Modeled after the system in England, people seen as unable to provide for themselves, also known as "paupers, are sent to the Overseer of the Poor, or the "Poor Master," who uses tax monies to provide food, water, and housing. Many people living on the streets are forced into poorhouses, which are also known as "almshouses" or "work houses," where their labor is exploited and they are often housed in unsanitary conditions.

People living in poverty (or their families) can also put themselves up for auction and be sold to the lowest bidder, who will be contracted to provide them with food, clothing, housing, and care. In the early years of this system in the U.S., people use their barns for poorhouses, which will become known as "poor farms." By the mid-1800s, the poorhouse system will be questioned for doing little to reduce the problems of poverty and houselessness. After the Civil War, legislation that provides assistance for war veterans and their families will prohibit placement in poorhouses.