The Issue of American Poverty

How low should someone be allowed to fall in a wealthy society? Is it moral and ethical to allow people to live in poverty?  America is currently experiencing an economic boom brought on by speculation in the markets on artificial intelligence (AI) (Gould & Kandra, 2024). Yet, while the rich get richer our middle class dwindles and our poor stay poor. How can we be experiencing unprecedented rises in productivity and unmatched shareholder value- while also having a higher percentace of poor people than fifty-five years ago (Kochhar, 2024)? That’s easy: corporate interests -have captured nearly every decision-making body in the US government. Legislators are using their insider knowledge to benefit their wallets rather than the public good. There have been many possible inflection points over the last century where we could have doubled down on the public good but chose not to. These are the results.

Widespread and Deep Poverty

One in nine Americans (including one in eight children) live in poverty. To put that into perspective, that’s more than 38 million people who cannot afford basic necessities. 

  Of those 38 million people, 18 million scrape by in a form of deep poverty. This is defined as living below half of the official poverty line. In order to meet this criteria in 2025, a single person would need to be making less than $7,825. A family of four would need to make less than $16,075 (FPL, 2025). That is not the end of the line on American poverty, however. There is a subset of those who live in deep poverty who are “absolutely poor by global standards.” This means that they have the grotesque distinction of living on $4 a day or less. 

Growing Inequality

Untouchables 

According to The U.S. Department of Housing and Urban Development (2024), 152,585 individuals were counted as experiencing chronic patterns of homelessness. In order to be considered chronically homeless an individual needs to have been experiencing homelessness for at least a year or have had at least four episodes of homelessness in the last three years that add up to a cumulative 12 months of homelessness. In 2024 the US reached its highest ever Point-in-Time (PIT) count since HUD began collecting homeless count data. The total count was 771,480 people (HUD, 2024). That means roughly 23 out of every 10,000 people were living in an emergency shelter, safe haven, transitional housing program, or in unsheltered locations across the country.

Poverty and Race

A growing segment of the US population lives as an undercaste. America has a lower caste of individuals permanently barred by law and custom from mainstream society. People labeled as criminals, especially Black and Brown men, are relegated to the margins, legally discriminated against in areas like employment, housing, public benefits, and voting rights, similar to the historical racial caste systems of slavery and Jim Crow (Alexander, 2010. p. 15-19).  The historic legacy of denying black people access to land and many rights white people see as “table stakes” contributes directly to the severe wealth gap between the two groups (Desmond, 2023, p. 23).

Poor Black and Latine families are far more likely to experience concentrated community-level disadvantage (living in neighborhoods with over 40% poverty rates) than their poor white counterparts. This yields an advantage to poor white children not granted to poor children of color. Poor white children are statistically more likely to live in more safely built environments, safer communities, experience lower rates of police violence, and go to better funded schools (Desmond, 2023, pp.22-24). Today, poor people of color are often excluded from homeownership because their neighborhoods function as "mortgage deserts", which means a large portion of the homes in their neighborhoods were bought with cash. This implies that the homes were bought by institutional investors rather than by the people who live there. Poor renters who are not white or who have children often face discrimination by landlords (HUD, 2024).

Millionaires, Billionaires, and Brahmins

These high rates of inequality and poverty are a stark contrast to America's top earners. According to the PEW Research Center (2024), America’s upper-middle income households accounted for 19% of all Americans in 2023. The gap is substantial. In 2022 the median income of upper-income households was 7.3 times that of lower income households. 

While the income gap between lower and upper-middle households is significant, it serves as a mere prelude to the profound wealth stratification evident when examining the top one percent of American households. These earners saw a rapid growth in annual earnings between 1979 and 2024 when their earnings increased by more than 180% (Gould & Kandra, 2024). There are some who may believe that this rise in wealth among high earners was a result of their own hard work. However, these rises in wealth also fall in line with changes in policy that subsidize affluence and remove supports from those in poverty. 

Pro-poverty Policies

America’s declining middle class and growing lower class (Kochhar, 2024) isn’t simply the output of inevitable economic misfortune, it’s a policy decision. Not only is it a policy choice, it's a fairly new policy at that. In the latter half of the 20th century, American policy has (for the most part) pivoted to pro-business practices and moved away from anti-poverty measures. This impulse to punish the poor was built from older, similarly crass historical biases. The first and primary being the subjugation of minorities (Floyd et al., 2021). The second being the holdovers of colonial ideas of  deserving and undeserving poor (Stern & Axinn, 2018, pp. 90-95).

