Poverty is a choice.
Not the cliched “pull yourself up by your bootstraps” attitude that treats every Memphian as having the same kinds of opportunities that provides them with the boots to pull up in the first place.
Rather, poverty is a choice made by our community for 142,000 of our men, women, and children. Despite decades of rhetoric about solving the problem of poverty that dogs Memphis, the number of men, women, and children trapped in a system designed to hold them is frustratingly consistent. The overall Memphis poverty rate is 21.4% but the poverty rate for African Americans is twice Whites – 25% to 12%.
This does not result from a person’s bad decisions and bad luck. Rather, the intractable poverty in our community is, simply put, the result of a system whose results are predetermined by its design. As a result, it is a birthright.
Harsh Realities
It should not surprise us. A favorite epigram of mine is that “every system is perfectly designed to get the results it gets.” It then follows that “if we keep doing what we’ve been doing, we’ll keep getting what we’ve been getting.”
And that is precisely what we’ve done here, and without changes to the system, poverty persists and despite the decades and decades of talk about new programs and new plans, today’s underlying structural, philosophical, social, and economical foundations of the problem produce the predictable results.
The problem is stark. Among cities with more than 500,000 people, Memphis is #5 in highest poverty rate and #3 in cities with the highest child poverty rate. (Our community is #1 in both categories in the ranking for MSAs with more than one million people). As Memphis entered the 21st century 23 years ago, the overall poverty rate was 16% and Black poverty was 25.6% and today, it is respectively 24.2% overall and about 26.5%.
Roughly one in three children in Memphis live in poverty. Children born in a low-income family in Memphis have only a four percent chance of becoming a high-income adult, and those are the worst odds for any major city in the continental United States.
Stuck In Time
Put directly, despite decades of talk about ending poverty, we have little to celebrate.
In fact, there are harsher data points that underscore how the system is tilted against Black Memphians. At the time of the 1968 murder of Dr. Martin Luther King Jr., only 9% of African Americans in Memphis had high school degrees but that number increased ninefold by 2000. In the same time period, the percentage of African Americans earning bachelor’s degrees went from 4% to 20%.
In the era when Dr. King was killed, African American leaders were told that more education was the key to earning more and capturing the American Dream. And yet, after the dramatic rise in high school diplomas and bachelor’s degrees that outstripped the trajectory of Whites with the same degrees, it seemed apparent to many African Americans in Memphis that someone had their thumb on the scales.
Here’s why: in 1970, the median household income for Whites was twice that of African Americans. Despite the dramatic increase in educational attainment, today, in Shelby County, it remains essentially the same.
Median household income in Shelby County for African Americans is $41,543. Median household income for Whites in Shelby County is $82,594, according to the indispensable 2022 Memphis Poverty Fact Sheet by Dr. Elena Delavega and Dr. Gregory M. Blumenthal.
Unleashing Potential
This racial income gap represents the single greatest opportunity to increase our GDP. It’s about four times of the economic impact of building Ford’s BlueOval plant. After all, the racial income gap represents $25 billion in lost GDP.
It would seem that unleashing this untapped economic potential would be enough for everyone in this community to sign on to a determined campaign to reduce poverty and increase the incomes of African Americans. But instead, the system largely continues to produce the precise results it’s designed to produce. There’s no other way to make sense of it:
* Can you remember a time when a political or business leader discussed how Memphis’ African American majority is a competitive advantage? How can Memphis be the model of success for other diverse cities?
* Can you remember when a political or business leader advanced a vision of Memphis as a hub of African American talent? Atlanta became an economic dynamo by setting the goal of becoming a national hub of Black talent. Why can’t Memphis state the same goal?
* Can you remember when a political or business leader said that closing the racial income gap – which would create more than $25 billion in new GDP for Shelby County – is the overriding economic development priority for our community?
* Can you remember when a comprehensive investment agenda targeting the levers of progress for Black Memphians was launched citywide for a long enough time to increase African American wealth to reduce poverty?
At this point, the answers are obvious answers and indications that the system will continue to produce similar results that it has in past decades.
