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Widespread Poverty
in the Richest Nation in Human History

By Ronald J. Sider

We are the richest nation in human history, yet we have a higher poverty level than any other industrialized nation.

In 2001 (the latest official statistics from the U.S. Census Bureau), 32.9 million Americans (11.7 percent of all Americans) fell below the official poverty level. That was 1.3 million more poor people than in 2000. And things have gotten worse since 2001.

The official poverty level is $18,104 for a family of four (40.8 percent — 13.4 million people live at halfor less of the poverty level).

What would it be like to live in the United States on $18,104 a year? Try to imagine what your family, or the family of four you know best, would need to give up to exist on $18,104 a year. (See Table 1.)

Begin by selling your house and moving to a modest two-bedroom apartment ($711 a month, including heat). No more study, rec room, bedroom for each child, second bathroom, backyard, or porch. If you are willing to live in a lower-income, multiracial neighborhood, you might be able to buy a small house.

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Next, sell all your cars. You don’t have a garage anyway. You can get around on public transportation, or perhaps you can afford an old car — only $49 a week for transportation.

Forget about being in fashion. New clothes each season are unthinkable. If you visit the local thrift store for most things, you can probably get by on $410 per person per year.

You will no longer be able to afford to eat at restaurants. You will have to figure out how to avoid hunger and stay healthy on just a little more than $1 per meal for each person.

No more regular telephone calls to Grandma, other relatives, or friends in other cities. Your telephone budget is just $30 a month. And be sure to turn off the lights when you leave a room because you have only $41 a month for all utilities not included in your rent.

Let’s look at the totals.

The 2001 poverty level was $18,104, so you have $2 for a call to Grandma once a year on her birthday.

Notice what this budget does not include. No household appliances, no vacations, no toiletries, no birthday or Christmas gifts, no recreation, no visits to the dentist, no private health insurance, no donations for church, no child care, no movies, no travel outside the city, no private music lessons, no sports equipment for the children. Poor people, of course, do have some of these things. However unthinkable from a middle-class perspective, somehow they manage to spend less on some of the other items or receive help from family, friends, or church.

Any volunteers? No, I don’t mean for 3 years of graduate school while you prepare for a secure middle-class livelihood. I mean year after year with little hope for improvement. That’s what millions of our neighbors struggle with in our affluent nation.

Life at the poverty level is tough. In addition to scraping by financially, poor people feel excluded from the community. Many poor people face terrible schools, widespread crime, and a lack of quality health care. More than 43 million persons in the United States do not even have health insurance.

That’s the bad news. The good news is that for the first time in decades, the larger institutions of society are astonishingly ready to welcome the contribution of religion to solving our most desperate social problems. Christians and other people of faith have a historic opportunity that has not existed for decades.

To seize this opportunity, we need a comprehensive, holistic vision of how to overcome the complex problems of intolerable poverty in our country today. We must combine a biblical framework of values with careful social analysis to create a holistic vision and an effective, comprehensive agenda that combines evangelism and spiritual transformation of individuals with the right public policies by government, business, and the media. Of equal if not more importance, we must motivate the millions of Christians sitting in our pews — and other people of faith as well — to care as much about the poor as Jesus did.

Who are the poor?

Mention poverty and many people in the United States instantly think of a single, African-American mom living in an urban ghetto with a bunch of little kids. Wrong.

Only 12 percent of the poor live in urban ghettos; only about 27 percent are African-American. About 35 percent of the poor live in families headed by a married couple. Twenty percent of poor families have an adult working full-time year-round and still live in poverty; 37.2 percent of all poor children in the United States live in a family in which at least one parent is working full-time.

The elderly used to suffer the highest poverty rates. Now it is our children. In 1960, one-third of the elderly were poor. Now — thanks to Social Security and SSI — only about 9 percent are poor. But over 16 percent of all our children live in poverty.

Thirty years ago, half of the poor lived in rural areas. Today, only 25 percent do. Poverty is growing fairly rapidly in the suburbs (especially the inner suburbs) where 33 percent of the poor now live. The largest group live in our cities (43 percent), mostly in mixed-income neighborhoods. Only 12 percent of the poor live in urban ghettos — defined as an area in which at least 40 percent of all the residents are poor.

Although less than half of the poor are African-American and Latino, poverty rates for minorities are more than double those for whites.