Corporate Welfare

Policies that enable exploitation in the labor market (leading to low wages) and financial markets (forcing the poor to pay more) benefit corporate interests and affluent shareholders. This involves political actors approving tax breaks for the wealthy, deregulation of the banking system, and the establishment of a system where corporations are subsidized by government programs. According to Desmond (2023), these decisions are driven by the self-interest of those who benefit from the deprivation of the poor. A great example of this is the Earned Income Tax Credit (EITC). EITC functions as a generous handout to corporations because the program effectively subsidizes their low wages instead of mandating higher wages in the first place. By supplementing the meager earnings of the working poor, the EITC allows corporations to keep labor costs low without fear of workers falling into destitution. This arrangement ensures that a low-wage workforce remains available. For instance, Wal*Mart has established initiatives to help its employees claim the EITC and has supported legislation requiring large employers to notify workers about the benefit. The U.S. Chamber of Commerce and the National Restaurant Association have also pushed for the EITC's expansion.

Mass Incarceration

According to Alexander (2010), mass incarceration is a strong example of the ways in which racism is enshrined in US legal policy. Following release from prison, people are relegated to a permanent undercaste via a plethora of laws, policies, rules, and social stigma that deny them access to the mainstream economy and society. This legalized discrimination prevents them from obtaining basic resources necessary for economic stability, such as employment, housing, public benefits , and even the right to vote and exclusion from juries. These exclusions mirror the systemic forms of discrimination prevalent during the Jim Crow era. According to the United States Sentencing Commission (2023) Black males received sentences 13.4 percent longer than their white counterparts. Consequently, mass incarceration ensures that a large percentage of the African American community remains locked out of opportunity, reinforcing racial hierarchy and poverty that began with historical caste systems (Alexander, 2010). 

Institutional Racism in Child Welfare

Throughout the mid-20th century, state-level policymakers imposed policies like "suitable home" and "man-in-the-house" rules, often targeting Black and unmarried mothers. An example of this misuse of state power culminated in 1960, when Louisiana removed 23,000 children from its welfare rolls. The state claimed that they were the children of unwed mothers and therefore ineligible. Historical racist narratives about Black women as unfit parents drove the production, adoption, and implementation of these policies (Floyd et al., 2021). 

 Institutional racism not only disrupted the flow of cash assistance to Black families but also targeted them for removal of their children in favor of foster care. Policies such as the Child Abuse Prevention and Treatment Act (1974) and the Adoption and Safe Families Act (1997) are statutory measures rooted in those same beliefs. This type of "white male ideology" subjects poor families of color, particularly Black families, to harsh treatment and family separation (Jones & Haynes, 2023). 

Temporary Assistance for Needy Families (TANF)

The TANF program, which replaced the federal entitlement to cash aid, was created by the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) (Floyd et al., 2021). It was signed into law by President Bill Clinton following strong political pressure from the Republican-controlled Congress (Matthews, 2016). TANF's resulting design perpetuated a legacy of anti-Black racism and unfettered state control (Floyd et al., 2021). One of TANF’s main issues is that it uses a funding mechanism known as block grants. Block grants are a fixed amount of money filtered down by the federal government to a state for a specific policy area. They undermine real efforts to help those in poverty in several ways. 

Diversion of Anti-Poverty Funds. First, block grants give states ultimate control over how the funds are spent, including not spending the funds at all. Funds that are earmarked for poverty-relief can be funneled into adjacent, similar causes (Desmond, 2023, pp.28-30). The most famous case of this misallocation of funds was from 2016-2019 when Bret Farve received over $1 million in TANF funds for speaking events he never attended. Farve also diverted an additional $5 million to build a volleyball court at the college his daughter played volleyball at (McEwen, 2024). In 2020 it was reported that only 22 cents of every dollar spent on TANF was given directly to poor Americans as cash assistance (Desmond, 2023, p.29).

