Personal Improvement

Why is it So Hard to Escape Poverty in America

Last Updated on September 5, 2019 Last Updated on September 5, 2019
Why is it So Hard to Escape Poverty in America

The federal government has been fighting a war on poverty for more than five decades, even longer than it has been fighting the war on drugs and it’s been just as successful. Which is to say, not very successful at all. America has one of the highest poverty rates among developed countries.

Escaping poverty is largely down to luck no matter what the bootstrap brigade would like you to believe. If you’re lucky enough to be born in the right place to the right family, you’re very unlikely to ever experience real poverty or even just being broke.

But if through an accident of birth, the cards were stacked against you, you’re in for a long, tough slog. Escaping poverty isn’t out of your reach but you are going to have to do absolutely everything right. The passes to say nothing of the endless perks afforded to the lucky ones will not be afforded to you.

If you get caught with a joint, you’re going to be arrested and likely end up with a criminal record, especially if you’re black or Hispanic. No affluenza defense or acquittal for you. If you don’t have the grades to get into college, no fake crewing background wrapped up in a $500,000 bribe is going to change that for you.

But the war on poverty cavalry isn’t coming to save you. Or even the cavalry of common human decency in the form of a properly funded and administered system of safety nets or a supplemental poverty measure. So if you’re looking for ways of escaping poverty, you’re going to have to do it for yourself.

Poverty in America

Poverty has different definitions largely dependent on geography. The poverty thresholds for those in the developing world are different from those for low-income families in America.

Most Americans with some shameful exceptions have easy access to clean drinking water for example. But millions of Americans don’t have access to healthcare.

Can anyone with a gunshot walk into an ER and receive treatment? Yes, (which is good since it’s like the Wild West in this abattoir of a country) but that’s not healthcare.

People without insurance coverage have worse access to care than people who are insured.

One in five uninsured adults in 2017 went without needed medical care due to cost.

Studies repeatedly demonstrate that the uninsured are less likely than those with insurance to receive preventive care and services for major health conditions and chronic diseases.

No one in America is literally starving to death but millions live with food insecurity. Food insecurity is “the state of being without reliable access to a sufficient quantity of affordable, nutritious food.”

Food insecurity pyramid

According to HUD, as of 2017, there were around 554,000 homeless people in the United States on any given night which is 0.17% of the population.

Individually, maybe all of these numbers don’t seem that high. But when you factor various markers of poverty together, 42.6 million people, 13.4% of the population, live in poverty.

In the richest nation on earth. A nation that allocated $716 billion to defense spending which is more than China, Russia, Saudi Arabia, India, France, the UK, and Japan combined but just $71.5 billion to education.

Classifying Poverty

There are two measures of U.S. poverty- poverty threshold and poverty guidelines.

Poverty thresholds define and quantify poverty. It’s a dollar amount considered the minimum required for basic needs. The number varies by the age and number of people in a family.

The poverty threshold is updated yearly by the U.S. Census Bureau. If a family’s yearly household income is below the threshold, everyone in that family is classified poor.

For 2018, the poverty threshold for a single person under 65 was $12,140, for a family of four, $25,100.

Federal Poverty Level

Poverty guidelines are issued by the Department of Health and Human Services and are a simplified version of the poverty threshold. Poverty guidelines are used to determine eligibility for programs like Medicaid and the Supplemental Nutrition Assistance Program (formerly known as Food Stamps).

The 2018 poverty guideline for a family of four is $25,100.

Many of us are unfamiliar with either of these terms. The term we usually see is poverty line as in “living below the poverty line.” Poverty line is the same as the poverty threshold.

These numbers seem outdated. Consider the median cost of a one-bedroom apartment. In 2018, it was $1,025. A year’s rent costs $12,300. But the poverty threshold and remember it’s gross, is $13,064. The math won’t work out no matter how you crunch the numbers.

Also, consider that the national housing wage for a one-bedroom apartment is $17.90 and the federal minimum wage is $7.25, which hasn’t changed for a decade.

Cities and states can set their own minimum wage and most do. But currently, the highest minimum wage in the U.S. is in Emeryville, California at $15.69 per hour. Still well short of the $17.90 an hour for a one-bedroom.

Get our best money lessons:

Types of Poverty

Just as poverty can be defined in different ways, there are different types of poverty.

Situational Poverty: This type of poverty is usually temporary as it involves a crisis or loss occurring. Events connected with situational poverty include environmental disasters, divorce, or severe health problems.

A good example of situational poverty caused by an environmental disaster would be New Orleans after Hurricane Katrina. Many people were homeless, lost their jobs, lost everything. The fall of the economy can also be considered an event that could cause situational poverty.

