American poverty is too high for all kinds of people

The case for universalism

The United States of America is a very rich country with a very high median income,¹ but we also have relatively high levels of poverty and squalor. Tens of millions of Americans experience food insecurity, homelessness, or other severe problems because, despite our affluence, our welfare state is relatively stingy.

GiveDirectly, a program whose efforts to support direct cash transfers to poor people in poor countries I’ve enthusiastically supported, is launching a new U.S.-based guaranteed-income program focused on Atlanta’s Old Fourth Ward neighborhood, the birthplace of Martin Luther King, Jr.

With the money available, GiveDirectly needed to start in a relatively small place, and since King’s final unfinished struggle — the Poor People’s Campaign — included a proposal for a guaranteed minimum income, launching in this historic Black neighborhood is powerful symbolism. I’m not sure transferring the GiveDirectly model to the domestic context will actually work, but I’m glad to see them trying.

I was less enthusiastic about Siobhan McDonough’s writeup for Vox, which invokes King and the neighborhood’s symbolism in defense of race-based framing of anti-poverty measures.

“For many activists working on narrowing the racial wealth gap through anti-poverty programs, racial justice is at the moral center of their goals, and to downplay this would be to draw attention away from the point of the programs,” McDonough writes, “but historically it’s been easier to garner support for plans that emphasize the economic benefits of poverty reduction.” She then expresses some optimism that the political circumstances have changed and that race-focused framing can work.

This, to me, is wrong not just politically but morally. King’s actual program as he outlined very explicitly was not to reduce the racial poverty gap but to eliminate poverty.

“In a sense, you could say we are engaged in the class struggle,” he told Jose Yglesias in 1968 explaining his plans for a second March on Washington. “It will be a long and difficult struggle, for our program calls for a redistribution of economic power. Yet this isn’t a purely materialistic or class concern. I feel that this movement in behalf of the poor is the most moral thing — it is saying that every man is an heir to a legacy of dignity and worth.”

Martin Luther King supported a race-neutral anti-poverty program

I quoted King speaking to my grandfather for an article he wrote for The New York Times Magazine because that was personally my first exposure to King’s economic thought.

But King’s most detailed presentation of his late-career ideas was laid out in his final book “Where Do We Go From Here: Chaos or Community?” I do not think that all of King’s ideas hold up or remain workable in the changed economic circumstances since he wrote the book, but it’s a very compelling moral and political vision, and many of the specifics I think hold up.

King notes, for example, that while poverty (and especially concentrated poverty) loom larger in Black America’s daily experience, numerically there are more poor white people (emphasis mine):

Within the white majority there exists a substantial group who cherish democratic principles above privilege and who have demonstrated a will to fight side by side with the Negro against injustice. Another more substantial group is composed of those having common needs with the Negro and who will benefit equally with him in the achievement of social progress. There are, in fact, more poor white Americans than there are Negro. Their need for a war on poverty is no less desperate than the Negro’s. In the South they have been deluded by race prejudice and largely remained aloof from common action. Ironically, with this posture they were fitting not only the Negro but themselves. Yet there are already signs of change. Without formal alliances, Negroes and whites have supported the same electorate coalitions in the South because each sufficiently served his own needs. [Page 53]

King wants to rouse poor white people from their racist slumber and make common cause with them.

But of course poor white people aren’t going to make common cause with a guaranteed income program that doesn’t give them any money. So that’s not what King proposes:

This proposal is not a “civil rights” program, in the sense that the term is currently used. The program would benefit all the poor, including the two-thirds of them who are white. I hope that both Negro and white will act in coalition to effect this change, because their combined strength will be necessary overcome the fierce opposition we must realistically anticipate. [Page 174]

Earlier, while discussing the merits and demerits of the Black Power movement, he nods to the virtues of self-help and community organizing while also insisting on the need for universalistic programs:

Black Power is also a call for the pooling of black financial resources to achieve economic security. While the ultimate answer to the Negroes’ economic dilemma will be found in a massive federal program for all the poor along the lines of A. Philip Randolph’s Freedom Budget, a kind of Marshall Plan for the disadvantaged, there is something that the Negro himself can do to throe off the shackles of poverty. [Page 39]

The full title of the Freedom Budget proposal, in case the point isn’t clear, was “A Freedom Budget for All Americans” — a universal program.

King wrote a foreword to the Freedom Budget:

The long journey ahead requires that we emphasize the needs of all America’s poor, for there is no way merely to find work, or adequate housing, or quality-integrated schools for Negroes alone. We shall eliminate slums for Negroes when we destroy ghettos and build new cities for all. We shall eliminate unemployment for Negroes when we demand full and fair employment for all. We shall produce an educated and skilled Negro mass when we achieve a twentieth century educational system for all.

Randolph himself in his introduction writes that “the tragedy is that the workings of our economy so often pit the white poor and the black poor against each other at the bottom of society.”

