Magazine | July 20, 2015, Issue

Poor and Isolated

The least fortunate Americans often don’t have networks to help them escape poverty

For a very long time, fighting poverty has been a kind of boutique issue for conservatives. The 2016 election season has been no different: Over the past few months, the candidates for the GOP presidential nomination have devoted most of their time and attention to tax reform, Obamacare, and the threats posed by Iran and Russia. A few candidates, Jeb Bush and Marco Rubio most prominent among them, have emphasized the importance of upward mobility, but it’s not unreasonable to say that the plight of low-income households has not been at the heart of the debate.

In fairness, it’s true that there’s not much we can do about persistent poverty if the economy as a whole isn’t growing (hence the importance of tax reform), if the rising cost of federal health expenditures crowds out everything else government does (a problem that Obamacare makes much harder to solve), or if the world is burnt to a crisp (which is rather more likely to happen if America retreats from the world).

Nevertheless, even as the country as a whole grows more affluent, there’s reason to treat poverty as a more important issue than it has been in the past. The problem is not primarily the fate of poor adults without children, though of course many of them lead difficult lives. Rather, the worry is that children raised in poor families today face challenges for which we have no real precedent.

Before delving into why that’s the case, let’s briefly review some of the basics about poverty in America. What are the factors that keep people in poverty, and those that rescue them from it? Once we understand them, it becomes clearer why the poverty problem may, to a conservative eye, be about to get worse.

There has long been some debate about how poverty ought to be measured — how many poor Americans there are and how much they earn — but it’s clearer than it once was. Since 2010, the Census has issued a Supplemental Poverty Measure (SPM), which offers a number of helpful tweaks to the old-school Official Poverty Measure (OPM). Rather than base its poverty threshold on food prices from 1963, it uses a broader basket of goods (food, clothing, shelter, and utilities). Moreover, while the OPM takes into account cash benefits such as Social Security but ignores other forms of government assistance, the SPM factors in non-cash benefits and tax credits to offer a fuller picture of low-income households’ sustenance. The SPM also factors in out-of-pocket medical expenditures, work expenses, and payroll taxes, and it accounts for differences in the cost of living across regions, which the OPM does not.

One can certainly quibble with the SPM, but it offers a useful picture of what people in poverty are living on. As of 2013, the OPM poverty rate for the U.S. was 14.6 percent, while the SPM rate was actually a bit higher, 15.5 percent. But this modest difference in the overall poverty rate masks bigger differences across subgroups. For children under 18, for example, the SPM rate was 16.4 percent, well under the 20.4 percent OPM rate.

But consider what happens when we zero in on what families are actually earning, leaving out transfer programs to the extent possible. A team of researchers led by Christopher Wimer of the Columbia Population Research Center tried to do just that, using a modified version of the Supplemental Poverty Measure. With taxes and transfers, overall SPM poverty in 2012 was 16 percent. Without them, it would have been 29 percent. Child poverty goes from 19 percent to 30 percent. So if all American families were left to their own devices, it would be reasonable to suggest, the scale of economic deprivation would significantly increase, including for families with children.

So what else is there to say, really? Isn’t this clear evidence that giving people money is the surest route to solving the poverty problem? That depends on how exactly we define the poverty problem. If our goal is to shrink the SPM poverty rate over time, giving people money is indeed the most straightforward approach. If our goal is to foster economic self-support, however — because, say, we think work is healthy and important to human flourishing — the answer is more complicated.

There are many factors that the static counterfactual offered by Wimer et al. doesn’t address. In a world without Social Security, many older Americans would continue working, or they’d have saved more for their retirement during their working years. Many transfer programs lead people to work fewer hours, or even to leave the labor force entirely. One of the liberal arguments for Obamacare, for example, is that it allows people who might only be working to retain their employer-provided health insurance to quit their jobs entirely. Conservatives have objected to the fact that Obamacare will tend to reduce labor-force participation. But it’s easy to see why this aspect of Obamacare would prove particularly compelling to those on the left who see value in liberating people from the need to work for a wage. Plenty of other transfer programs have this effect: In 2015, the economists Brian C. Cadena and Brian K. Kovak released a working paper in which they observed that low-skilled immigrants are far more willing than low-skilled natives to move in response to rising unemployment, in part because immigrants are far less likely than natives to be eligible for unemployment insurance and other local safety-net programs. In the absence of these programs, presumably, people might be more willing to uproot themselves and their families in search of work. There would be many downsides to such a world, to be sure, but earnings might be somewhat higher.

Some transfers, like the earned-income tax credit, do manage to make work more attractive. To lump all transfers together is foolish, since transfers that encourage work have the potential, over time, to make people less dependent as they gain experience and climb the job ladder.

Another crucial poverty question is how to distinguish between Americans who are poor for a short spell and those who are persistently in need of government assistance. The social scientists Mark Robert Rank and Thomas Hirschl have found that, between the ages of 25 and 60, 54 percent of Americans will find themselves poor or near-poor at least once, and two-thirds of Americans will make use of some means-tested social program at some point in their lives. Most people who experience poverty and who draw on means-tested programs do so for only a year or two. Unfortunately, there are many Americans who experience more than one spell of poverty. In a 2002 paper, Rank and Hirschl found that roughly 40 percent of Americans made use of a means-tested program in five or more separate years.

