Here are two phrases that should be oxymorons, but aren’t: ‘working poor’ and ‘poverty-level jobs.’ Writer and anti-poverty advocate Hanna Brooks Olsen joins Nick and Goldy to explore how the intense burdens of poverty make it nearly impossible to even think about climbing the economic ladder.
Felicia Wong is the President and CEO of the Roosevelt Institute, a think tank that seeks to re-imagine the social and economic policies of Franklin and Eleanor Roosevelt for the 21st century.
Twitter: @FeliciaWongRI @rooseveltinst
Hanna Brooks Olsen is a writer and policy consultant. Her work has appeared in The Atlantic, the Nation, Salon, the New York Daily News, the Huffington Post, and Democracy.
Annie Fadely: Hi. I’m Annie Fadely. I am a senior policy associate at Civic Ventures. We’ve been doing this podcast for a while and we are thinking that you probably have questions about some of the topis that we’ve discussed. So we’re gonna put together an AMA episode, that stands for ask me anything, me as Nick. One where you can ask any economics-related question that we might have missed, and the questions can be super simple or super complex. We’re game for anything. Feel free to challenge us or [00:00:30] ask us something fun and we’ll just go where the questions take us. So the phone number is 731-388-9334. We’re super excited to hear what you’re all thinking about, and make sure you look out for that episode because you might be on it achieving pitchfork economics fame.
Speaker 2: What we’ve long understood though is that some communities have consistently had the odds stacked against them.
Nick Hanauer: That already low poverty line, the vast majority of the people who fall below that are [00:01:00] working poor.
Felicia Wong: Over half the jobs created by the economy since the 2008 financial crisis were poverty-level jobs.
Speaker 2: So I hope this conversation continues. Not as a question of whether, but of how we can work together to grow opportunity.
Hanna Brooks O.: Hugely what I have seem among people is a feeling of a loss of control over their future, over what they can do.
Nick Hanauer: Loss of agency and power.
Hanna Brooks O.: Yeah, you’re just at the mercy of whatever rich dudes do next.
Felicia Wong: Poverty isn’t like a scratch or a bruise. We’re talking about a really cancerous [00:01:30] tumor, and band-aids are really not the solution to the problem.
Speaker 2: We all want our country to be one where hard work pays off and responsibility is rewarded. We want a place where you can make it if you try.
Speaker 7: From the offices of Civic Ventures in downtown Seattle this is Pitchfork Economics with Nick Hanauer, a pointed conversation about who gets what and why with one [00:02:00] of America’s most provocative capitalists.
Hanna Brooks O.: My name is Hanna Brooks Olsen. I am a writer. I am an award-winning journalist, which I always like to lead with. I am an anti-poverty advocate. I am a former poor person and I am a college graduate, first in my family.
David Goldstein: I’m David Goldstein, Senior Fellow at Civic Ventures.
Nick Hanauer: I’m Nick Hanauer, Founder of Civic Ventures.
Hanna Brooks O.: So you guys asked me to come in today.
David Goldstein: [00:02:30] Oh, absolutely.
Hanna Brooks O.: You rolled out the red carpet.
David Goldstein: We rolled out the red carpet Hanna partially because we miss you, and partially because this is an episode on poverty and why it’s so hard to get out of poverty. Nick and I know a lot about the numbers but we are the spoiled, privileged, white men who actually never experienced poverty ourselves. Whereas, you have a little more experience in the empirical real-world [00:03:00] reality of it.
Hanna Brooks O.: Yeah. I am a one-time ragamuffin.
Nick Hanauer: You are a genuine ex-poor-person.
Hanna Brooks O.: I am. I’m a Horatio Alger story sitting right in front of you.
David Goldstein: The exception that proves the rule.
Hanna Brooks O.: I think I’m actually the exception that proves that you can get exceptionally lucky over and over and over again, and that even people who live in some degree of poverty can also be extremely privileged. ‘Cause that’s the other thing, I’m still white, I grew up with parents who valued education [00:03:30] hugely even though they didn’t necessarily have it.
Nick Hanauer: Yeah. You were already a thousand times ahead.
Hanna Brooks O.: Yeah. But I also live in a family where both of my siblings, who are also extremely, extremely smart, both don’t have college degrees. They have very sort of, my sister especially is a total, more of an American dream than I am. She’s a small business owner, with no degree, and she’s amazing at it. But she’s also someone who got lucky in a lot of ways.
