Above Photo: Charlie rests while listening to a sermon before being admitted to lunch at the Hope Center on June 21, 2022 in Hagerstown, Maryland. The Hope Center, which has been assisting homeless and addicted men and women in the Hagerstown community since 1955, continues to see a steady stream of people in need. Spencer Platt/Getty Images.
Sociologist Matthew Desmond explains the roots of poverty in America in exploitation.
And the willful policies at all levels of government that keep people trapped in precarity.
Some 50 million people in the United States live in poverty today—and over 108 million people survive on less than $55,000 a year. Despite having the largest economy on earth, poverty in the US is often grinding and brutal. From millions who live without running water or reliable power, to countless children who experience food insecurity and homelessness. The data on poverty only becomes exacerbated when race is taken into account. In 2019, the median White household had a net worth of $188,200, compared with $24,100 for the median Black household. Matthew Desmond joins The Chris Hedges Report to discuss his new book, Poverty, by America, which delves into the reality of American poverty not as a condition earned by individuals’ poor choices, but a phenomenon produced by the knowing and unknowing choices of the wealthy.
Matthew Desmond is the Maurice P. During Professor of Sociology at Princeton University. His primary teaching and research interests include urban sociology, poverty, race and ethnicity, organizations and work, social theory, and ethnography. In 2018, Desmond’s Eviction Lab at Princeton University published the first-ever dataset of more than 80 million American eviction records. The Lab currently is pursuing nearly a dozen lines of inquiry analyzing this groundbreaking dataset that will help scholars, policymakers, and advocates better understand eviction, housing insecurity, and poverty.
The following is a rushed transcript and may contain errors. A proofread version will be made available as soon as possible.
Chris Hedges: According to the Center on Poverty and Social Policy at Columbia University, 14.3% of Americans, nearly 50 million people, were living in poverty as of last December. “If America’s poor founded a country,” Matt Desmond writes in his book, Poverty, By America, “That country would have a bigger population than Australia or Venezuela.” Almost one in nine Americans, including one in eight children, live in poverty. There are more than 38 million people living in the United States who cannot afford basic necessities, and more than 108 million getting by on $55,000 a year or less, “Many stuck in that space,” he writes, “between poverty and security.” More than a million of our public school children are homeless, living in motels, cars, shelters, and abandoned buildings. More than two million Americans don’t have running water or a flushing toilet at home. “These statistics,” he writes, “are bad enough. But when seen through the lens of institutionalized racism, they are even worse.”
In 2019, the median White household had a net worth of $188,200, compared with $24,100 for the median Black household. “And yet,” as Desmond writes, “spending on the nation’s 13 largest means tested programs, aid reserved for Americans who fall below a certain income level, went from $1,015 a person the year Ronald Reagan was elected president to $3,419 a person one year into Donald Trump’s administration. That’s a 237% increase.” Why does poverty on this scale exist given our affluence? Desmond argues that poverty in America is not an accident. It is by design. “The majority of Americans,” he writes, “benefit from a system that callously exploits the poor.”
Joining me to discuss his book, Poverty, by America, is Matthew Desmond, Professor of Sociology at Princeton University. Matt, you write about what you call a hard bottom layer of deprivation, a kind of extreme poverty once thought to exist only in far away places, of bare feet and swollen bellies. And this is the one in 50 Americans who receive no cash income. I just want to begin there. If you can talk about the consequences of this extreme poverty, which I should add, coming out of the New York Times, it’s been rendered virtually invisible by the media.
Matt Desmond: Well, it’s good to see you, Chris. Thanks for having me. For my last book on eviction, I lived in two very poor neighborhoods in Milwaukee and saw a kind of poverty that I’d never seen before, never experienced before myself. I saw grandmas living without heat in the winter in mobile homes, just piled under blankets and praying the space heater didn’t go out. It was routine to see children being evicted. If you’ve ever been to eviction court, you just see a ton of kids running around those courts and being put out on the streets every single day in a city like Milwaukee. And so I think that that really sharpened and focused what I understand to be American poverty today.
