In 2019, the official poverty rate in the US was 10.5%. This was the lowest rate since estimates began in 1959. But that’s still an astonishing 34 million people below the poverty line, and other estimates put a much higher number. According to a recent report, those numbers rose to at least 11.7% in 2020, thanks in large part to the coronavirus pandemic.
While some may experience short-term poverty, others will remain trapped in poverty for life, and generations will be burdened by persistence, even in America. So what should we do? With January being National Poverty in America Awareness Month, now is a good time to explore the causes and effects of poverty and what we can do to fight it – both for ourselves and for others.
Causes of Poverty in America
It would be a breeze to try to summarize a thorough discussion of the causes of poverty in a few paragraphs. This is not an easy subject and there are many opinions and studies on the subject. Some researchers argue that structural causes such as the economy or income inequality are to blame and need to be addressed through government programs and initiatives. Others claim that behavioral and cultural factors related to education, employment and family are more causal and that some government programs do indeed enable poverty. Many see this as a complex combination of structural, behavioral and cultural influences, and both personal choice and government intervention play a crucial role.
In addition to the deep causes, we should highlight key factors that the above researchers say tend to cause, maintain, or correlate with poverty, such as:
- Education: Frequent absenteeism and failure to finish high school are caused by and perpetuate poverty.
- Crime: It is believed that greater exposure to crime and drug use increases the likelihood of poverty.
- Marriage: Poverty is far more common in single-family households.
- Health: Serious health problems, mental illness, and a lack of health insurance can all contribute to poverty.
- Employment: Poor economic conditions and the inability or failure to find employment are often the forerunners and perpetrators of poverty.
Of course, extensive research has been and is being carried out in America on these and other causes of extreme hardship. However, a basic understanding of them enables us to help ourselves and others to escape poverty or to avoid it in the future.
Who is most affected?
Studies show that poverty affects certain population groups disproportionately. A recent study found that nearly half of people living in poverty were non-Hispanic whites, but minorities and ethnic groups were over-represented in the general population relative to their number. For example, Hispanics made up 18.5% of the total population in 2018, but 27.6% of the people living in poverty. Similarly, blacks made up 12.3% of the total population but 21.9% of the poor population.
In addition, most of the poor are women and almost a third are children. Women are more likely to lead single-parent households and their income is on average lower than that of men. In terms of age, working-age adults are the largest group and most people living in poverty do not have full or part-time employment. With these numbers, it is easy to see why much poverty reduction efforts focus on minorities, vulnerable youth, single mothers and the unemployed.
How to Fight Poverty
It’s understandable to feel overwhelmed by such a complex and ubiquitous problem. There are no easy, quick fixes, but each of us can make choices in our daily life that can affect the results for ourselves and for those who are close to us. We can start by prioritizing education, efforts to find and stay employment, and individual and community work that offers youth alternatives to drugs and crime.
At the individual level, we can also do everything in our power to improve and maintain our own financial literacy and wellbeing, including:
- Create a budget
- Establishment of an emergency fund
- Avoid Excessive Debt
- Build up savings, including for retirement
And on a larger scale, making an effort to help others is always a good thing, whether we are in good financial shape or still having problems. Some options to help fight poverty in America include:
- Donate or volunteer for local charities like soup kitchens, food banks, emergency shelters, after-school programs, etc.
- Promotion of local and national policies and initiatives to support the poor and minorities and to combat discriminatory practices.
- Donations to national charities that focus on poverty solutions.
- Teaching others how to improve their money management skills.
These things may seem like small contributions that would barely handle such a colossal problem. But like many great movements, it starts with individuals in their communities. The minister and abolitionist Edward Hale wrote: “I am only one, but I am one. I can’t do everything, but I can do something. And I’m not going to let what I can’t interfere with what I can. “
Stay up to date and expand your financial literacy
Understanding and combating poverty in America is one of those noble endeavors that takes time, effort, and openness. But apparently small actions can also have a big ripple effect. Visit our blog for more information and stories about financial literacy, literacy, debt management, and how you can lead yourself and your family towards a better financial future.