhelming issue. It is simply not possible to pay for childcare costs that would consume more than one third of a poverty-level income.17

Why is the rate of single-parenthood so high among poor, inner-city African Americans? There is debate about this question, and no clear consensus has arisen. Although there are some factors that are specific to poor, urban black people, society-wide forces have also played a large part.

  • Nationally, the birth rate outside of marriage has soared in the last two decades, although whites have largely accounted for the increase. From 1980 to 1992, for instance, the rate of births outside of marriage increased among whites by 94%, among blacks by only 9%.
  • Social mores have changed considerably. The social pressures throughout society to marry and stay married have decreased dramatically.
  • Men have felt freer to leave their families (and studies show that most men pay no child support or less than agreed upon).
  • A woman now has the "right to reproduce" under any conditions she chooses; well over 90% of single women who carry pregnancy to completion take the baby home.
  • There is a general increase in sexual activity among young people and the pregnancy rates among teenagers have increased.

These society-wide factors influence especially the poor because their impact is multiplied by causes of single-parenthood that are especially intense in the ghetto. What are the causes that affect the ghettos particularly?

  • The high stress of being poor leads to a high rate of divorce. Marriage is difficult enough without the extraordinary problems associated with being poor in America.
  • The high rate of joblessness among inner-city men leaves them virtually incapable of supporting a family economically. Not only does this make them less desirable marriage partners, but being unable to fulfill the socially expected male role of breadwinner within a family also makes it emotionally difficult for a man to stay in the marriage. Studies show that when a single man has a job, he is much more likely than a jobless man to marry the child's mother after the birth of the baby.
  • More recently, the extraordinarily high numbers of young black men in the criminal justice system further decreases the chance of marriage.
  • Poverty leads to despair. Chronic poverty impairs one's motivation to aspire to something greater than what one sees in the environment. It increases the male's desire to "prove himself" by having a child. For both men and women, sex among teenagers in the ghetto is more about personal affirmation than about status or a ticket to a better life. Economic prospects for young, inner-city women are poor regardless of marital status, so there is little reason to value marriage, especially for teenagers. The desperation of the ghetto leads to a sense that there is little to lose. The girl from a poor, inner-city family sacrifices only a few of her already limited options by having a child out of wedlock.
  • In part due to changing societal mores, in part due to joblessness, in part due to the oppression of the ghetto, the cultural norms within the ghetto in support of husband-wife families and against out-of-wedlock births have become much weaker. There is no longer any stigma attached to having an "illegitimate" baby.18 Many young ghetto women, in fact, have come to see a man in the house as a liability.
  • For those who doubt the importance of the structural causes of poverty, it might be instructive to meditate on the fact that, at least in America, a high out-of-wedlock birthrate is correlated with societal oppression. American blacks, Puerto Ricans, Native Americans and native Hawaiians all began as indigenous peoples, were overrun by conquerors or colonizers, were consigned to positions of dependency, and have been easily identifiable racially.19 Their rates of out-of-wedlock births range from 46% for Hawaiians to 68% for blacks, compared to 18.5% for whites.

It is important to dispel some widespread myths. There is, for instance, little scientific evidence that welfare plays a significant role in promoting out-of-wedlock births. It is likely that some welfare requirements have caused some intact couples to stay out of formal marriage. Nevertheless, research examining the association between the generosity of welfare benefits on the one hand and out-of-wedlock childbearing and teen pregnancy on the other indicates that benefit levels have no significant effect on blacks having children outside of marriage (although there may be a small effect on whites). The rate of out-of-wedlock teen childbearing, for instance, has nearly doubled since 1975 despite the fact that the real dollar values of welfare, food stamps, and Medicaid has fallen. Contrary to popular belief, mothers on welfare have, on average, slightly fewer children than other mothers. Although the statistics can be confusing, it is important to understand that although the rate of single-parenthood has increased dramatically in the last half century, the rate of births to unmarried black women aged 15-24 (the "non-marital fertility rate") has remained constant. Which is to say that the problem is not that single-parents are having more children but that so few women marry. Single-parenthood in the ghetto, of course, is self-perpetuating. Almost all of the female role models in ghetto neighborhoods are single mothers, and young women see few other options. Adolescent children of single mothers are more likely to be school dropouts, to receive lower earnings in young adulthood, and to be recipients of welfare. The single mother can exert less control over adolescents (especially young men), so peer values toward sex, pregnancy and marriage more easily become the norm. It is only a short step to a "culture of poverty" in which single-parenthood is the socially accepted norm. Crime and Violence The joblessness of the ghetto and consequent poverty, the low level of education and consequent hopelessness, and the segregation and consequent alienation from white, middle-class norms create a fertile field for nurturing workers in the drug trade. Young men can earn more in hours than their peers in low-paying jobs can in weeks. Children are recruited as "runners" because of their relative immunity from prosecution, and mothers with no other source of income can look the other way when their sons come home with gifts of money, food, clothing, and other needed items. With the drug trade, of course, comes violence. The vastly increased availability of weapons, including sophisticated, high-powered guns, sent the murder rate skyrocketing in the inner cities during the eighties and early nineties (although they began decreasing significantly in the mid-nineties). As guns became the accepted way of resolving disputes in the drug trade, more and more people uninvolved in drug trafficking acquired them and began using them, sometimes for protection, sometimes to resolve their own disputes. These weapons, however, have terrorized the wider community. As Geoffrey Canada writes so compellingly,20 physical violence has long been a way of settling disputes within the ghetto. Before the proliferation of the guns, however, this violence was dependent on physical strength, the organization of the gangs, courage, and so on. The violence was a way of establishing a pecking order and therefore actually stabilized the neighborhood. With assault weapons, however, it takes little courage and no strength or skill, so anybody can kill anybody. The violence is now a terrifying destabilizing force. Statistically, it has been more dangerous to be a young black man in the inner cities of America than to be an American soldier in the Vietnam War during the height of the fighting. Drug and Alcohol Addiction Drug and alcohol addictions are major problems in our society as a whole but especially in the inner city. In addition to the generally increasing use of illicit drugs in the society and all the usual reasons why people succumb to addiction, there are special factors in the inner city.

  • Drugs are ubiquitous and easily available, including especially the inexpensive and highly addicting crack cocaine.
  • The social disorganization and consequent loss of parental control make adolescents particularly susceptible to peer pressure and rebellious against societal norms, creating a fertile environment for the development of addiction.
  • The joblessness of the ghetto means that young adults have too much free time on their hands and too little structure to their day, so falling into addiction is easier. Middle-class adolescents, of course, "experiment" with drugs and alcohol, too, and lots of them become addicted, but
    • middle-class kids who use "recreationally"21 are restrained from heavier use by the constraints of school and work, and
    • more affluent people who become addicted generally have better access to addiction treatment programs than those from the ghetto.
  • The hopelessness and despair of the ghetto lead to an intense desire to get out and the sense that one has little to lose. Intoxication provides an easy, affordable escape.
  • As drug use becomes more and more common in the ghetto, social prohibitions relax. Children more often have people who are addicted for role models.

