Causes of Poverty in the U.S.A.
This paper explores the problem of poverty in the U.S. It explores the meaning of poverty and delves into its root causes. By contextualizing the causes of poverty such as corruption, this paper aims to show how poverty is brought about by the wider economic developments in the world. The paper also discusses the problems of First World countries and how these can be solved. Primarily, the study manifests that money is not the main solution to the problem of poverty. Thus, the paper presents several possible solutions to end poverty.
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Causes of Poverty in the U.S.A.
Many nations in the world are experiencing poverty. (See Table 1.) It is one of the most common and universal problem of today. As a result, the percentage of poor people keeps on growing. It is estimated that roughly over 80% of the total population lives on less than $10 a day. Also, majority of them (more than three billion people) lives on less than $2.50 a day. According to UNICEF, about 22,000 children die of poverty each day. Sadly, they “die quietly in some of the most destitute homelands on earth, very much detached from the scrutiny and the conscience of the world.” In addition, about 27 to 28 percent of all children in the Third World countries are classified as underweight or stunted. The bulk of these deficits are in the regions of South Asia and sub-Saharan Africa. With these, it is then evident that poverty has taken its toll as a major problem of the world. (See Table 2).
In the U.S., about 15.1 percent of all persons lived in poverty in 2010. (See Table 3). The U.S. poverty rate in 2010 was the optimal level since 1993. From 1993 and 2000, the poverty rate dropped annually and it reached 11.3 percent in 2000. In the past, the poverty rate for all Americans was 22.4 percent in the 1950’s or about 39.5 million individuals. These numbers steadily dropped down throughout the 1960s. It reached a low of 11.1 percent or 22.9 million individuals in 1973. Over the next ten years, the poverty rate fluctuated between 11.1 and 12.6 percent. However, it started to steadily increase again in 1980. By 1983, the number of poor individuals had increased to 35.3 million people or 15.2 percent.
For the next decade, the poverty rate remained above 12.8 percent. It rose to 15.1 percent or 39.3 million individuals in 1993. The rate dropped for the remainder of the 1990’s to 11.3 percent by 2000. From 2000 to 2004, the rate rose each year to 12.7.
In the 60s, the poverty rate for adult people (aged 65 years and above) has significantly decreased. The poverty rate for children has been somewhat higher than the general poverty rate in the past. The poverty rate for single women headed households has dramatically increased as compared to the general poverty rate.
As it is, the problem of poverty in the U.S. is indicated by the marked differences in the socio economic profiles of the Whites and the colored citizens. This paper shall explore the different aspects of poverty in a very powerful and rich country such as the U.S. While it seems absurd that there are poor people in the “land of milk and honey,” it has also been evident that many of the citizens live in poverty and they lack the different resources such as health cards or insurance. This paper shall also contextualize the root causes of poverty and its connection with political events.
II. What is Poverty?
As Encyclopedia Britannica defines it, poverty is “the condition of an individual who lacks a common or socially acceptable amount of money or material possessions.” The said definition might seem to be common if inquired by the people. However, no matter what the definition of poverty is or no matter what other people refer it as conceived, it remains undeniable that poverty is so prevalent in today’s world.
If traced back to history, poverty has been a concern in previous societies even before the beginning of recorded history. Anthropologist and historians recorded poverty occurring in the ancient civilization of Egypt, the Sumer in the Middle East, and the Indus Valley (which is now India). The rulers and other influential or rich members of these ancient civilizations usually mistreated the poor. They sometimes subjected them to hard labor or they enslaved them. Poverty was common during the time of the Great Roman Empire. For instance, there are accounts telling how poor Roman citizens sold themselves as gladiators to solve their financial problems. Indeed, poverty has been a perennial problem among peoples and among countries all over the world.
Poverty is characterized by various features and it is hardly brought by just one cause. It is a broad range of massive problems with various inter-linked but distinct indicators. There are enormous numbers of people in the world who experience and suffer from poverty. Aspects of global poverty include but are not limited to the following:
- Poor access to health services and high incidence of disease
- Unpredictable or lack of access to food and staples
- Reduced access to credit or insurance to control risk
- Not being able to participate effectively in society
- Insufficient basic social security/services
Many of these aspects are related to low, total levels of material wealth and to low, relative levels of wealth.
III. What Causes Poverty?
Americans families were having challenging times to make both ends meet even before the recession. With the continuing unemployment and increasing costs of living, more and more families have to choose between basic necessities like health care, child care, and even food. In 2012, the national poverty rate increased to include 13.2% of the total U.S. population. Hence, about 1 out of 7 people were at risk of experiencing hunger in the United States. To add, about 3.5 million people were actually sleeping in parks, under the bridges, in institutional shelter or vehicles.
The combination of the high standards of living, low-wages and high unemployment rates exacerbate the problems of poverty and force many Americans to decide their spending between food, shelter and other expenses. Studies reveal that money devoted to food is usually the first to be sacrificed. Families will usually pay their fixed bills first (like rent and utilities) instead of buying their food.
