S2E3: Redefining How We See Poverty in America
S2E3: Redefining How We See Poverty in America
What does poverty look like today in America? What are the most important factors that are keeping people in poverty and what can we do about them? Today, we are bringing you part one of our “why is it so expensive to be poor” mini series, and discuss this important topic with Alexandra Cawthorne Gaines, the vice president of the Poverty to Prosperity Program at the Center for American Progress.
You can find Alexandra Cawthorne Gaines's bio and her works here.
Explore more publications focused on poverty on Center of American Progress's website here.
Check out TalkPoverty mentioned in the episode, for more real stories about poverty in America.
Submit to our Calling All Voices for a chance to chat with us on a future podcast episode!
Welcome back to Your World, Your Money. We've missed you guys so much, and we're so happy to have you with us again today. We're kicking off a two-part series called "why is it so expensive to be poor", and guess what question we're answering? Why is it so expensive to be poor. We think this topic is really important for everybody, and we really want to try and bring some empathy to the conversation and dig in on just how difficult poverty can be to climb out of. And I'm not here alone today. I'm here with our co-host for this series, Nolan DiFrancesco. Hey Nolan!
Hi Mary. Thank you so much. And yes, it's true that we often think about poverty as a temporary condition, a situation where people are just scraping by until they can build up some savings and find better opportunities for them and their families. But too often, that's not the reality. When you find yourself working a low-wage job, struggling to pay off credit cards or other loans with outrageously high interest rates, avoiding things like overdraft fees around every corner. And knowing that any little medical emergency could put you on the path to bankruptcy, life is pretty hard. It can be near impossible to find the financial breathing room to lift yourself out of that situation. And that can be heartbreaking, but there are some glimmers of hope, and I'm really excited with the guest that we have to chat with today.
That's right. Joining us today is Alexandra Cawthorne Gaines. Alex is the vice president of the Poverty to Prosperity Program at the Center for American Progress. Prior to her time at American Progress, Gaines directed the human services program within the Economic Opportunity Division at the National Governor's Association. In this capacity, she provided leadership and strategic direction to the NGA's human services program, which focuses on state policies and programs that promote the economic and social wellbeing of families, children, individuals, and communities. Alex has a career distinguished by service to organizations that advocate on behalf of children and families with low incomes, she has served in advisory roles to the National Alliance to End Homelessness, the Corporation for Supportive Housing, Results for America, and the National Child Welfare Workforce Institute. She currently serves on the board of directors of the Alliance for Strong Families and Communities. That's a lot of really incredible organizations and that was actually really fun to read. I was like, wait, there's so many governors and important associations that I think I should know about. Alex, we're so happy to have you. Hi!
Thank you so much. It's a pleasure to join you for a really important conversation.
Tell us what prompted your interest in this kind of work. What got you started to devoting a career to researching and working on behalf of families in poverty?
Sure. So really for as long as I can remember, I've had an awareness that poverty is really a form of social injustice. I would say it's a part of the way that I was raised. But you know, what was really important to my family is, and the perspective that we took is that it's really a moral duty for people with more to give time and resources to help others. And so what that meant really in my family was helping my extended family. So cousins, aunts, uncles, grandparents, with food, if they needed it. Doing community volunteer projects, and other sort of more charitable types of actions. But what I would say in terms of what really set me off on a career path focused on antipoverty particularly helping children and families with the most needs, is after college. I participated in a year-long antipoverty fellowship where I was placed in New Orleans. And this was before hurricane Katrina, where I did a research project on the connection between housing insecurity and health. And in that context, I worked with the poorest community in the city. But I lived in the wealthiest community in a house that was, was donated to us by a family that had resources and cared a lot about this work that was going on in the city at that time. But I literally saw families trying to thrive in housing that had holes so large on the outside, you could see inside. I mean, this is, you know, families facing exposure to weather events, to all kinds of critters and general just insecurity being in a house. I guess you could say a lack of good security being in a home that is more easily accessible due to the condition of it. And so I thought I would be interested in doing direct service work following that year that I spent in the fellowship, but I was exposed to policy work in DC through that fellowship as well. And so I developed a passion for what I call systems change, uh, and my career moved on from there. And so sort of grounding my career, I've heard people say recently that poverty is a policy choice, I 100% believe that, and I believe that government has an affirmative responsibility to ensure there's a minimum standard of living for everyone, in which all people have their basic needs met.
That hits home to me and I think a lot of people. I'm curious to get your perspective, Alex, on what does poverty look like today in the United States? You know, I'm under the impression that there is kind of a long history of us trying to measure poverty in different ways, sometimes measuring things like access to basic goods or how many families have access to things like a refrigerator in their house. But, I think that's not really the case today. How should we update our mental models about how to think and understand what poverty really is today for families?