The largest single bloc of poor people (43 percent) live in single-parent families with children. Twenty-two percent of the poor are single adults not living with children. But that still leaves one-third (35 percent) of all the poor living in married-couple families.

A close connection exists between single parenthood and poverty. In 1996, only 8.7 percent of all married-couple families were poor, but 44.3 percent of all female-headed households with children were in poverty.

What Causes Poverty?

In the last few decades, political liberals and conservatives have fought harsh ideological battles over the causes of poverty. Liberals traditionally argued that structural changes and systematic injustice caused most poverty. They explained how globalization, technological change, and the shift from a manufacturing to a service and information economy reduced the demand for low-skill, well-paying jobs. Robots and machines replaced many factory workers. When possible, companies moved labor-intensive operations to developing countries where wages were dramatically lower. In addition, many jobs moved from central cities to the suburbs. Suburban industrial parks replaced crowded factories in decaying urban neighborhoods. Retail jobs moved to new suburban malls, and new suburban office complexes emerged closer to suburbanites’ homes. Since public transportation to suburban locations was inadequate and the urban poor often lacked cars, there were simply not enough good jobs available to the urban poor.Woven through everything else was continuing racism.

Conservatives disagreed. Poverty has resulted from wrong moral choices exacerbated by bad government policy. They loved to point out that only a very small percentage of those who finished high school and avoided having children out of wedlock were poor. Soaring illegitimate births, divorce rates, and single-parent families — along with bad choices about drugs, alcohol, work, and sex — were the primary causes of poverty. And generous government welfare programs that allowed the state to replace fathers as the breadwinners simply made things worse.

Who is right? Both are partly right. I have lived and worshiped with the poor far too long to side either with the liberal who quickly dismisses the way personal choices contribute to poverty or with the conservative who ignores the way complicated structural barriers make it difficult for many hardworking people to escape poverty. If your factory closes because global economic forces prompted management to move production to Mexico and you can only find a much-lower-paying job, the problem is not lack of personal responsibility. On the other hand, if you lose your job because of poor work habits, drugs, or alcohol, personal choices are more clearly central to the problem.

I argue that there are four broad causes of poverty: structural causes; personal decisions and misguided behavioral patterns; sudden catastrophes; and permanent disabilities.

Structural causes

Decreasing number of low-skill, well-paying jobs. Harvard sociologist William Julius Wilson is surely correct in seeing the loss of low-skill, decent-paying jobs as one major cause of poverty. Many formerly well-paying, low-skill, blue-collar jobs have moved to Mexico or China, and new service sector jobs often do not pay enough to support a family. Many employers have moved to the suburbs, but the public transportation system was not designed to enable inner-city residents to travel easily to such locations. The lack of jobs that pay a family wage, Wilson rightly argues, helps create absent fathers, increasing violence, and general social decay.

Falling wages.Changes in the global economy and technological changes that caused people to be replaced with machines have also produced falling wages for low-skilled persons. Wages for men without a college degree have fallen dramatically in the last 20 years even when such men work full-time all year.

Minimum wage.The falling real value of the minimum wage is another structural cause of poverty. When the minimum wage remains the same while inflation reduces each dollar’s purchasing power, the real value of the minimum wage falls lower and lower. In 1975, a full-time, year-round worker paid at the minimum wage earned a salary at least equal to the poverty level for a family of three. In 1997, that same full-time worker’s wages were just 84 percent of the poverty level.

Unions. Unions, which historically have been successful at raising wages, have lost members and power in the last few decades. In 1953, 26.9 percent of the U.S. labor force belonged to a union; by 1998, only about one-half that many (13.9 percent) were unionized.

Racism. The lingering effects of our racist past and racial prejudice in the present play a role in the poverty of minorities. A racist history means that African-Americans inherit less wealth. Ongoing discrimination in housing, education, employment, and law enforcement limits their opportunities and lowers their earnings. One study suggested that if we simply reduced discrimination in the sale and rental of housing by 13 percent, we would narrow the gap between African-Americans and whites in earnings and education by 33 percent.

A quick review of the years from the mid-1960s to mid-1980s shows how broad structural factors reduce or increase poverty. After President Lyndon Johnson launched the War on Poverty in 1964, several important programs quickly followed: Food Stamp Act (1964), Economic Opportunity Act (1964), Medicare and Medicaid (1965). The economy was also booming. The result? The poverty rate fell from 19 percent (1964) to 11 percent (1973).