"Poor Motivation" I put this last factor in quotes because it is not at all my experience that poor people are poorly motivated. Some of the hardest-working people I know are poor, scratching out a living for themselves and their family on several part- and full-time jobs at minimal wages. What is surprising is that they are not less motivated than they, in fact, seem to be. Given the average educational level, the few decent-paying jobs available, and all the other strikes against poor people, any realistic look at their future is pretty grim. High aspirations are usually punished by the reality of poor vocational options. Like most other people in our individualistic culture, poor people ultimately blame themselves for their lack of success and can easily lose self-confidence. The little public assistance that is available is administered in ways that make it difficult to transition back into the world of self-sufficiency. The perception of middle- and upper-class persons that ghetto residents lack proper motivation has many sources, not the least of which is our belief that anybody can "make it" in America, which leads directly to the assumption that there must be something wrong with anyone who doesn't make it. But as their dialect indicates, black, inner-city residents are severely isolated from the rest of society because of American segregation. It is not surprising, therefore, that some lack certain social and job-related skills necessary for life in the wider society. If one has seen relatively few people get up in the morning and go to work on a regular basis, if one has not lived in an environment where punctuality is important, if one has not learned appropriate deference toward superiors, if one has not learned, even, to deliver excuses in a sincere and believable manner, then one will be misunderstood. Most of us, for instance, could not say where we learned it, but we have learned to:

  • dress well for a job interview even if the place to which we're applying has few employees who dress well, even if the job we're applying for will not require us to dress well.
  • make sure that we are absolutely on time and present at work each and every day during the first weeks or months on the job. During that probationary period, we know that even excuses are likely to be dismissed.
  • take few breaks and appear eager to work during the first weeks and months on the job.

If one has not learned those behavioral skills, one's behavior may very well be misread as disrespectful, lazy, or slovenly. The middle-class perception of many poor people is that "they don't want to work." In my experience, that is rarely the case, but cross-cultural miscommunication is easy. An Oppositional Value System The poverty and hopelessness of life in the ghetto make it difficult for ghetto residents to develop self-esteem by conforming to the values and ideals of the larger society or to gain prestige in a socially acceptable fashion. Until recently, ghetto residents continued to hold the values of the wider culture even as they were unable to fulfill them. Getting an education was crucial, having a job was considered important, marriage was a goal, respect for the law was widespread, and so forth. As the ability to fulfill these values has deteriorated, however, it has become harder and harder to maintain them as values. Gradually a parallel status system has developed in opposition to wider cultural norms. To do well in school is considered "acting white." Flouting the system by using drugs or selling them is cool. Carrying a weapon and using it becomes an acceptable way to establish privilege. Working hard at a low-paying job is a sign of self-disrespect. Learning Standard English becomes a deliberate snub of one's own culture. As this oppositional culture becomes more established, members of the ghetto who continue to hold the values of the wider society will come under increasing pressure to change. A Caveat In devoting an entire chapter of a short book to "ghetto-related behavior," there is the danger of emphasizing the negative, when I mean to do just the opposite. I take that risk because it is important to confront directly our prejudices about the individual causation of poverty. Mere survival of the "Surround" in which most inner-city people live, however, indicates enormous strength and resilience. Observe carefully in any poor inner-city neighborhood, and you will see many strong, resourceful, independent people who are not only keeping their own heads above water but strengthening the community as well. But these people are swimming against an overwhelming current, forces that overpower all but the most resilient.
Chapter IV Welfare In the current welfare debate, there is much misperception of the history of welfare. While a comprehensive history is impossible here, several important points must be clarified. There is, for example, an enduring myth that earlier in American history care of the poor was private, through charities and individuals taking care of their neighbors. In fact, welfare22 in America has always been a combination of public and private assistance. In the late 18th and early 19th centuries, for instance, city governments sometimes gave "general relief" (albeit meager) to poor people during hard economic times (usually in order to stave off riots or other civil disturbances). The poorhouses of the 19th century were attempts (albeit most often spectacularly unsuccessful) to reduce the cost of welfare by bringing all the poor under one roof and creating self-sustaining communities. After the Civil War, the Federal government offered veterans benefits (including survivor benefits to families) to those who had participated in the war (and later to all veterans). The first "widows' pensions" were to the wives of those veterans. In fact, pensions to veterans and their families were 18% of the total Federal budget just before World War I, when the program was discontinued. The current mixture of public and private assistance has been going on since the beginning of the Republic. The function of welfare has not been limited to the alleviation of distress. Historically, welfare has also functioned

  • to regulate labor markets by controlling the supply and price of labor through manipulating incentives to work. (If benefits are relatively high, for instance, workers become unwilling to take low-paying jobs and will demand higher salaries, so the supply of workers will shrink. If benefits decline, the supply of workers increases and they will work for lower wages.)
  • to "improve people" by regulating their behavior as a condition of relief. As part of Welfare Reform, for instance, some states deny an increase in benefits for additional children born while the mother is on welfare in order to discourage welfare mothers from having more children.
  • as a mechanism for political mobilization. Public officials have frequently used local welfare payments for political purposes, distributing them to secure the votes of the poor. Ronald Reagan used his opposition to welfare as a strategic part of his campaign in the 1980s.
  • Since 1960, welfare has been used as a way of reversing past racial injustice. One can see each of these purposes operative in the current debate over welfare.

