Root Causes of Poverty
To better deal with the problem of poverty first we need to understand its causes. The reasons for poverty can generally be divided into individual factors — such as certain behaviors and life choices — and structural factors beyond the control of individuals, such as the economy. There is much debate about whether personal or external factors are the main reason Americans live in poverty today.
It is important to acknowledge the role certain behaviors and life choices play in a person’s likelihood of entering or remaining in poverty as there are innumerable examples of Americans overcoming the disadvantages that often lead to poverty.
But individual choices alone cannot explain the level of material deprivation in America today. Compared to previous generations, upward income mobility today is becoming increasingly less common, and in some areas it is close to zero. According to recent research on intergenerational mobility, the percentage of children who earn more than their parents is down from approximately 90% of children born in 1940 to roughly 50% of children born in the 1980s.
Upward mobility is easier to achieve when segregation and inequality are low, when the school system is of higher quality, and young people are supported to obtain an education. These have all worsened or changed, however, due largely to widening gaps in income and community resources.
Richard Rothstein, a senior researcher and segregation expert at the Economic Policy Institute, has in his analyses of socioeconomic disparities shown that groups with greater disadvantage will necessarily have lower average educational achievement than more affluent groups.
A lack of health insurance, low-weight births, fewer preventive doctor visits, school absences, frequent moves and school switches, greater exposure to crime and drug use, job layoffs, financial distress, and a host of other factors are more common in low-income communities and contribute to worse outcomes for children in school as well as for adults who may be trying to improve their standards of living.
In such communities, the impact of structural factors is clear due to the failure of individual choices to remedy a family’s economic precarity, according to Tim Smeeding, Lee Rainwater distinguished professor of Public Affairs and Economics at the University of Wisconsin’s LaFollette School of Public Affairs. In an email to 24/7 Wall St. Smeeding added, “The combination of low wages and intermittent work, especially amongst single parents, most of whom are working to some degree won’t by themselves bring the family from poverty.”
Scheduling changes, need for child care, unexpected expenses such as a high medical bill or sudden losses of income, as well as simply the characteristics of where a person was born, also contribute to the problem of poverty in the United States.
While some areas have unbroken histories of economic disadvantage, there are new areas, notably in the nation’s once economically vibrant industrial hubs, where the chance of obtaining a decent standard of living has fallen precipitously.
Places like Dayton, Ohio; Gary, Indiana; Detroit, Michigan, and other former industry hubs and innovation centers had broad based prosperity during the 1930s to 1970s. More patents were recorded per capita in Dayton — the city where the Wright Brothers started working on bicycles — during that time than any other U.S. city.
Today, Dayton has a 30.7% poverty rate and is struggling with an opioid epidemic. Officials of Montgomery County, which contains Dayton, estimated that Ohio as a whole would see 10,000 overdoses by the end of 2017.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.