Forgetting to Pivot
The Memphis Jobs Conference was launched in 1981 because Memphis was languishing behind its regional rivals and economic signs for the future were not good. To jump start the economy, the Jobs Conference set tourism, logistics and distribution (FedEx had begun operations in Memphis eight years earlier after moving from Little Rock), and agricultural research as top priorities.
It is impossible to miss the fact that the priorities set in those years reflected the vested interests of companies benefiting most from low-wage, low-income workers.
June 1, 2017: The injustice of a Memphis economy built on low-wage jobs
The Jobs Conference rescued the faltering Memphis economy and the priority sectors boomed, relying heavily on low wage-low skills jobs. Cynically, it can be said that people of means and influence, in their own self-interest, relegated their fellow Memphians to continue to work in low-income jobs.
As economist David Ciscel wrote on this blog, the problem with the Jobs Conference priorities was that the community got stuck in that agenda and failed to transition with a plan to better-paying knowledge economy jobs and to increase the percentage of college graduates to fill them.
Without that transition strategy, tens of thousands of Memphians were stuck along with the economy in jobs that placed a premium on cheapness – keeping costs and taxes as low as possible, keeping property values low, paying as little in wages as possible, and placing little value in training workers.
It’s easy to draw a straight line from Memphis’ commodities history to this reality. That attitude resulted in city and county governments giving birth to their PILOT (payment-in-lieu-of taxes) program to reward companies and real estate developers with generous tax breaks.
Leaning to Higher Income People
At the time the PILOT program was created, the employees of some companies receiving tax breaks qualified for food stamps and publicly subsidized health care. Recently, Memphis and Shelby County Economic Development Economic Engine (EDGE) amended its criteria to require that a company must pay its employees $15 an hour in order to receive a PILOT. Until that change a few months, companies paying $13 an hour could qualify for a tax break.
Somehow, in the public mind, $15 an hour has become the definition of a living wage. It is not.
The MIT Living Wage Calculator or the United Way A.L.I.C.E. Index demonstrate conclusively that $15 is inadequate. That’s in spite of companies and organizations patting themselves on the back for paying $15 an hour although it does not reduce poverty or boost the economy.
That’s why the sparring a few months ago between the Arlington School District and the Germantown School District was so telling – and disturbing – about our community’s point of view. The school district for Germantown, which has some of the highest median household incomes in Tennessee at $132,949, was irate because it was paying its janitorial workers $12 an hour and Arlington began to pay its workers $15 an hour.
“I’m a little irritated that Arlington is just apparently throwing money around, and we’re having to react,” said Germantown school board member Brian Curry. “They’ve caused us to budget money that could be going elsewhere.”
His comment said volumes about the attitude toward low-wage earners in our community; they exist to be exploited. It’s no wonder that 42% of Black workers earn less than $15 an hour. Germantown’s school budget is $87 million a year.
May 11, 2022: Memphis potential is about Black Memphians reaching theirs
Mr. Curry’s comment also speaks to the geographic inequality that propels the poverty problem in our community and the public policies that do nothing to solve it.
The gap between rich and poor areas, between thriving, wealthier eastern urban centers like Germantown and urban core neighborhoods with high poverty, creates a political imbalance that result in conservative legislators from those well-to-do areas injecting their personal philosophies into laws that stifle local self-determination, that bind local governments to tax sources regressive at their cores, that block living wage regulations, that block federal funding that could benefit Memphis neighborhoods, that cut the threads of the social safety net, and more, all while creating tax perks, private school vouchers, and new tax benefits for higher income citizens.
The legislative preference for people with higher incomes is built into Tennessee’s tax structure, one of the most regressive in the country. It means that the less a family earns, the greater the percentage that the person pays in taxes. For example, a family earning $25,000 a year has a tax burden of 18%, but someone earning $150,000 has a tax burden of 5%. It is a textbook case of regressivity and also a textbook example of how the system is designed to punish those who need support the most.
Geographic inequality also surfaces in City of Memphis policies that put lower taxes as a top priority ahead of lower poverty rates. There never seems to be enough money to invest in low-income Memphis workers and Memphians living in poverty.
Memphians are told that their government doesn’t have enough money to fully fund public transit, it doesn’t have enough money to reverse the disinvestment of low-income areas, it doesn’t have enough money to open libraries and community centers longer, it doesn’t have enough money to combat economic segregation, and it doesn’t have enough money to invest in more affordable housing to combat the swamp of predatory rental companies.