Poverty is measured as an income level but, of course, it’s this piling on of problems and adversities and humiliations. It’s that nauseating fear of eviction. It’s telling your kids they can’t have seconds. It’s debt collector harassment. It often is physical pain and toothache on top of getting roughed up by the police, living in slum housing conditions. And that kind of tight knot of social maladies is what poverty in America is today for those at the very bottom.
Chris Hedges: Well, it’s what Barbara Ehrenreich called living in poverty: one long emergency. And I think you raised that in the book, that it has consequences. Not just social and economic consequences, but deep emotional and psychological consequences because it’s constant trauma. But this is not something that I knew before I read your book. Because we have this argument that we’re always in austerity programs, slashing programs. “We got to cut the military budget,” which I think we do. But what you lay out is that we’ve increased spending on means tested programs 130% between 1980 and 2018, from $630 to $1,448 per person, but poverty’s gotten worse. And I’ll let you explain why. What’s happened to that money?
Matt Desmond: So this is a paradox, and I’d like to spend a little bit of time on that if it’s okay with you. So a lot of times when people see that paradox, they’ll say, “Okay, spending on poverty has gone up,” but poverty’s been pretty persistent over the years. If you look at the supplemental poverty measure, which captures a lot of that spending, 50 years ago, it was about 15%. 40 years after that, it was 15%. Really stable. The supplemental poverty measure dipped down a little bit before COVID, and then it plunged actually during the pandemic because of this incredible historic bold relief from the government. But what’s going on? And some people say, “Well, if we’re spending more and not really helping the problem, those programs won’t work,” and that’s just false. That’s empirically false. There’s a ton of research that shows that government programs are effective, they’re essential, they prevent millions of families from hunger and homelessness each year.
So what’s going on? What explains this paradox? And what explains it is that the job market isn’t really pulling its weight and we’ve failed to address the unrelenting exploitation of the poor in the labor market, but also in the housing and financial markets as well. So if you look at when the War on Poverty was launched in the Great Society in 1964, these were deep investments in the poorest families in America, right? This was making food aid permanent, expanding social security, founding Medicaid. And those programs, 10 years later after they were launched, they cut the poverty rate in half, but they weren’t fighting poverty alone.
One in three workers at that time belonged to a union. Real wages were increasing. You had some prosperity in the labor market and the labor movement was strong. But as workers lost power, the job market got a lot worse, wages stagnated, and so now we have to spend more to kind of stay in the same place. And I think this is fundamental for those of us who care about ending poverty in America today because it means we don’t just need deeper investments. We need different ones, ones that really cut at the root of poverty.
Chris Hedges: Well, you also point out that the way this money is distributed has changed dramatically. Clinton’s destruction of the welfare system meant the money was sent to the states. And you noted in the book not only how difficult and complicated it is to apply for assistance, but you had to figure that over a billion dollars of social security funds are spent not on getting people disability, but on getting lawyers so they can get disability.
Matt Desmond: Right. I learned this when my friend Wu was going through the process. Wu and I lived together in Milwaukee and he stepped on a nail in this rundown apartment we shared in a rooming house, and his leg got infected. And he has diabetes and that infection was accelerated by that, and the doctors eventually amputated his leg. He was one of the hardest working guys I knew. He was a security guard. He often worked double shifts, was out all hours of the night, but he couldn’t work after they took his leg. And so we applied for disability together and the application got rejected. And to Wu, this was a normal thing. He was like, “Well, I got to hire a lawyer now.” And so working on contingency, the lawyer kind of fought for Wu. And if they win, they get a chunk of the back pay. That’s what happened to my friend.
Wu got about $3,600 in back pay. He used it to buy a wheelchair-accessible van that ran for a few years and then caught on fire. And his lawyer took $400. Wu never lost any sleep over that, but it was hard for me to get over the fact that every year, a billion dollars, billion with a B, doesn’t go to folks like Wu, right? It goes to lawyers to help folks like Wu get on disability. And so part of the mystery, part of the paradox, is that a dollar in the federal budget doesn’t necessarily mean a dollar in a family’s hand.
