The Poverty Industry: The Exploitation of America's Most Vulnerable Citizens

Families, Law, and Society

by Daniel L. Hatcher

How funds for the needy are siphoned off for “A distressing picture of how states routinely defraud taxpayers of millions of federal dollars.” ―Boston Review Government aid doesn’t always go where it’s supposed to. Foster care agencies team up with companies to take disability and survivor benefits from abused and neglected children. States and their revenue consultants use illusory schemes to siphon Medicaid funds intended for children and the poor into general state coffers. Child support payments for foster children and families on public assistance are converted into government revenue. And the poverty industry keeps expanding, leaving us with nursing homes and juvenile detention centers that sedate residents to reduce costs and maximize profit, local governments buying nursing homes to take the facilities’ federal aid while the elderly languish with poor care, and counties hiring companies to mine the poor for additional funds in modern day debtor’s prisons. In The Poverty Industry, Daniel L. Hatcher shows us how state governments and their private-industry partners are profiting from the social safety net, turning America’s most vulnerable populations into sources of revenue and stealing billions. As policy experts across the political spectrum debate how to best structure government assistance programs, a massive siphoning of the safety net is occurring behind the scenes. In the face of these abuses of power, Hatcher offers a road map for reforms to realign the practices of human service agencies with their intended purpose, to prevent the misuse of taxpayer dollars—and ensure that aid truly reaches those in need.   “Meticulously researched . . . lifts the lid on a system that rather than helping the needy, systematically turns them into ‘a source of revenue.’” ―The Guardian   “Walks through the evolution of legal doctrine regarding rights of vulnerable persons [and] provides compelling evidence that scholars, policymakers, and advocates should take a closer look at the political and business relationships shaping contracting decisions involving for-profit firms.” ―Political Science Quarterly

Genres: Nonfiction, Politics, Economics, Poverty, Social Justice, Political Science, Social Issues

287 pages, Kindle Edition

Published October 24, 2014

About the author

Daniel L. Hatcher is Professor of Law in the University of Baltimore’s Civil Advocacy Clinic in which law students represent low-income clients. He is author of Injustice, Inc.: How America’s Justice System Commodifies Children and the Poor (UC Press) and The Poverty Industry: The Exploitation of America’s Most Vulnerable Citizens. A former Maryland Legal Aid and Children’s Defense Fund attorney, he has long been a scholar, advocate, and teacher on poverty and justice.

Reviews

[Darren · Rating 5 out of 5]

This book, that lifts the lid on exploitation affecting some of America’s most vulnerable citizens, is something that you want to hope is made-up, misunderstood or otherwise not true. As it is, there is no suggestion that the author or the publisher are being economical with the truth, so the only other interpretation is that there is something to get very angry about.

Make no mistake, this reviewer is politically more right-of-centre than anything else and does believe in free and open economies, yet there are some things that you just do not do and cynically manipulating the system to (apparently) legally take money otherwise intended for those who are needy or vulnerable is one of them.

Heck, one is seething even with the benefit of several thousand kilometres distance between Finland and the United States!

The author contends, in this well-written, accessible and source-positive book, that government aid is being “redirected” to places that morally, at least, it should not go to. State care agencies sit hand-in-hand with commercial companies to take various disability and survivor benefits from children to “benefit” the state and its accounts. Who gives a bleep about the children, the disabled and the poor, huh? If that is not bad enough, it is alleged that nursing homes and juvenile detention centres are sedating residents with psychotropic drugs to reduce costs and maximize profits.

It is a multibillion-dollar industry, says the author, yet you don’t seem to hear a lot of angry people demanding change. Are they ignorant to what is said to be going on, or do they just not care since, well, they are poor, crippled or just the “rubbish”. It seems hard to see that the federal government does not know what is going on, yet have they rushed to slap this excess down and change the rules? The answer sadly is quite clear, no…

The author is concerned and articulates this with aplomb. It is not a student-level rant about injustice but a forensic, focussed look at a situation, written by a professor of law at a respected university. As a non-American, this reviewer has a bit of a problem accepting and understanding the healthcare system. It feels morally wrong that the global superpower has a system where you can be bankrupted for the crime of being ill, even if you can afford some healthcare insurance. Private markets mean that, if you have the money, of course you may be able to get better, faster or more luxurious care. Yet basic healthcare in a civilised country should be a given. The claims made by the author about the shenanigans of certain state and private companies takes things to an even lower level.