The debate about who "deserves" public assistance dates back to the beginnings of modern welfare about 500 years ago in Europe. Society has always tried to separate the "deserving poor" (those who are poor through no fault of their own) from the "undeserving poor" (those who are considered to have brought their poverty upon themselves due to substance abuse, laziness, unwillingness to work, promiscuity and so on). Society generally tries to confine whatever private charity and governmental assistance it provides to the "deserving poor," while insisting that the "undeserving poor" improve their character as a condition of receiving relief. The problems with this debate are several. First, it is, in practice, impossible to distinguish with any accuracy who is "deserving" from who is "undeserving." If one tries to make this separation through governmental rules and regulations, one quickly discovers that the causes of poverty are complex and sometimes subtle and that the decidedly difficult-to-determine psychological state of a person heavily influences the state of "deservingness." (A person who on paper looks simply lazy and unwilling to work, for instance, may on closer examination be quite clearly mentally incapable of performing any useful work.) But if one tries to make this distinction locally through one-on-one determinations, one discovers that local prejudices weigh too heavily for the process to be considered just. Second, the debate substantially ignores the structural causes of poverty considered here. Third, in part because of the difficulty of separating deserving from undeserving poor, any regulations and policies designed to weed out the "undeserving poor" will also make life miserable for those who "deserve" assistance. In order that contemporary welfare not be too "attractive," for example, benefits are so low (average AFDC payments were $300 a month) that no one could survive on them. As might be expected, the definition of who is deserving changes over time. Not so long ago, for instance, poor single mothers with young children were considered "deserving" while we now consider most young welfare mothers "undeserving" of on-going assistance. The New Deal "Modern" American welfare began in the 1930s under President Franklin D Roosevelt's New Deal. During the Great Depression, millions of middle-class families were thrown suddenly into poverty. "The poor" had become "us." Attitudes toward welfare, of course, changed quickly, and there was great demand for Federal assistance to those suffering from poverty. Roosevelt quickly created the Federal Emergency Relief Administration (FERA), which gave out approximately $18 billion in relief over its history from 1933 to 1936. Roosevelt also created the Civilian Conservation Corps (CCC) and the Works Progress Administration (WPA) as ways of providing work to the unemployed, work ranging from building the Tennessee Valley Authority dams (CCC) to creating photo exhibitions of the dustbowl (WPA). There were also a number of programs initiated during the Depression that have become cornerstones of American social insurance. Unemployment insurance (which had previously comprised largely voluntary programs that differed from state to state) became mixed Federal-state programs in which the Federal government mandated uniform standards that the states were primarily responsible for enforcing. Through state law, employers were required to pay premiums for certain levels of unemployment insurance that would provide cushions for people who lost their jobs. The Social Security program, providing benefits not only for the elderly but also for the disabled, was probably the most important of Roosevelt's innovations in social insurance. Although the program initially excluded agricultural workers and domestics (and thus two-thirds of working African Americans at the time),23 it has since been significantly expanded. Sold to the public as a pay-as-you go insurance program, Social Security has nevertheless always been a form of welfare, with payments from younger, working individuals providing benefits for the retired and disabled. Illustrative of Social Security's nature as a welfare program, most beneficiaries have received approximately twice what they would have received if their payments had been simply invested in the same US Treasury bonds.24 Significantly strengthened during the 1960s, Social Security has been an enormously successful program: the poverty rate in 1997 for the elderly was just over 10%, about half the poverty rate for children. It is estimated that in the absence of Social Security payments, 50% of the elderly would be poor. The New Deal programs irrevocably tipped the balance between public and private forms of welfare. Prior to Roosevelt's administration, social welfare costs were approximately 1% of government expenses; in 1939 such costs (including Social Security and unemployment insurance as well as more commonly understood forms of relief) were 27.1% of government spending. While welfare in America has always been a combination of public and private, it is now a much greater percentage of government spending than before Roosevelt. The New Deal also cemented an ultimately untenable distinction between "social insurance" and "public assistance" that has prevented the United States from developing a more comprehensive program of economic security similar to the programs in the countries of Western Europe. In the United States, such programs as Social Security, Medicare, disability pensions, disaster relief, and so on are considered "social insurance," while payments to families with young children, food stamps, general relief, Medicaid, and so forth are considered "public assistance." It is the old distinction between the deserving and undeserving poor. In fact, social insurance and public assistance are both forms of "wealth transfer" wealth from certain groups of people (usually those who are working) to other groups (usually those who aren't working). Historian Michael Katz writes:

The resilient distinction between social insurance and public assistance reflects the long-standing suspicion of … welfare. There remains … a lurking assumption that many of those who ask for help neither need nor deserve it. By contrast, social insurance is acceptable because, so it is believed, it is earned. With their own wages, workers contribute to funds—supplemented by their employers—that will support them in periods of unemployment or in old age. Even though they may take out far more than they contribute, they can argue that they have paid their way. Equally important, social insurance is popular because its benefits cross class lines. Almost everybody is eligible for social security retirement benefits.25

One significant result of this distinction is that programs considered social insurance are generally administered by the Federal government with nationally uniform standards and benefits pegged to inflation, while programs considered public assistance are usually administered by state or local governments with cost-of-living benefits raises dependent on the uncertainties of the legislative process. As a result, of course, "social insurance" programs have substantially better benefits than "public assistance." In the twenty years before Welfare Reform, for instance, AFDC benefits (adjusted for inflation) had declined by 40%. The War on Poverty
During the prosperity immediately following World War II, poverty essentially disappeared from the political radar screen. Suburbanization and affluence were the watchwords, and the average American forgot that significant poverty existed in the United States. But in the heightened political consciousness of the 1960s and the Civil Rights Era, Americans rediscovered our poverty. Michael Harrington's The Other America—graphically describing poverty in our country—symbolized that renewed concern and was itself part of the political process that birthed the Great Society Programs under President Lyndon B Johnson. The War on Poverty, as Johnson called it, aimed to eradicate poverty in the United States. It was a time of national self-confidence: if we could put a man on the moon, surely we could end poverty. The "bifurcation of welfare into social insurance and public assistance" codified in the 30s, however,

trapped the architects of … Johnson's Great Society who wanted to wage war on poverty. For it ruled out any serious attempt to redistribute wealth, guarantee incomes, or tamper with the structure of American capitalism. … Unwilling to explain poverty as an inescapable consequence of American political economy, they had two alternatives. One was to place the blame squarely on individuals and to redefine poverty as evidence of moral or intellectual incompetence. The other was to see it as the result of artificial and unjustifiable barriers … inimical to the open and competitive structure of American life. In practice, explanations drifted between both poles.26

