American Dream’s dark side: There is chronic poverty in the US

Poverty persists in the world’s biggest economy, the United States (US). Nearly 12 per cent of the country’s population, or 37.9 million Americans, lived in poverty in 2021, as the latest data from the United States Census Bureau shows.

This is not significantly different from the level in 2020: 37 million people lived in poverty. In 1970, the poverty figure was around 12 per cent. It is the dark side of the “American Dream” that has not received much policy or political attention.

Even though poverty has reduced over decades in the US, it is becoming chronic, at least for certain population groups. Termed as “deep poverty” by the US Census Bureau — “extreme poverty” in general terms — some 48 per cent of those poor in the US have cash income below 50 per cent of the national poverty threshold: $13,590/per capita/annual.

Deep poverty, as economists observe, is also chronic by nature. Or, a generation in deep poverty is likely to transmit the poverty to the next generation as well. It is a kind of poverty trap. 

But why do people become or remain poor in the USA? As many describe, the rich country has forgotten about the existence of poverty.

Matthew Desmond, a sociologist who won the 2017 Pulitzer Prize for general nonfiction for his book Evicted: Poverty and Profit in the American City, has made this nagging question the focus of his new book Poverty, by America.

His book offers an “answer” to this question which many in the US would love to treat as a Leftist onslaught. His book opens with a quote by Russian writer Leo Tolstoy: “We imagine that their sufferings are one thing, and our life another.”

Desmond likens the chronic poverty in the US to a “class war” waged by the rich and privileged — wealthy Americans and the corporations — to keep the poor where they are.

This is because the poor or persistent poverty always means a profit for the corporations — the poor are too busy to keep a job and could also be cheap labour, thus increasing the profit.

“Capitalism is inherently about workers trying to get as much, and owners trying to give as little as possible. America’s poverty is not for lack of resources,” he argues in the book adding, “We lack something else.”

This, he further identifies, is the death of a system that is inclusive and encourages all to grow together. Rather, he writes that the US as a system has supported and enabled the privileged and the corporations to profit from everywhere at the cost of the general population.

From tax breaks to social supports, he lists almost all anti-poverty or income-supports that always benefit the non-poor. And that is by design which he articulates as the class war.

He has called Americans the “unwitting enemies of the poor.” In an interview with the television channel CNBC, he said: “We have this national entitlement program that’s just not for the poor. In 2020, the nation spent $53 billion on direct housing assistance to the needy, things like public housing or vouchers that reduced rent burden. That same year, we spent over $190 billion on homeowner tax subsidies. Those are things like the home mortgage interest deduction, which homeowners are entitled to. Protecting and fighting for those subsidies leaves less money with which to fight poverty.”

In a guest essay in the New York Times, he wrote: “Poverty persists in America because many of us benefit from it. We enjoy cheap goods and services and plump returns on our investments, even as they often require a kind of human sacrifice in the form of worker maltreatment.”

Inequality at a time when the world is at its fastest wealth creation phase is reaching crisis-level. Desmond’s analysis of chronic poverty in the US is a powerful statement for the fact that even one of the richest countries would have it if inequality is not fixed and anti-poverty programmes are not targeted effectively.