In a new book, author Mark Rank looks at why one of the world’s wealthiest countries has such a high rate of poverty
“What we’ve done so long is focus on who loses out in the game rather than why the game produces losers in the first place,” the social scientist says in a video call from his office at Washington University in St Louis, Missouri. “We’re playing a game of musical chairs with 10 players and only eight chairs. We can say, OK, who loses out of that game? Well, it’s people that aren’t as quick or they’re in a bad position when the music stops.
“But given that there are only eight chairs, then two people are going to lose out regardless of what their character is. That’s a very powerful analogy to use and it does capture what’s been happening in the United States. We focus on individual characteristics rather than saying, hey, there’s something wrong when we don’t have enough jobs that pay a decent wage.”
Rank, 67, who has spent decades researching poverty and inequality, is out with a new book, The Poverty Paradox: Understanding Economic Hardship Amid American Prosperity. It brings a much needed sociological method and rigour to an issue too often reduced to political slogans or newspaper snapshots.
The paradox in the title has dogged politicians for generations: why does the wealthiest country in the world also have the highest rate of poverty among industrialised nations?
This is the land of New York and Los Angeles, of skyscrapers and space rockets, of multibillionaires Jeff Bezos, Warren Buffett, Bill Gates and Elon Musk. Yet one in 10 Americans is officially poor. According to the US Census Bureau, the official poverty rate in 2021 was 11.6%, with 37.9 million people in poverty (an example definition being a family of three with income below $21,559).
Rank observes: “You can find poverty in rural areas, in urban areas, in suburban areas, which actually have some of the highest numbers of folks in poverty. In terms of race, it’s a double edged sword. Two thirds of the poor in the United States are white; however, if you’re non-white, you’re at a much greater risk of being in poverty. Both of those things are true.
“That’s why I say the reach of poverty is very wide in the United States. I’m looking at the risk of poverty across people’s lives and what’s the risk of poverty in the next 20 or 30 years? If you do that, the vast majority of Americans will experience poverty at some point.”
This is because Americans suffer greater economic insecurity than their counterparts in other western industrial nations, Rank argues. Many are in low paying jobs without benefits. If they lose that job or fall ill, there is little to protect them.
“Our safety net in the United States is very weak and so when these things happen, people are at real risk of falling into poverty. When you think about what can happen to me over the next 20 or 30 years, it’s not unusual to lose a job or to get sick or to have something like this happen and that’s why the rates are so high over a long period of time.”
Rank suggests that America’s anaemic welfare state – including an anomalous lack of universal health care – can partly be explained by the interplay of race and poverty. “There’s some interesting research that shows the more homogeneous a society is in terms of race and ethnicity, the more generous their social welfare state. The idea is if you look like me, I’m likely to be more empathetic, I can relate to you more.
“Whereas in the United States, we’re very heterogeneous. We’re a large country and we look different and therefore it’s harder to feel that kind of empathy. There has been a lot of backlash against immigrants coming into Scandinavian countries with respect to social safety nets and I’m sure in the UK as well.”
This heterogeneity has long been supposed to at least provide the spark for an unrivalled energy, vitality and get-up-and-go entrepreneurial spirit. The American dream – the notion that anyone, regardless of birthplace or class, can attain success – has seduced countless dreamers, not least from overseas. But for every self-made millionaire for whom the streets are paved with gold, there are far more Willy Lomans who fall through the cracks and just keep falling.
“In the United States we’re largely about rugged individualism. You do it on your own. You work hard. The idea is that there are opportunities to take advantage of. But the downside is you’re also on your own and, when stuff goes bad, it’s like well, that’s the way it goes. It’s kind of a Faustian bargain that we have here.
“‘If I did it, you can do it.’ The problem with that is for every person who really went from rags to riches, there’s 10 other people that didn’t get there at all.”
But even the comforting upside of this bargain is now looking tenuous as recent research shows the “land of opportunity” actually offers less economic mobility than many of its counterparts. The American dream has calcified into a myth.
“It’s become more rigid in terms of mobility and one way to think about this is not only does the United States lead the OECD countries in poverty but we also have the most income and wealth inequality. What’s happened is that as the income distribution has gotten wider, the rungs on the ladder have gotten further apart, making it more difficult for people to move up.”