Then the huge jump in oil prices in 1973 and the severe recession of 1974 to 1975 halted economic growth. In 1981, President Ronald Reagan cut taxes, as well as social programs for the poor. The effective federal income tax rate for the poorest 20 percent increasedfrom 8.1 percent to 10.4 percent from 1980 to 1985, and it dropped from 29.7 percent to 24.4 percent for the richest 5 percent. Reagan also restricted welfare benefits. What happened? From 1979 to 1983, the child poverty rate climbed from 16.4 percent to 22.3 percent. Structural factors obviously play a large role in the existence and perpetuation of poverty.

Personal decisions and misguided behavioral patterns

While the structural causes of poverty are many and varied, they alone do not explain all poverty. In fact, structural causes are often intertwined with personal decisions and misguided behavioral patterns. A young unmarried teenager who is sexually active, gets pregnant, and then drops out of school is certainly making personal choices that will very likely condemn her to extended poverty. But how much was her action shaped by the fact her father had left her mother when he lost his job because the factory he worked in moved to Mexico, by the fact subtle racism helped create an inferior high school, and by the fact the best-paying job available to her boyfriend was selling drugs? Keep in mind this interconnectedness as we examine some of the personal decisions and behaviors that lead to poverty.

An increase in the number of single-parent families. Skyrocketing single parenthood is one of the major causes of growing poverty in the United States. Single-mom families are the poorest people in our nation. Children who grow up in single-parent families are 11 times more likely to experience persistent poverty than children who grow up in two-parent families.

Out-of-wedlock births are the most important contributing factor to the growth of single-parent families. In 1960, 85 percent of all teenagers who bore children were married; by 1995, only 25 percent were.

Why this escalation in out-of-wedlock births? Society’s abandonment of historic Judeo-Christian sexual moral standards — thanks in part to TV, popular music, and the movies — is one reason. Decreasing job opportunities and lower wages for low-skilled men — especially inner-city minorities — is another.

Other behavioral patterns. The decisions and behaviors that lead to single parenthood are not the only ones that contribute to the existence of poverty. Drug use and sexual abuse are also important factors. A small but significant number of families are poor because one or both parents use illegal drugs or abuse alcohol. There is also a high correlation between sexual abuse and teen pregnancy. One study found that 61 percent of all teenagers who were pregnant or parenting had suffered sexual abuse earlier in life. Abuse creates low self-esteem, which fosters excessive craving for male affection. Poverty also increases the likelihood of sexual abuse. Female-headed households are more likely to have transient boyfriends who in turn often feel powerless and hopeless and sometimes compensate by asserting power over girls in the family. Tragically, that abuse increases teen pregnancy, which increases the chances of poverty.

Wrong choices, not merely unjust structures, cause poverty.

Sudden Catastrophes

Sometimes disaster strikes fast. Every day accidents on the road or at work kill or disable the principal breadwinner in solid lower-middle-class families. Every day long-term illness hits a person who, along with tens of millions of other people in the United States, lacks health insurance. Too often, the result is poverty. In these and similar cases, the cause is neither broader structural change nor misguided personal choices. But the result can be devastating poverty.

Permanent disabilities

Finally, some people are poor simply because (often through no fault of their own) they have a condition that prevents them from working. This is true of the mentally and physically disabled. It is also true of the elderly who can no longer work but were not able to save enough money for retirement.

Distributions of Income and Wealth

Not only are 33 million people in the United States poor in the midst of enormous wealth, they are becoming poorer while the rich grow richer.

Growing inequality

Table 2 shows that in 1974, the bottom 20 percent of the population received only 5.7 percent of the total national income, while the top 20 percent enjoyed 40.6 percent. In the next 20-plus years, the inequality became worse. The bottom share dropped to 4.2 percent, while the top share expanded to 46.8 percent. In 1974, the richest fifth enjoyed seven times as much income as the poorest fifth. Twenty-two years later, the rich had 11 times as much.

What about the distribution of wealth? In 1997, the top 20 percent owned over 84 percent of all wealth. In fact, the top 1 percent had more wealth than all people in the bottom 90 percent. In 1965, ceos made approximately 44 times the salary of the average factory worker. Today it is 500 times. If factory workers had received pay raises comparable to those of their ceos between 1980 and 1995, they would have earned $90,000 a year by 1995, and the minimum-wage worker would have earned $39,000 a year. The United States has the greatest income inequality of all developed nations. What can be done?