If even ten per cent of this book is true, a lot of people should be hanging their heads in shame. They should be doing jail time, although no doubt their behaviour is legally sound. Things should be changed immediately and this reported reprehensible behaviour terminated. If not, dear members of Senate and Congress, please don’t dare to lecture the world about how to do its business and behave until you even try and get your own house in order. This behaviour is lower than a snake’s belly, akin to stealing from a coffin at a funeral service.

If you have high blood pressure and even an ounce of caring in your body, think before you buy this book as you will be annoyed, angered, dismayed and possibly shocked. This should be required reading. In an ideal world this should be seen as a historical relic in a very short period of time, since change has been effected and this remains just a low point in U.S. history. I won’t hold my breath though…

[Barry · Rating 3 out of 5]

A not terribly well-written book about a terribly important subject. Hatcher details the myriad ways the government colludes with private companies to divert funds that were intended to benefit needy people. These examples of government and corporate malfeasance are as ubiquitous as they are perfidious. As government programs grow in size and complexity, so too do the opportunities for graft and corruption. There are just way too many greedy hands in the till, and it’s the poor who end up paying the price.

Unfortunately, the book is written in a very dry and tediously repetitive style, which detracts from its impact, and will likely reduce its readership. This exploitation of the poor is a national disgrace, but a better book may be needed to effectively sound the alarm.

At least read this excellent review by Gary:
https://www.goodreads.com/review/show...

[Gary · Rating 4 out of 5]

This is an important book that deserves a wide readership. While a widespread myth persists of poor folks who rip off the government by taking advantage of various welfare programs, the author reveals that those ripping off welfare in a wholesale fashion are those within government themselves, along with an entire industry of private consulting firms with whom agencies contract to siphon funds from the federal welfare systems.

There aren't too many books that set the blood to boiling from the very opening pages of the Introduction. Yet here's the vignette that sets the narrative going:

"Alex was taken into foster care at age twelve after his mother’s death. Over a six-year period, he was moved at least twenty times between temporary placements and group homes. Soon after losing his mother, Alex learned his older brother might be able to care for him, but then his brother died. There were also hopes that Alex could go to live with his father, but then his father died as well.

"Unknown to Alex, he was eligible to receive Social Security survivor benefits after his father died. These funds could have provided an invaluable benefit to Alex, supplying an emotional connection to his deceased father and financial resources to help with his difficult transition out of foster care.

"But without telling Alex, the Maryland foster care agency applied for the survivor benefits on his behalf and t0 become his representative payee. Then, although obligated to only use the benefits for the child’s best interests, the agency took every payment from Alex. The agency didn’t tell Alex it was applying for the funds, and didn’t tell him when the agency took the money for itself. Alex struggled during his years in foster care, left foster care penniless, and continued to struggle on his own. And after taking Alex’s funds, the agency hired a private revenue contractor t0 learn how to obtain more resources from foster children."

So here's the rub:

Sociologists have long identified an institutional dynamic known as the "complexing phenomenon." The essence of this "phenomenon" is that many organizations over time tend to direct less of their energy and fewer of their resources outward toward the mission for which they were originally founded, and more of them inward toward efforts at their own self-preservation. What Mr. Hatcher, who teaches law at the University of Baltimore and has worked for the Children's Defense Fund, demonstrates is that current institutions directed to serve the public welfare have taken the "complexing phenomenon" one step further: much beyond simply channeling more of their own resources toward their institutional self-preservation, as Alex's case illustrates, they are actively exploiting the very people entrusted to their care in order to bolster their own coffers. Not only are foster care agencies accessing the individual funds of their clients, but courts are financing themselves by piling fine upon fine upon their indigent prisoners (even charging for access to court-appointed lawyers, in violation of the 6th Amendment), and nursing homes are pumping their residents with stupor-inducing psychotropics so they can cut back on staff while bringing in more residents toward the end of obtaining greater federal funds.