Generational Poverty: This type of poverty involves the birth of two generations into poverty. Because they were born into this situation, they usually don’t have the tools to get themselves out of it.

Absolute Poverty: This type of extreme poverty is rare in the United States. People in absolute poverty don’t have basic necessities like a home, food, and water. Their only focus is on surviving from day to day.

Relative Poverty: This type of poverty is known as relative because it is relative to the average standard of living in that person’s society. What is considered high income in one country could be considered middle class in another. If a family’s income isn’t enough to meet the average standard of living, they are considered to be in relative poverty.

Urban Poverty: This type of poverty is only for metropolitan areas like New York with populations over 50,000. Overcrowding, violence, noise, and poor community programs make it difficult for people suffering from this type of poverty to get out of it.

Rural Poverty: Like urban poverty above, rural poverty occurs only in specific area types. These areas are nonmetropolitan with populations below 50,000. The low population limits services available for people struggling financially, and a lack of job opportunities compounds the problem.

The Effects of Poverty

Poverty is grinding and the effects ripple out from individuals to families to communities, and to societies. Poverty is a public health issue that affects everyone. So let’s start at the beginning, child poverty.

The child poverty rate in the U.S. is 17.5%, for children in a home headed by single mothers, it’s 50%.

Poverty and Academic Achievement

Children from poor backgrounds lag behind at all stages of education.

  • By the age of three, poorer children are estimated to be nine months behind children from wealthier backgrounds.
  • At the end of primary school, students receiving free school meals are estimated to be about three terms behind their peers.
  • By 14, the start of high school, this gap increases to over five terms.
  • By 16, children receiving free school meals are about 1.7-grade points below their more affluent peers’ average GPA.

Poverty and Psychosocial Outcomes

Children living in poverty are at greater risk of behavioral and emotional problems.

  • Some behavioral problems may include impulsiveness, difficulty getting along with peers, aggression, attention-deficit/hyperactivity disorder (ADHD) and conduct disorder.
  • Some emotional problems may include feelings of anxiety, depression and low self-esteem.
  • Poverty and economic hardship are particularly difficult for parents who may experience chronic stress, depression, marital distress, and exhibit harsher parenting behaviors. These are all linked to poor social and emotional outcomes for children.
  • Unsafe neighborhoods may expose low-income children to violence which can impact mental well-being. Violence exposure can also predict future violent behavior in youth which places them at greater risk of injury and mortality and entry into the juvenile justice system.

Poverty and Physical Health

Children and teens living in poorer communities are at increased risk for a wide range of physical health problems.

“Income and economic inequality are important factors in a wide range of social and health outcomes. One meta-analysis suggests that one-third of all deaths in the United States can be linked to inequality.”

  • People in the highest income group live an average of 6.5 years longer than those in the lowest income group.
  • The mortality rate for African-American infants is double that of white infants.
  • Poor adults are twice as likely to have diabetes as affluent adults.
  • Poor children are twice as likely to have unhealthy levels of lead in their blood than other children.

Causes of Poverty

Inequality is the simple answer, in all its forms.

Healthcare Inequality

The American healthcare system relies on private insurance. As a result, those with employer-sponsored insurance have more access to healthcare. Prior to the ACA, nearly a quarter of Americans had little or no health insurance. This resulted in more than 101,000 deaths.

Those in the top 1% live 15 years longer than the bottom 1%.

Educational Inequality

Every kid in American is entitled to free public education but all public schools are not equal. Public schools are funded by local property taxes so you can see the problem. This problem is writ large in places across the country. Here’s an example from Connecticut.

While students in higher-income towns such as Greenwich and Darien have easy access to guidance counselors, school psychologists, personal laptops, and up-to-date textbooks, those in high-poverty areas like Bridgeport and New Britain don’t.

Greenwich spends $6,000 more per pupil per year than Bridgeport does, according to the State Department of Education.

Given their inferior education, it’s harder for poor kids to get into college. If they “pull themselves up by their bootstraps” and manage to educate themselves enough to get into college, they still often don’t go. Why not?

The College Board collects information about colleges and universities across the United States. The organization recently investigated how much it costs Americans to attend a publicly-supported, four-year college in their home state.

It found that the average cost for a single student for the 2016-2017 school year is $20,090.

Yet the U.S. higher education system does have other choices. There are two-year community colleges and private four-year universities. Also, students must consider what financial aid can do for them.

For example, after including federal financial aid, the College Board found that the average yearly cost of a four-year public college is $14,210.

Income Inequality

This is the big one. One-quarter of American workers make less than $10 per hour. Most of these low-wage workers receive no health insurance, sick days, or pension plans from their employers.

