Authors: David K. Shipler
The Working Poor (3 page)
Indeed, being poor in a rich country may be more difficult to endure than being poor in a poor country, for the skills of surviving in poverty have largely been lost in America. Visit a slum in Hanoi and you will find children inventing games with bottles and sticks and the rusty rims of bicycle wheels. Go to a slum in Los Angeles and you will find children dependent on plastic toys and video games. Living in Cambodia, my son Michael marveled at the ingenuity bred by necessity, the capacity to repair what would be thrown away at home; when his television remote stopped working in Phnom Penh, he got it fixed at the corner for a dollar.
In the United States, the federal government defines poverty very simply: an annual income, for a family with one adult and three children, of less than $22,113 in the year 2011. That works out to $10.63 an hour, or $3.38 above the federal minimum wage, assuming that someone can get a full forty hours of work a week for all fifty-two weeks of the year, or 2,080 working hours annually.
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With incomes rising through the economic expansion of the 1990s, the incidence of official poverty declined, beginning the new decade at 11.3 percent of the population, down from 15.1 percent in 1993. Then it rose slightly in the ensuing recession, to 12.5 percent by 2003 and 12.3 percent in 2006, and 15.2 percent in 2011.
But the figures are misleading. The federal poverty line cuts far below the amount needed for a decent living, because the Census Bureau still uses the basic formula designed in 1964 by the Social Security Administration, with four modest revisions in subsequent years. That sets the poverty level at approximately three times the cost of a “thrifty food basket.” The calculation was derived from spending patterns in 1955, when the average family used about one-third of its income for food. It is no longer valid today, when the average family spends only about one-tenth of its budget for food, but the government continues to multiply the cost of a “thrifty food basket” by three, adjusting for inflation only and overlooking nearly half a century of dramatically changing lifestyles.
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The result burnishes reality by underestimating the numbers whose lives can reasonably be considered impoverished. More accurate formulas, being tested by the Census Bureau and the National Academy of Sciences, would rely on actual costs of food, clothing, shelter, utilities, and the like. Under those calculations, income would include benefits not currently
counted, such as food stamps, subsidized housing, fuel assistance, and school lunches; living costs would include expenditures now ignored, such as child care, doctor’s bills, health insurance premiums, and Social Security payroll taxes. When the various formulas were run in 1998, they increased by about three percentage points the proportion of the population in poverty, from the official 34.5 million to a high of 42.4 million people.
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The Supplemental Poverty Measure, introduced in 2011, raised the poverty rate from 15.2 to 16 percent.
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Such a change would presumably make more families eligible for benefits that are linked to the poverty level; some programs, including children’s health insurance, already cover households with incomes up to 150 or 200 percent of the poverty threshold, depending on the state.
Even if revised methods of figuring poverty were adopted, however, they would provide only a still photograph of a family’s momentary situation. In that snapshot, the ebb and flow of the moving picture is lost. By measuring only income and expenses during a current year and not assets and debts, the formulas ignore the past, and the past is frequently an overwhelming burden on the present. Plenty of people have moved into jobs that put them above the threshold of poverty, only to discover that their student loans, their car payments, and the exorbitant interest charged on old credit card balances consume so much of their cash that they live no better than before.
When the poor or the nearly poor are asked to define poverty, however, they talk not only about what’s in the wallet but what’s in the mind or the heart. “Hopelessness,” said a fifteen-year-old girl in New Hampshire.
“Not hopelessness—helplessness,” said a man in Los Angeles. “Why should I get up? Nobody’s gonna ever hire me because look at the way I’m dressed, and look at the fact that I never finished high school, look at the fact that I’m black, I’m brown, I’m yellow, or I grew up in the trailer.”
“The state of mind,” said a man in Washington, D.C. “I believe that spirituality is way more important than physical.”
“I am so rich,” said a woman whose new job running Xerox machines was lifting her out of poverty, “because—not only material things—because I know who I am, I know where I’m going now.”
Another woman, who fell into poverty after growing up middle class, celebrated her “cultural capital,” which meant her love of books, music, ideas, and her close relationships with her children. “In some senses, we are not at all poor; we have a great richness,” she said. “We don’t feel very poor. We feel poor when we can’t go to the doctor or fix the car.”