David Goldstein: Well that’s a great starting point because I want to make a distinction here between the empirical reality [00:04:00] of poverty, which we’ll talk a lot about on this episode, and the theoretical and narrative devices that we use to explain or explain away poverty as the case might be. I just want to focus for a moment on the theoretical side and the, what we consider to be the relentless logic of the market and the way that it compounds advantages and disadvantages over time. We mean that quite [00:04:30] literally. Nick, I mean throughout this series, we have made this distinction between the neoclassical orthodox economic model of the economy as a closed equilibrium system and the emerging science that models the economy as a complex adaptive and evolutionary system.
This is really important because in an evolutionary system we are literally talking [00:05:00] about a process of differentiation, selection, and amplification. Just like in an ecosystem where you’re evolving new creatures, we have a market economy that will amplify very small differences, little differences in adaptation, and you can have very small differences and starting point, or even just tiny, seemingly insignificant random events and that can result in very large [00:05:30] outcomes that seem outsize compared to where you started.
Hanna Brooks O.: I mean, I think one really good example is the last, say the last 10 years. I graduated from college in 2009, which was a great year to graduate from college if anyone recalls 2009. Now I’m in my 30’s here in Seattle, Washington, one of the most expensive housing markets. So it feels like both my starting point as I kind of entered into adulthood and then now when I should [00:06:00] be really tying it up, I’m waiting for the bubble to burst before I can do anything. Not because I made necessarily bad choices, literally just because of how old I am and the year I was born in, the year things happened.
David Goldstein: Right, and by comparison I graduated, I’m old so I graduated college in 1985 with a degree in history at a time when the economy was really strong and companies said, “Hey, you’re a smart kid who graduated from a good [00:06:30] school and you’re trained to do absolutely nothing? Come over here! We’re going to pay you a decent, white-collar wage.”
Hanna Brooks O.: Heres a bunch of money.
David Goldstein: “And we’re going to teach you how to do the job,” and as a result I own a house in this amazingly expensive housing market that I bought 20-some years ago.
Hanna Brooks O.: In an up-and-coming neighborhood.
David Goldstein: In an up-and-coming neighborhood. I feel a little bitter about the generation before me, when they got those houses for a quarter of the price that I paid.
Hanna Brooks O.: Oh my gosh.
David Goldstein: But [00:07:00] my God, you kids.
Hanna Brooks O.: Yeah. So the question that we’re talking about is, why is getting out of poverty so hard? A big part of it is you can’t predict any of this. You can’t plan around this. There is no decision-making process you can make to change, first of all where you’re born, again, which benefits you have right at the beginning, and then also what kind of economic climate you graduate into. I mean, the cost of college has increased by like 200% since I graduated, and I’m still crushed by student debt a decade after graduation.
Speaker 8: College graduates are carrying more student loan debt than ever before. [00:07:30] In total 44 million Americans owe nearly $1.5 trillion, and on average a 2016 graduate is on the hook for about $37,000 upon receiving that diploma.
Hanna Brooks O.: I don’t even know how this generation-
David Goldstein: So do you have student debt?
Hanna Brooks O.: I do.
David Goldstein: How much?
Hanna Brooks O.: I have now, I think I’m down to like $11,000. Which, I graduated from college with some amount that now seems relatively small in comparison to other people. I want to say I graduated with something like $70,000 in debt.
Nick Hanauer: $70,000.
Hanna Brooks O.: And it seems small, [00:08:00] and all I have is undergrad.
Nick Hanauer: Holy crap.
Hanna Brooks O.: And I worked the whole time. I paid for my summer classes in cash with money I made as a waitress. I was constantly working.
Nick Hanauer: Hanna, remind me where you went to college.
Hanna Brooks O.: Western Washington University. I went to a state school.
Nick Hanauer: And you still racked up $70,000?
Hanna Brooks O.: No one in my family knew that school out of state was more expensive, so I went to the school that had a teaching college which is what I was going to do originally. Yep. I mean, I paid as little as possible. It was as absolutely little as I could. [00:08:30] My degree is twice as expensive because I couldn’t pay for it up front, which is another way that we keep people poor.
David Goldstein: But if we let you off the hook and forgave your loan, think about the moral hazard. You might go to college a whole second time.
Hanna Brooks O.: I might get a master’s degree.