There is enough here to outrage any reader, no matter where the reader stands on the political spectrum. Conservatives who believe government does not work will be fortified in that belief, because there is certainly plenty of evidence here that the government agencies commissioned to serve the public welfare are NOT working toward their intended purposes. On the other hand, left-wing critics will find much ammunition here as well, as much of the dysfunction can be attributed to private companies that have invaded the welfare establishment to make billions (hence the title of the book, "The Poverty Industry"), who have come here because they see there is profit to be made.

There are two weaknesses to the book. Lawyers who are authors don't necessarily have to write like lawyers, but unfortunately this one does. The case that is presented contains a lot of repetition, as if Mr. Hatcher doesn't want his jury (i.e. the reading audience) to forget his main points. He tells you what he is going to tell you, then he tells you, than he tells you what he just told you--often more than once. Unfortunately, that means that after that blood-boil-inducing Introduction, everything dies to a simmer in the following chapters as he presents exhibit after exhibit of evidence.

Secondly, Mr. Hatcher alerts the reader in the beginning that after presenting his case he will propose solutions at closing. I had been looking forward to what he had to say because in receiving all the testimony, I couldn't see much hope in correcting a system that had seemed to become so corrupt it should just be torn down and rebuilt from scratch. Alas, when it came to "solutions," much of what Mr. Hatcher had to say only served to disappoint. Mostly, his suggestions seemed to consist of nothing more than saying all the wayward institutions should remember their original mandates to serve rather than take and do the right thing. Furthermore, all necessary laws should be enforced. Well, yes, but . . . These things SHOULD happen, they should have ALWAYS happened, but they are NOT happening, so what can possible change-of-heart is going to occur to make them happen NOW?

Also disappointing was that, in having made a case that it's the involvement of private for-profit consulting companies that has corrupted much of the system, Mr. Hatcher doesn't do much to take them on in his recommendations. How's this for a recommendation: prohibit the hiring of any such corporations by government agencies?

Still, I have been recommending this book to others because it shines a light on a real scandal of government misconduct of which few are aware. When an individual con man is uncovered taking advantage of the most vulnerable among us--an elderly or mentally disabled person--we're ready to have that person's head. We wonder, "How could anybody be so low?" We should be just as outraged when we see it being down on a wholesale basis, especially by those who are hired to be serving us.

[Mehrsa · Rating 5 out of 5]

I had no idea. This book is essential reading for anyone that works in local or state administration and every single taxpayer. The poverty industrial complex is siphoning federal grants into state and private coffers. Literally taking money away from foster children. The book is very dry and overly technical so I really hope Hatcher does another version for a trade audience that is more digestible. This will make you angry.

[Ietrio · Rating 1 out of 5]

The government has been corrupted. The funds collected for one purpose go to serve other goals. Is that money laundering or just the usual lies politicians tell to feed their private clientele? Sadly Hatcher's mind never gets to fly that high and Hatcher prefers to stay low and spit slogans. In fact, Hatcher is so irrational, he thinks that restarting the government on HIS plan with make everything better somehow.

[Suzanne · Rating 3 out of 5]

Somewhat dry and repetitive but delved into what I have been noticing for a long time. The next time you want to cheer for a new government agency read this book first. Keep in mind they should be results and mission driven not hand out driven. The exploitation of the poor is at epic proportion on so many levels, the point of this book really brings it home.

[Domenica · Rating 3 out of 5]

While the subject is very enlightening and indeed shocking, this book is hindered by a lack of depth that would have helped further bolster its claims. Yes, money is being funneled to state coffers, but the author doesn't go into how exactly the money is being re-directed. There is an underlaying assumption you will agree with him on this fact even though it isn't further explored. More context setting and historical background would have helped too. Also it is very repetitive when it comes to the ideas he articulates. Nonetheless, this is a good expose on an alarming issue of use of social welfare program funds that deserves a more well-rounded scrutiny.