For decades, liberals blamed poverty on unfair structures and proposed expanded government social programs. Conservatives blamed poverty on bad personal choices and wanted to cut government programs. And both tended to ignore the role of civil society, especially religious organizations.

Fortunately, much is changing. In the last few years, many leaders in government, the media, our top universities, and public policy think tanks have begun to discover the powerful way that religious organizations help overcome social problems.

The Role Of Religious Institutions

Studies show that church attendees are about twice (64 percent) as likely to volunteer time (and volunteer twice as much) as those who do not attend church. Recent studies by social scientists underline the positive social impact of religious faith. Harvard economist Richard B. Freeman discovered that the best predictor of whether young black inner-city males would escape the syndrome of drugs, crime, and prison was church attendance. Some preliminary data suggests that, sometimes at least, faith-based providers of social services are far more successful than secular programs. Teen Challenge’s Christ-centered drug rehabilitation program has an 86 percent success rate in graduates who entered the program because of drug and alcohol use — a rate that is far better than secular programs.

We need extensive, sophisticated evaluations of a wide variety of secular and religious social service programs to evaluate these claims. But if careful studies by social scientists confirm that faith-based programs are more successful, it will not surprise Christians. Christians know that persons are not just complex socioeconomic machines. They are also spiritual beings whose free decisions contribute to social problems. Therefore, dealing with whole persons rather than just the physical side of persons ought to produce better results. Especially in the case of persons caught in a destructive environment that makes misguided decisions about drugs, sex, school, and single parenthood extremely easy, coming to personal faith in Christ is important. Conversion and the work of the Holy Spirit produce a radical transformation of outward behavior. While secular agencies and government programs cannot bring about such transformation, evidence clearly indicates that Christ-centered programs — especially those with a substantial religious content in their activities — can and do.

That is why President Bush’s Faith-Based Initiative is so important. President Bush rightly says that there is a poverty of the wallet and a poverty of the soul. Government can do something about the first, but cannot touch the second. But Christian social programs like Teen Challenge correct the poverty of the soul.

The central importance of the President’s Faith-Based Initiative is that it (like the Charitable Choice legislation that then-Senator John Ashcroft inserted in the 1996 welfare legislation) seeks to demand a level playing field so religious social service programs are not discriminated against when they apply for government funds. The new proposals in the Faith-Based Initiative insist that government dare not discriminate against explicitly religious agencies. Such agencies may keep their religious symbols and hire staff that share their faith. No government funds dare be used for "sectarian worship, instruction, or proselytization," but the faith-based agency may raise private funds for such activities and include explicitly religious activities in their overall program.

Expanded faith-based Programs Are Not Enough

A greatly increased emphasis on the crucial role of faith-based programs must be at the heart of any successful program to combat poverty. It would, however, be utterly wrong to suppose that religious groups by themselves can conquer poverty. If religious congregations were to replace the federal government’s spending on just the four most basic programs for the poor, every one of the approximately 325,000 Christian, Jewish, and Muslim congregations in America would have to raise another $289,000 per year to assist the needy. And if these congregations also took over the federal government’s share of Medicaid, the figure would be $612,000 per congregation each year. That would be rather difficult since 50 percent of all U.S. congregations have less than 100 regular participants and their total median annual budget is a mere $50,000 to $60,000.

Without Social Security from the federal government, almost one out of two elderly Americans in 1997 would have lived in poverty. Thanks to Social Security, only about one in 10 elderly Americans was poor. Without government benefits, more than one-fifth of all Americans (21.6 percent) would have been poor in 1996. Government programs reduced the poverty level by almost 50 percent to 11.5 percent. Unless jobs paying a family wage are available for everyone willing to work, poverty will prevail no matter how much individuals are spiritually renewed.

We dare not allow politicians to use expanding faith-based programs to legitimize governmental abandonment of the poor. Furthermore, let no one suppose that if civil society and government get it right, then large private institutions like the media and business have no responsibilities. Civil society, business, the media, and government all have crucial roles to play if America is to dramatically reduce the scandal of widespread poverty in this land of abundance. We need a multisector strategy in which each group does what it does best.