David Goldstein: And actually-
Hanna Brooks O.: Learn something?
David Goldstein: … become a teacher, which is so low-paying that you still couldn’t afford to buy a house.
Hanna Brooks O.: I mean, that’s the thing when you talk about, what is the answer? Is it education? One thing I would say is, it’s not education as long as people can’t [00:09:00] afford it. I mean, I told my partner one time that if our house was on fire I would save the dog in one arm and my degree in the other, ’cause it’s the two things that I love the most in the world ’cause I’m so proud that I finished school. But God, it is so expensive. So I think when we talk about getting out of poverty it’s really difficult, because there’s, again, just so many different forces every step of that way. There’s some other way that it’s whittled away. If it’s not healthcare costs it’s childcare. [00:09:30] Of if you’re, people in my generation are starting to get, and Goldy’s I guess too, being the sandwich generation, right? I guess we all kind of are in this, where you have kids and parents, both of which you’re caring for. So that can knock you down a bunch of different ways.
And there’s little stuff. So my parents live in rural Oregon, or they live outside of Eugene. So after college I could not move back home with them because if I did, I would not be able to work. What am I going to do living out there? So I moved to Seattle because I got an internship. [00:10:00] Again, a time I was very lucky. Someone gave me an unpaid internship in 2009, so also I was a cocktail waitress and also I was a barista, and also I took on a lot of odd jobs that year. But during that year when I was working bananas hard just trying to pay rent, stay afloat, my friends who had parents who lived in Seattle, who were from Seattle, had a huge advantage just ’cause they had somewhere to crash for free. I did not have that. Or, they had parents who helped them out with rent.
I earn more than my parents [00:10:30] ever have now, and I’m a freelancer so bracket your expectations. I pay my own health insurance and I’m just throwing money, heaping money at my student loans, and I’m still doing great by my account because we can go to dinner and it’s fine and I’m able to save money. But that’s ’cause we’re lucky, it’s not because of any decisions we made. So when we talk about who is poor there’s so much moralizing that goes into it, when I think we really need to be thinking a lot about luck, circumstance, and who’s born on third.
Nick Hanauer: [00:11:00] And that’s the biggest aspect of luck, is how you’re born. Whether you’re born poor, born middle-class, born wealthy.
Hanna Brooks O.: Born white.
Nick Hanauer: Born white.
Hanna Brooks O.: Or born in a place where there’s jobs once you get out of high school.
David Goldstein: Right, which was different back in the 1960s when you could be born into a small town in the Midwest and graduate high school and get a union job at the local factory where you were guaranteed a middle-class wage.
Hanna Brooks O.: And [00:11:30] a pension.
David Goldstein: Right, and vacation and benefits and so forth.
Hanna Brooks O.: You know who knows a lot about this stuff? Our friend Felicia Wong from the Roosevelt Institute. So we thought we’d touch base with her about some of the metadata on poverty, what we can do, and also whether or not we’re even talking about this right.
Felicia Wong: Hi, this is Felicia.
Nick Hanauer: Felicia, are you there?
Felicia Wong: Hello Nick.
Nick Hanauer: How are you?
Felicia Wong: I’m great, [00:12:00] how are you?
Nick Hanauer: Good.
Felicia Wong: Hi, I’m Felicia Wong, and I’m President and CEO of the Roosevelt Institute.
Hanna Brooks O.: So we have some questions. Today we’re talking about the economy, as we always do, but specifically how the economy is sort of rigged toward inequality and also sort of keeping people there. So can you talk to us a little bit about the past four or five decades and how we got here, and what some of those decisions were?
Felicia Wong: Well I think part of the problem is [00:12:30] that for many decades, at least since the 1980s, we have thought about people in poverty as needing certain kinds of programs, food stamp programs, other kinds of TANF programs. Look, these kinds of programs in the poverty alleviation frame generally is really important, but in a way these are kind of like band-aids. These are not the right policies because they are not really cures. [00:13:00] One of the other problems is that poverty isn’t like a scratch or a bruise. We’re talking about a really cancerous tumor, and band-aids are really not the solution to the problem. So I think it’s important to look at much deeper ways in which the structure of our economy is actually driving poverty.
Nick Hanauer: Right. So Felicia, what I often say is that people are poor because they’re not [00:13:30] paid enough money.
Felicia Wong: Right. Right.
Nick Hanauer: Which seems really obvious.