“The American Dream is rapidly becoming the American Illusion, as the U.S. … now has the lowest rate of social mobility of any of the rich countries.”

In 1981, the top 1 percent of adults earned on average 27 times more than the bottom 50 percent of adults. Today the top 1 percent earn 81 times more than the bottom 50 percent.

The U.S. had the largest income inequality in the developed world, trailing only Chile, Mexico, and Turkey.

15 Ways to Fight Poverty

This is not about what should be done about poverty or what could be done about poverty. By every poverty measure, poverty in the U.S. could be eliminated.

This can simply be done by diverting a fraction of the bloated defense budget to things like healthcare, education, and public works projects that would not only fix our crumbling infrastructure but provide well-paying jobs with good benefits.

In the richest country in the world, no one should live at the poverty level. But here we are. You’re going to have to do this for yourself.

And you’re going to have to do all of it perfectly without a moment of falter because one false step, one small mistake, can undo whatever else you’ve done right up to that point. Being poor is not only expensive in America, but it is also completely unforgiving.

1. Educate Yourself

You’re going to have to scrounge up every educational opportunity you have outside of your public school because your public school likely sucks if you’re poor. Read books, take online classes at Coursera, edX (free courses from 140 institutions like Harvard and MIT, go to after-school tutoring programs, look for free summer school courses.

And learn something useful. I hate this bit of advice because I think everyone should learn about a wide variety of things including “less useful” things like literature, art, and history. But when you’re poor, you do not have the luxury of learning “for fun.”

The kind of stuff you need to learn is practical, how to manage money, how to invest, how to code, how to apply for scholarships to pay for college.

2. Find a Mentor

If you’re poor, odds are that you live in a “chaotic” household. At best you have two parents who don’t know much about how to escape poverty otherwise they and you wouldn’t be poor.

You need to find an adult who can teach you things like what it means to eat healthily, how to fill out a job application, how to apply for financial aid and scholarships, how to write a college essay.

You need a guide to help with your escaping poverty efforts. You’re a kid, it’s not your job to know these things. If you don’t have family who can teach them to you, find a mentor.

A mentor can be a teacher or a volunteer from a dedicated mentoring program like Big Brothers Big Sisters or a more local organization. If you don’t know where to start, Google “mentoring programs near me” and get yourself into one.

There are mentoring programs for adults too.

3. Stay Your Ass Out of Trouble

I hated where I grew up and if you’re growing up poor, you might too. Do you know what I did as a kid? Sat in my room reading books and waiting to go to college. I didn’t blunt my misery with drugs or alcohol (I started doing that way later!).

I didn’t deal with the tedious boredom of life in a go-nowhere town with wild friends doing things like shoplifting or breaking into cars. Nor did I hang out on the corner giving cops a reason to hassle me.

And I’m a white girl so even if I had done those things, there probably wouldn’t have been any consequences, certainly none that colored the rest of my life. If you’re a minority, you won’t be as lucky. Black kids are five times more likely to be incarcerated than white kids.

This should be no problem as you’re too busy educating yourself to get into trouble.

4. Stay Healthy

Even in the face of health inequality, there are simple, inexpensive things you can do to keep yourself healthy, mentally and physically and usually, the things that keep you mentally healthy keep you physically healthy as well.

Food deserts are real and if you’re a kid reading this (I really hope some kids are reading this) you don’t always have a lot of control over your diet. Eat as well as you can in your circumstances. There are ten million versions of “eating well” but it’s really pretty simple.

  • Eat enough protein. Your brain needs protein.
  • Eat vegetables, preferably green ones like lettuces and broccoli.
  • Don’t eat junk food very often.
  • Don’t drink anything but water, black coffee, or unsweetened tea. No soda, no juice, not even 100% juice, it’s pure sugar.

That’s about it. If you can follow those rules most of the time, you’ll be fine. If you’re not sure what is healthy or how to cook, the internet can tell you everything you need to know.

Get some exercise on most days. It really improves mental and physical well-being. I work out every day. I lift weights (12-pound dumbbells) in my kitchen and run outside.

Costs me $0 after the dumbbells and running shoes. You don’t even need dumbells, you can use your own body weight. You do need decent running shoes though if that’s your chosen form of exercise.

5. Don’t’ Develop Bad Habits

Not like biting your nails, like smoking and drinking and drugs. They’ll eat up your disposable income, destroy your health and possibly your life. There is nothing wrong with having a drink a day but you know what I mean.

6. Don’t Have a Kid

You can have a kid or even more than one eventually if you want. You’ll have a lot more disposable income if you don’t though. But don’t have a kid young, before you’re financially stable, and outside of marriage. I expect pushback on the marriage part but the stats don’t lie. Children do better in every metric when they’re the product of a married couple.