Business

Unacceptable levels of injustice and agony, however, are a part of the way today’s market economy works in America. It is simply wrong that some people work full-time and still cannot escape poverty. It is immoral that over 43 million people lack health insurance. It is unacceptable that corporations treat labor as merely an economic input, undermine family life, and use advertising techniques that subtly, powerfully promote the lies that human fulfillment comes by means of more gadgets and joy comes through illicit sex. Business leaders can and must contribute to empowering the poor and renewing society.

Profits are essential, but elevating the maximization of profits above a concern for workers, the common good, and the environment is idolatry. Businesses have a moral responsibility to adopt policies that help make jobs available to everyone (especially the poor) and strengthen rather than undermine family life.

Businesses have numerous opportunities to empower the poorer segments of society. Programs for profit sharing and employee ownership, generous on-the-job training for low-skill workers, and corporate giving focused on the poor would all help. It would also help for corporate leadership to urge the federal government to abolish most of the $125 billion in corporate welfare that private business now receives and spend those savings on effective programs to empower the poor.

Unions

Strong unions also play an essential role in the fight against poverty. Biblical faith teaches what Lord Acton aptly summarized: In a fallen world, power tends to corrupt and absolute power tends to corrupt absolutely.

Large corporations wield enormous power. By comparison, individual employees are mere ants. Top business executives are no less — or more — sinful than the rest of us, but their enormous power offers vast opportunity to use it for selfish advantage unless other power counterbalances corporate power. Strong, honest, democratic unions can do that. Unions have often been effective tools, helping the poor to demand a living wage and minorities to find a place in economic life.

Media

TV, movies, and the Internet are often the primary moral teachers for our children, and, tragically, what they teach concerning consumerism, sex, and violence is abominable. What we need is clear: less sex and violence, and more positive stories about wholesome family life and successful social ministries that empower the poor.

Government

I have argued that everyone would benefit if nongovernmental institutions, especially faith-based organizations, played a substantially larger role in combating poverty. When a social problem emerges, the first question should not be, What can government do? The first question should be, What institutions in society have primary responsibility for and are best able to correct this problem? Many times there will be overlapping responsibilities. In those cases, it is crucial that the several institutions support each other’s respective roles. Frequently, nongovernmental institutions will be more effective at less cost. We must reject liberals’ automatic preference for government solutions.

Libertarianism ("the less government, the better"), however, is not the answer. Biblical principles, church history, and realistic contemporary analysis, however, all lead us to reject libertarian approaches.

In the Old Testament God commanded kings to do justice and righteousness. The Hebrew words include economic justice. Kings were to have a special concern to care for the poor and needy and restore productive assets to the impoverished. To be sure, the first responsibility lay not with the king but with the family. But there is not a shred of biblical support for those Christians who argue that individual believers and churches, but not government, should assist the poor. In fact, church history demonstrates that Christians over the centuries have supported the role of government in alleviating poverty.

There are some things that only the government can do. Society needs marriage laws that apply to everyone. Even though the primary responsibility for renewing marriage and the family rests with churches and synagogues, governments should rewrite divorce laws to make them more family friendly. Government should act as a last resort when other institutions do not or cannot care for the poor.

It is both morally right and in each person’s long-term self-interest for the government to tax us all so it can provide funding for effective programs that empower and care for the needy. In the biblical perspective, poverty is a family affair. Therefore, using tax dollars to care for our needy brothers and sisters and restore them to dignity and community is right. It is also wise. None of us knows when drastic, permanent illness may swoop down on us, wiping out our savings and exhausting private insurance policies. When government serves as the insurer of last resort, the risk for catastrophic events is shared by all citizens. Furthermore, effectively empowering the poor so they can become productive citizens (paying taxes instead of requiring public assistance or even police and prison) benefits everyone in society. Appropriately, therefore, everyone also contributes to make this happen. Dramatic reduction of poverty in America demands a crucial role for government.

What we need is a new holistic vision. If we are to dramatically reduce poverty in the richest nation in history, every institution in society must do what it does best. The churches must greatly expand their holistic social programs that combine evangelism and social change, thereby offering both spiritual and social transformation. At the same time, the media, business, unions, and government must all do their part. People need Jesus and a job.


Ronald J. Sider is founder and president of Evangelicals for Social Action and professor of theology and culture at Eastern Baptist Seminary, Wynnewood, Pennsylvania.

 

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