Hanna Brooks O.: It’s so simple.
Nick Hanauer: Yeah, it’s really super simple. In a capitalist economy, you’re not poor because you don’t get food stamps. You’re not poor because you didn’t get rent assistance. You’re poor because you didn’t get paid enough money, almost certainly by your employer. To be clear, there are some people who don’t have jobs.
Hanna Brooks O.: Sure.
Nick Hanauer: There are people who definitely in our society, and to be fair in every society, actually [00:14:00] cant take care of themselves and may not have the capacity to have a job. But that’s a relatively small proportion of the people in our country who are struggling. The vast majority of people who are struggling actually do have jobs and are still poor.
Hanna Brooks O.: So how did we get there?
Felicia Wong: Well I think, one of the ways I like to think about this is the way Martin Luther King thought about it. His Poor People’s Campaign from the mid-1960s really talked about, yes, he definitely talked about [00:14:30] the number one thing was a meaningful job at a living wage for every employable citizen. And he talked about access to land and he talked about access to capital, and he talked about the right to organize. So all of these things together are the things that actually our economy doesn’t do well at providing for most people, and that is why people are poor. Some people have little or no capital, they have no hope of getting it in a capitalist economy, as you often say Nick, as you just said.
Some people live [00:15:00] in places where work has totally disappeared. Where there is no hope of work. They remain, even in an economy that looks very bubbly, like our economy today, there remain neighborhoods where black men are still at 40% unemployment, black men of working age. Some people who have jobs, they can’t organize for better wages. Some people have no access to housing and no hope of getting housing. So these are all very big problems and [00:15:30] again, not to denigrate food stamps, food stamps are very important for many people, but that kind of approach is not what’s going to get us out of poverty.
So that’s the long way of saying it. The short way of saying it is, we don’t have the right policies, probably ’cause we don’t have the right analysis of what’s wrong. I think lots of people currently think about markets as being these things that just operate perfectly by themselves, and that if a market is operating properly and government gets out of the way then the supply curve and the demand curve are going to cross and that people will be paid [00:16:00] what they’re worth, and that all people will be able to live a decent life.
But actually, that is not the way markets work. Markets are structured to work for some people and not for other people. So we talk a lot at Roosevelt about the rules that we need to structure markets so they actually do work properly. One of the things that we see now, just by way of example, is that the increase in corporate power, for example, in our economy means that we [00:16:30] have companies that are making tremendous numbers of profits, as you have said Nick. But those profits are actually going right back to the executives who take those profits out of the company in the form of stock buyback and they’re not actually being transmitted back to workers in the form of wages.
So that gets right back to where you started this conversation Nick, people are poor because they are not being paid enough money. So what we need to then focus on are the rules that either allow people to do that or don’t allow [00:17:00] people to do that. The rules that would require paying a living wage or not.
Hanna Brooks O.: So I have a question then, and this is sort of a big question, but how do you get then from, “The market will fix itself,” to, “We have to step in or sort of ensure that this playing field is leveled,”?
Felicia Wong: Well this is an answer you would expect from somebody like me, ’cause I run a think tank, but you have to look at the data. [00:17:30] Here’s one interesting statistic. All reduction in poverty has occurred through government action. It’s government that reduces poverty rates. So 50 years ago, 1967, the poverty rate was 27% without tax credits and benefits. Today that number is 16% if you include tax credit and benefits, and all of that is through government programs. This is based on some [00:18:00] work that Jason Furman recently did.
So you really have to look at the role that a number of government programs play in reducing poverty, and yet still we have the kind of poverty rates that we were lamenting at the top of the hour. We didn’t say this, but at some point over half of all Americans will live in poverty. My point is, the way for us to get out of poverty is through government action. Some of that is through direct tax and transfers and a lot [00:18:30] of it, as we try to argue at Roosevelt, is actually through restructuring rules so you don’t have things like stock buybacks and instead you have things like higher wages.
Nick Hanauer: Yeah. Absolutely. But Felicia, don’t you think that the country’s economy is at the point now where in many ways … I don’t know how to say this. I don’t mean to say that poverty isn’t a problem, but it’s almost becoming a second-order problem as most [00:19:00] people in the middle class become poor, right?
Felicia Wong: Yes.
Nick Hanauer: Our language doesn’t capture this very well ’cause we only have one word for poverty, poor.