This trend can be traced to the warp and weft of political ideologies. In 1964, Democratic President Lyndon Johnson declared a war on poverty, telling Congress in his state of the union address: “We shall not rest until that war is won. The richest nation on earth can afford to win it. We cannot afford to lose it.” And while total victory was unattainable, the effort did make strides in poverty reduction.
Rank – whose previous books include Living on the Edge: The Realities of Welfare in America and One Nation, Underprivileged: Why American Poverty Affects Us All – notes that wages have stagnated since their peak in 1973, leaving earners no better off today than they were were in real dollars half a century ago.
Then came the election of Ronald Reagan, a Republican who declared “We fought a war on poverty, and poverty won.” It was religion of small government, trickle down economics, pull-yourself-up-by-your-bootstraps and the demonisation of “welfare queens”. The tone was set for poverty as individual pathology.
Rank adds: “There was very much this backlash that government isn’t the solution, government is the problem, let’s cut back on these programmes and the result is that there’s a very weak safety net to try to protect folks.”
The resulting policies, he writes, have been primarily aimed at trying to “improve” individuals on the assumption that causes of poverty lie within their attitudes or behaviour. Approaches include “tough love”, job training and skill development programmes and benign – or not so benign – neglect, premised on the belief that governments do more harm than good.
A generation after former Hollywood actor Reagan, there was former reality TV star Donald Trump, who recycled Reagan’s “Make America great again” slogan. The wealthy New Yorker appealed not to the poor but to those who perceived themselves to be economically fragile and caught in a downdraft – and looking for a ready scapegoat.
“What has happened is they feel like they are not getting ahead. They feel that other people are getting ahead of them, like African Americans and immigrants, and they’re falling behind. Trump tied into that angst and anxiety and he started talking about that and saying, ‘Hey, these people are getting ahead of you!’ and that resonated.”
It took a once-in-a-century crisis to rebuke Reaganism and show what is possible. During the coronavirus pandemic, government stepped in, albeit temporarily, with an expanded child tax credit that reduced child poverty by an estimated 40%. Other safety net expansions included three stimulus cheques, a moratorium on evictions, increased unemployment benefits and more funding for food and housing.
Rank comments: “That shows that on a structural level, on a policy level, you can really do something to address poverty. If we take a longer term picture, I think the pendulum will be swinging more towards saying, you know what, there are things we can do to really reduce poverty, particularly child poverty. So although that was short term, it did show the effect that policy can have.”
The implication of Rank’s book is that poverty is not inevitable but is a societal choice. His solutions include universal healthcare, which Senator Bernie Sanders has championed but Joe Biden has not. “It’s just ridiculous. We should view healthcare as a human right, not as something that your wallet determines whether you’re able to have that or not. There are certain things that we should put in place that European countries and the UK and others have as well.”
Rank would also seek to improve salaries for workers in low paid jobs. “The premise should be if you work full time in the United States you shouldn’t be poor. That just seems wrong. You should at least be a bit above the poverty line and that’s not the case. So I would focus on some social policy things and also on getting a number of those low wage jobs up to a decent level.”
In the final third of The Poverty Paradox, the author examines how poverty undermines American values including democracy. He says: “You have a lot of people that are completely disenfranchised. We’re making it harder and harder for people to vote that are either racial minorities or poor and, on the other hand, you’ve got people with enormous resources that are distorting democracy.
“They have an undue influence on our policy and in our government. This is getting at more the question of widening inequality: we can point to research that shows that undermines a democracy. Addressing poverty is not only important from a social justice perspective, but it’s also an economic question, because when you disenfranchise a lot of people, when you don’t invest in people, your economy is not going to be as strong as putting your resources into your human capital.”
Rank sums up: “One way or another, having this poverty in the United States affects us all here. We pay a price. You can either pay on the on the front end of a problem or on the back end of the problem and we’re paying on the back end, which is always more expensive. The European Union, UK, other places are more likely to pay on the front end by providing good childcare, good healthcare, education and that’s a much better way of addressing this. We need to to shift our thinking about poverty from an issue of them to an issue of us.”
Source: The Guardian
