Gender Lens on Poverty - Page 3

4.  What causes poverty?

Answering this question is as confounding as it is enduring. In this section, we take a high-level look at structural, individualistic and functionalist explanations that scholars, policy thinkers, politicians, practitioners, and laypeople have offered about the causes of poverty. By structural, we mean the theories and practices that guide the nation’s economic development and shape ordinary citizens’ lived realities. Individualistic explanations focus on the role individuals play in their experience of poverty. With functionalist explanations, we consider the idea that poverty persists because it serves specific functions within the larger economic and social landscape.

Structural causes

Two key structural policy factors many scholars identify as foundational to poverty’s existence and persistence include neoliberal macroeconomic policies, and labor market inequality.

Neoliberal macroeconomic policies

Neoliberalism emerged as an ideology in the 1930s, and it, perhaps more than any other economic or social policy, has contributed to the long-term rise in poverty in the U.S. over the past 30 years. To the layperson, the term is opaque and confusing (see this excellent presentation on the topic by the Barnard Center for Research on Women). But as a candidate in his 1980 campaign for the presidency, Ronald Reagan effectively translated neoliberal ideas into economic policies when he charged that “undue tax burden, excessive government regulation, and massive social spending” were responsible for economic decline in the country. Promoting the notion of “supply-side” or “trickle-down” economics, he proposed a tax cut, concentrated in the upper-income brackets.

CorpWatch, a non-profit research group that advocates for corporate accountability and transparency, identifies five main facets of neoliberalism: (1) Maximize the free market economy, wherein capital, goods and services move freely with the natural result of a “trickle down” distribution of wealth, and wherein restrictions (e.g., unions) will constrict economic growth, whereas institutional-level government subsidies (e.g. agriculture) and tax benefits for certain industries drive expansion of the free market; (2) Minimize expenditure of government funds for social services, including health and education, safety-net programs and infrastructure (roads, bridges, and water supply maintenance); (3) Reduce regulations such as environmental protection and occupational safety as a precondition for economic growth; (4) Privatize industries traditionally owned and operated by the government, including railroads, highways, electricity, water, schools, and hospitals; (5) Replace the concept of “the public good” or “community” with “individual responsibility.” From this point of view, poverty is seen as a choice, not a systemic failure, and the onus is on individuals living in poverty to compensate for failing schools, low wages, and unmet needs.

Economists have not reached consensus on Reaganomics (or neoliberalism) to this day. However, many economists agree that these policies, in combination, created concrete, enduring challenges to combating poverty. As American History professor Joseph A. Palermo writes, under Reagan, the tax rate for wealthy Americans dropped by 20 percentage points (from 70 percent to 50 percent) while lower-income people’s tax rate changed by 3 percentage points (from 14 percent to 11 percent); the national debt ballooned from $994 billion when Reagan took office in 1981, to $2.9 trillion when he left office in 1989; and the percentage of union workers as part of the private workers workforce fell by close to half, from approxicmately 20 percent in1980 to 12.1 percent in 1990. During his 1976 campaign, Reagan began to lobby against “handouts” to the poor, and his successors, the first President Bush and then President Clinton, fulfilled his goal to fundamentally change the poverty safety net. As a 2011 study by the National Poverty Center points out, “Between 1996 and 2011, the period directly after welfare reform ended cash entitlement for poor families with children, the number of families living on $2 or less in cash income (per person, per day) rose from 636,000 to 1.65 million. This represents a growth rate of 159 percent.”

Palermo underscores the lasting effects of Reagan’s neoliberal policies, including how “Deregulation, along with ‘free trade’ and cutting welfare spending, became bipartisan orthodoxy,” and financial services deregulation, enacted toward the end of the Clinton administration, “took a mere eight years to bring the nation's economy to its knees.”

Labor market inequality

The labor market in the U.S. today, not surprisingly, reflects the picture of extreme polarization and increasing inequality observed in the country as a whole. At each phase—from agriculture to manufacturing to its current service-based economy—the U.S. labor market has witnessed workers seeking better wages, reasonable hours, and safe working conditions struggle against industry-level opposition and (at times) an unsympathetic general public.

For women, the particulars of labor market inequality endure in the form of a gender pay gap and occupational segregation. Despite recent reports that so-called millennial generation women are starting their careers with the smallest pay gap ever (earning 93 percent of their male peers’ pay), the expectation is still that women’s wages will lag behind, with the gap increasing as they enter their 30s. Overall, the pay gap is at 77 percent. Occupational segregation, put simply, is the idea that women and men work primarily in industries predominated by other individuals of their gender. Problems arise, however, from the fact that overall, “men’s jobs” are better paid than “women’s jobs.