If you want a sure path to poverty for yourself and your kids, be a young, single parent. The cost of child care alone will cripple you financially even with tax credits. I’m not telling you not to have sex, you’ll do it anyway and sex isn’t “bad.” But use birth control.

7. Get a Job

Start working part-time during the school year and full-time in the summers as soon as you’re old enough to get a job. You can use the money to buy better food, to save for college, or just to save. There are even plenty of online jobs for teenagers.

8. Get Out

I don’t know what made me realize there was a bigger world out there than the one I grew up in but I knew there was and I couldn’t wait to join it. And I did. I got out and experienced the bigger world, met people who were different than I am and different from anyone I grew up around.

There is nothing special about me and I think if I hadn’t gotten out of the no-opportunity town I grew up in, I might have been dragged down by the crabs in a bucket mentality. If everyone and everything around you are mired in poverty, get the hell out and away as soon as you can.

It’s scary and hard to move to a new place where you don’t know anyone and where the way of life is different than what you know but it’s so worth it. I know two sisters who were of course raised by the same parents in the same way whose lives turned out very differently.

One got out, went to college and became a teacher. The other didn’t and started having kids in her teens, has worked crappy low paying jobs her whole life, lives from one financial crisis to the next and was a grandmother by age 37, starting the third generation of poverty.

9. Go to College

College graduates make more than their peers who did not attend at all or failed to graduate. But college isn’t a guaranteed way to escape poverty. If you’re going to get a degree, get one that will enable you to make a good living.

And don’t go into debt to do it, or at least avoid as much student loan debt as you can. We saw that financial aid only goes so far so you have to look for other ways to lower college costs and pay that tuition bill.

student-loan-refinance

Do your prerequisites at a community college before transferring to a four year. Work part-time and take classes part-time, there’s no rule that you have to graduate in four years. Or work for a few years to save money for college.

Again, no rule stating only 18-year-olds can go to college. Apply for every scholarship you are remotely eligible for. Lots of small scholarships can add up.

Not everyone is cut out for college and college isn’t the only way to escape poverty. There are plenty of careers that pay well and don’t require a four-year degree.

10. Get Health Insurance

Even the cheapest health insurance plan can protect you from being financially wiped out in the event of a major accident or illness. And many low-cost plans provide free basic health care like a yearly physical and certain preventative measures.

And use your health insurance. Prevention is cheaper than the cure so taking care of minor things before they become big things protects your health and ability to continue working.

11. And Renters Insurance

If you become a homeowner, your lender will require you to have homeowners insurance but if you rent, most landlords don’t.

lemonade-insurance

Not having renters insurance is a bad gamble. It’s not expensive, about $20 a month and it can bail you out of all kinds of situations that could ruin you financially.

12. Learn Financial Basics

Even people who didn’t grow up poor often don’t get much personal finance education but if you did grow up poor, you might really be behind. Much like staying physically healthy, staying financially healthy isn’t that complicated.

  • Learn how to create and stick to a budget.
  • Avoid debt, especially “bad” debt like credit cards and payday loans.
  • Create an emergency fund.
  • Start investing early. Even if it’s only a few dollars a month, investing is one of the best ways to not only escape poverty but to grow wealthy.
  • Invest for retirement. Social Security won’t be enough.

13. Pick Your Partner Wisely

The person you share your life with has a tremendous amount of influence on your entire financial life. Make sure that person shares the same values as you when it comes to money. And talk about money often. Finances are one of the most important areas of our lives and one of the least discussed.

14. Help Until or Unless

Poor people are more generous than the rich. Probably because poor people know what it’s like to be poor and they want to help others in the same boat.

It’s admirable to help your family and friends who are not doing as well as you. Until helping them hurts you. If helping puts you in financial jeopardy, you are allowed to say no.

Or unless they don’t deserve your help. The ties that bind can strangle and just because someone is your “friend” or related to you, does not mean you owe them anything if they’re abusing your generosity or preying on your guilt.

15. Get Help

If you’re struggling, there is help, free help, available. Don’t wait until a bad situation gets worse before you reach out.

Urban Upbound is one example of free financial help for those escaping poverty.

The Great Escape

Escaping poverty is not easy. Forces that you can’t control are working against you at every turn. That’s why doing everything we’ve listed is so important. They’re things you do have some control over. And none of them are beyond anyone reading this.

Escaping poverty is just the start but it’s the hardest part. Once you’re on the other side, you can start actually building wealth. Building wealth is a million times easier than escaping poverty. And LMM is here to help.

We can teach you to budget, to get a great job, to get a great raise, to make extra money, and to invest. Make the Great Escape and we’ll be here waiting for you on the other side.

learn podcast popular toolbox search