Several years ago, pre-recession, some married friends of mine decided to start their own business. The husband (I’ll call him Jay), a plumber, worked for someone else, and while he liked his job, his wages weren’t enough for his family of four to break out of a low-income bracket. Jay and his wife (we’ll call her Beyoncé, just to mess with the image in your head) went out on their own.
Jay and Beyoncé prepared themselves well. They took classes and worked within a network of other small business owners to share ideas and fine tune the business plan for their plumbing company. Their growth was measured, but reasonable. But things popped up that got in the way of their progress. For instance, they had a son with juvenile diabetes. Once Jay left his job and became self-employed, they couldn’t get health insurance that would cover their son. His medication ran about $300 a month, and heaven help them if they encountered an emergency situation due to his disease. The system left them in a vulnerable position, and yet, they persevered, and grew, until the recession hit. Then they went back to traditional employment (for now, at least.)
There are plenty of people like Jay and Beyoncé in this country who are working arduously to achieve financial independence—not just to be free of government assistance, not just to be able to pay their monthly bills, but to have savings in the bank and enough left over to take a family vacation every year. They are bootstrappers, to a large degree, but they face barriers.
I didn’t realize how many barriers to financial independence existed until I did some work—both paid and volunteer—in the non-profit sector. I met clients and heard their stories, read legislation, and learned about social assistance program rules. Then I understood that while some people may be government assistance ‘lifers,’ content to collect every benefit they can for as long as possible, most want to get out of the social-assistance cycle, but find it tremendously hard to do so. They’d be better at bootstrapping if they didn’t have one hand tied behind their back and a blindfold on.
The examples are numerous, so here are just a few to illustrate how the social assistance system can create obstacles and/or prolong dependency (although laws and programs vary from state to state):
- In some states, recipients of EBT cards (electronic benefits transfer cards) pay a transaction fee each time they use their card. In Washington State, it’s 85 cents. Whether they buy 20 grocery items or a jug of milk, they’re charged. This is due to contracts negotiated between state social service agencies and banks, and it eats a chunk of their assistance.
- Welfare recipients who start their own business may have their benefits reduced as soon as they report business revenue. Since it takes three to five years for a business to really get going and become profitable, this policy is pretty counterproductive. Yet, the alternative in many cases is for the person to take a job that doesn’t provide a living wage, and soon enough they find themselves back on assistance.
- Other activities that are associated with ‘getting ahead,’ e.g. saving money, getting post-secondary education, can also mean a reduction or discontinuation of benefits. People are penalized for implementing strategies that will lead to their long-term financial sustainability.
It is possible for people to break out of poverty, but currently it’s kind of like running a marathon where the water stations disappear at the eight-mile mark. More of them would be successful if the barriers—to education, living-wage careers and financial security—were removed. Instead, we often cut people off at the knees just as they’re starting to gain some momentum. And then the cycle continues…
Are you a bootstrapper? Have you run head-on into an economic barrier (ouch)? Tell me your story!
Next week, I’ll be talking about why the idea of bootstrapping is nice metaphor, but largely a myth in real-world application.
Kathy Lynn Hall says
Well done, Laura! Simple examples that might make a difference for those that don’t get how hard it is for those that DON’T want to be in the system. Some simple changes would allow them to get ahead. Thanks for this post.
Laura Zera says
Thank you, Kathy! Glad you stopped by. I volunteer for a non-profit that is working on some really good policy changes in Washington State — it’s a lot of work to make it happen, but it can be done.
Such a struggle! Such a trap that keeps people on assistance, and they have to jump through so many hoops, it takes quite a skill and so much energy! Not much left for the bootstraps!
Laura Zera says
A lot of energy — it can really wear people down. Thanks, Jodi. xo
When we were on assistance in Cali, two things were in place or were put in place while wee were on. First, when I started, you could go to school. Later they let you go to school, as long as it was in one of their approved programs, which meant you couldn’t work with the college to create a major to go into a brand new field that had few practitioners. Guess what? My English degree didn’t do crap to help us because I was going to need another 2 years of certification education before the schools would even look at me. I was already in debt more than enough, and wasn’t willing to put myself further in debt for a job that may not be there when I was done…which ended up being what happened. Teacher jobs all across the country, especially for those who didn’t teach math or science, were cut across the country.
The second thing was when they put the work requirement in. My husband found a job, but they were pissed he found it without them and denied paying for the uniforms and boots he was required to get for it.
And did you know in Georgia, a disabled adult is expected to be able to live on $600/month? It’s true. If my son gets support from his dad, it’s taken dollar for dollar out of his SSI. If he works, there’s another formula for it, but, yes, they’ll take that out too. Good thing he lives with us and our income no longer counts against him (because he’s an adult), but I worry about what will happen to him when we’re gone.
I should add, we were on assistance for a long time, moved to Georgia because of family help, and fought tooth and nail to stay off assistance because we knew it would only make things worse. We’re going to be paying for that for a long time, and honestly, we’re not out of the woods yet. But out here, they’re running out of money, so even if I decided I had to get on any kind of assistance, I would probably be denied.
Laura Zera says
Wow, it sounds like you have seen all sides of it. Your story reminds me of what I’ve heard from some other people, which is that case workers want to tell people what to do, where to go, what jobs to get, instead of working with people to find out their strengths and interests so that the client can have more of a role in determining their future. There is a new program in Washington state that teaches front-line case workers how to provide career coaching to assistance recipients instead of instructing them what to do all the way along. Anyway, sorry it has been a difficult road for you and thank you for sharing your story.