Johnson's programs were grandly conceived, creating a significant increase in spending for social welfare. Unfortunately, the War in Vietnam intervened, and funding for almost every program conceived was severely limited. According to Katz, the Office of Economic Opportunity (the hub of the War on Poverty) received less than 10% of the most conservative estimate of what it needed to reach its goals. According to Michael Harrington, "It never cost even one percent of the Federal budget and never reached the 'takeoff' point that is normal in most Federal programs." Despite these limitations and despite some spectacular failures, there were important successes in the War on Poverty. Headstart, Legal Aid, the Job Corps, Medicaid, Medicare, Food Stamps and other major programs largely succeeded in their aims despite (with the exception of Medicaid and Medicare) inadequate funding. The common wisdom that the Great Society programs failed simply does not match the evidence of their successes. What is true about this common wisdom was that poverty increased during the period of the Great Society programs, largely due to massive economic shifts against which the inadequately funded War on Poverty was helpless. What is not usually recognized is that social welfare programs expanded greatly under the Republican president Richard Nixon as well. Despite Nixon's anti-welfare rhetoric, government spending on welfare and public housing increased more during his administration than during Johnson's. A major change in welfare during this period was the expanded use of the Aid to Dependent Children program, which had existed since the New Deal. The program was initially small and mostly confined to widows with dependent children; it had remained so until the 1960s, when the increasing feminization of poverty meant a drastic increase in applications, mostly from women who were divorced, separated, or never-married rather than widowed. Other political forces encouraged or at least allowed a higher fraction of the eligible to apply, a fraction that increased from about one in three in the early 60s to more than nine out of ten by 1971. ADC (eventually changed to Aid to Families with Dependent Children [AFDC]) became a large program supporting many families in the inner city. It is this program that most people call "welfare." The Medicaid program, which provided grants to states intended for medical assistance to the poor, has become more than four times as costly as AFDC. The cost of Medicaid ballooned primarily for four reasons. First, the program was an "entitlement," meaning that the government had legally committed itself to provide whatever funds were necessary to cover anyone who fit the guidelines, regardless of the cost. Second, the number of poor people and the depth of their poverty increased. Third, Medicaid covered the growing costs of nursing home care (often to formerly middle-class elderly who had become poor by virtue of illness). Fourth, and probably most significant, the cost of medical care rose precipitously over the next decades. Although Medicaid became a most important program, nationally only about a third the people living below the poverty line have been eligible for its benefits.27 By far the most massive of the social welfare programs of the Johnson and Nixon administrations and certainly the most effective were not directed specifically toward the poor at all. During this time, the expansion of Social Security and the creation of Medicare—from which everyone benefited—dwarfed funding for all of the other social welfare programs combined. It is not coincidental that these two programs were also the most effective in alleviating poverty. Because they targeted everyone, they enjoyed broad political support. Not only have they been adequately funded but (unlike AFDC, for example) their benefits increase automatically with inflation. As a result, however, the Federal government spent about 75% of its social welfare budget during this period on the non-poor! The War on Welfare By the mid-1970s, the Great Society programs had not lived up to their promise and the general perception grew that they had failed. Black poverty in the inner city was highly visible and growing rapidly, which threatened white voters. Most liberal voices had withdrawn from the debate over black poverty. The political mood shifted dramatically, and American government—from local to Federal level—has waged war on welfare since. Due to the many factors considered earlier, poverty in the large cities worsened into the mid-seventies. As a result of this increasing poverty, the exodus of the middle-class suburbs, and the flight of industry to the Southwest and abroad, the tax base of the American city declined at the very same time that the need for services was increasing. As the cities declined, their credit ratings slipped, and state voters became less willing to subsidize their losses. Voters in most states also rescinded their support for general relief to the poor, which disproportionately affected the cities. As affluent people left, the cities lost much of their political power. The Federal government had previously given considerable assistance to the cities, accounting for approximately 22% of urban expenses. In the early 1980s, however, the Federal government decided that supporting the cities was a state responsibility and so cut its support back from 22% to about 6% of city expenses. The states received these previously allocated urban funds as "block grants" intended for the cities. Given the loss of urban political power, the states merely substituted the Federal money from the block grants for their own, so the total state dollars to cities remained the same, meaning that the cities had to absorb the Federal cuts in their entirety. The effect was deadly! Schools collapsed, crime and violence soared, city services (especially social services) declined precipitously. As a result of their increasingly troubled status and the tax-cutting mood of the country, most city governments were forced into austerity budgets. Since many other government functions (maintaining the roads, police protection, picking up the trash, etc.) require a constant level of funding regardless of the government's decisions, the social welfare budgets were most directly affected. The cities were forced to cut many of their direct services to the poor: general relief, housing assistance, medical assistance to the majority of poor people not eligible for Medicaid, child protection, and so on. State and local governments had always provided some level of assistance to poor people: general assistance programs for those not eligible for Federal money, medical assistance for those not eligible for Medicaid, and so on. Most of these programs had originally been given to people on the basis of their income alone: if you were poor enough, you received the benefits. During the seventies, the states and cities began restricting eligibility to "unemployables." Although the definition of "unemployable" varied from locale to locale, the restrictions generally meant that childless, able-bodied adults were no longer eligible for help. It didn't matter whether there were appropriate job openings or not. If you were able to work you couldn't receive benefits even if you couldn't work. The other tack was to tighten the regulations restricting eligibility, excluding, for instance, those who were unable to work because of alcoholism or drug addiction. Thousands of people lost their eligibility, and benefits for most others declined. The Federal government also participated in the attack on welfare. President Ronald Reagan was elected to office in 1980 on a campaign that featured anti-welfare rhetoric. He promptly set about dismantling welfare. The Reagan administration attempted to cut not only public assistance but also other forms of social insurance. Political reaction, however, immediately precluded significant change in Social Security or unemployment insurance. His administration was successful, however, in cutting into disability insurance, part of the Social Security Act intended for anyone who had been disabled for at least a year. Charging fraud and waste, the administration tightened requirements (which required no approval from Congress) and almost 200,000 people lost their eligibility. Among those declared ineligible were people whose poverty was a result of addiction and manychildren suffering from illness. Of those former recipients who had the resources to challenge their administrative termination, over half of them had their eligibility reinstated on appeal. The vast majority of those cut, however, never challenged and lost eligibility. Public assistance programs were more successfully targeted. By 1983, 300,000 families had lost their eligibility for AFDC, "saving" the government over a billion dollars a year. Eligibility and benefits for food stamps, school lunch programs for the poor, Medicaid, extended unemployment benefits, and other programs were cut. The Federal housing budget was slashed from over $30 billion to $7 billion, virtually precluding any new construction of housing for the poor. By 1992, political support for curtailing social welfare programs was bipartisan, and in most places it was political suicide to campaign on the basis of increasing the amount the government spent on programs for poor people. The Welfare Reform Act of 1996 was the capstone of this process. Welfare Reform After campaigning on a promise to "end welfare as we know it," Democratic President Bill Clinton joined with a Republican Congress in 1996 to pass the Personal Responsibility and Work Opportunity Reconciliation Act, popularly known as "Welfare Reform." (Because this legislation uses the term "welfare" to refer to the Aid to Families with Dependent Children [AFDC] program, I will follow that usage in the next paragraphs.) Among the most important features of the legislation were the following.

  • Most importantly, the national "entitlement" to welfare (established by Roosevelt in the 30s) was rescinded. According to previous legislation, poor families with young children were entitled to benefits, that is, if you qualified you got benefits. During periods of recession when poverty increased, the welfare budget increased automatically to take care of the additional families entitled to welfare. Under the new law, however, the Federal block grants are essentially capped amounts that will not rise even with additional need.
  • AFDC and several smaller programs were abolished and replaced with Temporary Assistance to Needy Families (TANF), a program comprising Federal block grants to the states and a set of broad guidelines about how that money could be used. While the recipient states must provide some form of welfare, there is great latitude in how that assistance may be provided. For instance, there is no requirement to give cash to recipients; the entire program could consist of vouchers or services. States would also be allowed to transfer up to 30% of the block funds into two other block grants. There was also latitude for changing the administration of the programs, for instance, through privatization. Instead of a single national AFDC program, there are now 51 separate TANF programs.
  • Work requirements were mandated. Recipients would have to go to work, sometimes within two months of receiving aid. The numbers gradually increase over the life of the program so that by 2002 at 50% of any state's recipients will have to work at least 30 hours a week or Federal funds to the state will be cut.
  • Time limitations were instituted. Getting recipients "off welfare" became a central goal of the program. The states would be penalized (through reductions in funding) if defined percentages of their welfare population were not off the roles within defined periods of time. Individual recipients could receive assistance for only five years during their lifetime. Federal money could not be used for additional support. The freedom that the states had under the broad guidelines of the legislation to individualize their programs did not extend to modification of this basic goal: to get people off welfare.
  • Eligibility for Medicaid-a most important benefit-was not changed. Families who would have qualified for AFDC under pre-reform regulations may still receive Medicaid. Evaluating the impact of welfare reform has been hampered by at least four variables. The first is that there is no longer one program to evaluate but more than fifty. Some states have created programs that appear to be better than the previous ones; other states have allowed the programs to slide.

