How To Solve the ‘Poverty Paradox’
It’s a riddle that has haunted the United States for decades—how can the world’s wealthiest nation also have one of its highest levels of persistent poverty? Washington University sociologist Mark Robert Rank tries to supply some answers in his new book, The Poverty Paradox, which publishes on April 25. Rank sees the problem as one of structural failures, both economic and political, that game the system against those on the bottom rungs of the economic ladder. Rank spoke with Spotlight recently about his new work; the transcript has been lightly edited for length and clarity.
Mark, great to see you again. The book is out in a few weeks?
Yes, the publication date is April 25th.
Well, congratulations.
Thank you. We talked about my Poorly Understood book before so this is a very nice follow-up to that.
Well, let’s jump right in. Tell me about the idea for the book and how you would frame it for us.
It’s based on a lot of research I’ve been doing over the years regarding the issues of poverty and inequality. I’ve developed a framework for thinking about this and the book explores that framework. I’ve touched upon it in earlier work, but this book goes into much detail and depth about the perspective. It lays out what I’ve referred to as a structural vulnerability framework, which is a new way of thinking about why poverty exists. The title of the book, The Poverty Paradox, comes from the idea that on one hand, the United States is the wealthiest country in the world, and yet on the other hand, we have some of the highest rates of poverty and inequality among high economy countries. It explores why it is that we have such a paradox.
And what are some of the central reasons why?
I think a lot of it has to do with a structural failure in the United States. And by that, I mean that there’s a failure at both the economic and political levels. On the one hand, the United States has done a fairly good job in creating jobs over the last 40 or 50 years, but on the other hand, many of those jobs have been low-paying without benefits. It’s really hard to support a family on these types of jobs. People may be working but they just can’t get ahead, and that’s a failure at the structural level. At the political level, we have a very weak social safety net in this country to protect folks from falling into poverty. So, when things happen to people, like losing a job or getting sick or a variety of other things, there’s not a whole lot to protect them, as compared to a number of other countries that have a much more robust social safety net. For example, we’re just about the only industrialized country that does not provide universal healthcare. Well, that’s a failure at the structural level that doesn’t have anything to do with individuals not working hard.
The analogy that I use, and that I’ve used before in other work, is the analogy of musical chairs. And that is, we can either focus on who loses out in the game, or we can focus on why the game produces losers in the first place. If we think about musical chairs, let’s say we have 10 players and eight chairs, and the music stops; who loses out? Well, it’s those two people who perhaps were in a bad position when the music stops and who might not have been as quick or agile as the other eight players. But given that the game only has only eight chairs for 10 players, then two people are going to lose out regardless of what their characteristics are. And that’s the analogy I make on a macro level as to what’s happening in the United States. Yes, people who are more likely to experience poverty have less education or may be single parents or people of color. But the ultimate reason for their poverty is because they aren’t enough opportunities for everyone playing the game.
Can you address this adequately through political means? And that begs the question of even if that would ever happen, do you believe that there needs to be more a macro structural change in how Americans view their economy?
I think we can turn to some of the social democratic countries in Europe, like the Scandinavian countries, that certainly are capitalist societies, but they’ve dealt with these structural failings to a much greater extent than we have and have smoothed over the rough edges of capitalism. Because if you let capitalism just run its course, it’s very brutal. It’s going to create a lot of inequalities. We can maintain a capitalist structure, but we need a robust safety net. However, that goes against the history of the United States, which is based on rugged individualism and that people do it on their own—they don’t depend on others, this kind of thing. My work on poverty shows that, over a long period of time, most Americans will experience a year or two below the poverty line. This affects a lot of people, and rather than having this idea of you do it on your own, why not have a system that provides some kind of protection? That’s the idea behind having insurance on your car or your house. You don’t think your house is going to burn down tomorrow, but down the road something may happen and it’s important to have some protection.
Yet we have been through this national experiment with the expanded Child Tax Credit, which achieved remarkable results but really wasn’t that politically popular, to the surprise of a lot of Democrats, who thought it would be so wildly popular that it would easily extended.
I know. That is surprising, although it was a relatively short time that it was in play. But the effect it had, even in that short team, really illustrates the impact of dealing with poverty on a structural level since this had a very large impact on reducing childhood poverty. The other really big anti-poverty program that also illustrates the structural level that I’m talking about here is Social Security. If there was not Social Security in this country, the poverty rate for the elderly would go from about 10% to about 40%. And that illustrates the effectiveness of dealing with poverty on a structural and policy level.
Are there other potential policies that you would see addressing these problems in a more structural way?
Going back to the issue of having too many jobs that don’t pay a decent wage, we can think about how can we get those wages up? Obviously raising the minimum wage to a livable wage and then indexing to the rate of inflation each year would be one idea. Another idea that’s been around for a while is coming in at the back end on the tax side with an earned income tax credit to give a benefit to workers who are below a certain income level. And then, as I mentioned at the beginning, the fact that the United States doesn’t have universal healthcare and that we are the only industrialized country that doesn’t have that, is just ridiculous. That in and of itself would be a tremendous step forward. With Obamacare we did move forward, but it seems like Congress is so polarized that nothing can get done. Some of these issues would have bipartisan support and one of the arguments I make in the book is that addressing poverty, especially childhood poverty, is not only a moral issue and a social justice issue, but it’s also an economic issue. It makes economic sense to invest in children’s wellbeing. We know this from plenty of research and yet we’re short-changing children and that hurts all of society. It hurts us all because we wind up paying for higher healthcare costs. We wind up paying for workers who are not as productive as they could be. There’s a high cost in not dealing with poverty.
Does this paradigm change the way that you think politicians should talk about poverty? The CTC is a good example, where we’ve seen focus groups aren’t very supportive when it was presented as an anti-poverty policy, but very supportive when it’s framed more as an anti-hunger, pro-family policy.
One of the things that I’ve talked about for a long time in various books and writings is, with the issue of poverty, we often frame it as an issue of them versus us. Poverty is seen as affecting someone else, and not myself. And that’s the wrong way to think about it. This is actually an issue of us because first of all, as much of my life course work has shown, many of us will directly experience poverty at some point in our lives. And as I was saying before, dealing with poverty benefits us all economically—it makes us a more productive and innovative society by investing in people’s human capital and in their wellbeing. So, I would frame this as, don’t think of it as an issue of them, but rather as an issue of us. By doing so, we begin to understand that it’s in all of our best interests to address and reduce poverty and the negative consequences that comes from it. This is what is traditionally referred to as “enlightened self-interest,” and such a perspective can begin to help move us forward in the future to truly alleviating the extent of poverty in the United States.