Chris Hedges: Well, you also write in the book how money that’s supposed to go to the poor gets diverted by states in particular.
Matt Desmond: Yeah. That’s right. So if you look at cash welfare, Temporary Assistance to Needy Families, or TANF, this is a big program. It’s about $32 billion a year and it’s a block grant, which is just a fancy, wonky way of saying, “Okay, states. Here’s the money you can decide how to spend it.” And man, states are very creative about how they spend those welfare dollars. Maine uses them to fund Christian summer camps. Other states use those funds to fund anti-abortion education, abstinence-only programs, marriage initiatives, things that don’t really have anything to do with helping the poorest kids and the poorest parents.
And some states don’t even spend the money. So last time I checked, Tennessee was sitting on over $700 million in unused welfare funds. Hawaii was sitting on so much, they could give every poor kid in their state $10,000. And so you’re right. Because we’ve kind of allocated this money in a way that doesn’t give the government, the federal government anyway, kind of oversight, states have really used this in ways that don’t directly impact the poorest families and their borders.
Chris Hedges: Do you have a theory as to why? Why would you sit on $700 million that should go to the poor?
Matt Desmond: It’s a good question. I mean, it’s hard to think this is by accident, right? Every state does this except Kentucky. Kentucky is the only state in the nation that spends most of its cash welfare dollars on direct assistance to needy families. But for most other states, it turns out that $1 budgeted for cash welfare, only 22 cents ends up in the pockets the poor, and it’s hard to read that as an accident. It’s hard to read that as something other than by design and kind of a state-sponsored callousness, and a negligence to alleviating the suffering of the poorest families in the country.
Chris Hedges: I want to go to the American Enterprise Institute. They have their three steps to avoid poverty and they are: graduate from high school, obtain a full-time job, wait until you get married to have children, and then these steps are called the Success Sequence. And then one of their studies found that only 2% of people who completes the sequence were poor in 2007, compared to 76% of people who violated their three rules. I mean, you just ripped apart the data, but this is the classic kind of subterfuge. It’s right up there with welfare queens. But explain what they’re doing and what the reality is.
Matt Desmond: I wish it were that simple. I truly do. I wish that all we needed to do was follow these three steps. It’s a little confusing because this is the stuff we tell our kids. “Work hard, study hard, graduate from high school, put off having kids for a while,” and I think that’s good parenting advice. But good parenting advice isn’t necessarily good social theory. And when you look in the data, you realize that most of that benefit is just driven by getting a full-time job.
Chris Hedges: Yeah.
Matt Desmond: If you’re getting a full-time job, it is a clear pathway out of poverty sometimes. But if you look at the data, more people followed the Success Sequence than didn’t who were poor. And the difference between Black Americans who followed the rules and White Americans who did, there’s big differences. Black folks are far less likely to escape poverty, even when they check all three of those boxes. And I just also think as someone that’s spends a lot of time in poor neighborhoods that have family and dear friends that are struggling with poverty, for folks that have faced serious adversity since birth, asking them to just get a good job and just delay having kids, it’s kind of asking them to have a different life sometimes.
And I don’t think that we devalue the importance of work or education or marriage when we just kind of say, “This isn’t going to cut it.” And I think the international comparison for me is really telling. We have so much more poverty than many of our peer nations. And it’s not because folks in Germany or South Korea or Canada are working harder or are playing by the rules better than we are. There’s something deeper in our system that needs to be addressed.
Chris Hedges: There was an interesting point you made in the book about or challenging this orthodoxy, this economic orthodoxy that says that raising the minimum wage leads to higher unemployment, and you kind of imploded that theory. Explain.