The second is that no comprehensive evaluation has been mandated. In fact, one response from several states to the concern that too many people are sliding off the rolls and into poverty has been to stop studying the issue. The third is that the United States economy has enjoyed an uninterrupted boom since the passage of the act, and this prosperity has increased employment, slowed the growth of poverty (and more recently reduced the percentage of people living below the poverty level), and increased both state and local tax coffers. States thus have had less poverty and more tax money than is likely to be average over the next few years. Since the amounts of the block grants were based on states' needs during the base period 1992-95 (when needs were relatively greater), the states are now receiving proportionally more (in both tax revenue and block grants) per poor person than they will during more recessionary times. With more income and fewer recipients the states should be doing quite well. The real test is yet to come. Fourth, many time limits (most importantly the five-year lifetime cap on benefits) have not yet kicked in. Few people have been forced out of the program as a result of using up all their time, so the deleterious effects of the time limits have yet to be felt. On the positive side, there has been no rush on the part of the states to reduce cash benefits and there has in some cases been additional money allocated for childcare (which is necessary if parents of small children are to go to work as mandated). It does appear that many families are leaving the welfare roles, thus reducing welfare costs. And the percentage of those in poverty continues to decline, although this is most certainly due to economic factors, especially the level of employment, which is higher than it has been in decades. On the negative side, it appears that many of the families leaving the welfare rolls are leaving because of sanctions imposed for noncompliance with program rules. Unfortunately, there has not been much follow-up, so we don't know what has happened to those families. Since the average poor family became $200 poorer in 1997, the concern is that many of those families may have dropped through the safety net. We do know that many of the people who have left the rolls have had to take jobs that give them incomes below the poverty level and many families have returned to welfare within a few months. Despite the action of some states to increase subsidized childcare, there is still far too little available. Among single mothers with a high school diploma or less, a relatively small number of will find childcare they can afford, certainly one of the major reasons for early return to welfare. Elements of American Welfare in 1999 So, what is left? What are the major elements of American Welfare in 1999? Social insurance (e.g., Social Security, Medicare, and unemployment insurance) dominates public welfare spending in America, and the gap between social insurance and public assistance (e.g., TANF and food stamps) continues to increase with time, in part because the former are pegged to inflation while the latter are not, in part because public assistance programs have been severely curtailed in the last twenty years. The cost of food stamps plus AFDC was $47 billion in 1992 while the cost of Social Security was $238 billion. The cost of Medicaid (the most important program for the poor that has kept up with inflation) was $96 billion; even so Medicare benefits totaled $120 billion. Probably the most important and certainly the most overlooked anti-poverty program is the Earned Income Tax Credit (EITC). An idea backed and turned into legislation by the Reagan and Bush administrations and expanded enormously under Clinton, the EITC offers low-income working people a maximum of $3,65628 in yearly tax credits. If these credits are more than Federal tax due, the family receives the balance as a cash benefit. The credit varies with family size and with income. For very low-income families the credit increases with increasing income, providing an extra financial incentive to go to work, while families with more income gradually lose the tax credit until it phases out (at just under $30,000 for a family of three). Studies have shown the EITC to be very effective at raising people out of poverty. For instance, the program encourages single parents to find work. Recent Census data show that among working families, the EITC lifts substantially more children out of poverty than any other government program or category of programs. Although there has recently been more criticism of the program, it has been politically popular, presumably because it provides no disincentive to work; indeed, it is only available to working people. Supplemental Security Income (SSI and SSD) and mandatory Workers' Compensation benefits provide at least some income for disabled people and prevent total indigence. While SSI benefits (for the never- or little-employed disabled) are less than $500 a month currently and will not raise an individual out of poverty and SSD benefits (for those who have worked consistently) are higher than SSI (they vary with previous income) yet still relatively meager, both are pegged to inflation so that their value remains constant (in contrast to AFDC payments). While Social Security benefits the poor and non-poor alike, it is an extraordinarily important and effective anti-poverty program for the elderly, keeping the official poverty rate for the elderly at approximately 10%. Similarly Medicare is available to all elderly persons and thus disproportionately benefits the poor, especially those who would not qualify for Medicaid. Temporary Assistance to Needy Families (TANF), despite the cutbacks, remains an important program for families with small children as does Medicaid, which covers not only young families but the disabled. What has largely been missed in the welfare debate is the fact that AFDC (the precursor to TANF) was never intended to make people self-reliant. Its purpose has been to alleviate poverty through direct cash grants rather than change the conditions in which the poor live. To call welfare a failure because it has not raised people out of poverty is like calling the fire department a failure for not preventing a city's fires. While welfare funds are a necessary bridge to keep people out of poverty, they must be accompanied by other programs if they are to give people the resources to escape the "Surround." The Food Stamp program, administered through the Department of Agriculture, is available to all the poor, not just to young families. Initiated during the New Deal as a small program, it was expanded greatly during the War on Poverty. Research has indicated that food stamps have been effective in virtually eliminating hunger in the United States. Despite the massive cutbacks in the early 1980s, there is still some public housing (with rents proportional to income) as well as "Section 8" vouchers to subsidize some housing costs. While many poor people would be eligible for such housing assistance and while the programs are very important to the people they serve, the waiting lists are long (as long as ten years in the District of Columbia), so the large majority of poor people do not benefit at all from these programs. At the state and local level, Public Assistance (general relief to anyone who is poor) has largely disappeared over the past twenty years. Most state and local assistance is now in the form of social services (child protection, shelters for the homeless, grants to voluntary institutions to provide particular services, and so on) rather than as cash grants. It is a raggedy assortment of programs that is especially hard on poor children. The United States separates public assistance from social insurance and then tries to distinguish between the deserving and undeserving poor as it hands out benefits. Compared to other nations, our programs do very little to pull people out of poverty.
