Poverty in America After Welfare Reform

By Joyce West | 2/06/17 12:30 PM

Since welfare reform was enacted in the 1990s, the United States has seen a sharp rise in the number of families living on as little as $2 a day in cash, according to a Johns Hopkins University sociologist.

Kathryn Edin, a poverty researcher and Bloomberg Distinguished Professor at Johns Hopkins University, is the author, with H. Luke Schaefer, of “$2.00 a Day: Living on Almost Nothing in America” (2015). She spoke with Renee Shaw on KET’s Connections about her research and its implications for policy.

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According to the book, in 2011, about one out of every 25 households in America with children was living on no more than $2 a day in cash income, a number that had doubled since 1996, when welfare reforms were enacted.

“We’re kind of focusing on losses in manufacturing jobs, but even when you look at the low wage sector, the bad jobs of today are simply much, much, worse than the jobs of 20 years ago,” she said.

Edin said it is very difficult for those without a high school diploma to find a full-time job in the retail sector. “Employers will give you 25, maybe 30 hours a week, but no more. But they’ll also expect infinite availability so you can’t get a second job,” she said.

Since welfare reform in the 1990s, some states have put more money into child care subsidies, as well as liberalizing Medicaid eligibility so people don’t lose medical benefits as soon as they leave welfare for work. The federal Earned Income Tax Credit reduces income taxes for low- to moderate-income working individuals and couples.

In fact, Edin said, welfare reform did initially result in more employment of single mothers in the late 1990s. “We really did a lot of good things to support work,” she said. “The problem is the economy started to work against us, and these things were predicated on the assumption that you could find a full-time employer – which for many Americans now is like chasing a rainbow.”

The Great Recession
Edin said people who have found full-time, full-year work have never been better off. “If you can find that full-time job, we support you more than we did before,” she said. “For those who can’t do that, it is definitely the case that they are worse off than before.”

Most people who don’t work full time do work at some point during the year, Edin said. But they have periods of several months without cash income. “Here in Kentucky, there are counties where there simply are no jobs. They’re ending up in these situations where they literally have no safety net to catch them when they fall.”

In the late 1970s in Kentucky, 90 percent of families with children with no means of support got some sort of cash support from the government, Edin said. Now that figure is 19 percent.

Edin has found that many people in poverty want to work. “When you go to places like eastern Kentucky and you look for them, you find families who are all about work. They have work histories, they’re trying to get work. … I think they’re sort of hanging on to the ragged edge of a low-wage labor market that’s really dissolving within their grasp.”

Living With Almost No Cash
Edin said over past 20 years, government has cut back on cash assistance dramatically. Now less than 800,000 adults across the country are receiving cash assistance. More do get food stamps, and at this time more people are covered by Medicaid. “The irony is, our research suggests that living without cash is actually associated with making you sick,” she said.

In her research, Edin met a 26-year-old young woman who had lived in poverty since age 12. “The first thing you notice about her is she puts her hand in front of her face when she smiles. She has no teeth. She got no regular dental care as a child,” she said. “So you can imagine what this has done in employment situations.” Her health profile, Edin said, is that of a 60 or 70 year old.

People who are extremely poor must be resourceful to survive, collecting rainwater to wash clothes, growing food, and selling plasma, Edin said. “Only in the United States can you give [plasma] up to two times a week,” she said. “All other nations on earth consider this a health risk. Because of this, the U.S. has become the OPEC of plasma. We provide up to 70 percent of the world’s plasma. A lot of this is from the veins of the poor.”

Extreme poverty takes a heavy toll on a person’s physical and mental energy. “It taxes it in such a way that psychologists show it forestalls long term planning. Literally, the energy you’re expending on survival is compromising your future.”

Some people in extreme poverty trade food stamps for cash on black markets. She has also met women who turned to prostitution to get money for food. “This is not what we want to see in America,” she said.

Solutions for Extreme Poverty
Rural poverty is growing faster than urban poverty, Edin said. The largest concentration of extreme, $2-a-day poverty is concentrated in Appalachia and the Deep South, she added.

Edin said her research shows that cash benefits work best to alleviate poverty. She acknowledged that people worry that the poor won’t spend cash wisely, but said her research shows the opposite: People use the extra money from the Earned Income Tax Credit for savings, transportation needs, and debt payoff.

Edin says policy solutions to poverty should focus on three areas:

Supported work: “Supported work, supporting private sector employers to increase their labor force, and bringing services alongside these workers so they can stay in their jobs – employers love this idea because it takes away their risk,” she said. Such a program, Edin said, could make big differences in states with few jobs.

Housing: Edin said a voucher program for housing does better than public housing in terms of giving people more dignity. But landlords, she said, still discriminate against voucher holders, leaving them to find housing in some of the least advantaged neighborhoods, she said. “So we don’t get as much benefit from that program as we could,” she said.

Safety net: Edin believes the Earned Income Tax Credit should be expanded, or, as Schaefer says, families should be offered a guaranteed child allowance. “This is common in many parts of western Europe. That child is a public gift and public good, and we’re going to put a floor under you, a couple hundred dollars a month, you spend it how you see fit. But we wanted to signal to you that we value your role as parent. You need to go out and work to get the income that it takes for the rest of your family to survive, but we’re going to help you with that public good, given the cost of child care and other costs of raising a child.”

Some countries, Edin said, talk about establishing a universal basic income. Canada and Finland have experimented with this because they want more entrepreneurship, she said.