How Our System Traps People in Poverty

Our current system of anti-poverty programs and policies reflects a fundamental misunderstanding of the structural causes of poverty and does little to address the systemic and internal barriers that make it nearly impossible to overcome it. The struggles of those in poverty remain nearly invisible to better-advantaged individuals.

For people living in poverty and near poverty, the cost of goods and services becomes the most critical factor in purchasing decisions. People in poverty have to prioritize those costs over opportunity, comfort, physical needs, emotional needs and even their safety.

We need to offset and push to progress beyond a system that institutes unnecessary and disproportionate cost and time burdens on individuals and families in poverty as well on the agencies that provide services to them.

It’s Outdated

Our poverty gap has widened substantially

  • A family must now earn an income that is 5 times the federal poverty level in order to reach financial self-sufficiency.
  • 1/3 of workers earn below-poverty wages.

Low-wage jobs no longer pay enough to support a family

  • Economic changes over the past 50 years have compounded the strain of supporting a family.
  • It now takes two incomes to maintain the same standard of living that one previously provided, adding the costs of childcare and transportation.
  • Parents in low-income families with children under 5 are more likely to report concerns about their child’s learning, development or behavior than parents in higher-income families.
  • Higher-earning jobs now require a college degree or specialized training that is often inaccessible for workers.
  • 30 years ago, Medicaid and SNAP served unemployed families already receiving public assistance, now they mostly subsidize families in which one or both parents are working.
It’s Fragmented
  • We lack an integrated strategy to most efficiently leverage and build on available resources.
  • Programs and policies focus too narrowly on individual symptoms of poverty rather than its structural causes.
  • Assistance organizations weren’t designed for cross-agency collaboration and so work in isolation with each other, leading to costly redundancies in the application and eligibility-determining processes.
  • Differences in funding and definitions of success, as well as rigid guidelines and structure makes it difficult to respond to the needs of children and parents in a coordinated way, or worse, puts the needs of parents and children in conflict.
It Charges People for Being Poor

Individuals in poverty and near-poverty pay more for staple goods and services

Reliance on neighborhood convenient stores means spending up to 10 times the price of basic goods than those who have increased financial flexibility and accessibility.

They get locked into compounding fees

  • Bank fees for accounts with too little money
  • Service fees for not having a bank account
  • Check-cashing fees (up to 20%)
  • Debit and paycard fees
  • Overdraft fees
  • Late fees
  • Default charges
  • Policy reinstatement fees
  • Citation fees

They pay higher interest rates

  • Those unable to pay more than minimum card payments can easily end up paying 3x as much for goods and services.
  • Even credit cards from national banks have raised credit card interest rates as high as 79.9%.
  • Individuals without sufficient assets or credit history have to rely on payday loans and car title loans when unexpected costs arise. These loans typically have rates of up to 500%, but have reached up to 7000% during defaults.

They pay higher replacement and repair costs over time.

  • Cost constraints require choosing the cheapest item over investing in the longest-lasting or most economical purchase.
  • Lower quality goods require more frequent replacement and repair costs.
  • An inability to afford recommended maintenance on items like cars lead to higher repair costs and the cost of alternate transportation.
It Attempts to Punish People out of Poverty
  • We place the burden of overcoming hardships on the person in crisis rather holding our policy makers accountable.
  • We demand changes from individuals in poverty without equipping them the necessary tools.
  • Our cultural stigma shames people in poverty for behavioral and/or educational deficits caused by lack of opportunity and resources.
  • We systematically fail to recognize desperate behavior as indicators of crisis situations such as hunger, eviction, or having utilities turned off.
  • The inability of individuals to succeed with the insufficient or fragmented support provided perpetuates a cycle of a depleted sense of self-worth, increasing the obstacles of overcoming poverty.
It Lacks Sufficient Outreach & Efficiency in Benefit Delivery

Assistance programs are significantly underutilized by eligible individuals due to:

  • A lack of awareness of the comprehensive services for which they qualify.
  • Not understanding or being overwhelmed by the application process.
  • Administrative burdens that decrease benefit accessibility and retention.

 

Misconceptions About Those in Poverty Adversely Affect Public Support for Funding & Employers’ Hiring Decisions.

MYTH: Subsidized benefits for those in poverty or near-poverty are one of the biggest drains on the economy.

  • Collectively, those in poverty receive $30 billion less in subsidized benefits than our nation’s corporations, not including the $60 billion corporations receive in tax breaks from sheltered profits.
  • Those in poverty aren’t able to take advantage of deductions that function as subsidies for the rich and middle class. For example, 60% of the home interest mortgage deduction goes to households with incomes higher than $100,000.

MYTH: Poor families don’t pay their fair share of taxes.

  • The bottom 20% of wage earners pay twice as much in taxes as a share of their income as do the top 1% of our nation’s earners.
  • Working families may not pay as much in federal income tax, typically because they don’t earn enough to qualify, but they pay more in sales tax, payroll tax, etc.
  • When working families do pay federal tax, they pay as high or higher rates than wealthy individuals who earn most of their income through investments.

MYTH: Most poor people are unemployed

  • More than 80% of households in poverty have at least one parent who works.
  • Overall, poor and near-poor individuals work longer hours than the wealthy and middle class and are more likely to work multiple jobs.

MYTH: Poor families take advantage of welfare programs long-term

  • The vast majority of welfare beneficiaries get off of the system in less than 5 years, despite the absence of official welfare-to-work programs, resources and/or training.

MYTH: Welfare families have more children to get more benefits

  • Families on welfare have on average the same number of children higher income households.

MYTH: Poverty is a result of an individual’s bad choices

  • Most people living in poverty today were born into it.
  • Poverty in most cases doesn’t afford individuals second chances.

MYTH: Poor and near-poor parents have high rates of drug- and alcohol-abuse.

  • Poor parents have lower rates of alcohol abuse than their peers in wealthier households.
  • Drug use is spread evenly across income groups.