A Study of the 1.5 Million American Households With Practically No Income at All

And why they aren’t getting much in the way of government assistance

When Americans talk about the failings of the country’s economy, the focus is usually on inequality—the uneven distribution of prosperity among the population. Poverty, on its own terms, receives less attention.

That’s not the case in a necessary new book by Kathryn J. Edin and H. Luke Shaefer, $2.00 a Day: Living on Almost Nothing in America. In it, they report on the roughly 1.5 million households that are surviving on cash incomes of practically nothing and not much in the way of government assistance.

I spoke with Edin and Shaefer about poverty in America, how it’s gotten so deep, and how it is affecting the millions of people who live in it. The interview that follows has been edited and condensed for clarity.

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Rebecca J. Rosen: Let’s start with the idea that there are millions of people in America who are living at a level of poverty we normally associate with the developing world. I think many people don’t believe that that exists here.

Kathryn J. Edin: Well, you know, we didn’t either. We came upon this quite by accident, doing fieldwork here in Baltimore on another topic. I was looking at a group of young people who grew up in public housing and observing their transition to adulthood. But I kept coming across more and more people who were living on virtually no cash. And because I was studying a housing program, everybody had a housing subsidy, so—

Rosen: What year was this?

Edin: This was in 2010. And I was thinking, this is really different. What does it mean to live with no cash? Right? Even if you're getting a lot of income benefits.

Luke came to visit Harvard in the fall, where I was teaching, and I immediately remembered that he was the guy with the expertise on the very dataset that could answer the question of whether what I was seeing was widespread or just sort of an anomaly of the households I had happened to run into in Baltimore.

Sure enough, he had just the right algorithm already on his computer for another analysis. And within a few days, you know, not only did we learn that it was big— and I'll let Luke fill in his part of the story—that half the people who fit in the category didn't even get food stamps and only a very small portion had housing subsidies. It was actually far deeper than even we realized.

H. Luke Shaefer: We started with this definition of just asking, “What kind of cash income is coming in from the house?” This could be from earnings, or any gifts from family and friends, public programs that come in dollars, odd jobs, etc. We wanted to be as comprehensive as possible. Our baseline number [of families with cash incomes of less than $2.00 per person per day] goes from, in 1996 (about the time we're making a big change to our social safety net) about 636,000 families who fit that profile, and by 2011, it’s more than doubled to about 1.5 million families with three million children who are reporting cash incomes of less than $2.00 per person per day. Even when you account for some of these major programs like SNAP (Supplemental Nutrition Assistance Program)—which is what we call food stamps now—the Earned Income Tax Credit, public housing, you still get an increase of about something around 50 percent between 1996 and 2011 in the number of families below the threshold.

As we got into the work, what we really saw was that in a modern society you need some cash to get out of those circumstances; you need some cash to basically keep your family going day-to-day.

Edin: In the third world, often, the economies are barter economies, so cash is only one means of exchange. Whereas in the United States, it's very nearly the only way.

Rosen: What are some of the strategies you saw people deploying in order to get by without cash?

Shaefer: There's sort of a constant, perpetual state of crisis. And then, what we really see, is that people spend a significant amount of their time trying to—it's really work—trying to generate that small amount of cash.

[One woman we talked to] in Johnson City, Tennessee, donates plasma two times a week—as often as the law will allow, if her body can take it. That’s a pretty arduous process. She gets paid $30 for it every time she goes. You can see in a lot of the families that we got to know these little divots in the creases of their elbows, where they've given plasma so many times, there’s a little scar.

We saw some people who did have SNAP. A lot of them would feel compelled to sell a portion of their SNAP, which was felony. And they would also lose a lot of the benefit of that. So, if they sold $100 of their food stamps, they'd get $60 back. We saw some selling sex; this is really not prostitution as people would imagine it, but just sort of a trade of sex. Maybe it gets you to stay in the house you’re in for another night, or maybe it results in some money.

We really just a lot of different survival strategies that I think show a lot of innovation, if you will, in families doing what it takes to survive.

Edin: There's one man in Cleveland who really illustrates this ingenuity brilliantly. He has figured out a way to capture the rainwater, so that he can use it to flush the toilet in his house because he can't afford any of the water. He has an unpaid water bill and there's 24—

Shaefer: 20-plus people packed into the house, because the whole family is in trouble.