For practically every family, then, the ingredients of poverty are part financial and part psychological, part personal and part societal, part past and part present. Every problem magnifies the impact of the others, and all are so tightly interlocked that one reversal can produce a chain reaction with results far distant from the original cause. A run-down apartment can exacerbate a child’s asthma, which leads to a call for an ambulance, which generates a medical bill that cannot be paid, which ruins a credit record, which hikes the interest rate on an auto loan, which forces the purchase of an unreliable used car, which jeopardizes a mother’s punctuality at work, which limits her promotions and earning capacity, which confines her to poor housing. You will meet such a woman in Chapter One. If she or any other impoverished working parent added up all of her individual problems, the whole would be equal to more than the sum of its parts.
Consequently, most issues confronting the working poor are laced into most chapters of this book, even while each chapter throws a spotlight on one or another element of deprivation. In the chapter on work you will find stories of parenting; in the discussion of health you will see the matter of housing. Isolating the individual problems, as a laboratory would extract specific toxins, would be artificial and pointless. They exist largely because of one another, and the chemical reaction among them worsens the overall effect.
If problems are interlocking, then so must solutions be. A job alone is not enough. Medical insurance alone is not enough. Good housing alone is not enough. Reliable transportation, careful family budgeting, effective parenting, effective schooling are not enough when each is achieved in isolation from the rest. There is no single variable that can be altered to help working people move away from the edge of poverty. Only where the full array of factors is attacked can America fulfill its promise.
The first step is to see the problems, and the first problem is the failure to see the people. Those who work but live impoverished lives blend into familiar landscapes and are therefore overlooked. They make up the invisible, silent America that analysts casually ignore. “We all live in the suburbs now, not in the inner cities,” proclaimed Professor Michael Goldstein of the University of Colorado, explaining on PBS why Woolworth’s had been replaced by Wal-Mart in the Dow Jones Industrial Average.
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Tim Brookes, a commentator on National Public Radio, once did a witty screed against overpriced popcorn in movie theaters. Indignant at having been charged $5 for a small bag, he conducted research on the
actual expenses. He calculated that the 5¼ ounces of popcorn he received cost 23.71875 cents in a supermarket but only 16.5 cents at prices theater managers paid for fifty-pound sacks. He generously figured 5 cents in electricity to cook the popcorn and 1 cent for the bag. Total cost: 22.5 cents. Subtracting sales tax, that left a profit of $4.075, or 1,811 percent.
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Evidently, the theater had the remarkable sense not to hire any workers, for Brookes gave no hint of having noticed any people behind the counter. Their paltry wages, which wouldn’t have undermined the excessive profits, were absent from his calculation. The folks who popped the corn, filled the bag, handed the bag to him, and took his money must have been shrouded in an invisibility cloak. No NPR editor seemed to notice.
I hope that this book will help them to be seen.
MONEY AND ITS OPPOSITE
You know, Mom, being poor is very expensive.
—Sandy Brash, at age twelve
Tax time in poor neighborhoods is not April. It is January. And “income tax” isn’t what you pay; it’s what you receive. As soon as the W-2s arrive, working folks eager for their checks from the Internal Revenue Service hurry to the tax preparers, who have flourished and gouged impoverished laborers since the welfare time limits enacted by Congress in 1996. The checks that come from Washington include not only a refund of taxes withheld, but an additional payment known as the Earned Income Tax Credit, which is designed to subsidize low-wage working families. The refunds and subsidies are sometimes banked for savings toward a car, a house, an education; but they are often needed immediately for overdue bills and large purchases that can’t be funded from the trickle of wages throughout the year.
Christie, a child-care worker in Akron, earned too little to owe taxes but got $1,700 as an Earned Income Credit one year, which enabled her to
avoid the Salvation Army’s used-furniture store and instead buy a new matching set of comfortable black couches and loveseats for her living room in public housing.
Caroline Payne’s check went for a down payment on her house in New Hampshire. “I used my income tax and paid a thousand down,” she said proudly. When she sold it five and a half years later and her daughter lent her money to rent a truck for her move, she planned to pay her back “when I get my taxes.”