Matt Desmond: So this has been a concern for a lot of us for a long time and it started in with the 40s. There was an economist named George Stigler and he said, “Look, we can’t raise a minimum wage because that’s going to cost jobs. If you’re an employer and you have to pay your workers more, you’re going to hire fewer of them.” And he wrote a paper on that and it became kind of canonical in economics. But if you read the paper, you realize there’s no data in the paper. It was just kind of an elegant theory and it kind of makes sense. When you hear it, you say, “Okay, that makes sense.” But in 1994, a couple of economists at Princeton, they realized there was a natural experiment going on. New Jersey was going to raise its minimum wage and Pennsylvania wasn’t, and they said, “All right, let’s test Stigler’s hypothesis. Let’s see if he’s right,” and it turns out he was wrong.
It turns out there was a lot of job growth, actually, in New Jersey and not in Pennsylvania. So in that case, it wasn’t that New Jersey lost a lot of jobs. It gained them. And so since that time … and that paper came out in 1994, which is a bombshell paper … economists have done a lot of studies looking into the effects of raising minimum wage on employment. And the best studies have found that the effect is really negligible. We can’t absolutely raise the minimum wage without costing jobs in this country. And again, if you look at Denmark, the guy that’s flipping burgers over there is paid twice as much as the guy that’s flipping burgers here, and somehow their country hasn’t collapsed into ruin. And so I also think it’s important to ask another empirical question on the minimum wage, which is what happens when we don’t? What do we cost people. We cost them life and family and health. We cost them kind of a full existence in the richest country on the planet. I think that’s another question that’s worth exploring too.
Chris Hedges: Well, you have a character. I mean, you juxtapose what happens when his minimum wage salary is raised in terms of his lifestyle, in terms of stress, the ability to be with family, all of that as you point out. You go back a lot in the book to the importance of raising wages, but also unions. And of course most people in unions are firefighters, nurses, police, other public sector workers. Nearly all private sector employees, that’s 94%, are without a union. And I wondered if you could just address what that has meant for the working class and the working poor, and then also this idea that non-unionized businesses, as anti-union champions claim, are somehow more productive.
Matt Desmond: So if you look in modern history and you ask, “When was the most economically equitable time in our country? When was CEO pay reigned in and worker pay climbing?” That was in the 70s, and that was when worker power was at its max, when unions kind of were at their full strength in America. And that wasn’t a perfect time by any means. I mean, we have to address the fact that many unions were racist. They barred Black and Latino people from their ranks, but they also did massive good to raise wages for the rank and file, including the poorest paid workers and including people in non-unionized shops, right? Because if you were working in a union shop and right across the road was a non-unionized shop, the non-unionized guys were like, “Man, Chris is going to come. There’s no way my workers are going to work for me if I don’t get up to those union standards.”
But as workers lost power, as unions were attacked as manufacturing left the country and unions lost their traditional power base, worker power stumbled, and that’s when you saw this massive pay raise for the richest Americans in the country, and that’s when you saw wages starting to stagnate. So between 1945 and 1979, real wages, inflation-adjusted wages, increased by about 2% every year. So you had a job. You had some room for advancement. Your pay went up every year. You had some benefits. But since 1979, real wages have only increased by about 0.3% a year. And for men without a college degree, their inflation-adjusted wages today are less than they were 50 years ago. This has to be addressed. We have to address exploitation in the labor market. And if we don’t do that, we’re going to kind of be in this place where we’re spending more to stay in the same place.
Chris Hedges: And this raises a point you make in the book that when you’re not paying workers even a subsistence salary, it’s not work that keeps poorly paid workers from poverty, but the state. And then I just wondered if you could explain what you call the new fissured workplace?
Matt Desmond: Yeah. It’s not my term. It’s been around for a while in social science. But basically, it means there used to be a time where if you worked for Ford, you worked for Ford. Ford signed your paycheck and you were an employee of Ford. But today, if you look at Apple and Google and many of our biggest corporations today, most people that work for those corporations don’t work for Apple and Google. They’re independent contractors and there’s kind of a two-tiered system of work. There’s software engineers and corporate bosses and attorneys, and they work for Google and there’s strong benefits, strong pay. But then there’s a lot of independent contractors that the room for advancement is really tough, almost impossible sometimes. The wages often are stagnant. The benefits are not really there.