That's a great question. I think I'll start by sort of rounding in some facts about how we measure poverty. So census estimates that there are currently 34 million people living in poverty, but it's important to know that the way the government calculates this threshold was determined back in 1963, and it hasn't been updated or changed since then. So the calculation defines poverty, the poverty level for a family of four at three times a typical families food budget, but this was based on the 1955 household food consumption survey. So you can imagine there are a ton of people who are not captured in this measure. So in the way we assess poverty is increasingly out of touch with the economic reality that people face today. This 1963 measure also fails to take into account the overall rise and geographical variation and wages, the cost of living as well as inflation over time among a bunch of other issues.
So first I would say that poverty is much more widespread than people understand it to be. And this is even going back before the Corona virus pandemic. I've seen research that estimates that nearly 40% of adults will live at least one year in poverty during their prime working years. And I think that was ages 25 to 60. So again, before the pandemic studies reported that more than 43% of the US population, which is approximately 140 million Americans, reported that they did not earn enough money to adequately cover housing costs, food, transportation, healthcare childcare, and a bunch of other essential expenses. So I would say that poverty is often a daily struggle for many people. And it's a struggle that requires sacrifice and still leads to deprivation. Poverty in the US often looks like people being forced to make choices between paying rent on time or paying for medicine, making an occasional trip to the food bank, to supplement their meager food that's left in the refrigerator before their next payday. It looks like a mom, missing work for several days in a row at risk of losing her job due to the inability to pay for childcare, when her family member or friend who would normally step in, are unavailable. And I'm talking about episodic poverty right now, but we really should not ignore the reality that there is deep persistent poverty in this country. There are parts of this country where there are entire communities that live in substandard housing, like I described, but where utilities like electricity, clean drinking water are absent. And this is especially the case when reservations and in the black belt and the rural South. And we see people experiencing homelessness, literally living on this street in nearly every part of this country. Uh, so, you know, poverty looks like some of what our mental models tell us or some of what we may have hold in our heads to be true, but the reality is, poverty touches far more people than we actually realize in this country.
You mentioned something about the pandemic and how that's affecting poverty. And we're very mindful because I mean, at the foundation, and also in general, we hear a lot about how the pandemic has kind of reversed a lot of the strides that were made in bringing people out of poverty globally. But we don't really talk about that at all in the United States, at least I haven't heard much of that conversation. And so were we making any progress before the pandemic? And whether or not that's a yes or a no, how has the pandemic, which I assume is at the forefront of everybody's mind, affected poverty in the United States now?
That's a great question. So prior to the pandemic, we actually did see progress and poverty reduction in the US. So for example, the official poverty rate in 2019, which is the year for that is most recently available, was 10.5%. And this is down from almost 12% in 2018. And this was the fifth consecutive annual decline in poverty that we've seen since 2014. And the poverty rate has actually fallen more than four percentage points. And what I often look at as some, in terms of how poverty has been impacted, our people have been impacted by the pandemic, is some research from Columbia university. Researchers there are actually began estimating poverty on a monthly basis at the beginning of a pandemic. And they used a supplemental measure of poverty that takes into account families expenses, plus the impact of safety net programs like food assistance, housing assistance, and so on.
So before the pandemic, those researchers put the poverty rate at actually 15%. And when we saw the economy basically grind to a hall in March and April, the impact of high unemployment was actually blunted by the federal economic relief package that we know as carers, that was the coronavirus aid relief and economic security act. And if you recall, in that act, qualified individuals receive stimulus checks of $1,200. Married couples received $2,400. Those were children had an extra $500 per child, and then people who have filed for unemployment insurance received an additional $600 per week from the federal government. We saw with the increases and the generosity in the safety net, an actual impact on poverty. We saw less poverty as a result of that. Those researchers say without that cares package, poverty would have actually jumped to almost 20% in this country. So that relief package lifted 18 million people out of poverty. It's important to note that the actions that we took during COVID to help people make meet their basic needs actually had a tremendous impact. But since then, poverty has continued to climb and we have an urgent need for more support right now. We have an eviction moratorium that went expired, we're going to see a wave of homelessness like we've never seen in this country before. There is a hunger crisis. People have a lot of hardship they're facing right now. And so we are very eager at CAP, and among a number of anti-poverty organizations across the country to see this next round of federal relief come forward.
Just to give a little bit more perspective and color to what you're talking about. You're talking about a percentage point, year over year, you said for five years, it's been going down by percentage points. What does a percentage point mean? Like how can people understand, how can they perceive the importance and value of that one or two percentage points?
