Employment instability and an inadequate social safety net are two realities confronting many low-income individuals in the United States, and often families. turn to debt as a way to make ends meet. Increased access to credit cards has helped many in the U.S. enter “mainstream” financial life, but the fees and interests of these products are often very high. But debt is not just a way to overcome financial difficulties; in the United States, borrowing can help achieve upward mobility through student loans to finance higher education and mortgages to buy a home. But does debt help to smooth consumption and promote progress up the economic ladder? Or does it play a more insidious role? What lessons can we draw from historical accounts of debt and sharecropping?
Data for this paper comes from a longitudinal qualitative study of 45 low and moderate income women living in the Detroit metropolitan area who were interviewed yearly from 2006 to 2011. Nine were recruited via flyers while the remaining were recruited into the study after they had participated in a large survey. Reflecting the demographics of the Detroit area, the sample is predominantly African American. Women ranged in age from 21 to 61 years old at the start of the study. On average, household income was less than twice the federal poverty line, with nearly half (22) of the women consistently having income below the poverty line.
The interviews were recorded and then transcribed into word processing files. This analysis focuses on discussions about debt, placing women’s narratives about why they took on debt and the role debt plays in their overall financial well-being in a historical context, contrasting these accounts to those collected by historians from sharecroppers in the South.
Results and Implications
Women took on debt for a variety of reasons, including paying for unexpected expenses and needing money when the social safety net was not responsive to income loss. Substantial debt arose from trying to become upwardly mobile, in the form of student loans and mortgages. However, over a six year period (or longer in some cases), no one was able to pay down their debt.
Families current experience has eerie parallels to the sharecropper system in place in the post-Civil War South. The wages (or public benefits) low income individuals are paid are never enough or do not come in a timely enough fashion to keep up with bill payments. Families today use debt as a way to manage day-to-day, like sharecroppers did when they had to borrow in order to plant, to pay rent, and to purchase food. Families can find themselves trapped in a cycle of debt, never able to pay down balances, let alone make a dent in debt they might have accrued in the past. They have become modern-day sharecroppers, always owing someone and never being able to fully “settle up.”