Edin: There was a family business that went bust. They also planted a garden based on spoiled foods and are reaping a bounty. The guy's totally fascinating. Right now, he's drilling a hole in his basement, so he'll have his own source of water. He's figured out a way to capture the water from the rinse load when his water is on. It's a very laborious process because you have to do it by hand, and he re-uses it for the next wash load, so he can cut his water bill down.

Often, the people engaging in these activities themselves feel that these activities are morally reprehensible—maybe especially selling food stamps—but you’ve got to buy the kid a pair of underwear and you’re not going to let them be ridiculed at school because they are wearing the same shirt day in, day out, and don’t look like the other kids. People are really making hard choices—parents are making really hard choices—and they're doing things that they themselves don't think is moral. But of course the ultimate morality is providing.

Rosen: A big part of the story in this book is what has happened to our nation’s safety net. What’s the shift you saw from the mid-’90s to today?

Edin: In the mid-’90s the large majority of poor families were getting something from the AFDC (Aid to Families With Dependent Children) system. Some were also working on the side—my first book detailed this. There was a group of people called the "working poor," but welfare really was a safety net for America's neediest families. It was a system that both helped a lot of people and was universally reviled.

When 1996 came along, Clinton’s advisors seized on the opportunity to suggest that the welfare system didn’t just need to be reformed, it really needed to be fundamentally replaced. And that’s what happened.The basic idea—to end welfare as you knew it—actually became a reality. In fact, it became far more of a reality than anyone thought. Now just over a quarter of poor families even get a penny from TANF. That’s a huge reduction.

What we’re seeing now is a system that’s a shadow of its former self. We argue in the book that it’s really dead. In fact, if you go out in communities, people say, “What's that?” In fact, when we asked one woman—her family’s about to get evicted, they have these two lovely little girls, they’ve really, really tried to find work, her husbad just got work as one of the dancing tax men for Liberty Tax, so he's got a temporary job, but they're three months behind on their rent, and there's no furniture in the apartment—and yet, when we asked her about TANF and why she doesn’t go on it, she says, “What's that?”

Another woman, in Chicago, who's living in a homeless shelter with her daughter, says, “They just aren't giving that out anymore. Haven’t you heard?” Welfare isn't only dead as a program, because of its rules and restrictions; it’s dead in the imaginations of the poor.

Some poor have really been helped by the changes in the ‘90s. These tax credits we've added to the bottom line of the working poor have been very meaningful and we really applaud that effort and really think of it as a huge triumph for social policy. But, what we hadn't seen is that all of these people were really falling through the cracks with no visible means of support.

Rosen: This seems to be so off-the-radar for many Americans. You wouldn't hear about it from the presidential candidates who are campaigning right now. Why is this so invisible and what are the consequences of that invisibility?

Shaefer: I think part of it is that when welfare reform happened in 1996, it was paired with these big tax-credit expansions, which were really good for the working poor, and it was paired with an incredible economy. I think the narrative really became that it was a success, and that sort of stuck, even though over the last decade, we’ve seen a lot of the evidence of the shortcomings.

It’s always been that people didn’t spend a lot of time thinking about poverty in this country. You see a lot more discussion about inequality, which is a different—it’s related, but it’s a somewhat different thing. And I think there are a lot of misconceptions about poverty. I mean, even we were really surprised to find that the families who we started to follow had this very significant attachment to the labor force. At the very, very bottom of society, people have worked recently—maybe not recently, but if you look back over a year, they have been working. We see that in the large-scale data too. I think that really doesn't fit with the perceptions that a lot of people have.

Edin: This is a really critical point. So in the SIPP (Survey of Income and Program Participation) data from the Census Bureau we find that 70 percent of households had an adult worker in the last year. And only 10 percent claimed even a penny from the TANF system. So what we’re seeing here is a group of people who have really drunk the Kool-Aid of welfare reform. The official name is Personal Responsibility and Work Opportunity Reconciliation Act and, man, they are about personal responsibility. They see themselves as workers. They’re fiercely proud of the fact that they’re not dependents. And this is part of why they don’t go down to the welfare office when, even though they really need to, because that would go against how they see themselves. Ironically, this is one big evidence of the success of welfare reform—it's really made mothers think about work in a fundamentally different way.

When I was studying welfare back in the early 1990s, there was a tradeoff between raising your kids and being a worker. Now, it’s as if you can’t be a good parent without being a good worker. This fierce commitment to work really revealed to us just how brutal the very tail-end of the labor market can be for so many working parents.