Also, I find it hard to believe he comes to the conclusion that there isn't anything inherently wrong with private contracting for social welfare programs (uh, bro, I think that may be part of the inherent issue) but that is must my opinion.

[RK Byers · Rating 4 out of 5]

slept-read through 1/2 the book and still found all the varying and insidious ways of monetizing poverty illustrated here both amazing and shocking.

[Allies Opinions · Rating 5 out of 5]

What you read in this book will definitely make you mad. That inherent distrust most people have for their governing bodies exists for a reason. Well, it exists for many reasons and this book details a whole pile of them.
Hatcher has done his research and his findings are incredibly shocking. This book is aptly named. Those in poverty are being systemically farmed for sympathy money. When you drive around your town and you see homes falling apart, insanely skinny kids wearing faded clothes covered in holes you feel horribly for those suffering people. This elicits a emotional response that is a factor in your voting ideology. You vote and approve of measures to help lift those poor souls from their poverty prison. You don’t realize that those policies are actually keeping the poor …well poor. The farming bit I was talking about..well they are farming your sympathy which really translates to your taxes.
Hatcher outlines these atrocities in easy to understand detail. He introduces these scenarios with real people and elicits a personal connection from reader to cause.
Most of what I read in this book was enlightening and very upsetting. I know that it will for sure change the way that I vote. I think it is for reason’s like this that the idea of Democratic Socialism looks better and better. We are not a great country if we allow those who are vulnerable to suffer.
Hatcher has illustrated the issues plaguing the poor and outlines a plausible array of solutions to these issues.
Excellent book.

[Maureen Flatley · Rating 5 out of 5]

An absolute must read for anyone who cares about children, government accountability of exploitation of the poor.

[Shai · Rating 5 out of 5]

First off, the negatives:

1) The first chapter is insanely repetitive -- to the point of being rather annoying. I could not tell if the author was using this as some sort of rhetorical device, or if he simply was being lawyerly in his approach ... almost like this was a brief or contract. That said, it does kinda help it to sink in, the basic violation of duty & sense of social good that these practices among states, agencies, contractors etc. entail. But, don't skip that first chapter, you can kinda breeze through it though, as it sets the tone for really understanding how far gone this entire "business" is.

2) There are no real solutions offered -- the last few pages kinda hint at what could be done, but they are so high level and general as to come off as common sense wishful thinking, almost echoing the basic refrain from the first chapter ... that this is all just wrong.

3) The depth of analysis is incomplete -- this is clearly only one very narrow side of the story. Facts are marshaled and stories are shared ... and you'll understand how some players in these schemes are truly evil. But, I wish I could have heard more from the people in the middle. The underserved/ignored are the targets, the contractors and big pharma are the main predators -- but what about those caught in that upheaval who are trying to do some good at the agencies, at the state and county level, those people trying to hustle just to keep other gov programs afloat. It seems manipulative to paint only the outlines of the picture and color in one portion with great vividness.

Now, why the 5 stars? Well because EVERYONE should read, skim, or try to read this book.

1) Even if you don't have an interest in the field of child care/welfare, the health industry or government policy ... you probably pay taxes, have some sort of political leaning when it comes to how that money is spent and care if your dollars are really going to the right places. Of course, some people on the right simply don't think they should pay for anything at all to help anyone else. Many on the left might advocate for more programs, money, effort to help those in need. But what most of us have in common is how little we really know about how the BILLIONS upon BILLIONS of dollars go from our pockets to the federal government and then get disbursed to run various state and local programs -- even outside of those mentioned in this book (children, elderly, poor). This book does an amazing job of enlightening us in the dark, even if it's not always a joy to read ... the details and complexities of these machinations are engrossing, and often just gross.

2) The well researched (mostly footnoted) collection of lawsuits, anecdotal tales, investigative articles, policy excerpts, and corporate consultant contract verbiage -- will simply blow you away. Just reading these (outside of the author analysis) will help you understand how f'd this situation is. How far away from the mission of an organization/policy/law our money can fall -- and that in the end, the goal (for a variety of reasons) inevitably transforms/devolves into the simple pursuit of more money ...

