Living on $2 Per Day

The Atlantic recently published a brief, riveting account of a poor mother of two young girls who sells her plasma in order to pay bills. It's an excerpt from a new book by Kathryn Edin and H. Luke Shaefer: $2.00 a Day: Living on Almost Nothing in America. If you need a primer on how extreme income inequality has become in America, start here.

First, there's no pity in this glimpse of the 21-year-old woman in the story. It portrays her as determined, resourceful, and inventive--in other words she doesn't resent her situation. She's just dealing with it. Without better options, she's simply doing what needs to be done. Others at her income level in Johnson City, Tennessee, where she lives, resort to sex work, drug trafficking, and under-the-table, off-the-books jobs. In other words, she's found one of the least degrading ways to feed her kids. Yet even her own plasma is not a sure sale: she takes iron supplements to ensure it passes quality tests. If it doesn't, it's worthless to the clinic (though it would continue to keep her alive by running through her veins.) She can make $30 per donation, ten times per month. Her husband can't: he's had too many tattoos, which disqualify him. The rules are strict, in order to keep the plasma safe and pure. So his job is to walk his wife and kids to the plasma clinic. The Atlantic reports:

Today, a striking number of Americans live on extremely small incomes. As of early 2011, 1.5 million households (with roughly 3 million children) were surviving on cash incomes of no more than $2 per person, per day, during any given month. What's different these days--and what affects the $2-a-day poor so profoundly--is that welfare can no longer be counted on to provide a floor of cash that families can depend on.

Here's the key fact tucked away in this story, though: this Tennessee family is three month's behind in their rent.

That fact jumps out at you, if you've looked at household spending numbers from the Department of Labor Statistics and the Federal Reserve, as I've done over the past year with the help of economist Andrew Terrell. What we found was that about 40 percent of the American people--most of them have jobs--are in the same boat as this young woman, in terms of growing debt. Like this family in the Appalachians, two fifths of U.S. households can't make enough to pay their monthly bills. So they pay on credit. Which means, they are sinking deeper into debt every month. It's hard enough to be in that position if you actually have work, but for those who don't have jobs, it's nearly impossible to escape the cycle of poverty.

As Nobel Prize-winning economist Joseph Stiglitz has pointed out, more than half of all Americans will slip into poverty at some point in their lives--in this job market, that means many right out of college. It's not simply a problem other people face. Our socio-economic system in America today seems incapable of dealing with the plight of so many of our fellow citizens. With the fee structures in place now, it's more expensive to put money into a bank than to keep cash on hand in a dresser drawer--but to pay bills then requires a money order, which also costs a fee. Transportation to and from a job, and care for small children not old enough for school, eats up most or all of what minimum wage jobs pay. And the poor have no way of getting a loan, so credit cards, with what for them are exorbitant interest rates, are their only resort for those monthly bills. It's quicksand.

If this $2-a-day scenario were isolated into small pockets of deprivation, it would be a problem we could put on the list of all the others we face, but it isn't. Two fifths of the U.S. population is heading toward, or sinking into, this quicksand. Given the household debt figures, it's only getting worse with each passing day. In a nation with so much accumulated wealth, this situation is intolerable. We need more jobs and higher wages, and while Congress could and should approve funding for infrastructure repairs as a stimulus, it's up to the private sector to take the decisive action. We can hire more people tomorrow. We can invest in new ventures next week. Most of all, we can raise wages. These are choices people in the private sector can be making immediately--nothing is stopping us but our willful blindness to the crisis around us.

Peter Georgescu is the author of The Constant Choice. He can be found at Good Reads.