Hanna Brooks O.: Well and most people think of themselves as middle class, right?
Felicia Wong: Right, right.
Hanna Brooks O.: Even people who earn well below the poverty line still consider themselves to be middle class.
Felicia Wong: Right. But frankly, we don’t like about it that way at Roosevelt really for exactly the reason that you suggested Nick. That because [00:19:30] it’s really not about a small fraction of poor people, it is really about the disenfranchisement and the lack of power and agency of the vast majority of Americans. Frankly, I think it’s one of the reasons that Occupy took off in 2011 was because the tagline, We Are the 99%, that really resonated. That mathematically, it is true that the 1% were pulling away from the 99%. But it also is true that even people at the [00:20:00] 70th percentile, even people at the 80th percentile felt very insecure. They had too much debt. They didn’t know how they were going to apy their kids’ school fees. They weren’t sure about whether or not they’d be able to afford a vacation or a restaurant meal, or any of the things that we think about as sort of the markers of a modest middle-class life.
So I think that one of the reasons that at least for a while we were talking about this as inequality [00:20:30] was to try to capture … And I’m not sure that inequality, by the way, is the right political frame either because it feels very mathematical. The economists love it, but inequality still doesn’t feel very human, and I think what we need is an economy that works for people. And, by the way, a capitalism that works for more people, that’s what we really ought to be focused on. But at any rate, the poverty frame which comes from the 1960s and 1970s feels like it was an artifact of a time when [00:21:00] most people were not in fact poor and there was more equality of opportunity, and people could expect that their kids would do at least as well and probably better than they would and have an economically secure life.
Poverty was about alleviating the pain. That’s when programs, whether it’s Head Start or food stamps or whatever, they started in a period where we weren’t looking at our whole economy, we were looking at people who for some reason, often because of race or gender by the way, but for some reason were not [00:21:30] able to fully partake in the market economy. The situation now is totally different,. So the poverty frame right now kind of feels like, yes alleviating poverty is really important, but actually fixing the way our whole economy works, that’s what’s most important.
Hanna Brooks O.: I think one of the things I’ve found in writing and reporting is, when you really sort of loop people in and place them on the spectrum and sort of show how their experience puts them not as much maybe in the comfortable middle class as they would think, or when you sort of show them the numbers or [00:22:00] you sort of loop them in, then everybody sort of feels a little bit poor a lot of the time. So I think there’s sort of a pro and con there. But I think poverty alleviation, like you said at the very top, I think it lets a lot of the systems off the hook that create poverty and that create that precarious middle class.
Felicia Wong: Right. Right, exactly.
Hanna Brooks O.: If you’re only focused on food stamps you’re not focused on the prison industrial complex. You’re not focused on out of control medical bills. You’re not focused on all of these other huge systems [00:22:30] that keep people not just poor, but keep them out of that upper middle-class American dream echelon.
Felicia Wong: I think that’s exactly right.
Nick Hanauer: But I think one of the most pernicious ideas that actually a lot of people on our side, lots of progressives, have come to believe, certainly neoliberals, is that people are poor, people aren’t paid enough because they’re not well-educated enough. This is a super pernicious idea. That is just objectively false.
Felicia Wong: Right. That is not true at all.
Nick Hanauer: That is not [00:23:00] true, but it’s this trap that you can get into, which is to come to believe that the people at Walmart who are paid seven or eight bucks an hour are paid that because that’s what they’re worth, because that’s all their educational attainment allows them to deserve.
Hanna Brooks O.: Well, ’cause they didn’t bother to try, right?
Nick Hanauer: Whatever. Whatever. And it’s a tricky area because on the one hand, yeah more education is always better and on the other hand, no that’s not why people are poor and it’s [00:23:30] not why people are poorly paid. So if Felicia Wong was in charge of everything, what would the top three things be that she would do to fix this mess? Sorry to put you on the spot there.
Felicia Wong: Oh my gosh. Well, I’d do a couple things. I would definitely think about ways to kind of right-size and/or right-incentivize large companies and kind of, I would go [00:24:00] in the direction of Elizabeth Warren’s new kind of accountable capitalism bill, which talks about all kinds of ways in which very large companies need to actually be good corporate citizens. So that’s one thing I would do. I think the second thing I would do is to really make sure that kids of all races have enough capital, enough potential to have some kind of wealth. So whether it’s a kind of baby bonds or, something so at the very beginning of your life you start out with at least some fighting chance for [00:24:30] opportunity.