The economic factors which cause poverty include the following:
- Low Incomes - many low and minimum wage workers cannot provide themselves sufficient food and steady shelter. In the last 25 years, wages for the lowest income workers in the U.S. have not kept pace with the dramatic rise in the cost of living costs. There was no increase in salaries for those who are in the highest income brackets as well. The loss of value of the minimum wage has been experienced since the late 1960s due to the adjustments in inflation. As such, the present minimum wage is worth 27% less compared to the 1968 figures. This leaves the lowest salaried workers unable to provide for their basic needs such as housing, food and medical care.
- Lack of Affordable Medical Care - the cost of health care and insurance has significantly increased over the past years and can cost a family up to $8000/annually. For families living on low or middle incomes, this cost can be exorbitant. For families or individuals that lack health insurance, a sudden illness, chronic disease, or accident can be financially devastating.
- Lack of Affordable Shelter – there is a great need for affordable shelter in the U.S. The growing gap between wage earnings and the cost of housing makes millions of families and individuals live shabbily. According to the National Low Income Housing Coalition, U.S. families across the nation must earn a “housing wage” of $15.37 an hour, nearly three times the present minimum wage, to be able to rent two-bedroom apartment at the average fair market price. Even in West Virginia or the cheapest rental state in the country, a full-time salary earner must work for more than $8.78/hour-$3 higher than the federal minimum wage-in order to afford a two bedroom apartment.
The political factors which cause poverty basically highlight the reduction in the federal assistance for housing programs and social services which have coincided with the rise in homelessness in the country. During the 1950s and 1960s, federal housing projects and services nearly stamped out the homeless. During the 1980s, however, housing programs were reduced to almost half and the homeless population in the U.S. began to increase once more.
Programs created to provide a safety net for individuals and families who live at or near the poverty line. One fine example is the Temporary Assistance for Needy Families (TANF). Such programs also faced difficulties and budget cuts which usually make it harder or impossible for individuals at risk of or who are already experiencing homelessness to secure of the said program or service. The program’s components like work requirements, penalties, time limits, and immigrant limitations take off many Americans from the program’s benefits. The lack of a safety net to help, many of the lowest earning individuals must choose between necessities like food, medical care, and housing to live decently.
In sum, the main causes of poverty in the U.S. are the absence of means to proper food, health services and education. Low wages and pressure from other economies with low wage bases are also causing poverty in the U.S. since their economy is highly globalized (which means that they are selective of cheap labor resources, making their own people jobless). Other causes of poverty are the differences among the sub group’s income and race, tax breaks for corporations which exclude lower income businesses, and other social class inequities.
Poverty in the U.S. exists because the economic system is arranged in a manner that motivates wealth accumulation at one end and creates conditions of scarcity on the other end. Hence, this makes poverty inevitable. However, the present market system promotes poverty in other ways as well. With the intent to make profit, for instance, capitalism places a high value on competition and efficiency. This encourages companies and their managers to control costs by making wages in its lowest or most competitive level and replacing workers with machines or replacing full-time workers with part-time workers.
This makes it rational for people to move jobs to regions or countries where labor is more competitive and workers are not complaining about the abject working environment, or where environmental laws against industrial wastes are not rigid, or workers experiencing occupational hazards are weak or unorganized. Market system economy also promotes shutting down of factories and investing of money in other enterprises which offer a higher ROI.
These impact the lives of many people, especially those on developed countries like the U.S. Even when they have full-time jobs, there is no guarantee of a decent living, which is why so many families depend on the earnings of two or more adults just to survive. All of this is made possible by the simple fact that in a capitalist system most people neither own nor control any means of producing a living without working for someone else.
The situation is also made worse by the high divorce rate. To illustrate, large numbers of single-parent families who have a hard time relying on a single parent for both childcare and living. The historic legacy of racism in the U.S. continues to stagger millions of people through poor education, discrimination, isolation in urban ghettos, prejudice, and the diminishing of industrial jobs. These minorities are often paid less salaries as they have relatively small formal education. These were the jobs which made it possible for various generations of white European immigrants to stay out of poverty. The decent jobs that were once available to these minorities at competitive wages are not lacking for the masses of urban poor.
As shown, the patterns of widespread poverty are inevitable in an economic system that sets the terms for how wealth is produced and distributed. Hence, the best way to tackle poverty is to alter the main economic system which cripples the lives of millions of Americans.
V. Solutions to Poverty
Generally, most people believe that money is the best possible solution to end poverty. However, it is not the only solution there is. Money is supposed to be a temporary solution and not because one has given a portion of his income to those who are poor does not mean that those people are totally alleviated from poverty. However, money should not be the thing to be given to the poor. If money is not given to them, the government can pool more resources to ensure that all the poor people are given basic commodities and social services in the most equitable and efficient manner. Hence, more successfully, the problem of poverty is reduced.