What is it that separates those who experience poverty for only one brief spell from those who climb in and out of poverty again and again?

One thing: full-time employment. In 2013, the Census Bureau found that the SPM poverty rate of those who worked full-time throughout the year was 5.4 percent, while those who worked part-time had a rate of 19.6 percent. (The entire group had a 15.4 percent poverty rate.) As the policy analyst Adam Ozimek recently observed, workers in the bottom fifth of the income distribution work 1,523 hours per year on average, compared with 1,983 hours per year for workers in the middle fifth of the income distribution. To be sure, there may well be important differences in people’s ability to work long hours: Single parents might need to carve out more time to care for their children, and people with disabilities might struggle to work longer hours, or indeed to work at all. Or it might be hard for many low-wage workers to work because of factors beyond their control. Some Americans are simply disconnected from good employment opportunities, whether geographically, because they live in regions that are economically depressed, or socially, because they don’t have the relationships that can help them identify better jobs.

Why are social connections so important? In 2013, Elizabeth Ananat, Shihe Fu, and Stephen L. Ross identified a phenomenon that at first glance might have seemed surprising. One might expect that the gap in average wages between whites and blacks would be smaller in bigger cities than in smaller cities, as bigger cities are more cosmopolitan and less racially prejudiced (or so the stereotype goes). In fact, the gap in average wages between whites and blacks gets bigger as the size of the city in which they live gets bigger. Instead of focusing on racial prejudice, Ananat et al. argued that while workers benefit from the knowledge spillovers that come from living and working in a place where there is a higher concentration of people doing a certain kind of job (as happens in big cities), these spillovers tend to be bounded by race. Compared with whites, blacks have fewer same-race peers from whom they can learn new skills and identify new opportunities, so whites gain more insider knowledge with each passing year, which in turn allows them to earn more money.

Race can be seen as having been a crude proxy for a more general phenomenon, of people benefiting from having connections with other people who have valuable knowledge. This is as true of poor people as it is of everyone else. Yet, while we have reams of government statistics to track exactly how much a family earns in a given year, we know precious little about, for instance, the number of supportive friendships they have. So we are left with little more than suggestive evidence. In a 1998 article, the sociologists Leann M. Tigges, Irene Browne, and Gary Green surveyed the social networks of poor blacks in Atlanta, and they found, among other things, that they were far less likely than their non-poor counterparts to have even a single person outside their household with whom they felt they could discuss important matters. This is important, as these “discussion partners” are vital conduits to information about the wider world. Even the most intellectually omnivorous family can’t know everything there is to know about the world or the state of the labor market, which is one reason upwardly mobile people tend to form social ties with other upwardly mobile people.

Why do I believe that America’s poverty problem is about to get worse? It’s simple. A number of powerful factors are contributing to greater social isolation for poor Americans, and also to more chaotic family lives. For much of American history, poor people have been able to rely on informal self-help networks to sustain them through times of distress. These networks have historically been rooted in extended families, churches, and ethnic communities, yet they’ve evolved in a number of ways as our society has grown more mobile and more individualistic.

For one thing, these networks are far more likely to be segregated by class. Whereas immigrants and blacks living under segregation were forced by prejudice to band together, the decline of discrimination has led to a corresponding decrease in group solidarity. Among middle- and upper-middle-class Americans, self-help networks have been deinstitutionalized: They’re less likely to be organized through churches or the local Rotary Club and more likely to be organized informally, through friendships with college classmates, business associates, and other like-minded people of similar class background. Pace Ananat et al., these networks can even be fairly diverse in racial and ethnic terms.

But among poor Americans, these self-help networks haven’t just been deinstitutionalized — they’re less capable of offering people access to the kind of information they need to build a better life. The chief reason for this is that the foundation of any self-help network, the family, has been utterly transformed among the poor. The rise in single motherhood is the most obvious manifestation of this phenomenon. But further, as sociologist Nicholas Wolfinger notes, a growing proportion of female-headed households are led by never-married mothers, who tend to be much poorer and more socially isolated than divorced mothers.

Moreover, many poor mothers have children with multiple partners. One study found that 22 percent of white mothers, 35 percent of Latina mothers, and 59 percent of African-American mothers had children with more than one man, and the economist Robert Cherry of Brooklyn College has noted that children raised in these families are at greater risk of child abuse, because of the presence of non-biological fathers in the household. Children who are mistreated often struggle as adults — indeed, they’re far more likely to wind up in the hands of the criminal-justice system. Mothers and children living in these circumstances experience a great deal of tension and stress. They could use better employment opportunities and more-responsive welfare bureaucracies, yes. But what they might need even more are the self-help networks that their parents and grandparents once relied on, full of people they knew and trusted. The tragedy is that families in these circumstances tend to know only other families in very similar circumstances, who are rarely in a position to offer more than sympathy.

Closing the yawning social gap between children who are raised in unstable families and those who are not will take more than infusions of cash. It will take a broader effort that will go beyond the earned-income tax credit and school vouchers and the various other policies already favored by wonks who lean right of center.

Are any of the GOP candidates even aware of the scale of these challenges, let alone what it will take to meet them?

Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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