That's a great question. I mean, you know, behind percentage points, we often talk this way as researchers or advocates, but you're absolutely right. Percentage points don't mean much to people who aren't super wonky and in the policy field. We're really talking about hundreds of thousands of people, if not, depending on the number of millions of people who in fact were lifted out of poverty, which means due to our system of cash transfer and, in kind support that we have in this country that we call the safety net. These are people who were able to pay the rent to not face eviction, to put food on the table for their families, and not live in real abject poverty, or fall into deeper poverty because of our social safety net.
Can you talk a little bit about some of the daily struggles that, like, what are the most important factors that are keeping folks in poverty and what are the kinds of situations or roles that either the government policy plays or just the state of capitalism today, that other folks just don't think of. We don't run into the same kinds of traps or problems.
That's such an important question. And I do have to go back, to this idea that poverty touches more people than we realize.And that, an everyday situation can drive someone into economic insecurity, right? So there was a study, for example, from the federal reserve in 2019, that found that 40% of adults in this country would not be able to cover a $400 unexpected expense. So let's say your stove goes out or your dryer doesn't work, you know, there's just an unexpected medical emergency, a bill associated with that, four in ten adults in this country would not be able to cover that expense without carrying a balance on credit cards or from borrowing from family or friends. And of those people, 12% would not be able to pay for the expense by any means. So this means that people would have to skip a monthly bill or two in an emergency or skip a necessary health procedure or medical treatment, or make other tough decisions. It's expensive to be poor and the absence of a financial cushion like savings or assets or access to affordable credit and loans. We often see people turn to payday loans, and I know that you all are gonna have a second conversation that gets a little bit more into this, but I did want to touch a little bit on this part of it, that we see people turn to payday loans, auto title loans, and other forms of high cost credit to fill in those gaps. And those predatory loans and credit options are far more expensive than other products. I mean, we're talking interest rates that are 10 to 20 times higher than a typical credit card. And so I've, you know, I got stuck on this quote by a journalist that described high cost credit as a leaky life vest that drowns families in debt and sinks them into financial ruin, which is absolutely the perfect description. But beyond these emergencies, I would say everyday expenses are higher for people with low incomes. For example, having low-income and poor credit, you're required to pay a security deposit to turn on utilities when you move to a new place. If your utilities are turned off, you likely have to pay a fee to turn them back on. If you don't have a good rental history, you know, including a prior eviction, you might be asked to provide several months of rent plus a security deposit to secure housing. I would also say that given the connection between low-income and poor credit people with low incomes that do qualify for car loans or other mainstream banking products are often seeing a higher interest rate, which means they have higher monthly payments, and they often end up upside down in their loans. This looks like pay more for a car than, or other products than what they're actually worth. And I would say that even mainstream banking becomes challenging when you have a low-income or inconsistent income. For example, in order to access what we call a free checking account in many banks, you actually have to have regular direct deposits, which means you have to have consistent income likely through an employer. If you overdraft your account, as you were saying, there is often a fee for each transaction that goes over. So really paying more for everyday things contributes to an ongoing cycle of economic instability. You know, where this next emergency can literally push a family into homelessness or any other types of prices.
But that really takes me to another thought because this is an institutional thing. We can change if we want our banks to not have overdraft fees or if we want them to change the policy around it, that's an institutional thing. And that could be something that's changed, but I imagine that's pretty hard to change. And so I'm really curious about some of the policies or initiatives that you're really excited about because of the impact that they might have. And obviously they're probably not focused exclusively on overdraft fees, but that just really made me think, well, there has to be a way to change this, right?
A little bit about the work that my organization is doing, the Poverty of Prosperity team right now is focused on three key areas for action. One being, ensuring an equitable recovery from the pandemic that addresses both the immediate needs we're talking about, but also a lot of the root causes of inequity in this country. Certainly focusing on the impact of race on geography, all of these things that come to play when we talk about poverty. We're also doing quite a bit of work around modernizing the safety net and in doing that, building the economic resilience of people with low incomes and that, you know, that gets back into the conversation around assets and savings and ensuring that we have safety net programs that don't dis-incentivize people from saving. And I would say the last area for action that we're really focused on is advancing an agenda to cut child and youth poverty. And I would say like, you know, reflecting on the second part of your question around what excites me right now is that, during the Trump administration, a lot of my team's work really focused on playing defense. You know, for example, we were launching advocacy campaigns to prevent certain administrative changes that would make it harder to access safety net programs. So work requirements in Medicaid, or a lot of the rules around food stamps that limited access for people who were unable to work. But we have this tremendous opportunity before us to focus on rebuilding our country and our economy post COVID in a more equitable way. We're looking at opportunities that expand the safety net. And right now, for example, there's lots of energy, at the federal level, and I would say at the state level too, around, expanding tax credit. So expanding the child tax credit, expanding the earned income tax credit, both of these are things that would put more cash in people and individuals and in families' pockets, and when it comes to the child tax credit, in particular there's research, that's shown that it actually could expanding it and increasing the amount of the credit available to people and also doing it monthly, which is what people are talking about. So not just waiting until you file your taxes and getting a big lump of cash during tax season, we're talking about structural changes that would actually have the IRS sending families who qualify checks every month and that cash is going to make a huge difference.
