Poverty Industrial Complex

It is believed that the widespread outsourcing of human services formerly provided by government agencies to for- profit companies started with Personal Responsibility and Work Opportunity Act that was signed by president Bill Clinton in 1996. The reform changed a system that formerly provided large sums of direct cash transfers to those in need into taking that federal aid in providing services for vulnerable citizens with it. Those services include child care assistance or work-related activities and refundable tax credits that are essentially a different form of cash transfer. According to a research group headed by Pavetti the largest sum is going to a spending pot names "other", covering a broad range of services such as child welfare, parenting training, substance abuse treatment, domestic violence services and early education. Author Daniel Hatcher criticised that an poverty iron triangle has developed between the federal government, state governments and poverty- industry private contractors. Funds provided by the federal government to help vulerable populations are misused and fuddled towards privat companies and in addition to that used by the states, which often have a tight budget, as a mere revenue stream.[1]

The Health and Human Services Department (HHS) is a department that provides poverty assistance. It has an annual budget in the US of around 100 billion. One major branch of the HHS is the Office of Community Service (OCS). The OCS provides funds to states, counties and cities that are intended to lift people out of poverty.[2] The author of The Poverty Industry: The Exploitation of America’s Most Vulnerable Citizens, Daniel Hatcher, compared the practice of for- profit companies taking over government functions deemed for the most vulnerable in society as a hug "poverty industrial complex" thus comparing it to the military industrial complex. According to Hatcher human service agencies and private companies conspire to create a large poverty industry in which billions in federal aid meant to go towards helping the poorest of society are taken up by these private companies and services provided to those in need, as for example abused children, become inadequate. Among the private companies providing these services are those known for integral roles in our country’s defense industry — like Lockheed Martin and Northrop Grumman. These companies provide services like child support services, Medicaid services, health insurance call centers and welfare-to-work programs. As for profit companies they turn to consultants that help them figure out how to maximise their bottom line. The company Maximus for example states in advertisements that it has partnered with state, federal and local governments to help provide high-quality health and human service programs in "cost-effective" ways tailored to each community. The company has partnered with government agencies in different states where it was accused of not paying overtime to employees or not allowing them to work overtime, thus rendering it impossible to respond to emergency situations. Additionally Maximus was accused of misclassifying employees and underpaying employees. Maximus received the nation’s first privatized welfare contract in 1987 from Los Angeles County and by 1990 was generating $19 million in revenue, Mother Jones reported in 2019. Maximus has partnered with agencies in 28 US states for 1.7 billion US dollars in services. 40 % of the total revenue of the company is generated through state contracts to provide government services.[3]

• Poverty, Inc.
• Poverty industry
• Military–industrial complex

• Daniel L. Hatcher The Poverty Industry- The Exploitation of America's Most Vulnerable Citizens ISBN 9781479874729