These were not people who were unaware of racial discrimination or indifferent to specifically racial forms of injustice. They were not practicing “colorblind” politics in the sense of modern-day Republicans who insist we can never talk about race or racism or its impact on American history and society. But they not only believed in a politics of universalism; they believed one of the major sins of racism was to pit people against each other who should have been cooperating to solve common problems.

White poverty is a significant issue

White Americans experience poverty at a much lower rate than Black Americans, a legacy of racism over the course of American history. It’s also true that white Americans of all income levels enjoy certain racial privileges. But if you are yourself white and poor, it doesn’t really do you, personally, any good to know that a different set of white people has a lot of money or that white people on average are unlikely to be poor.

As King was at pains to point out, in his time, a large majority of the poor were white. That is less true today since the population as a whole has become less white. But it is still true that since non-Hispanic whites are such a large share of the overall population, they are a plurality of the poor despite the lower poverty rate.

You can see this in the OECD’s relative poverty rate, which counts a person as poor if they are at less than half the national median income.²

I think it’s a bad political strategy but also bad ethics to sweep low-income white people under the rug. This is a group that voted for Barack Obama twice before flipping to Donald Trump, and they experience lots of very real problems of material deprivation. They deserve on the merits to have their problems taken seriously, and taking those problems seriously is a necessary ingredient to winning a political coalition that will tackle poverty. If activists sincerely can’t get themselves excited about a broad political push against poverty per se and see the moral force in that, then I think that just reflects poorly on them. But I also doubt anyone who says that really means it. Little kids growing up in trailers with parents who don’t earn any money aren’t to blame for structural racism, and everyone knows it.

I do suspect that the wealthy donor class genuinely does find King-style rhetoric about class struggle off-putting and prefers to think of things in narrow racial terms. But that is precisely the virtue of going back to the great civil rights leaders’ original texts, because King and Randolph and Bayard Rustin and others all rightly saw that as a dead end.

Philanthropists can fund a pilot program in one neighborhood, but tackling America’s structurally high poverty rate requires a bigger lever and bigger thinking.

The tragedy of the lost Child Tax Credit

A population-wide UBI is a really huge political lift, and no country that I’m aware of has one. But we did have just within our grasp an incredibly effective approach to cutting poverty in the form of cash transfers to parents.

The best way to think about the paradox of America’s dismal poverty amidst plenty is that median incomes are driven largely by market wages. The typical American wage-earner earns perhaps less than one would like him to — economic growth is always good! — but compared to the median wage-earner everywhere else on Earth, he is doing very well. But in the United States and in other countries, on any given day lots of people are not employed. Some of that is due to the ups and downs of the labor market, but much of it also relates to things like being a child or a retired person or disability or caregiving responsibilities.

Having children tends to be impoverishing because it adds non-working people to a household (the children) while also adding non-work responsibilities that make it harder to maintain a full-time job.

Many countries address this by providing cash assistance to parents — a child allowance — in recognition of the fact that labor markets do not magically allocate additional funds to workers who have dependent children. In the United States, momentum was growing among congressional Democrats to create some kind of child allowance during the lead-up to the 2020 elections. I should at some point write a comprehensive history of how the expanded Child Tax Credit first looked like it definitely wouldn’t happen (Joe Biden, the only major Democratic presidential candidate to oppose it, won the primary) and then looked like it was (one-year credit enacted in the American Rescue Plan) and then ultimately didn’t (Build Back Better went to shit), but for now let’s just say we got tantalizingly close to enacting a game-changing anti-poverty program and then didn’t.

But how would it have changed the game? In an exciting new paper, Irwin Garfinkle and a bunch of co-authors synthesize data from across different sources and give us “The Benefits and Costs of a U.S. Child Allowance,” which Milan has summarized for us graphically.

It is really sad that we are not going to do this during Joe Biden’s term. Now, if by some miracle the political situation dramatically changes and Democrats do well in the midterms, I think there would be a shot at enacting Mitt Romney’s version of a child allowance, which I think is, in important ways, even better. But I would not place high odds on that.

Political battles often take a long time, but the battle to take a huge bite out of poverty — not just in one neighborhood but for tons of American families of all races — is worth waging. I also think it’s worth waging in the broadly normie terms depicted on that chart. If kids grow up in more economically secure circumstances, they do better and school and grow up to be healthier, more functional adults who commit fewer crimes and work more consistently and pay more taxes. We should stick to MLK’s vision of programs that benefit and unite needy people across racial lines.

1. Leftists on the internet often claim this is false and America only looks rich because of inequality or billionaires, but we are in fact richer at the median than every country other than Luxembourg.

2. This OECD-based poverty threshold is higher than the ones used to calculate both the official poverty rate and the supplemental poverty metric in the U.S. Social Security lifts a large number of people to a level that’s between the official poverty rate and the OECD poverty rate, so on this chart, we show up as having a high elder poverty rate while you normally see a low one.