3) Not to sound like a commie/socialist but -- if you want to see what's wrong with our current economic, social, market system, specifically the privatization of everything, this will help you understand. I can totally get why it makes sense to turn our needs and wants into products ... who doesn't want to have 25 different kinds of toilet paper? But when you start turning PEOPLE INTO PRODUCTS, that is truly, viscerally concerning. When our free market is so totally unchecked as to allow people to make billions of dollars by turning anything and everything into a commodity/cash cow, it's not just unfair, or amoral, it signals what feels like the end times of that society/empire/system. When a child in need (poor, no parents, disabilities) is referred to as a revenue generating unit ... all does seem lost. And yes, the fact that this book speaks about targeting the voiceless, and most vulnerable ... does tug on the heartstrings, but when nothing can have an objective/clear goal that can be safely tucked away from the profit motive (news, healthcare, justice, education) ... you're just asking for double-dealing and greed to take root.

[Ophelia · Rating 3 out of 5]

As others have noted this book gets really repetitive, but it would serve well as a basic understanding of how the poor are treated when they come to the government for help. A Dickensian state of affairs in our United States. A third of this book could have been edited out because he keeps repeating the same points of exploitation of the vulnerable: the states and private companies are working to get the most money out of nursing homes, foster cares, the courts, medicare/medicaid (and pharmaceutical business), and of course health and human services departments by targeting the poor and vulnerable. It's all a shell game with money that the private companies and states work together to maximize and keep most of the money for themselves while the poor (especially children and elderly) are exploited and tossed asunder. It would have been interesting to know where all the money actually goes but I guess that's another book (or privileged information--they only let you know so much). The constitution and human rights don't actually exist for the poor. What only exists are bottom lines because corporations are people but people are not people in the poverty industrial complex. This is just one tiny tip of the iceberg of what's happening in our country and while it was an interesting books in some ways, it could have had much more depth. My fellow Americans, what good is awareness of these horrible games being played when nothing was done about most of it and nothing will be done about it? This book was upsetting for that very reason. I wasn't expecting a fairy tale ending to this book by any means but it's as if justice no longer exists. I'm something of a poor myself and I've experienced first hand a couple of the things spoken about in this book and there's no recourse for how I was treated as a single parent when I applied for TANF or child care assistance. They do not care about your well-being or your children's well-being. "Ask not what your country can do for you..ask what you can do for your country" has entered the upside down. The book also didn't mention that with Medicaid & Medicare, when you sign up and if you pass away, your estate goes to them to "recover" your medical costs. I recommend this book to high schoolers so they know what they're in for if god forbid they every have to go to the government for any kind of "help."

[Fahad Qazi · Rating 4 out of 5]

Not perfectly written but a hard read due to the subject matter. The author here illustrates the “deal with the devil” made by states who, strapped for cash, have taken advantage of federal funding rules in order to supplement shortages in state budgets. The author here does a good job of reflecting on the constitutional violations that occur as a consequence of state desperation, and showcases how state courts, through sanctions and penalties frequently push offenders underneath the poverty line and make it difficult for those in foster care/on welfare systems to move out of these systems, showcasing systemic problems that exist and need to be taken care of. It becomes disparaging to see how state agencies essentially become pressured to separate children from parents at the suggestion of aid consultants to maximize revenue from federal subsidies. Themes like this, wherein state agencies can steal up to 93 percent of aid intended for children showcase the dire need of intervention, both to reduce poverty and harm being inflicted on those in dire need of aid.

One especially important thing to note is that these problems aren’t necessarily divided between “red” and “blue” states, and have been targeted by bipartisan solutions that have failed to gain widespread support. The author notes how while drastic reform is needed, the elimination of federal subsidies for state handled entitlement programs isn’t the solution needed for this problem.

[Char Utyro · Rating 5 out of 5]

This book is amazing. It brings to light the largest Ponzi scheme America has yet to perpetrate on the poor. Both sides of the political aisle should be ashamed of their crimes against the poor, the disabled and the elderly, as should all of the “contractors” hired to “manage” these funds which were designed to help these groups of people. Instead, they have devised plans, loopholes and schemes to take the funds desperately needed by the poor in order to enhance not only state coffers, but individual pockets as well. In doing so, they do not work to help those who struggle with poverty, but perpetuate it with long lasting affects. Shameful.

