The Economic Consequences of Homelessness in The US

Some argue that the low status nature of some jobs can have negative psychological
effects on workers, but others argue that low status workers come up with coping
mechanisms that allow them to maintain a strong sense of self-worth. One of these
coping mechanisms is called boundary work. Boundary work happens when one group
of people valorize their own social position by comparing themselves to another group,
who they perceive to be inferior in some way. For example, Newman (1999) found that
fast food workers in New York City cope with the low-status nature of their job by
comparing themselves to the unemployed, who they perceive to be even lower-status
than themselves. Thus, although the low-status nature of working poor people's jobs
may have some negative psychological effects, some, but probably not all, of these
negative effects can be counteracted through coping mechanisms such as boundary
work.
Anti-Poverty Policies
Scholars, policymakers, and others have come up with a variety of proposals for how to
reduce or eliminate working poverty. Most of these proposals are directed toward the
United States, but they might also be relevant to other countries. The remainder of the
section outlines the pros and cons of some of the most commonly proposed solutions.
Welfare State Generosity
Cross-national studies like Lohmann (2009) and Brady, Fullerton, and Cross (2010)
clearly show that countries with generous welfare states have lower levels of working
poverty than countries with less-generous welfare states, even when factors like
demography, economic performance, and labor market institutions are taken into
account. Having a generous welfare state does two key things to reduce working
poverty: it raises the minimum level of wages that people are willing to accept, and it
pulls a large portion of low-wage workers out of poverty by providing them with an array
of cash and non-cash government benefits. Many think that increasing the United
States' welfare state generosity would lower the working poverty rate. A common
critique of this proposal is that a generous welfare state would not work because it
would stagnate the economy, raise unemployment, and degrade people's work ethic.
However, as of 2011, most European countries have a lower unemployment rate than
the US. Furthermore, although Western European economies' growth rates can be
lower than the US's from time to time, their growth rates tend to be more stable,
whereas the US's tends to fluctuate relatively severely. Individual states offer financial
assistance for child care, but the aid varies widely. Most assistance is administered
through the Child Care and Development Block Grants. Check here to find the contact
information for your state. Many subsidies have strict income guidelines and are
generally for families with children under 13 (the age limit is often extended if the child
has a disability). Many subsidies permit home-based care, but some only accept a day
care center, so check the requirements. If you need to use an authorized provider, ask if
they will put you in touch with an agency that can help you find one.
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