Hence, financial aid is not a sweeping solution to end the ever increasing incidences of poverty. Donations, if used for the wrong purpose, have the potential to do more harm than good. Poverty is not purely a lack of money. It should be considered along with the relational causes and aspects of poverty.
In another sense, the concept of poverty should not be totally taken in money or economic terms. Most people are poor because the Western world defines poverty by accumulation, net worth and wealth. Many of the world’s “poor” might be reclassified through more virtuous traits in defining their poverty. It does not really mean that if people have so much money, they are already rich. People are also considered poor because of cultural values, practices and social expectations. Money is not individually owned, it is communal. Hence, when someone gets money, it is distributed to the whole family, both the deserving and the undeserving. People often share and distribute their money instead of just owning it.
There are also other solutions to poverty. This starts from identifying the root causes of poverty itself, then, drawing out solutions to address the cause. In case to case basis poverty, it was stated that unemployment and lack of education are the major causes of poverty. Indeed, education indeed offers a whole lot of new opportunities. Educated people make a significant endeavor in ending the cycle of poverty. To further expound, unemployment can more easily be solved if people have graduated from school. They would have a better opportunity to get jobs with sufficient salary. Hence, poverty would then be reduced or most probably be managed by society.
Another best possible solution to poverty is financial aid regulation. This means that the government as well as the governments of other countries must less focus on giving financial aid to poor people or underdeveloped nations. Hence, in order to end poverty, there must be two things that must be taken into close consideration: education and most importantly, regulation on financial aid.
Poverty is indeed a huge problem in the world today. Surprisingly, even rich nations like the U.S. experience cases of poverty. Poverty has varied causes. Hence, it also has a variety of solutions. The primary causes of poverty are lack of economic opportunities and social inequity in the general society. Sub groups, especially the Blacks, lack education and economic opportunities. As for the solution, it is not money alone. There are several factors that can help reduce poverty such as financial aid regulation and education. While social services is the immediate solutions to ease the incidences of poverty in the U.S., it is also highly important that the economic order is also revitalized to ensure that even when there is strict competition everywhere in the world, the local workers are not disadvantaged by the country’s global competitiveness, especially in terms of finding cheap labor.
Population living under 1.25 and2 dollar (PPP) a day (%)(International poverty line)
Source: The World Bank, 2013. “Poverty.” Available through: http://data.worldbank.org/topic/poverty. [Accessed on 16 November 2013].
Percentage point change in proportion of population living below the national poverty line
Source: ILO Website. 2013. “Poverty, Income Distribution and the Working Poor.” Available through: http://kilm.ilo.org/manuscript/kilm18.asp. Accessed on 16 November 2013.
SOURCE: U.S. Bureau of the Census, Income, Poverty, and Health Insurance Coverage in the United States: 2010,Report P60, n. 238, p. 61.
Children Living in Poverty
SOURCE: U.S. Bureau of the Census, Income, Poverty, and Health Insurance Coverage in the United States: 2010, Report P60, n. 238, Table B-2, pp. 68-73.
1) See Anup Shah, POVERTY FACTS AND STATS, p. 1.
2) See Anup Shah, POVERTY FACTS AND STATS, p. 1
3) See Anup Shah, POVERTY FACTS AND STATS, p. 1
4) See National Poverty center Website, http://www.npc.umich.edu/poverty/.
5) See Ha-Joan Chang, POVERTY, ENTREPRENEURSHIP AND DEVELOPMENT, http://www.wider.unu.edu/publications/newsletter/articles-2010/en_GB/10-2010-Chang/.
6) See Ann Harrison, GLOBALIZATION AND POVERTY, http://www.nber.org/papers/w12347.pdf?new_window=1.
7) See Ann Harrison, GLOBALIZATION AND POVERTY, http://www.nber.org/papers/w12347.pdf?new_window=1.
Hacker, J. S. (2006). The great risk shift: The new insecurity and the decline of the American dream. New York: Oxford University Press (USA).
Chang, Ha-Joan.“Poverty, Entrepreneurship, and Development.” United Nations University – World Institute for Development Economic Research. October 2010. Web. 13 March 2013. < http://www.wider.unu.edu/publications/newsletter/articles-2010/en_GB/10-2010-Chang/>
Harrison, Ann. “Globalization and Poverty.” National Bureau of Economic Research. June 2006. Web. 02 April 2013. < http://www.nber.org/papers/w12347.pdf?new_window=1>
Hassan, Marwan. “Less focus on aid – an unexpected solution to poverty.” The Yorker. 05 December 2012. Web. 05 April 2013. <http://theyorker.co.uk/comment/opinion/international/12976-less-focus-on-aid->.
National Poverty Center. “Poverty in the U.S.” 2013.< http://www.npc.umich.edu/poverty/>.