Women, particularly since the 2008 recession, are increasingly occupying low-wage jobs. In fact, women’s “employment recovery” in terms of job growth has progressed at a greater rate than men’s, but almost all of the jobs have been at the lowest end of the pay scale. As Dissent reports, “women make up just under half of the national workforce, but about 60 percent of the minimum-wage workforce, and 73 percent of tipped workers.” (Federal minimum wage for tipped workers is $2.13/hour). Because full-time federal minimum-wage level employment does not ensure that a family of four would remain above the poverty line, adding jobs in this area does not decrease the level of poverty among women. Across the workforce, high-skill, high-wage jobs, and low-skill, low-wage jobs are increasing in number, while middle-skill, middle-wage, white- and blue-collar jobs are being squeezed out—a phenomenon some scholars call the polarization of job opportunities.

The compensation gap that exists between the lowest-paid and highest-paid workers within the same companies has widened exponentially. A study by the Economic Policy Institute found that between 1978 and 2011, CEO compensation grew by more than 876 percent, while that of an average worker increased by 5.4 percent. According to an executive pay survey conducted by the Wall Street Journal/Hay Group, Apple’s Timothy Cook was the highest paid CEO in 2012 with $378 million in total direct compensation—i.e., an hourly wage of $121,000 (assuming a 60-hour work week). The average hourly wage for all workers in that year was $19.90.

Individualistic causes

According to Edward Royce, an expert on social stratification and inequality, there are three individualistic theories of poverty: biogenetic, cultural, and human capital theory.

(1) Biogenetic theory proposes that people are born with different levels of intelligence and aptitudes, and these differences lead to some becoming poor, while others become rich. The controversial 1994 book The Bell Curve: Intelligence and Class Structure in American Life captured the theory, including the idea that racial differences in intelligence explain why poverty is persistent among racial/ethnic minorities.

(2) Cultural theory posits that some people lack motivation to succeed and their “culture of poverty” engenders intergenerational poverty. Ruby Payne’s A Framework for Understanding Poverty, for example, argues that people who have been transgenerationally poor are noisy, disorganized, and unable to pursue goal-directed, future-oriented actions and need to be taught the superior traits of the affluent.

(3) Human capital theory is based on people making choices and living with the consequences of those decisions by suggesting that people with low education, skills and work experience earn less because they have chosen not to invest in increasing their education, skills and work experience. For example, the view maintains that women earn less because they value flexibility in work hours or conditions, and therefore choose occupations that offer workplace flexibility.

In order for these theories to be valid, some assumptions have to be satisfied—i.e., everyone operates on a level, non-discriminatory playing field and is able to make free choices among comparable options. One’s answer to whether the country has achieved these conditions is a personal and subjective matter (although, IQ tests have long been criticized for being culturally and class biased and people experience daily race, gender, sexual orientation, age, and ability discrimination despite legal protections, etc.).

Many of these individualist-based notions of who is poor or on welfare carry more than a whiff of sexism, racism and stereotyping. According to Frank D. Gilliam, Jr., ideas about poverty within the U.S. are deeply informed still by the “Welfare Queen” myth, reinforced during Ronald Reagan’s 1976 campaign for President. The myth, in short, was a riff on a real-life example of a Chicago woman who had committed fraud: “She has 80 names, 30 addresses, 12 Social Security cards and is collecting veteran’s benefits on four non-existing deceased husbands. And she is collecting Social Security on her cards. She’s got Medicaid, getting food stamps, and she is collecting welfare under each of her names.” The two key stereotypes that emerged from the myth are, first, a “gender narrative” that “poor women choose to be on welfare because they fail to adhere to a set of core American values.” The second is a racialized gender narrative: “while poor women of all races get blamed for their impoverished condition, African-American women commit the most egregious violations of American values. This story line taps into stereotypes about both women (uncontrolled sexuality) and African-Americans (laziness).” Despite that research shows how relatively little fraud poor people commit, this is the mythology that has prevailed.

This discourse is frequently picked up by politicians during polarizing moments in Washington politics, including the most recent Presidential campaign (Rick Santorum (“I don’t want to make black people’s lives better by giving them somebody else’s money), Mitt Romney (on why he does not want an “entitlement society,”) and Gingrich (calling President Obama a “food-stamp president”).

Functionalist causes

The functionalist perspective on why poverty exists argues that it serves positive and negative functions in U.S. society. In his original work, Herbert Gans, whose ideas influenced scholars such as Mark Rank and Frank Munger, identified 15 functions of poverty. They are summarized below in two broad categories: economic and sociopolitical.

Economic

Under this theory, a core function of persistent poverty is to guarantee that there are dispensable low-wage workers to perform dirty work—“physically dirty or dangerous, temporary, dead-end and underpaid, undignified and menial”—cheaply. Economic policy and social structures segment the population to create a class of workers that have few options but to perform these dirty jobs at low wages—cleaning hotel-room toilets, changing diapers and bedpans, picking fruits and vegetables, removing fecal matter in meat-processing plants, polishing nails, checking coats, parking cars and constructing buildings. Increasingly, the poor are fighting U.S. wars. To make ends meet, they become subjects for clinical trials and medical research, and sell blood.