You know, it could effectively cut child poverty in half through that monthly benefit. So that's huge. That definitely excites us. Relatedly, you know, a lot of the conversation around what we call a child allowance or a channel child benefit has also opened the door to, conversations around guaranteed income or, you know, people talk about universal basic income, guaranteed income. My program doesn't necessarily have a perspective on that, but I, you know, I would say any way that we can get more cash to people to help them navigate economic emergencies and challenges, and to help them better support their family without making serious sacrifices, I'm behind that, you know, my program is behind.
If you had five minutes alone in a room with Joe Biden tomorrow, what would be your advice in terms of how do we reduce poverty by the largest possible scale?
Great question. So I would say as far as how I feel about, what we've seen from the bidet administration so far, I am cautiously optimistic. I would say there have been great strides made to take into reverse those harmful rules and regulations that I mentioned earlier, that were passed during the Trump administration. So some of the rules around access to food stamps or snap and Medicaid, those have been reversed. And I would say there's really sincere interest in effort and passing relief packages that center providing support to those who need it the most, some of the things that we've talked about. But I think importantly, there's also interest in thinking about systemic fixes to problems that plagued us before the coronavirus pandemic that we've discussed. My advice to the Biden administration would be no matter what the policy area of interest is, but especially when we're talking about economic policy, sensoring low-income people and families, and that policy making, especially the communities of color that have suffered the most. As my team does our work, for example, there're some questions that I often ask us to center our work. So one, you know, is the policy that we're talking about, is it something that's going to actually harm the individuals and communities that it seeks to support? Will this policy actually were pair or expand the safety net for individuals and families? Will this policy address more than one generation of families that are affected by poverty? and importantly, will this policy address systemic barriers that low-income individuals face when attempting to move out of poverty, that whole suite of things that we've talked about today? So that's what I would say. I think centering the experiences and the needs of low-income communities is actually good for all of us. It's good for the economy. It sort of gets that a lot of the structural issues that this country has faced for some time that have only exacerbated inequality,
Something that you just mentioned that I really want us to dive more into because it's so incredibly important, especially as we talk about the new administration and we talk about any kind of mobility at all. Let's talk a little bit about intergenerational mobility. We have this idea and this story, around the American dream and the belief that no matter where you were born or the condition that you're born into, you can have the possibility to make something with your life, quote, unquote, make something with your life. And we see that a lot of course, with a lot of immigrants and we idolize the stories so much and we still see it in the news, but I kind of want to talk about the reality of that. Compared to other countries, how does the US actually fair and what can we be genuinely doing better to enable the gains in income mobility or, you know, intergenerational wealth, whichever one you want to dive into, but just mobility in general, how can we really make a difference there?
Such an important question. So to address where the US ranks, looking at some recent research when compared to 24 middle income and high income countries, this was a study, I think of a couple of years ago, the US actually ranked 16th out of 24 in the amount of inter-rational earnings mobility. And so there's a couple of different explanations for this. One. You know, this relatively low rate of mobility, could be connected to the fact that low-income children in the US tend to have less stable and lower income families. And so that, in and of itself, creates a situation in which there's not really wealth being built that allows people to do things like buy a house or attend school without taking on lots and lots of student loan debt. But research also shows us the intergenerational mobility, and by saying this, what I'm talking about is the likelihood that children will achieve a higher standard of living in the household in which they were raised. It varies based on geography, race, and gender. It's super important to talk about this. There was an excellent series a couple of years ago in the New York Times on this. And I think it was connected to research conducted by Raj Chetty. But black boys raised in America, even in the wealthiest families and living in some of the most well-to-do neighborhoods still are in less than adult head than white boys from similar backgrounds. And this is according to again, research from a few years back, the trace of lives of millions of children. Conversely white children, white boys in particular that grow up rich are likely to remain that way. Black boys raised at the top, however, are more likely to become poor than to stay wealthy in their own adult households.
