Why The U.S. Can’t End PovertySep 08, 2023
37.9 million. That is the number of Americans currently living in
poverty, representing 11.6% of the total population. This is despite the fact that the United States ranks first as the richest nation in the world in terms of GDP. The United States is known for having great abundance, and at the same time, along with that abundance, there is widespread
povertyand economic insecurity. Sometimes you wonder, you know, this is the United States of America, how can citizens be going through a problem like that? We always brag about being a superpower, that we are the richest in the world and things just don't make sense.
Poverty in the United States had been steadily improving over the past decade. From a high of 48.8 million people living in poverty in 2013 to 34 million in 2019. That was until the pandemic changed its course. COVID absolutely had a very profound impact on access to employment and long-term employment for a number of families who were already vulnerable for a variety of reasons. Before, it was my two older brothers and I, along with my stepfather, who worked constantly to support everyone in the house. But after COVID 19 and all the confinement, they fired us. And since then we have had problems finding work.
Poverty is expensive. About 11% of the federal budget or $665 billion goes to economic security programs. Child poverty alone is estimated to cost the US more than $1 trillion, according to the latest research from 2018. There are also really high costs at the individual level. Poverty generates more anxiety. It leads to more stress. It leads to more health problems, all kinds of things that amplify the effect of poverty. The feelings you would normally encounter when you are in this position are mainly depression. Why can't I find a job? Why are we in this situation? You know, we're doing our best and sometimes we just fall flat on our faces.
So how did poverty become such a major problem in the United States, and why is it so difficult to end? Income inequality is one of the main reasons why the United States suffers from such high poverty rates. The income of the top 10% was more than 13 times that of the bottom 10%, according to the US Census. Unfortunately, in the United States we are at the high end in terms of income inequality. And so what happens is that when the distance gets further and further, the rungs of the ladder get further apart and it's harder for people to climb those rungs from poverty to the middle and upper class.
The pandemic has worsened inequality. The Gini index, which measures the country's income inequality, increased by 1.2% for the first time in a decade in 2021. The reason the pandemic has worsened is because when you talk to large organizations, corporations, what What they saw was that the staff was leaving, but they had an answer to that, right? His response was: let's give bonuses. Let's give raises. Many organizations, many small businesses and governments do not have that luxury. So inflation has kept pace with the money most people in the 1% have earned. But it has deepened and widened the gap between those who have money and those who do not.
Research from MIT estimates that the living wage in the United States is $24.16 per hour for a family of four. But the federal minimum wage is set at $7.25 an hour. This means that a typical family of four needs to work more than two full-time minimum wage jobs to earn a living wage, and single-parent families must work much harder. We work in a banquet hall. Any type of party, we organized it, we arrived early, we set the tables, the plates, the cutlery, everything, whatever. We work for 15 dollars an hour. It was really bad. I would say we were really overworked.
Sometimes 13 hour shifts. We were really frustrated with where we were, but at the same time, we were thinking, what are we going to do if we leave? You know, we were at that stage where, yes, we hate this job, but we have to keep it to continue. Wage problems are especially worse for workers of certain races. If we look at the broader population of poor or low-income people, that is, one emergency away from being poor, we are talking about approximately 140 million people. Of the 140 million, more than 70 million people, more than half of that population are people of color.
The United States also suffers from a lack of social safety nets that protect Americans from poverty. If you look at, for example, the amount of money that people could receive if they are low income, it is very, very minimal. We're on welfare right now and it's about $250 for my household of seven and it's actually helped us a lot. Sometimes the numbers really don't make sense because how can a large family live on a couple hundred dollars, especially now in this day and age where you go to the grocery store, you spend, and some items cost $100? Most countries, for example European countries, have what is known as child benefit, where if you have a child, you receive a certain amount of monthly income to help raise them.
That's pretty common. But in the United States we don't have any of that. And in the United States we don't have universal benefits, for example, health care or child care. It is also a system that is often omnipresent and creates situations of poverty. So I'll give you an example. If I'm eligible for Medicaid today and I'm also eligible for cash assistance and I'm also eligible for SNAP, if I get a job that gets me a little bit closer to poverty, I lose all of those benefits immediately. which means that if I need medical care for my children and I have a job that is not going to provide it right away, I am incentivized not to look for a job that pays me an amount that makes me ineligible for certain benefits. , good?
So while people are working very hard to achieve upward mobility, the systems we have do not give them the grace to be able to lift themselves out of poverty and give them their own agency to actually create the opportunity for upward mobility. The official measure of poverty in the United States today is based on estimates from the mid-1960s. It is calculated by comparing pre-tax income to a threshold set at three times the cost of the minimum subsistence allowance in 1963. A large number of federal programs still rely on this measure to determine who is eligible for assistance and welfare.