Nonresponsiveness to Economic Shifts. Even when these funds do directly assist needy families, the funds are fixed. They are therefore not responsive to things like inflation or any rise in the cost of living. Recessions therefore pose a real problem for TANF as the funds do not rise and fall with the number of families receiving them (Matthews, 2016).

Harsh Requirements. Built into TANF is a couple of measures designed to keep TANF recipients from receiving funds. TANF makes it difficult for families to access aid and easy for families to lose assistance (Floyd et al., 2021). 

Conclusion

From the 38 million Americans living in poverty and the 18 million in deep poverty, to the skyrocketing rates of homelessness, the US reveals its true face. It is a nation that considers economic growth to be paramount over all else, including the health and wellbeing of its people. As a result, it has chosen to allow widespread, deep, and racially concentrated deprivation.

This is not a tale of personal misfortune by individuals, but a clear reflection of decades of pro-business practices and pro-affluence policies. These policies have actively eroded the social safety net and punished the poor. The systemic dismantling of anti-poverty measures, exemplified by the disastrous block-grant structure of TANF and the corporate subsidy disguised as the EITC, highlight the means by which the powerful manipulated our political system.

Policies like mass incarceration and the remnants of institutional racism in the child welfare system have created a permanent undercaste, disproportionately impacting Black and Brown Americans and reinforcing a legacy of legal discrimination. The result is a widening chasm where the top earners see their wealth surge by 180% while families struggle to survive on less than $4 a day. It is a shameful state in which  to find our beloved “land of the free.”  

References

Alexander, M. (2010). The new Jim Crow: Mass incarceration in the age of colorblindness. New Press.

Desmond, M. (2023). Poverty, by America. Crown Publishing Group.

Floyd, I., Pavetti, L., Meyer, L., Safawi, A., Schott, L., Bellew, E., & Magnus, A. (2021). TANF policies reflect racist legacy of cash assistance. Center on Budger and Policy Priorities.

Gould, E., & Kandra, J. (2024, December 11). Wage inequality fell in 2023 amid a strong labor market, bucking long-term trends. Economic Policy Institute. https://www.epi.org/blog/wage-inequality-fell-in-2023-amid-a-strong-labor-market-bucking-long-term-trends-but-top-1-wages-have-skyrocketed-182-since-1979-while-bottom-90-wages-have-seen-just-44-growth/

HealthCare.gov. (2025). Federal poverty level (FPL). HealthCare.gov. https://www.healthcare.gov/glossary/federal-poverty-level-fpl/

Jones, J., & Haynes, C. D. (2023). Institutional racism in the child welfare system in: Social work, white supremacy, and racial justice. https://doi.org/10.1093/%20oso/9780197641422.003.0010

Kochhar, R. (2024, May 31). The state of the american middle class. Pew Research Center. https://www.pewresearch.org/race-and-ethnicity/2024/05/31/the-state-of-the-american-middle-class/

Matthews, D. (2016, June 20). “If the goal was to get rid of poverty, we failed”: the legacy of the 1996 welfare reform. Vox. https://www.vox.com/2016/6/20/11789988/clintons-welfare-reform?view_token=eyJhbGciOiJIUzI1NiJ9.eyJpZCI6Iko4SEhUNjd5T1kiLCJwIjoiLzIwMTYvNi8yMC8xMTc4OTk4OC9jbGludG9ucy13ZWxmYXJlLXJlZm9ybSIsImV4cCI6MTc2MzM5MzE5NiwiaWF0IjoxNzYyMTgzNTk2fQ.p9fiUtkusos7AyZeu7Gsw7sZvhG5jTyswhU0gME8JqQ&utm_medium=gift-link

McEwen, M. (2024, September 24). Brett Favre testified about allegedly misusing welfare funds for volleyball arena. NPR. https://www.npr.org/2024/09/24/nx-s1-5124756/brett-favre-testified-about-allegedly-misusing-welfare-funds-for-volleyball-arena

Stern, M. J., & Axinn, J. (2018). Social welfare : a history of the American response to need (9th ed.). Pearson.

United States Sentencing Commission. (2023, November 14). 2023 demographic differences in federal sentencing. United States Sentencing Commission; United States Sentencing Commission. https://www.ussc.gov/research/research-reports/2023-demographic-differences-federal-sentencing