And so this is a way to have a very profitable work environment, but one that comes at a cost for all those folks that really are our gig workers. And I think that when we think of the gig economy, we usually think of Uber and Lyft and TaskRabbit and DoorDash, places where we really are interacting with the gig economy. But there’s gig workers in universities and hospitals and hardhat jobs. It’s an incredibly big and growing part of our economy now.
Chris Hedges: And we should just be clear, a gig worker, you don’t have benefits. You don’t have job protection. You don’t have health insurance. I was just part of the strike of adjuncts, at Rutgers. You have people teaching full course loads trying to live on $28,000 a year. One of the things I found really interesting in the book, which I wasn’t aware was true for low wage workers, and that is how employers make it difficult for workers to leave for other jobs, for better jobs, by having them sign these non-disclosure contracts.
Matt Desmond: Yeah. This was really shocking to me as well. So let’s say you’re working at Subway Sandwiches, and you’ve been working there for a couple years and you’ve got a lot of skills in that kind of work, and you want to take your skill set to the Jimmy Johns down the road or another deli and kind of use this power workers have. The power to quit to get better jobs. A lot of companies are making these low level, low pay, poorly paid, I should say, workers sign these non-disclosure agreements and non-compete agreements saying, “You can’t go and get another job for six months after you quit.” And ostensibly, this is to protect intellectual property. But a lot of times, corporations are using it just to delude and push down worker power. And so, again, we can’t abolish poverty in this country if we don’t find a way to increase worker power across the board.
Chris Hedges: Algorithms. You say they’ve proven to be more exacting bosses than people, which I guess anyone who’s read anything about Amazon will understand, and the stress. But talk about how algorithms are used and low wage work.
Matt Desmond: One of the things we’re seeing is how algorithms and other AI technology are really used to measure worker productivity by measuring the number of mouse clicks and keystrokes, even use of heat sensors and other kind of tech technology to really have an exacting and never resting, that’s an eye that never blinks, look at workers. And you might think, “Well, only workers at the bottom of the pay scale are affected by this,” but it’s not true. The New York Times had a bracing reporting that showed that chaplains at hospices, therapists, are under these regimes as well. And so workers have lost power, but companies have become productive, and that’s the classic definition of exploitation.
Chris Hedges: You have a chapter called How We Force the Poor to Pay More, and I wondered if you would explain how this works, including what you call mortgage deserts, the effects of overdraft fees, check cashing stores, denial of credit, payday loans, this kind of predatory inclusion.
Matt Desmond: Yeah. So I’ve used the word exploitation a few times in our conversation. And to some, that’s kind of a charged scary word., But to me it just means when you don’t have a lot of choice, people can take advantage of you. And we’ve all been in this situation, no matter our station in life. We’ve been in a situation where we’re in a pinch and we just have to pay for it. But for poor families, that’s kind of their existence. And when you look at housing, for example, most poor families have just one choice about where to live. They’re shut out of homeownership, not because they can’t afford a mortgage, but banks don’t want to do business with them, and they’re shut out of public housing because we just don’t have enough of the benefit to go around. And the waiting list for public housing now is not counted in years. It’s counted in decades.
So they’ve got one choice. They rent from a private landlord, and if they’re below the poverty line, they spend most of their income on housing costs. And if you look at the profit margins of landlords across the country, you realize those that are working in poor neighborhoods are not just making more, but often are making double. Landlords and affluent neighborhoods, and the reason is pretty clear. The operating costs in poor neighborhoods are a lot lower than they are in affluent neighborhoods, but rent is not that much lower. And so this is how the poor are paying more for housing. Where if you look at financial exploitation, every year, $11 billion in overdraft fees, $1.6 billion in check cashing fees, almost $10 billion in payday loan fees pulled from the pockets of the poor. This is $61 million in fines and fees every single day. So when James Baldwin remarked how incredibly expensive it is to be poor, he couldn’t have imagined these receipts.