And some of these widest black-white income gaps. And that study appear again in wealthy communities. It really fits with previous research that has shown that the effects of racial discrimination really cross class lines. And so we're talking about a need to, if we're sincere about addressing intergenerational mobility, we have to get at the impact of structural racism on people's ability to move up and to do better than their parents and their grandparents. I think it's important to also note that although children benefit from growing up in places with higher incomes and more resources, black children do not benefit nearly as much as white children do. And so moving children of color, black children in particular to opportunity is not a guarantee that they can tap into it. So moving people, in other words, out of the neighborhoods of origin, like there have been some policy experiments to do and into higher income neighborhoods doesn't necessarily correlate with the growth in income in adulthood.
So again, and addressing structural racism is critical to really increase the mobility, and that these poor economic outcomes for black children are tied to the lack of mobility. So what excites me in terms of how people are thinking about addressing this really important issue is they're focusing on the wealth gap. And in particular, there's been quite a bit of work at the Center for American Progress, around the black-white wealth gap. One really interesting policy that, has been floated. I think there was actually a piece of legislation recently introduced by Senator Cory Booker. It's a concept called baby bonds, which would essentially provide every child in the US with a $1,000 savings account at birth. And for many people, particularly the lower, on the lower income scale, more money would be added each year. And so if we were actually to implement this policy, a recent analysis found that the median wealth among young black Americans would actually increase from two $57,000 more than $57,000 from $2,900. You know, what we need to do on top of potentially implementing really innovative policy ideas like this. Like I mentioned a little bit earlier is ensure that our safety net, so for families that are really struggling and need to access income support programs to meet their basic needs, that the safety net doesn't prevent people from building wealth. So for example, if you're applying for the supplemental nutrition assistance program, which we call snap, which was formerly known as food stamps, you can't have a car that's worth more than a few thousand dollars. You can't have a whole lot of money in your checking account. You can't really have assets, that prevents you from actually being eligible for the policy that is counter to the idea of trying to build mobility, and allow for mobility to increase among our lowest income families. So we need to do both. We need to be, make sure we're investing in strategies that will grow wealth for people, and that we are not holding people down when they access critical programs to make sure they can make ends meet.
Where do you think the real opportunities are? How would you encourage those who have a desire to get involved, but might not know where to start?
So one thing sort of shameless self plug, that I would encourage people to do is if they want to learn more about, poverty strategies for policy strategies that could actually address poverty, and other things that are happening currently, I definitely encourage them to check out our website, but in particular, there is a journalistic part of our anti-poverty program called TALK Poverty, where we regularly post columns and briefs, on relevant policy issues. But in particular with talk poverty from the voice of people with lived experience. So these are people who are currently experiencing poverty writing about the policy solutions or practice changes that they would like to see to make life a bit easier. And so I think it's such an incredible, incredible work, incredibly important work. And it makes sure that people have a perspective that's rooted in people's lived experiences. Um, but we also do advocacy campaigns asking for people to reach out to their members of Congress on really important issues. So I would say just sort of, not only looking at the CAP website, but there's a wealth of national organizations who track what are going on, what's going on. And it's important to stay engaged and touch on that But certainly also researching your local representatives to see what they're doing on poverty or what they're not doing. And reaching out and, encourage action in certain ways. I think it is valuable and especially important at the local level.
Yeah. Thank you so much, this is so great!
I really appreciate it. This was a fun conversation to have, even though it wasn't a fun topic. If that makes sense.
Thank you so much listeners for sticking around and we hope you enjoyed this conversation. I know it can be a dense and heavy topic sometimes, but talking about poverty is important. And so I hope you can join us next week for part two of our series on why is it so expensive to be poor. We're going to be talking to Amy Traub from the think tank demos, a nonprofit that powers the movement for adjust inclusive and multi-racial democracy. And we're going to delve into the subject of credit scores, a history that a lot of people don't know, and the disproportionate impacts that can have on low income Americans. So hope to see you then. And Mary there's one other thing.
Speaker 1: (39:26)
Yeah. If you absolutely loved the conversation today, which hopefully you did, and if you didn't absolutely love it, at least hopefully you're ready to go action it. So we are opening up a Call for All Voices so that people can write papers about things like finances and disparities and intergenerational wealth and things like that. So we'd love to hear your voice and what you think about it. And if we choose your paper, cause you're amazing and awesome and absolutely stellar, you actually get to come on the podcast with us and talk about that specific topic that you wrote about. So if any of these topics are speaking to your soul, keep an eye out for that and go over to our website to see what's up with that. Calling All Voices and our podcast!