College Student Poverty: A Reflection Of a Bigger Problem

Young College Grads (© Futcher)

College student poverty is just a tiny piece of the problem with the new US economy. We need to stop dwelling on a supposed economic boom and start to look at sub-categories of the economy to get a real story.

Erin Crook was in poverty during her college years. Her description of her life should be a lesson in how to treat poor people.

Read Erin Crook‘s answer to What is it like to be a broke student at Stanford? on Quora

My reply to this post is as follows:

I truly understand her situation. I see the judgments of others when they see poverty-stricken people. This country hates poverty so much that they hate the poor but not the economy that causes poverty.

I figured out from government statistics that if we had taxed the top 1% income-receivers only 1% more, INSTEAD of giving them a HUGE tax-cut, we could give that money to all those living under the official poverty level, wiping out poverty. At the time I worked this out (Dec 2017), the top 1% paid 1% less tax than the next lower income level.

Several studies show that giving that kind of money to the poor will pull families out of poverty well enough to end generational poverty in most people. Most families taking part in these studies, showed enormous success in getting out of and staying out of poverty. They managed to build their own income portfolio to well beyond poverty level wages, through education, budgeting, and a feeling of security. It is tax money well spent.

We give welfare to poor people and hold them accountable in two ways: They must pass a means test to become eligible for the benefit, and impose rules for how they spend that money. The process of obtaining any kind of welfare benefit involves filling out many forms, and getting interviewed.  However, there are often sudden changes in decisions by the government, calling for renewal requests out of the blue (often two or three times within the space of 2 months).

Probably the worst government behavior is taking away some of any benefit when the person gets a “cost-of-living allowance” (COLA) in Social Security retirement income or any other government entitlement. People getting any entitlement, e.g. Social Security retirement, will have their disability, TANF, SNAP, etc benefits reduced after a COLA is applied. They “win” some and then lose what they “won.”

The COLA is to make up for the increased costs of living of the previous year, so it cannot be considered a “win” but a required proportional adjustment, after the fact, that should automatically trigger adjustments in welfare benefit eligibility levels. The beneficiary has had to bear rising costs of living on a fixed low income during the year before that COLA is applied. That COLA increase belongs to the person getting the entitlement, not the state. It is supposed to allow people to keep up with the cost of living. It is NOT a gift to the receiver but a right. By constantly whittling away any COLA of a poor person, they are guaranteed to keep losing the battle imposed by an unfair economy.

However, our government likes to give welfare to the rich without making them accountable. The huge tax cut they got in 2018 was just such a “free” welfare benefit to the wealthy. Why? Because it was a CUT instead of a DEDUCTION. You have to qualify to get a deduction. You are held accountable for getting this welfare.

The tax cut for the wealthy should be considered an “entitlement” since it alone was permanent. The tax cuts for everyone else are temporary.

The tax cut for businesses was meant to bring them to the same level of taxation imposed on their global competitors. The majority of businesses in the US are small businesses, often never filing a business tax return. The owner/operator usually just includes business costs as deductions on the individual tax return. Many probably do not even take part in the global economy.

The result of the tax cut on businesses has been equivocal. About half of the businesses plowed that cut back into their businesses. Some increased benefits/salaries of workers. Some hired more workers. Some improved their infrastructure. For many small businesses the benefit of the tax cut had to be weighed against giving any employees health care insurance.

BUT, many large corporations used that tax cut to  increase the dividend to their shareholders, or increase the CEO salaries. This happened in spite of what happened for several years during the economic boom,  when many corporations asked their workers to give up benefits and/or take salary cuts under the guise of increasing productivity.

Yes, many people have felt an improving economy. But it has been estimated that 70% of Americans got no benefit from the tax cut.

But beware of statistics that tell us what the effect was on the “average” American. The economy for the wealthy has been great. The economy for the poor has been really lousy. The economy for middle incomes has been so-so, but not great. The economy for urban America has been good and so-so. The economy of rural America has been totally chaotic, but definitely not booming. It should not be surprising that most of rural America lives in poverty.

If poor kids go to college, they are more likely to go to colleges near home and pay less tuition. They face the reality that to actually gain employment after college, they will have to move to the big city. Rural towns have low unemployment because the unemployed have to move to a big city, not because jobs are booming.

There are more college grads in big cities facing huge college debt problems than in rural towns. They can live with their parents while looking for work. Migrating rural grads cannot.

Both rural and urban college grads have to co-mingle in the big city. Both poor and rich grads will run into each other. But, because of the HUGE rural-urban divide in economies, there will be a lot of grads who have grown up with a much higher standard of living than poor grads who cannot take an Alexa or new car, or buying a house for granted.

The rural immigrants to the city can’t even expect a meal at the end of the day as states keep decreasing the SNAP benefits to recipients. Where I live, four years ago, many recipients could get as much as $120 in SNAP benefits per month. Now they are lucky to get $15. The cost of living has NOT decreased at all. In fact it is getting higher and higher. The state hates the poor that much.

If we got most Americans out of poverty, maybe the hatred would go away.

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