On Poverty and Politics

In this post, I’m going to examine two related questions. The first part of the post will explore whether or not it’s easier to work part-time and take government benefits versus working full time for minimum wage without benefits. The second part of the post seeks to answer why someone who makes less than $50,000 would vote against their best interest.

Part One: Is it easier to be poor?

Lately, I’ve been wondering about whether or not it’s easier to be poor than to work a job hovering somewhere between a minimum and livable wage to make ends meet. I had been fortunate enough to have full time, salaried employment with benefits for years after graduating with my MBA. That all changed when I decided to take a leap of faith and move to Flint, Michigan. Ever since I made that move in 2017, my employment has been on and off. I even received unemployment at one point.

I conducted a little exercise and created two sample budgets: one for someone who works part-time for low wages and receives government benefits (SNAP, Medicaid, Section 8) and the other one for someone who works full time and receives no government benefits for housing, health insurance, and food.

Person A: Working full time minimum wage and receiving no assistancePerson B: Working part time and receiving government assistance
Monthly Income$1,820Monthly Income$1,000
Monthly ExpensesMonthly Expenses
Health Insurance$250Health Insurance$0
Car Insurance$50Car Insurance$50
Phone Bill$50Phone Bill$50
Total Expenses$1,814Total Expenses$695

The results were interesting:

  • It illustrated that it can be easier to work part-time and be on the dole than it can be to work full time and try to make ends meet on your own. 
  • Person A is almost unable to save money, which opens up the door for credit cards, car loans, and so on in order to make additional purchases.
  • Person A although they pay nearly 3 times as much money in taxes as Person B receives no government assistance for food, health insurance, or housing because they are above the thresholds even though they have a very low income.

This quick exercise highlights why person A might vote Republican because they don’t benefit from Democratic Social Programs and a tax break is a bigger benefit for them than higher taxes for social programs they don’t qualify for.

Part Two: Why would someone who makes less than $50,000 vote Republican from an economic standpoint?

The Republican platform believes in things like Welfare to Work programs to get people off of the dole and into jobs. An opinion that is shared by many of the more financially secure American citizens as highlighted in a study by Pew research.

You can read the full article here

Furthermore, people with higher incomes tended to favor Trump over Clinton in the 2016 election as shown in a study by Edison Research for the National Election Pool. This doesn’t come as a huge surprise considering people who are more financially secure tend to favor less government welfare programs a view that aligns with Trump and the Republican’s platform. 

But what is interesting is how many low-income voters favored Trump. Even though Clinton still won out among those demographics, Trump did something McCain wasn’t able to in 2008 and captured a larger percentage of this base.

$100,000 & over49%49%
Source: https://ropercenter.cornell.edu/polls/us-elections/how-groups-voted/how-groups-voted-2008/

Trump’s campaign was artful in its targeting and messaging. The US Census in 2015 stated that 21.3 Percent of U.S. Population Participates in Government Assistance Programs Each Month. Trump’s tax plan is designed to sound appealing to low-income earners, which is sadly more than 50% of the US population. 

If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.

If 21.3% of people are receiving government benefits on a monthly basis then one could assume that around 30% of the population who are low income earning and could benefit from government welfare programs are not receiving any type of aid. As a result, a $1000 tax break incentive seems better than nothing to them.  And they aren’t wrong to feel that way.

On only one item – perceptions of the economic impact of immigrants – are the least financially secure and more conservative than those who are better off: 44% of the least secure say immigrants are a burden on the U.S. because “they take our jobs, housing and health care.” That is considerably higher than the share of the most financially secure (27%) who express this view. Yet negative views about immigrants are more strongly correlated with vote preference among the financially secure than among the insecure.

Another reason low-income earners vote Republican is their view on immigration and jobs, which isn’t surprising. This is similar to the reason that the Civil War started because poor whites didn’t want Southern Slave owners to take their slaves west with Manifest Destiny. It’s oftentimes an economic issue that spurs politics.

Speaking of economic issues, regardless of if someone voted Democrat or Republican, many Americans are in financial distress.

If you look at the macro scale, these are the same people who have been turned into debtors over the past decade with stagnant real wages, government policies that favor big businesses, and tax breaks that negatively impact the federal budget and programs that could help these people.

At the same time policies that foster a welfare state, act as a disincentive to people pulling themselves out of poverty. While identity politics go far at the polls they do little to raise people’s economic status. If anything, they keep poor people down.

I don’t know what the answer is, but I can say that both the Republican and Democratic parties have allowed for poverty to continue in America. Kowtowing to the interests of wealthy constituents.

At the end of the day, it doesn’t matter if you’re poor whether you vote red or blue. It will do little to improve your financial situation in the long run. You may get some money from a tax break or some welfare benefits, but those aren’t going to pave the way for a better future for your children and you. It’s going to take some real systemic change to make a brighter financial future for working Americans.

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