The surging ranks of  America's ultrapoor

AIMEE PICCHI MONEYWATCH  

 September 1, 2015, 5:15 AM

 

By one dismal measure, America is joining the likes of Third World countries.

The number of U.S. residents who are struggling to survive on just $2 a day has more than doubled since 1996, placing 1.5 million households and 3 million children in this desperate economic situation. That's according to "$2.00 a Day: Living on Almost Nothing in America," a book from publisher Houghton Mifflin Harcourt that will be released on Sept. 1.

The measure of poverty isn't arbitrary -- it's the threshold the World Bank uses to measure global poverty in the developed world. While it may be the norm to see families in developing countries such as Bangladesh and Ethiopia struggle to survive on such meager income, the growing ranks of America's ultrapoor may be shocking, given that the U.S. is considered one of the most developed capitalist countries in the world.

"Most of us would say we would have trouble understanding how families in the county as rich as ours could live on so little," said author Kathryn Edin, who spoke on a conference call to discuss the book, which she wrote with Luke Shaefer. 

Edin is the Bloomberg Distinguished Professor of Sociology at Johns Hopkins University. "These families, contrary to what many would expect, are workers, and their slide into poverty is a failure of the labor market and our safety net, as well as their own personal circumstances."

To be sure, the labor market has been rocky for many Americans, not just the poorest. But changes in how employers deal with their low-wage workers have hit many of these poor Americans especially hard, such as the rise of on-call scheduling, which leaves some parents scrambling for hours and dealing with unpredictable pay.

Retailers such as Walmart (WMT) and fast-food companies increasingly are using sophisticated scheduling software that allows them to tinker with work schedules at the last minute, depending on their stores' needs. That reduces costs for the employer, but it can make life difficult for employees, especially those with children and dependents.

"Time and time again, we would constantly see people's hours cut from week to week," said Shaefer, associate professor of social work at University of Michigan. "Someone might have 30 hours one week, down to 15 the next and down to 5 after that. We saw people who would remain employed but were down to zero hours. This was incredibly common in this population."

Other workforce problems include abuses such as wage theft and unhealthy workplaces, which lead to health problems and missed work, he noted.

These families have also been hurt by the welfare reform of the 1990s, when America's social safety net was overhauled to create Temporary Assistance for Needy Families (TANF), which is geared toward providing temporary monetary aid to poor families with children.

But TANF isn't working, Shaefer and Edin said. Since the program was created in 1996 to replace a 60-year-old welfare system, the number of families living on less than $2 a day has more than doubled. 

In 2012, only one-quarter of poor families received TANF benefits, down from more than two-thirds in 1996, according to the Center on Budget and Policy Priorities. According to "$2.00 a Day," the welfare program reached more than 14.2 million Americans in 1994, but by 2014 only 3.8 million Americans were aided by TANF.

The authors' research -- which included data analysis and interviews with ultrapoor families in four regions -- found that many families weren't even aware of TANF. "One person said, 'They aren't just giving it out anymore,'" Shaefer said. "In fact, in Appalachia it has, in some ways, disappeared. We asked, 'Have you thought about applying for TANF?' and they said, 'What's that?'"

Aside from a lack of knowledge about the program, poor Americans often put off applying for aid because of social stigma and other hurdles, such as requirements to attend orientation meetings, make employment plans and register for employment services.

Once a family qualifies for TANF, they can receive benefits ranging from about $300 a month for a family of three in Texas to as much as $780 per month in New York. That's hardly living in the lap of luxury, but it would lift those families out of dire need.

Many of the families Edin and Shaefer interviewed saw themselves as workers, the researchers noted. Rather than the negative stereotype of the "welfare queen" created by President Ronald Reagan, the families that are suffering with less than $2 a day want to work and are using self-reliance to get by. 

That hasn't stopped the stereotype from proliferating, even though Edin and Shaefer note that extreme poverty in America is an equal-opportunity affliction: It hurts single parents, married couples, white, blacks and Hispanics, as well as rural and urban families.

"One thing that surprised me was a clear attachment to the labor force," Shaefer said. "They saw work as a way to lift themselves up out of those circumstances."

So, how do families living on so little get by? They tend to rely on a few strategies, including selling their own plasma for $30 a pop and selling scrap metal. Some families also sell their food stamp benefits for cash, which is illegal and which Edin said is "very unusual."

Some women barter for goods and services using sex. Private charities provided very little assistance. Dealing in drugs wasn't common, Edin said, perhaps because the researchers were interviewing families, which might be less likely to engage in drug use given the presence of children.

"In no cases did [these strategies] raise people out of poverty," Edin said. "$60 would be the maximum per week" for earnings through these methods. "There was no case where someone was living high off the hog from this informal economy."

Edin and Shaefer have some solutions in mind for easing the plight of America's ultrapoor. Reforming TANF is one potential pathway, while increasing the quality of jobs available to people at the bottom of the income ladder is another. 

They also noted that government-sponsored work programs, such as the Works Progress Administration during the Great Depression, could also help put these families back on track.

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