And then the third thing I would do … Well, can I have four?
Nick Hanauer: Yeah, you can have four. We’re going to make a special exception for you.
Felicia Wong: Okay. The third thing I would do is to, this is actually the hardest thing, I would absolutely desegregate our schools and our neighborhoods. I mean you said I could run the world, right?
Nick Hanauer: Yeah, you can. Yeah, you can just impose your will on the world.
Felicia Wong: I think that the idea that we are so divided geographically by race and as [00:25:00] a corollary by income and/or wealth is absolutely pernicious. So I would desegregate. The last thing I would do is make sure that we have a democratic institution. Small D not big D, actually have a functioning democracy, because I believe that only when people continue to have input and agency and voice in making all these decisions, only then would a system that you set up reasonably well from the beginning be able to have any fighting chance of self-sustaining. So those are the four things I would do.
Nick Hanauer: I think that’s really awesome.
Hanna Brooks O.: [00:25:30] Those are very close to the four I wrote down. I wrote, overturn Citizen’s United and strengthen the Voting Rights Act as one, so I think we’re on the same page there Felicia.
Felicia Wong: Same thing. Same thing. You got the legislation, I’ve got the principles, but it’s all the same. Yeah.
Nick Hanauer: All right. Well Felicia, thank you so much for spending a few minutes with us chit-chatting about this stuff. It’s great to talk to you.
Felicia Wong: Great to talk to you. Thanks so much to both of you.
Nick Hanauer: So as Felicia pointed out, [00:26:00] most of the gains in reducing poverty over the past 50 years has come from federal programs, from transfers and subsidies. But even after that, we still have 16% of Americans living in poverty, which of course is a disgrace in the wealthiest country on Earth with an unemployment rate of only 14%. But that 16% number, even that still understates the problem. [00:26:30] Today, one third of Americans are housing-cost burdened in that they pay over 30% of their income in rent. Nearly half of families say they have no retirement savings at all and 78% of Americans report that they are living paycheck to paycheck, with 44% saying that they couldn’t even cover a $400 emergency expense. Clearly it’s not just the very poor who are struggling, so [00:27:00] are the bulk of the American middle class. And of course, all of these numbers are much, much worse for people of color and for children.
David Goldstein: So that broadly is the problem. The solution, I think we all agree, is to raise wages. And again, getting back to Felicia’s point, that’s going to require the government. But the broader point is, this is about much more than addressing the needs of the very poor. [00:27:30] Most of the poor are working poor, and that means the working middle class.
So maybe we should try to define poverty, which isn’t as simple as it first seems. So there’s actually two kinds of poverty. There’s absolute poverty and relative poverty. Absolute poverty, a lot of people have a good idea of what that is. It’s actually being below subsistence. Not having enough food, not having shelter, not [00:28:00] being able to keep warm in the winter, et cetera. The basic subsistence elements of life. Then there’s what we can call relative poverty, and you often hear this critique from the right that, “Oh, Americans aren’t poor. These are the richest poor people in history.”
Hanna Brooks O.: Well yeah, they have phones and running water.
David Goldstein: Air conditioning, right.
Hanna Brooks O.: Spoiled. Back in my day, poor people slept on the ground.
David Goldstein: You know what? I’m my day, some poor people [00:28:30] still do sleep on the ground. A lot more than they used to. So we’re failing on both counts. We’re failing on, as you can see the explosion of homelessness throughout the country, in Seattle, really everywhere.
Speaker 9: The homeless population in the United States is on the rise for the first time since the Great Recession.
David Goldstein: And then there’s also relative poverty which speaks to the growing inequality in this nation. It is not a fictional [00:29:00] thing to say that growing inequality, even if that you have that subsistence level, you’re not poor because you have a TV set and a cell phone. Because in the modern technological economy we have today Nick, you actually need things like cell phones and internet and so forth just to participate in this economy.
Nick Hanauer: Right.
Hanna Brooks O.: Yeah, can you imagine applying for a job without the internet? But yeah, to your point Goldy, so the federal poverty line, to define it, is $ [00:29:30] 24,600 for a family of four. Which, first of all is bonkers low. But not only that, that means that a family earning $25,000 with a family of four is not considered poor. So when we talk about “who is poor” there’s a very distinct category of people, something like 16% of Americans which is still like 40 million Americans or something like that, who are considered “poor” based on their earning. But I would argue that a [00:30:00] family of four earning $30,000 a year is still poor. You’re pretty poor.