Terri Giuliano Long says
Thank you for this terrific post, Laura! Our friend has recently been hospitalized. He got talking with one of the nurse’s assistants, a mom with four children. She’s working hard, employed full-time by a large Boston hospital, considered among the best in the country. She’s off the T line, so she must drive to work. By the time she pays for parking – the fee for the hospital lot is absurd – a large percentage of her net income is gone. My friend asked if her children received free lunch at their schools. When allotting services, the government doesn’t take things like parking into account; with her high income, she’s ineligible. Many days she cannot afford to give her children lunch money. This is bootstrapping in America today, a serious crisis in morality, I think. Thank you for bringing this important problem to light.
Laura Zera says
Terri, thanks so much for your comment. Your friend’s story shows how quickly things can change, and how sometimes it’s the middle-class who can suddenly be in jeopardy. I hope that things turn around for her and her family. xo
Jack Durish says
It’s not only sad, but also terrifying to see how badly things have gotten, especially for those with talent and ambition. I’m almost seventy now and must apologize for my generation. We have destroyed the economy that allowed us to dream, the one that you just missed.
No other country but America, in any other time, offered such opportunity for an individual to bootstrap themselves to success. But my generation had to go and diddle with the system. We broke it. Sorry ’bout that.
Can you repair it? Doubtful. It seems that our brightest and best can’t resist diddling some more, and with every misstep, we break it even more.
I suppose I can take comfort in the fact that I won’t be around much longer and shouldn’t suffer the consequences of my generation’s folly as much as you will. But, the truth is, I have children and grandchildren who will and I feel sorry for them. Please, forgive us.
Don’t bother asking how to fix it. You will only become more angry with me if I explain. I’d prefer to not incur any more of your wrath.
As I go to sleep for the last time, I will dream of a new America that may arise again somewhere, sometime. I hope they avoid the mistakes that we’ve made. Somehow, I doubt they will. The urge to diddle with that which is not broken seems to be an irredeemable human trait.
Laura Zera says
It’s an interesting comment/commentary, yours is, Jack. I accept your apology on behalf of “everyone,” even though I don’t feel like I’m getting hosed by all the diddling because I didn’t grow up here and don’t plan to stay here forever, either. (I want to grow old in a country that treats their seniors better than this one does). For me, I feel sadness, because I hear from many people, my age and older, about the changes in America in the past few decades and how it’s not the place it used to be.
I have one idea for how to get on the road to fixing it, and you may not like this one: get to a level of 50% for women in politics and government and on Wall St.
I’d be really interested to hear your idea for fixing it, and promise that no wrath would be dispensed. I do reserve the right to disagree. And you could email me. Mine is my first name at zerapress.com.
Cherryl Chow says
Thanks, Laura. What a great post. So many people don’t understand this. Some of my friends are caught in this situation–they’re bright, well educated people but have a health condition that makes it impossible for them to get ahead.
So what can we do?
Laura Zera says
Argh, yes, health problems can change everything (e.g. bank account balances) in a very short time, in addition to making work options limited. I hope we see improvements in preventive health care, prescription coverage and individual health plan benefits as part of the reform movement, as well as changes to short- and long-term disability benefits. It’s kind of sad that the list of things that need to be effectively reformed is so long… . Thank you for your comment, Cherryl, and I wish for brighter days for your friends.
Robn Diekow says
The parking lot fees and card fees mentioned above are the tip of the iceberg. Our system seems determined to kick people when they are down. Can’t pay a bill? Just add humongous penalties and if they still can’t pay threaten them with jail! (For driving without car registration, for example, which you can’t get without unaffordable insurance). Every day there are new fees for things you may not want but you are now required to get – at least if you want to work, and maybe even if you don’t.
I would like to see a NON profit payday loan business, but I wouldn’t be surprised if that’s not possible because of some regulation or another.
Laura Zera says
I think part of the issue is that people who haven’t ‘been there’ don’t understand how punitive the system can be in terms of obstructing people from getting a leg up. Good news, though, there is at least one credit union (which is a non-profit) that I know of that is doing work with low-income and unbanked people. It’s here in Seattle and is called Express Credit Union: http://expresscu.org/
Thanks for your comment!
Thank you for writing about this. This is a very frustrating situation for those of us caught in it. I would like to share an example of how this works. I am a single mother of two and am on Social Security Disability and SSI due to mental health issues. The most that Social Security can provide for me is $733 a month. In addition, we have child support in the amount $281 that comes in. The state provides $350 in food stamps, medical coverage for my children, and pays my medicare premiums.
I have tried numerous times to get a full time job, but it always ends with me about to lose my mind. The ideal solution would be for me to be able to work part time to make extra money to pay the bills, but this is how it all works…
If I earn $353 (gross) or above in a month, I will lose my SSI payment of $134. If that were the only repercussion, it could be dealt with. However, when I lose my SSI the state will no longer pay my medicare premiums, and I will be charged $85 for the premium should I continue to receive medicare. After these “costs” I have added $134 (gross) to the monthly income. After paying for gas and vehicle maintenance to get back and forth to this job, I am now in the hole… Earning more than this is only partially beneficial, as I start to earn more, I start losing food stamps too…
Laura Zera says
Thank you for sharing your real-life experience, Sandy. I really feel like some kind of transition system needs to be created, where someone can have a year or two to get going in their new job before benefits are affected, or, in a situation like yours, where you can retain your medical disability status when appropriate, and still work part-time without losing benefits. We are so glued to certain types of models, but if our government agencies tried out some creative models, they would probably surprise themselves with the results.
And then there’s the issue of a living wage. I live in Seattle, and they’ve recently begun rolling out a $15 per hour minimum wage. Of course, some businesses are crying foul, and we don’t have any hard data from it yet, but I’m hopeful that businesses will be able to adjust their models to make it work. Everyone has to do their part, even if it means cutting into their profits in order to allow people a fair wage.