And yet, while local government never seems to have the money for these purposes, it has no problem waiving an estimated $2.6 billion in local city-county taxes since the PILOT program was established in about 1987.
A Failed System
Because of these prevailing politics, Memphis has failed to create a geography of opportunity and shared prosperity. And that’s despite the fact that the Memphis property tax rate is the lowest it has been in 32 years – by 48 cents; however, rather than invest in intervention services and direct services, the Memphis mayor – and Shelby County Mayor Lee Harris too – emphasizes saving money that most benefits the wealthier people in our community.
And the cycle continues from a cruelly designed system and the Greater Memphis Chamber confirms it.
The Chamber ranks the Memphis region against Nashville, Louisville, Kansas City, Indianapolis, St. Louis, Birmingham, Milwaukee, Oklahoma City, and New Orleans, and in measurements particularly relevant to fighting poverty, the rankings shine a harsh light on the failure of our system.
Here are the rankings:
Shared Prosperity – #9 of 10
Inclusive Economic Growth – #9
Job Accessibility – #10
Economic Stability – #10
Per Capita GDP – #10
Bachelor’s Degrees – #10
Median Household Income – #9
Systemic Crisis
Brookings reported recenty that the Memphis metro is #5 in metros with Black-owned employer businesses. That may sound good until it’s considered how disproportionate that is. There are 1,158 Black businesses, accounting for 6.4% of employer businesses. But, and it’s a huge but, if Black businesses accounted for 48.6% of employer firms (equivalent to the Black metro population), there would be 15,851 more Black businesses. Black businesses create an average of 8 jobs per firm, compared to 30 for all businesses. If the average employees per Black business reached parity, it would create approximately 25,473 new jobs.
To underscore the crisis that we ignore at our peril, consider that the Tennessee Commission on Children and Youth released the Child Well-Being Profiles earlier this month. Shelby County ranks #92 for economic well-being; in education, the county is #91; and in health, Shelby County is #93. There are 95 counties in Tennessee.
If we can stand by and watch children in poverty deal with the tough realities of their daily lives, it’s little wonder there is so little movement to actually marshal a community army to reduce the poverty rate for their parents.
Yes, poverty is a choice. It’s just not a choice made by those trapped by it. It’s a choice made by a system perfectly designed to keep one out of four Memphians in it.
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I fear the problem of poverty in Memphis runs even deeper than the issue of race — though race and gender are key factors in why we ignore it. Service work, particularly semi-skilled service work, is viewed by many as unproductive labor. Just as in the 18th century, agriculture was seen as the only productive sector, we hold onto the archaic 20th century view that manufacturing is where value is produced. In travel, medicine, and hospitality, the products (planes, cars, medicines, food) are used to deliver a service. We live in a service economy. Particularly in a super-wealthy economy like the USA, service is what we are ‘all’ about. So, it sad that service workers — from servers, loaders, cleaners, agents to most medical laborers — are seen as auxiliary, not the primary focus of our economy. Now, there does seem to be a slow awakening among this giant class of laborer — unionization seems to be rising in that sector. The kinds of protections that we offered manufacturing workers during the 1930s now need to be reinvented for service workers. And, of course, service has been the province of women and minorities.
Short version: it would be much easier if we lived in a vacuum.
Long version: There are steps that would help ease and improve outcomes. Many of the local means to address poverty (living wage, transit, etc.) would move the needle tenths of a percent. Perhaps a whole percentage point over time. That represents a significant number of people and families. While such outcomes are worthwhile, it would hardly be transformative for the city and region. We also have to acknowledge how much local poverty is rooted in national factors and policy and will resist locally sourced change.
Where poverty and some other issues are concerned, much of the extremes we see are related to the Memphis MSA being home to an exaggerated concentration of trends and patterns seen nationwide that are often diminished behind the shadow of a more diverse population in other . This suggests that nothing less than a local, fundamental departure from the base policies and economic principles of the United States will result in large scale change. What would that look like? How would the region relate to existing local states and the nation as a whole? Could the Memphis MSA still relate as a geographic unit within the US economy?