[Andie Shine · Rating 5 out of 5]

I wish everyone would read this! While I would like if there were more solutions presented for the core audience, which I presume those working in the law or academics, I think it presents information that is too important to go unknown. I did have some issues with the structure of the book, but I wanted to give 5 stars to emphasize that it is a must read, even if it could be structured a little better.

[Emily · Rating 5 out of 5]

This book is an amazing eye-opener! I'm not sure I'll be able to sleep tonight, as I can't stop mulling over the terrible state practices Hatcher reveals in this book. States, counties, and private companies work together to draw federal dollars for vulnerable populations, and then use the majority of these funds on filling general fund coffers or private pockets. So disturbing!

[Liz · Rating 4 out of 5]

Super informative and completely infuriating. A worthwhile read, honestly a book I think every American would benefit from reading. My only critiques are that the writing can be a little clunky and repetitive in places, and the proposed solutions felt a little underwhelming. Overall, strong recommend!!

[Phoenix · Rating 3 out of 5]

Very important topic, yet the writing style is very dull and repetitive. Also i don’t know if this was just me but based on the tagline and the cover I thought that was going to be about the American prison system? So this was not what I expected but still interesting, just not engaging in the way I’d hoped.

[Karen · Rating 2 out of 5]

A really interesting (and disturbing) examination of how the government and private companies are taking advantage of the poor and vulnerable, but a difficult read due to the author’s structure and style.

[J. Carmona Fuller · Rating 5 out of 5]

A must read for anyone who might want an astonishing reality check to the social services available to children. Policy needs to change, not tomorrow, not with the next administration, but yesterday. Great read for anyone studying Policy, Social Work, or Criminal Justice.

[Kelly · Rating 5 out of 5]

Eye-opening for me!

[Boeds · Rating 4 out of 5]

Well, that was depressing. Important information nevertheless.

[Dl · Rating 5 out of 5]

Excellent

[Justin Thomas · Rating 5 out of 5]

Scary and sad

Horrifying look about how states and private contractors conspire to steal resources from the needy: including foster children and elderly.

[Austin Anthony · Rating 4 out of 5]

Emotionally exhausting in its thoroughness

[Holly Lagrotteria · Rating 4 out of 5]

Interesting and upsetting as well. Repetitive at times

[Amanda · Rating 2 out of 5]

I agree with the general premise of the book, but I could not get into it.

[Steve Lydick · Rating 5 out of 5]

Not 5 stars for literature but for importance of content. Yes, the book is repetitive and academic. Yes, I am ok with it. Interesting read.

[Seri · Rating 3 out of 5]

*2.9

[Jonathan · Rating 5 out of 5]

An eye-opening, horrifying, and well-researched book about how state and local governments work with private contractors to exploit the most vulnerable populations (e.g., foster children, the elderly, the poor, etc.). Hatcher details the schemes that state/county/local departments create in order to secure funding that they use to plug their own budget holes rather than to serve the populations that they are supposed to serve. We learn about human services agencies that declare themselves the guardians of foster children to secure Social Security Survivor's Benefits--which they just add to their general budget (without telling the children), about the predatory and cruel cost recovery schemes for TANF and foster care (which do more to entrench poverty and break families than to reduce costs), about ways that states pretend to be making Medicaid payments in order to match funding to the federal government which they then use for their general fund (in order not to have to raise taxes on the rich), about states that resell for a profit the prescription drugs secured at a discount from the federal government, about state departments that argue in court that private contractors' right to profit is worth more than the well-being of the children the department serves, and much more. Hatcher maintains an effective balance between anecdote and data--using the former to enliven the latter, not as a substitute. He explains the schemes in depth (with diagrams where necessary), citing court cases and departmental rules. I found his solutions at the end to be underwhelming--I think these problems necessitate a rethinking of the welfare state in order to make it more universal and equitable (beyond just legalistic tinkering). But it is a must-read--especially given how such privatization and predation will likely grow in the next four years.