Chapter V: Possibilities for Change The developed nations of Western Europe and Canada have taken a very different approach to social welfare. There is little "public assistance" as such. Their specific "anti-poverty programs" are largely folded into social insurance. There is nothing similar to Medicaid, since everyone has access to tax-supported health care. In many nations every family with children receives various allowances, so a special program to poor families is less necessary. And those programs that are specific to the poor are still seen as "insurance," insurance for everyone against the possibility of becoming poor oneself. Although many of the specifics of social welfare vary from country to country, one common element is universal health coverage. However this coverage is provided (and it is different in different countries), no one goes without health care; therefore, neither the month-to-month costs of health care nor medical emergencies throw people into poverty. The Finnish System It is instructive, I think, to take a closer look at the particulars of these social insurance programs in other countries to see what we Americans can learn from them. Because the approaches are so varied, it will be less confusing to use one country as an example. Since I am personally most familiar with Finland (my wife is Finnish) and have spent some time looking at its social welfare system, I will use that system as a particular example of what a program could look like. Like every other Western developed nation except the United States, Finland provides universal health care coverage. Doctors work thirty-seven hours for the state (either in the public clinics or hospitals) and are allowed to have private practices on the side, which many (especially specialists) do. Individuals may go to the public clinics for a nominal fee (about $20 a year); necessary hospitalization costs several dollars per day. Finns may also decide to use the private system, in which case the state will pay approximately two-thirds of charges for covered services. Perhaps the strangest (to American ears) parts of the Finnish system are their programs of Family Support and Home-Childcare Support. All families in Finland, regardless of income, receive allowances from the government for each of their children up to the age of 17. Interestingly enough, the allowance per child increases with every additional child, so that the family receives approximately $10029 per month for their first child but $200 a month for their fifth child. A family with three children, for instance, would receive almost $400 a month in total child support payments. A single mother receives an additional $40 a month per child from the state. In addition, a single mother is entitled to at least $125 per month in child support from the child's father, and the state takes responsibility for making sure it is paid, paying the mother any unpaid balance.30 In addition to the basic child support, one of the parents (or the single parent) of young children can choose to stay home to provide childcare and receive $300 per month base "pay." For each child under four an additional $100 per month is paid; for each child between three and the beginning of school (usually seven) the amount is $60 a month. For less affluent or poor families, there is an additional payment of up to $200 per month depending on family size and income.31 For parents who choose to return to work, the state provides childcare for a charge of $200 a month for the first child, $200 a month for the second child and $40 a month for each additional child. This charge is reduced for low-income families and is free for families with an income less than $12,000 per year. Unemployment insurance benefits are about the same amount as in the US (approximately half of the previous salary), but an unemployed worker can receive those benefits for up to two years, compared to six months in the United States. All Finns, regardless of income, are also eligible for education allowances for almost any kind of adult education: regular university, vocational or job training, continuing job-related education, retraining for a new profession and so forth. Tuition is free. Students (including full-time adult students) also receive living support ($300 a month) and rent support (2/3 of monthly rent up to a maximum of $170 per month). Retirement benefits are handled much as in the United States, with a combination of private retirement funds (through employers) and public social security benefits. They would be considered generous by American standards. (For example, my father-in-law, a professor at a state teachers' college, received a pension that was greater than the salary of the person who replaced him.) In addition to these benefits, which are available to everyone regardless of income, there are two programs specifically for the poor. The first is rent assistance, which may be as much as 80% of monthly rent, depending on income and cost of rent. Renters can choose housing wherever they can find it (thus avoiding the economic ghettoization common in the United States). Also, the names of those receiving such assistance are not public knowledge, thus avoiding any public stigma. Finally, there is a catch-all benefit that state social workers can give to people who still fall through the cracks. The amount one should need to live on is determined by a schedule that factors in family size, cost of living in the area, and any special needs.32 If all of one's income, including allowances and supports, is less than the determined amount, the social worker is allowed, on a case-by-case basis, to give an extra allowance to bring one up to that level, which is generous by American standards. A single mother with two children who rented an apartment for $500 a month would be considered to need at least $17,600, (compared to our poverty level of $13,650 for a family of three). A single person with a rent of $350 a month would need $9,000 per year (compared to our poverty level of $8,050). Unlike the other entitlements, these catch-all allowances are managed individually by an assigned social worker to make sure that funds are being used appropriately.33 If other special needs do develop, one can return to the social worker and apply for additional assistance. When we, as Americans, look at such a social welfare system, our invariable first response is, "With benefits like that, who would want to go to work?" We would wonder how many people are playing the system. When—in an extensive interview with a Finnish social worker—I tried to voice that concern, she at first literally didn't understand what I was getting at. She finally responded that in their city of 60,000 people, their system knew of approximately one hundred people whom they thought "should have been working." She went on to say, however, that they had just done a more in-depth study of these one hundred individuals. Extensive medical and psychological testing had determined that approximately half had subtle disabilities that really did prevent them from working. In the end, no more than 0.08% of the population was abusing the system. Because virtually all Finns belong to the same racial and cultural group, racial segregation is not an issue. Neither is there much economic segregation. The richer and the poorer live in the same neighborhoods; their children go to the same schools. As a result the disparity in services provided to rich and poor that is so prominent in the United States is largely absent. The result of this system is that Finland has little poverty as we would define it in the United States. There are certainly poorer people, but their incomes would generally not be allowed to fall below our poverty levels. Even the poorest would not be "poor" by the United States definition. There is, of course, a cost to such a way of conducting government. In the United States, average Federal and local taxation (not including social security taxes) is about 21%. The range in the other Western nations is between 40% and 50%, although not all of that increase is due to social insurance programs. The problems in the United States, of course, are quite different from those in Finland. Finland is a small country; the overwhelming issue of segregation (and the legacy of slavery) does not exist. The population is much more homogeneous and people tend to identify with one another. But there are several take-home lessons:

  • It is possible to create a social insurance program that does not allow the income of people to fall below that which is considered necessary. So defined, poverty is not an inescapable fact of human nature, political science, or even capitalist economy.
  • Creating such a system is expensive. It requires significantly higher levels of taxation than Americans have been willing to subject themselves to.
  • There is nothing intrinsic in this kind of social insurance that leads to lack of motivation or laziness. Given the proper support, virtually everyone will use the program appropriately (although it is important to recognize that the enormous physical and psychic damage already done to many poor people would demand much more intensive support for the first generation or two).

How might we, then, build such a system in the United States? Proposals for Change in the United States Desegregation By far the most important thing that must happen in the United States is desegregation, both racial and economic. As long as there are ghettos, Jonathan Kozol has written, there will be ghetto desperation. If one puts all of the poorest people together in one area, removes the jobs, decimates the social organization, and so forth, generational poverty is simply inevitable. Affluent people must move into poorer neighborhoods, and (somewhat more likely) the affluent need to allow poor people into their neighborhoods. The "specter" of poor people moving into affluent neighborhoods is threatening to most middle- and upper-class Americans. We fear that the problems of the inner city will accompany the people. Over the last twenty years, however, there has been a fascinating research study, the Gautreaux Project in Chicago, the importance of which has not been generally recognized. Chicago public housing has always been highly segregated. As part of the settlement of a Federal civil rights suit in the 1970s, the city of Chicago agreed to fund a study of approximately 5,000 families from a public housing project that was being razed. The tenants were, for all practical purposes, randomly assigned to two groups. Both groups were offered Section 8 housing vouchers (to pay the rent), but one group (the inner-city group) was offered housing in another part of the city, while families in the second group (the suburban group) were given the opportunity to move into middle-class and affluent white neighborhoods in the suburbs. Other than locating the eligible apartments (where landlords would accept Section 8 certificates), neither group was given any special help. These two groups were then followed closely and have been statistically compared over the last twenty years. To over-simplify, the mothers of the families from the suburban group had results not so different from the mothers in the inner-city group. They were employed about as often, made about as much money, and had to go back on welfare about as often. Interestingly enough, neither group of mothers felt more socially isolated than the other, which is to say that the poor, black mothers in the white, middle-class neighborhoods felt no more socially isolated than their counterparts in the city. It was not that the suburban mothers did not often feel isolated: they did. It was just as true, however, that inner-city mothers felt forced to chose self-isolation as a way of protecting their children from the dangers of the ghetto. It was in the children that the important differences were noted. As might be expected, during the first several years after moving into the more advanced suburban schools, the children struggled. They had much to catch up on, in many cases years of work, because their inner-city schools had simply not been teaching at the same level. After three or four years, however, the school performance of the suburban kids changed. They began to do as well compared to their suburban peers as the inner-city kids were doing compared to their inner-city peers. Said another way, if black inner-city kids were making A's in the inner-city, they were soon making A's in the suburbs; those with B's in the inner-city had B's in the suburbs, and so on. The children had "jumped the track" from ghetto educational standards to suburban educational standards. Some of these children have now been followed for over twenty years, and the differences between the two groups have been astonishing. Far more children graduated from high school in the suburban group, ten times as many matriculated into four-year colleges, there were fewer college drop-outs and so forth. As these children now move into adulthood, similar differences are being found in employment history and earning capacity. While the road was sometimes bumpy and not everyone succeeded, a high percentage of these former ghetto kids were moving out. For them, the cycle of generational poverty had been broken. There are several conditions in the study that should be noted. First, only one or two families were moved into any particular suburban neighborhood. This had a very important effect, especially on the adolescents from the inner city because it did not allow them to congregate and develop a sub-culture in the neighborhood or in the school that brought the ghetto problems along. Children were essentially forced to integrate themselves into the suburban culture. Second, neighbors did not know the history of the new family unless the new family chose to tell them. Neighbors were therefore allowed to form their own opinions of the newcomers without the prejudices that "the inner city" conjures. Third, black families were integrated into white neighborhoods despite the mothers' sometimes considerable reluctance. (No one was forced to take suburban housing, of course, but the very few who chose not to take it were dropped from the study and had to find their own housing.) Research has shown that the average African American would prefer to live in a neighborhood that is mixed about 50 - 50, and they become uncomfortable if the percentage of African Americans in the neighborhoods drops below 10%. Presumably, most of these families would have chosen to move into a middle-class black or integrated neighborhood,34 but they were usually not given that choice. These results must challenge those of us who blame primarily the individual or the family for the frequent failure in the inner city. Take the family out of the inner city, the Gautreaux Project strongly suggests, and the children will do well. The Gautreaux Project is now being replicated in a number of cities across the United States. A significant obstacle to multiplying such programs elsewhere is that the affluent communities have in some cases reacted very negatively to the idea, effectively killing the project. Social Insurance In the absence of real desegregation, the task of eliminating poverty will be very difficult. It is possible, however, to design a social insurance system in the United States that would bring most poor people out of poverty. The following is a proposal for American social insurance that, I think, would be accepted by the majority of Americans. Since it comprises only one new program that is favored in reliable polls by a large majority of Americans and an expansion of three currently existing programs, the proposal is politically feasible. First, the new program: universal health care must be provided. Poor and (increasingly) middle-class people simply cannot afford health insurance, and minimum-wage employers do not offer it; fewer and fewer employers of any kind are offering family coverage. Congressman James McDermott, a physician, has introduced into almost every session of Congress a proposal for a "single-payer plan" that would provide universal coverage to all Americans without increasing total health care costs for the country. Almost one hundred members of the House of Representatives have usually signed on to this bill. A single-payer plan would make the United States government into the sole "insurance company" to offer health care. (Regardless of what one thinks of the Federal government in other fields, it handles insurance very efficiently and cheaply. Social security is run with an administrative overhead of less than 3% compared to 15% - 20% in private insurance companies.) Doctors would still bill the "insurance company," but there would be only one company to bill, the government. The administrative savings from such a plan would be enormous.35 Not only would overhead be less for the government than for for-profit insurance companies, but overhead would also be less for the doctors and hospitals. The current Byzantine system of private insurance, each with different exclusions and levels of coverage is an expensive nightmare for health care providers. In separate studies the Congressional Budget Office and the Office of Management and Budget (OMB) have demonstrated that the administrative savings would be enough to provide comprehensive health coverage for all of the uninsured in the country. In other words, we could give everyone insurance for the same total cost that now leaves over 43 million people uncovered! Second, the Earned Income Tax Credit (EITC), already functioning as a well-accepted program, could be expanded such that no person working more than thirty hours a week would earn less than the poverty level for his or her family size. There are now millions of poor people who have a full-time worker in the family. None of these families would be poor. A further provision of the EITC could give an extra credit to parents of small children to make childcare affordable. Third, through a combination of the EITC and an expanded unemployment insurance, employees who are laid off should also receive an income that leaves them above the poverty level. Finally, the Supplemental Security Insurance program, which provides disability benefits to those permanently disabled, must be carefully expanded in two ways. First, eligibility must be expanded so that everyone who really cannot work (for whatever reason) qualifies. This would require only a change in regulations, not a change in the law, for coverage of all those who are disabled is the mandate of this program. Due to meager budget appropriations and other political factors, however, the regulations and the milieu of the decision makers in practice deny coverage to many disabled persons. Causes such as disabling back pain (often impossible for the claimant to "prove"), mental conditions that do not meet certain criteria, disability due to addiction, and many other disabling conditions are in practice not considered eligible. Second, the level of coverage must be increased to the level of the EITC discussed above, ie all individuals and families should have incomes above the poverty level. The total cost of the above programs would not be prohibitive. As outlined above, the cost of universal health care would not be any more than our current system. (Although it would necessitate an increase in taxes, this increase would be offset by the elimination of insurance premiums paid by employers that currently provide coverage and by individuals who must pay their own premiums.) The exact cost of the other three programs is not known, although it would not require more than a minimal (less than 1%) increase in Federal expenditures. In 1991, the Census Bureau estimated that it would have taken an additional $37 billion to raise the incomes of all poor families with children to the poverty line. By contrast, yearly Social Security income alone is approximately $500 billion. The tax deduction that homeowners are allowed to take for the interest they pay on their mortgages (really an income transfer program to the middle class) costs the US treasury $49 billion. The implementation all of the above programs—which would raise the incomes of almost everyone in the country above the poverty level—could be financed by less than a 1% increase in taxes (excluding the cost-neutral transfer of health insurance payments to taxes)! Although the political likelihood of enacting the above programs is small, we should not confuse the issue by saying that we have "tried everything" to eliminate poverty or that "the government can't solve the problem of poverty." The government (that is, the American people acting together) can solve the problem of poverty, and it would not be expensive. Would not the above programs simply allow—or even encourage—people to sit back and let the government take care of them? The evidence suggests not. The backbone of the above programs is the expansion of the EITC. According to a recent report by the Center on Budget and Policy Priorities,

A series of studies … [has] consistently found that the EITC has substantial positive effects in inducing single parents to go to work. One of the most important of these studies finds that the proportion of single mothers who are in the labor force rose sharply between 1984 and 1996 and that the EITC expansions instituted during this period are responsible for more than half of this increase.36

