“What is poverty? Poverty is hunger. Poverty is lack of shelter. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time. Poverty is losing a child to illness brought about by unclean water. Poverty is powerlessness, lack of representation and freedom” (The World Bank, 2009).
People are deemed poor if their incomes are insufficient to obtain the basic necessitates for themselves or their families. The most common and stereotypic explanation of poverty is the poor cause their own poverty because in America anything is possible if you want it. This “blame the poor” point of view is does not apply to all poverty stricken, a big misperception is that the poor do not work. Not only are most poor people able and more than willing to work hard and they do so when given the chance. The fact is nearly half of the poor populations of working age do work even if it is minimal and millions of them work full-time. The decline in wages is very hard on families with dependent children. Because of changes in our economic structure availability of well-paying blue collar jobs in manufacturing companies is limited. Most industries are outsourcing to other countries to minimize labor costs and using machines to replace workers. Therefore younger adults, particularly those who have very little education are forced to work in service oriented jobs for lower pay, no benefits and no chance for promotion. Because minimum wage does not keep up with inflation, it is nearly impossible to earn enough to keep families out of poverty.
According to our text, you have to understand the prices for human and capital resources and what determines the quantities that can be employed. Actual wage rate determination is based on the marginal revenue product (marginal product of labor and marginal revenue). As for the price for capital, the price of any kind of capital depends on the demand for and supply of units of capital, and, at market equilibrium, the price of capital equals what that capital is worth to its employer.
Market discrimination is another cause of poverty according to the text. Power to discriminate and the desire to discriminate are the two primary sources of market discrimination. The power to discriminate comes from a monopolistic market, which does not exist in the present day of the United States. The desire to discriminate is driven from people that are just downright prejudice. From an economic prospective, prejudice results in the resources being allocated on a basis other than productivity. So, employment opportunities and incomes of the adversely affected groups are reduced.
The 2001 census bureau report 22.2 percent of people without a high school diploma lived in poverty as opposed to 9.6 who had a diploma. 14.2 percent of high school dropouts were lived in long term poverty, while 3.8...