The researcher, whose work became the basis for that measure, never intended for it to be used in the way it is currently used, as a generalized measure of poverty, but as the basis for all these different welfare programs. social and fund allocations. resources for those programs. He does not take into account certain very obvious indicators. For starters, he looks at pre-tax income, which isn't what I take home every day, so it doesn't make sense. He also doesn't discuss different family compositions, which absolutely influence how a family can spend money. If I'm the type of family where both of my parents live with me, I'll spend more.
It does not consider expenses related to food or childcare. So in many ways, it's incredibly outdated because it hasn't kept up with the way life has changed for most Americans. In response to these criticisms, the supplemental poverty measure was developed in 2011 as an improvement over the existing measure. It incorporates into the measurement both the cost of basic needs such as food, clothing, public services, but also transfers and government programs. So you could see the effect of government programs to address poverty and economic insecurity. It also takes into account geographical differences. Therefore, the supplemental poverty line varies more depending on where you live, the size of your household, and what your housing situation is.
That's why it is more complete. In that sense, it is an improvement over the official poverty measure. But some experts argue that even the supplemental poverty measure is not a perfect method. Although it sought to close the gap in certain indicators that the original poverty measure did not take into account, it did not go far enough. Food is one of those places where we still don't take into account what food can do in a state like New York versus a state like Mississippi. So, if you have a universal brush for the entire country, you will lose a number of people who are at risk of falling into poverty or who technically already live in poverty but who are not counted by the measure.
The Census Bureau told CNBC that both the official poverty measure and the supplemental poverty measure provide consistent poverty measurement data and that the Bureau continually strives to innovate and improve the design and measurement of its well-being statistics. . This difficulty in measuring poverty has also led some experts to argue that poverty is not as serious a problem as it is made out to be. Poverty in America and the way it is typically understood is not a big problem at all. It is deliberately miscounted. So the reality is that we have poverty in America because the Census Bureau ignores the entire welfare state when counting poverty.
You count poverty by saying, well, a household has an income, let's say less than $26,000 a year, but you don't count all the social benefits or 95% of the social benefits, and you also underestimate income by about 50%. Therefore, there is a lot of poverty basically because most of the resources that these people have are not counted. Unless we can get an accurate figure for how prevalent poverty is in the United States, trying to eradicate it is nearly impossible. When we don't have those numbers. Many people who make political decisions do so blindly. Whether I'm a large corporation looking to invest in an organization or a city, or I'm a public official trying to determine how much SNAP is enough.
If I don't have a baseline, there's no way I'm ever going to solve the problem. If COVID has proven anything. Poverty is a problem that can be solved with the right policy. Government assistance caused a significant decline in the supplemental poverty measure, lifting 45.4 million Americans out of poverty during the height of the pandemic. I would argue that policies are one of our most powerful tools to fully address and eradicate poverty. It's where we can define what the problems are, measure them accurately, and then design and implement the programs we need to address the true extent of poverty.
A very good example that I will use is that of older people. This is the only real success story in the United States, as we have truly been able to reduce poverty rates among seniors thanks primarily to Social Security and Medicare. So if we didn't have those programs today, poverty rates for seniors would go from about 10% to 40%. And that shows the dramatic impact that government programs and policies can have on poverty reduction. Discovering a more accurate method of measuring poverty is a vital step in eradicating the problem. I would start by changing the way we define and measure poverty to include the full scope of economic insecurity.
Another way of measuring poverty, which is a way that European countries and other countries use, is what is known as a relative measure. And that's why they say that if you fall below 50% of the median income, then we will count you in poverty. So if the median income was $70,000 and you fell below $35,000, you would be considered poor. More targeted social programs could also have a significant impact on the impoverished community. Some of those programs may include an expanded child tax credit, like the one we saw in 2021 when it was expanded during the pandemic, raising the minimum wage immediately to at least $15 an hour, but then moving toward a living wage and ensuring that everything Anyone who wants to work can do so with the guarantee of ability and access to a well-paid job.
I think a really simple solution that people have been talking about lately is the idea of a universal basic income. So the idea here is that if poverty is a lack of income, then a very simple way is to transfer some income. This is the analogy I would use to get people to change their way of thinking, and it is the musical chairs analogy. Let's say we have ten people playing and eight chairs available. Now, who will win and lose in that game? Well, if we focus on individual level factors, people who were in a bad position when the music stopped and so on.
But if we focus on the structure of the game, then two people are going to lose regardless of individual attributes. And that's what's happening here in the United States. We are focusing on people not working hard enough. They are not doing this. They are not doing that. When really the problem is thatThere are not enough chairs in the game.
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