Nick Hanauer: Yes, for sure.
David Goldstein: And this is not just an arbitrary line because the poverty line determines what benefits you qualify for.
Hanna Brooks O.: Yeah. If you go a dollar above, and it depends, it goes state by state and it also goes by how many dependents you have and all those kind of things. But there’s a lot of people who are really struggling to pay for their groceries, to put gas in their car and all that kind of thing, but who also are not considered ” [00:30:30] poor enough” for these benefits.
Nick Hanauer: Yeah. And part of the goofiness of this number is that while a family who earns $25,000 or $30,000 a year in a tiny rural town where housing costs approach zero, they’re not rolling in dough but surely they can at least house and feed themselves. But a family of four earning $24,600 [00:31:00] a year in a city in the United States of America, certainly a city like Seattle or Portland or San Francisco or LA, they are way poor because you can’t even get a one-bedroom apartment in a place like Seattle for $2,000 a month.
Hanna Brooks O.: No, no. I was just looking at the National Low Income Housing, at the Out of Reach data that they do every year, I was just looking at this today. You have to earn something like $27 an hour to earn a one-bedroom in Seattle, which is almost [00:31:30] twice $15 minimum wage, which is then a hell of a lot more than $25,000 a year.
Nick Hanauer: Yeah, for a family of four.
Hanna Brooks O.: For a family of four. But if you’re earning, again $30,000 in Seattle, you’re pretty damn poor and you still are not necessarily eligible for a lot of different kinds of benefits. One of the things that people who have not been poor, not recently been poor, people sort of, part of the methodologizing they do is that people stay poor so that they can get all those sweet, sweet benefits. [00:32:00] So they can get that free ORCA card, oh it’s so good, not realizing how low you have to be to get that stuff. It’s not like you have a dope life and also you get a free ORCA card. It’s you have a very difficult life and congrats, maybe you get a free ORCA card. You can now go to your third job.
Nick Hanauer: Yeah, remind us what an ORCA card is.
Hanna Brooks O.: Oh, sorry, that’s the bus pass we have here in Seattle. So in King County we have the bus pass and if you’re a senior or you’re poor or you’re a teenager you can get a reduced pass.
Nick Hanauer: Yeah, below that poverty line, you get a-
Hanna Brooks O.: It’s our version of a Metro [00:32:30] card, New York, okay?
Nick Hanauer: Right.
Hanna Brooks O.: Now they understand.
Nick Hanauer: And to be clear, that already low poverty line, the vast majority of the people who fall below that are working poor. These are not just people, welfare queens or kings, or I don’t know what the non-gendered equivalent of that is.
Hanna Brooks O.: There isn’t one. We only talk about women in that way. Don’t worry about it.
David Goldstein: Don’t worry your pretty head about it.
Hanna Brooks O.: Welfare Steves is what I’ll be calling it.
David Goldstein: Right. These are mostly working [00:33:00] poor, and that means they are poor not because they don’t have jobs but … Nick you know this line.
Nick Hanauer: Because they’re not paid enough.
Hanna Brooks O.: Yeah. I mean I think this is something we’ve come back to a million times, is that if you work full time you should be able to live, period. You should be able to live, you should be able to rent a place. The idea that not only our wages, the bottom, the floor of wage is not in any way tied to cost of living is already difficult. [00:33:30] But we have become so skewed in what we think of as what people should earn. We all were around for the Fight For 15 where people were like, “Fifteen dollars an hour, that’s so much money.” 40 hours a week, $15 an hour, is not enough money to rent an apartment in Seattle. Thus, it’s not that much money.
So I mean, we pulled up some numbers earlier and it was of the working-age individuals, the people who were poor but [00:34:00] didn’t work, it was because almost 20% were disabled, 10% were in school, a lot of them were taking care of somebody else. Only something like 5% were not working and poor. That was the intersect. It’s very few. Most people have a job at some point. They either do seasonal labor, for example one of the biggest seasonal employers is the stadiums, so people will work seasonally with the stadiums. People do holiday, they do fulfillment for Amazon. They do any number of things.