“I’m waitin’ for my income tax to come in so I can pay my real estate taxes,” said Tom King, a single father and lumberjack who lived in a trailer on his own land.
Debra Hall, who had started at a Cleveland bakery, was keen with anticipation after filing her first tax return. “I’ll get $3,079 back! What am I gonna do with it? Pay all my bills off,” she declared, “and I haven’t had anything new in the house. Do some good with it, that’s for sure. Minor repairs on my car. The bills are first, for my credit [rating], to get all my back debts paid. It will be well spent.”
The Earned Income Tax Credit is one of those rare anti-poverty programs that appeal both to liberals and conservatives, invoking the virtue of both government help and self-help. You don’t get it unless you have some earned income, and since its payments are linked to your tax return, you don’t get it unless you file one. That leaves out low-wage workers— especially undocumented immigrants—who get paid under the table in cash and think they’re better off avoiding the IRS. By filing, however, they would end up ahead, because they’d get to keep everything they earned and would receive a payment on top of that. The benefits kick in at fairly high levels—at earnings of less than $41,952, for example, for a worker who supported more than one child in 2012. At the lower income levels, the Earned Income Tax Credit can add the equivalent of a dollar or two an hour to a worker’s wage.
Enacted in 1975, the program was expanded under Presidents Reagan, Bush, and Clinton, and in 2011 paid more than
$58
billion to 26 million households. Treasury officials worry about erroneous claims, honest or fraudulent, which may rise to 27 to 32 percent of the total.
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On the other hand, an estimated 10 to 15 percent of those eligible don’t file for it,
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partly because employers and unions often don’t tell workers that it exists. The presidents of two local unions in Washington, D.C., for example, one representing janitors and the other parking garage attendants, had never
heard of the Earned Income Tax Credit until I mentioned it to them. And I have not yet come across a single worker or boss who knew that with a simple form called a W-5, filed with the employer, a low-wage employee could get some of the payments in advance during the year. When I mentioned the W-5 to Debra Hall and she then asked at her bakery, the woman who handled the payroll waved her away impatiently and said she knew nothing about it. Later, the tax preparer told Debra it was better just to wait and get the payment in one lump sum after she filed her return.
It sure is better—if you’re the preparer. With cunning creativity, the preparers have devised schemes to separate low-wage workers from as much of their refunds and Earned Income Credits as feasible. The marvel of electronic filing, the speedy direct deposit into a bank account, the high-interest loan masquerading as a “rapid refund” all promise a sudden flush of dollars to cash-starved families. The trouble is, getting money costs money.
The preparers operate from sleazy check-cashing joints and from street-level outposts of respectable corporations. They do for a hefty fee what their clients could do for themselves for free with the math skills and the courage to tackle a 1040, or with a computer and a bank account to speed filing and receipt. But most low-wage workers don’t have the math, the courage, or the computer, and many don’t even have the bank account. They are so desperate for the check that they give up a precious $100 or so to get everything done quickly and correctly. “You get so scared,” said Debra Hall, who paid $95 to have her simple return done after ending twenty-one years of welfare. “I don’t know why it’s so scary, but I’d rather have it done right the first time.”
She was probably wise, because another disadvantage of being poor is that you’ve been more likely since 1999 to face an audit by the IRS. In that year, 1.36 percent of the returns filed by taxpayers making under $25,000 were audited, compared with 1.15 percent of those making $100,000 or more. The scrutiny was instigated by Republican congressional leaders who feared abuses of the Earned Income Tax Credit. In the face of bad publicity, the IRS shifted the balance in 2000 by auditing 0.6 percent of those under $25,000 versus 1.0 percent of those over $100,000. Thereafter, the audit rate tilted back and forth, to .86 and .69 percent, respectively, in 2001, then to .64 and .75 in 2002.
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In other words, as the IRS lost enforcement personnel, it dramatically reduced its scrutiny of well-to-do taxpayers, whose returns were once audited at the rate of 10 percent. This
despite the fact that audits at the upper levels of income naturally tend to recover more dollars in lost revenue.