And I want to kind of bring this to a personal level with us. Who benefits from this? Who benefits? So if you look at the financial exploitation, some banks and payday lending companies benefit, but many of us do too because our free checking accounts aren’t free. It turns out they’re subsidized by all of those fines and fees piled on the backs of the poor. Only 9% of bank customers pay 84% of overdraft fees. They’re the poor made to pay for their poverty. So this is another move that I’m trying to make in this book. It’s about policy, it’s about movements, it’s about politics, but it’s also personal. It’s about many of the decisions we make every day and how we’re connected to the problem and the solution.
Chris Hedges: Well, this gets to the tax breaks for the middle class and the wealthy. $1.8 trillion in tax breaks. That’s mortgage interest deduction. That allows 13 million Americans to keep $24.7 million, and you call this the invisible welfare state. And that gets to the point you were just making, that those who have means are the ones who benefit and profit from this system. Because if those tax breaks weren’t there and that money was directed towards the vulnerable, it would go a very long way to alleviating poverty in the United States.
Matt Desmond: Yeah. I mean, many of us don’t think of a tax break as a government program, and I get it. “Taxes should hurt,” Reagan famously said, and they do in the country. But if you think about it, a tax break and a housing assistance voucher, they’re the same. They both cost the government money. They both put money in our pocket. They both benefit a family. And so a 15-story public housing project and a mortgaged suburban home are both government subsidized, but only one looks and feels that way. And this really blew me away when I kind of calculated the bottom line of what the government does for us.
If you add up all the tax breaks and all the social insurance programs, and all the means tested programs like food stamps and Medicaid, you learn that every year, the average family in the bottom 20% of the income distribution, our poorest families, they get about $26,000 from the government. But the average family in the top 20%, our richest families, they get about $35,000 every year from the government. That’s almost a 40% difference. That’s the true nature of our welfare state. We give most to families that have plenty already, and then we have the audacity to look at a program that would reduce child poverty, or make sure everyone could have a doctor, and we just ask, “How could we afford it?” which to me is a sinful question and a dishonest question because the answer staring us right in the face. We could afford it if the richest among us took less from the government.
Chris Hedges: Right. And you’re very clear that the two political parties are not about to pull these kinds of tax breaks in this invisible welfare state because of the political backlash. And you have called for a campaign to abolish poverty in the face of this kind of rigged system. What do you propose? How do you think we can dig our way out of this monstrosity?
Matt Desmond: Right. So we need deeper investments in fighting poverty and a clear way to fund those deeper investments is through tax fairness. A study published a few years ago found that if the top 1% of Americans just paid the taxes they owed, not paid more taxes, just stopped evading taxes so successfully, we as a country could raise an additional $175 billion a year. That’s enough to reestablish the child tax credit that we had in COVID that cut child poverty almost in half in six months. $175 billion is almost enough to pull everyone above the official poverty line. So we have the resources. We could do this. And it’s not just deeper resources, though, that we need. We need different programs. We need policies that cut poverty at the root. And so this is finding ways to increase worker empowerment and expand the choices of families so they don’t get this best bad option when it comes to where they live and how they can access their money and their credit. So we need to address exploitation in the labor, housing, and financial markets.
And then the third move is we have to tear down our walls. Many of us continue to live in incredibly segregated societies. We build walls around our communities made up of laws, and we hoard opportunity behind those walls. And that concentrates affluence, but it also concentrates poverty. And so we have to strive and work for more inclusive, open communities. That’s the third move we have to make. And this is a political project. It’s a policy project, but it’s a personal one too. Poverty abolitionists strive to work for that in their consumer choices, their investment decisions. They do things like vie and fight for a government that makes deep investments in the poorest families in America, and they’re anti-segregationists and anti-exploitation. And that’s a personal thing that we can all take up on a day-to-day basis to start building up political will to really make pressure be felt at the highest levels of government.
Chris Hedges: Great. That was Matt Desmond on his book, Poverty, by America. I want to thank the Real News Network and its production team, Cameron Granadino, Adam Coley, David Hebden, and Kayla Rivara. You can find me at chrishedges.substack.com