Middle class and wealthy women, many of whom work outside the house and/or use domestic labor to help manage their households and children, are significant employers of domestic workers. At the same time, the low wages essentially subsidize the economic activities of those better-off—i.e., the corporations, institutions, small businesses, and individuals who hire these workers at substandard levels. According to the U.S. Department of Labor, in 2012, over 894,000 individuals worked as maids and housekeepers. They were predominantly women, immigrants, and minorities whose income levels were on average below the poverty level when working full-time.

Not only do the poor subsidize the affluent, they bear disproportionate levels of state and local tax burden. While the country’s federal income tax system is progressive—that is, the rate increases as one’s income increases—other kinds of payments are regressive and make the poor bear a bigger burden. As the following chart shows, when it comes to federal taxes, the top 20% of income earners paid the highest percentage of income, and the lowest 20% of income earners paid the lowest percentage of income. However, when looking at the percentage of income paid in state and local taxes, the lowest 20% of wage earners pay the highest percentage of income tax.

 

By Income Level, Federal, State and Local Taxes Paid as Percentage of Income in 2012
(Tax Foundation)

 

According to the Institute on Taxation and Economic Policy’s 2013 studythe top 1 percent of income earners paid 5.6 percent of their income in state and local income, property, sales, and excise taxes combined. The lowest 20% of income earners paid almost twice that, at 11.1 percent of their income. In the ten worst-offending states, the bottom 20 percent paid up to 6 times as much of their income in taxes as their affluent counterparts. At the same time, many state and local level government projects tend to serve more non-poor populations.

Additionally, a poverty-related services industry creates its own mini-economy. There are cadres of professionals trained to ameliorate the lives of the poor or modify their behavior—lawyers, social workers, psychiatrists, doctors, nonprofit administrators, substance abuse specialists, welfare administrators, etc. The increasing interconnection between the welfare system and the criminal justice system leads to institutions such as the police, child welfare agencies, prosecutors, public defendants, legal aid attorneys, and others whose existence depends largely on the difficulties those living in poverty consistently experience. Academic and media personnel—social scientists, professors, journalists, film makers, and activists—frequently make a living by documenting the lives of the poor. In 2013, there were approximately 333,000 nonprofit organizations nationally, with a combined budget of over $254 billion, providing services to the poor, e.g., mental health and crisis intervention, employment, housing and shelter, food, agriculture and nutrition, etc.

 

Number of Registered Nonprofit Organizations by Areas and Reported Revenue
(National Center for Charitable Statistics, 2013)

 

Number of Registered Organizations

Total Revenue Reported ($)

Crime and legal related

18,127

9,003,654,820

Public and societal benefit

64,035

94,491,116,572

Community improvement and capacity building

114,456

39,130,991,114

Civil rights, social action and advocacy

7,548

4,315,843,085

Youth development

30,434

7,036,840,589

Housing and shelter

30,118

24,622,790,007

Food, agriculture and nutrition

15,380

13,195,922,708

Employment

37,848

33,308,070,294

Mental health and crisis intervention

15,040

29,157,956,047

Total

332,986

254,263,185,236

 

Finally, those living in poverty contribute to the economy by having to pay more for everything, despite the need to live frugally: a phenomenon known as the poverty penalty. Poor people pay more for goods and services because businesses do not open up or close down in their neighborhoods. As banks and financial institutions disappear from poor neighborhoods, poor communities pay more for basic financial services. Slumlords, loan sharks, pawnshops, and payday lenders profit from the poor. Further, small grocery stores that operate in poor neighborhoods charge more for poor quality goods. Big-chain stores seldom open in poor neighborhoods; thus, to access those discounted goods, poor people face added travel costs.

Sociopolitical level

The dominant modern narrative about the poor involves laziness, lack of interest in work, and single-motherhood (Welfare Queen 2012 redux). This stereotypic image is juxtaposed with the supposedly normative Protestant work ethics, frugality, and heterosexual two-parent households. Perceived to be living lifestyles deviant from this norm, the poor are punished and their intimate lives are publicly scrutinized and regulated, according to Mimi Abramovitz, a social welfare policy expert.

Poor women who move between different intimate relationships are castigated for practicing serial monogamy. Women receiving social safety-net support are expected to work and to be ready to take any job, in order to qualify for their entitlement. If they still are unable to make a livable income, or they have to drop out of educational programs, so be it. Welfare recipients relinquish their privacy to institutional scrutiny, from their personal finances to the cleanliness of their homes. If poor mothers rear their children in ways that social workers do not approve of, they are often accused of child neglect or abuse. 

In addition, gentrification and urban renewal projects typically displace the poor from their communities to make way for parks, recreational spaces, universities, and hospitals mainly used by incoming residents of the neighborhoods. Low-income neighborhoods not targeted for gentrification are often chosen to house homeless and domestic violence shelters, drug and alcohol treatment facilities, and garbage or radioactive waste dump sites—the type of facilities around which middle/upper-class people organize NIMBY (not in my backyard) protests because they want to protect their property values.

 

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