Nick Hanauer: One of the really [00:34:30] interesting things about the federal poverty numbers are that the country, as far as I know, has always had one number which describes the poverty level. That number made a ton more sense during a time when the difference between living in a rural place versus a city was smaller. Clearly we live in a time, particularly right now in our nation’s [00:35:00] history, where the difference between living in rural Oklahoma and housing yourself and living in urban Seattle, or Chicago or New York, and housing yourself is just exponentially different. So as you consider that number and think about the number of people who are officially poor and then you connect that with data like nearly half of American households [00:35:30] are one emergency away from either homelessness or poverty, it begins to give you a sense for how the official number really doesn’t tell the story. Because if half the country is one emergency away from economic crisis-
Hanna Brooks O.: And 16% is poor, there’s a lot of people.
Nick Hanauer: Yeah, who effectively are poor but we don’t call them poor because we’ve just, as a matter of policy, [00:36:00] identified a number and just sort of put it out there as the number. I think that our work on inequality and just talking to people exposes how inaccurate that number is and how incomplete a way it is to understand the dimensions of the problem. We live in a society and an economy where while the official rate of poverty may be 16% and the official cutoff for being poor [00:36:30] is $24,600 for a family of four, that really doesn’t tell the story of what’s going on in the country. That in fact, a huge proportion of our fellow Americans are either poor or an inch away from becoming poor. The problem isn’t that a few people don’t have jobs and are poor, the problem is that most of us do have jobs and are still poor because we’re not paid enough money.
I think that inequality [00:37:00] may not be exactly the right frame within which to litigate these issues, but poverty for sure isn’t. The country doesn’t mostly have a poverty problem. It mostly has a wages problem.
David Goldstein: So what you’re talking about is adopting a much more ambitious frame. Not a poverty frame, it’s not about, people talk about how everybody should have a living wage. We need to move from this idea of a living wage, which is a subsistence idea, to a middle-class wage. [00:37:30] In the richest country on Earth, our ambition is for everybody who has a job to be able to afford a decent, dignified, middle-class lifestyle.
Hanna Brooks O.: And I think defining what middle class looks like and what people can expect as a middle-class person. I think people don’t even know what is acceptable and appropriate for them to expect anymore from a life that is considered to be middle-class, and I think one of the only ways that we can do anything about it is also just, show how much bigger it is [00:38:00] than food stamps. One of the things that Felicia mentioned is in addition to raising wages generally, we also have to give people a better voice in our democracy and make voting more accessible, and make people feel more connected to their local lawmakers, and generally be sort of involved citizens to feel like they have some control over this. ‘Cause I think hugely what I have seen among people is a feeling of a loss of control, over their future, over what they can do.
Nick Hanauer: Loss of agency [00:38:30] and power.
Hanna Brooks O.: Yeah, you’re just at the mercy of whatever rich dudes do next.
David Goldstein: And you can’t ever really be middle class if you live in constant fear of falling out of the middle class, or of your children not being able to stay in the middle class.
Hanna Brooks O.: I mean, I think true middle-class life means not having to think about this shit all the time.
David Goldstein: Correct. Correct. That’s it.
Hanna Brooks O.: I really think that’s the goal, if you can just buy groceries and not think about it, you’re middle-class.
Nick Hanauer: I think you’ve nailed it Hanna.
Hanna Brooks O.: Had a lot of time to think about this stuff.
Nick Hanauer: Thanks Hanna for coming back [00:39:00] to the office for a day and giving us a little well-needed perspective.
Hanna Brooks O.: It was great.
Nick Hanauer: On the next episode of Pitchfork Economics we’re going to take a look at pay equity, why women still only make 80% of what men do and what we might do about it. And if you have any questions, comments, or suggestions for future episodes or guests please send them to us at pitch@ [00:39:30] pitchforkeconomics.com and we’ll try to address it in an upcoming episode.
Annie Fadely: Pitchfork Economics is produced by Civic Ventures. The magic happens in Seattle in partnership with Larj Media, that’s L-A-R-J Media, and The Young Turks Network. Find us on Twitter and Facebook at CivicAction and follow our writing on medium @civicskunkworks, and you should also follow Nick Hanauer on Twitter @nickhanauer.
As [00:40:00] always, a big thank you to our guests and thank you to our team at Civic Ventures, Nick Hanauer, Zach Silk, Jasmin Weaver, Jessyn Farrell, Stephanie Ervin, David Goldstein, Paul Constant, Nick Cassella, and Annie Fadely. Thanks for listening.