Justice There is far more, of course, that needs to be done to bring real justice to the poor. Even if we lift people economically out of poverty, much of the damage that has already been done by poverty and oppression remains. Schools will still have to be radically improved, neighborhoods must be rebuilt, social services must be provided to the current victims of inner-city poverty (especially the children) to overcome some of the emotional damage that has been done, adult education must be expanded and so on. Justice demands that the conditions in the inner city be changed. The current response is mostly to add police (which does need to be done), increase prison sentences (which does not need to be done), and throw up our hands, saying, "There's nothing more we can do." The poverty of the inner city is a stain upon democracy in the United States. Yet there is nothing—except our failure to will it—that stands in the way of alleviating it. Footnotes 1 Katz, Michael, Improving Poor People 2 Shorris, Earl, New American Blues 3 I make no claims to the originality to the originality of this work, which is essentially a summary of material from a small number of other sources. As will be obvious to anyone who has read in the field of urban poverty, I have borrowed heavily from the works of Michael Katz, William Julius Wilson, Douglas Massey, and others. I have cited references to direct quotations, but it would be impossible to cite references to all of the ideas without creating a blizzard of footnotes. I am grateful to these authors for their work. 4 In absolute numbers had been an explosion in black single-parenthood. The ratio of black single-parent households to white single-parent households, however, has remained the same since 1950. In 1950, for instance, 17.2% of black households and 5.3% of white households were headed by women. The "black multiple" was 3.2. In 1993, the figures were 58.4% and 18.7% respectively, so the black multiple was essentially the same, 3.1. 5 The words "liberal" and "conservative" have been so misused as to become almost meaningless today. "Liberal," for instance, seems to describe anybody in favor of big government. In this book, I will use the term "liberal" to refer to those who emphasize the structural causes of poverty and see them as prior to and more important than behavioral causes. I will use the word "conservative" to refer to those who see individual agency as more important. 6 The "culture of poverty" was a term introduced by sociologist Oscar Lewis in the late 1950s implying that certain groups had culturally induced behaviors that precipitated their poverty. 7 Murray, Charles, Losing Ground. 8 Wilson, William Julius, When Work Disappears 9 Black women do not seem to be perceived so negatively. 10 Ibid p. 33 11 In fact, an astonishing experiment over the last twenty-five years, the Gautreaux Project, suggests that merely moving poor families out of the ghetto is enough to bring those families out of poverty within a generation. 12 Massey, Douglas and Denton, Nancy, American Apartheid pp. 2-3. This book is an excellent history of modern segregation and its impact on poverty. 13 African Americans compose approximately 12% of the population. If there were no segregation at all and if the rate of white poverty were 10% and the rate of black poverty 20%, then the average rate of poverty would be 11.2%. Given complete racial segregation, however, the rate in black neighborhoods would be 20% (not taking into account class segregation in the United States that intensifies the problem). 14 Massey and Denton, American Apartheid, p. 131 15 On the other hand, we tend to punish more severely those kinds of crimes committed by the poor than those committed by affluent people. Why is it, for instance, that we prosecute shoplifters so much more aggressively than people who "fudge" their expense accounts? Both are crimes against business that can cost a significant amount; both are Federal crimes since neither source of income is usually reported to the Internal Revenue Service. The notorious example of the differential punishment for possession of crack versus powder cocaine is another example. The amounts of cocaine one can possess without risk of significant jail time are one hundred times smaller for crack (used by poor people) than for powder (used by affluent people), despite the fact that the powder can be easily transformed into equipotent doses of crack. 16 Wilson, When Work Disappears, p. 55 17 Although costs vary greatly, the average cost of childcare, according to the Children's Defense Fund, is $3,400 per year per child. Childcare expenses consume from 18 to 21 percent of the income from poor and near-poor families. (Reported in The Youngest Minds by Ann and Richard Barnet, p. 255.) 18 Since no baby should be labeled "illegitimate," the term's virtual disappearance from our language should be considered progress. Nevertheless, it also indicates a change in our mores, a weakening the social constraints on out-of-wedlock births. 19White Puerto Ricans have out of out-of-wedlock statistics similar to the general population. 20 Canada, Geoffrey, Fist, Stick, Knife, Gun 21 It is more than coincidental, of course, that our language usage has middle-class kids "experimenting" with drugs and using them "recreationally;" there is no such mitigating language when black ghetto kids use drugs. 22 The term "welfare" can be confusing, for it has historically meant any form of public assistance to people in economic trouble. Local relief payments, certain disability payments, medical assistance, aid to families and so on are all "welfare." Today, however, the term often refers specifically to public assistance to single-parent families (now called Temporary Assistance to Needy Families [TANF], previously called Aid to Families with Dependent Children [AFDC]). 23 Social Security was part of the Economic Security Act of 1935. Also in the act was a matching grant program that encouraged the states to assist the elderly who hadn't worked long enough to collect benefits under Social Security. Although administered by the states (meaning that benefits varied greatly from state to state and were usually not sufficient to live on), such old-age assistance did not discriminate as much against blacks. This program was, for the most part, what American knew as "welfare" until the mid-50s. 24 Perhaps the greatest indication of the actual nature of the program is the funds that are in the trust. Any true insurance program should have enough money so that it could stop taking in new business today and have enough money in the trust to meet all of its future obligations. This has never remotely been the case for Social Security, which, at the end of 1996, had $567 billion in its trust fund and liabilities of $8 trillion (or $8,000 billion). Social Security has always been a transfer of income from the working to certain people who were not working, not an insurance program. 25 Katz, Michael, In the Shadow of the Poorhouse, p. 246 26 Ibid, pp. 259 & 263 27 Although partially federally funded, Medicaid is a locally administered program. Not enough funds have been appropriated to cover all who are poor, so each state decides how to allocate those funds. The District of Columbia, for example, gives benefits only to those poor who are completely disabled or parents of small children. 28 1997 figure for a family with two or more children that has earnings of at least $9,140 and adjusted gross income less than $11,930. 29 All dollar amounts are approximations based on actual figures in Finnish marks. 30 A single mother with one child would, therefore, receive $265 per month for that child ($100 basic payment, $125 from the child's father, and $40 single-parent compensation. For two children she would be paid $535 a month in family support payments alone. 31 A single mother with one child under the age of three and another between three and seven would, therefore, receive $660 a month for staying home and taking care of the children, making a total of $1,220 per month from the state. 32 Buying work tools, additional childcare, moving or funerals are examples of special needs. 33 If an unemployed person refuses an appropriate job offer, for instance, this support can be reduced by 20% for several months. If that person refuses another job in the same time period, the support can be reduced 40%. The reduction lasts only several months, however. 34 In all probability, the urban children would have done just as well (or perhaps better) in an affluent black neighborhood, but this has not been tested. 35 Physicians for a National Health Program (PNHP) has proposed a plan very similar to McDermott's bill. The details of such a plan can be obtained from them at 332 South Michigan Suite 500, Chicago, IL 60604 or from their website at www.pnhp.org. 36New Research Findings on the Effects of the Earned Income Tax Credit by Robert Greenstein and Isaac Shapiro, a report from the Center on Budget and Policy Priorities, 820 First St NE Suite 510, Washington, DC 20002. Their website is www.cbpp.org, from which the entire report (along with much other useful information) can be downloaded.

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David Hilfiker

is a physician and cofounder of Joseph's House. He's the author of Not All of Us Are Saints: A Doctor's Journey with the Poor and Urban Injustice: How Ghettos Happen.