The Causes of Poverty
What makes people poor? There are many causes, all of which have some truth to them.
Yes, some poor people sometimes commit crimes, or act irresponsibly, and end of contributing to their own poverty. (When middle-class people commit the same crimes or irresponsible behavior, however, they rarely end up poor.)
Yes, the racism and other invidious forms of discrimination disproportionately hold down the poor. (At the same time, many of the poor are white, and racism hurts middle-class African-Americans, Latinos, and others.)
Yes, the education system in Milwaukee and the United States in general frequently leaves poor children behind. (It is also true, however, that the very poverty of some children and their families makes it more difficult to provide an effective education.)
All these explanations hold some truth. But they overlook the fundamental labor market cause of poverty in Milwaukee and the United States.
The main reason why Milwaukee has so much poverty is because tens of thousands of impoverished adult job seekers who want to work at good-paying jobs that will lift them out of poverty cannot find work that pays well because the labor market doesn’t provide enough jobs to go around and between 20-30% of the jobs made available by the labor market pay wages too low to get them out of poverty.
In short: poverty in Milwaukee and everywhere else in the U.S. is the direct result of what the job market has available.
The Job Shortage
There are typically far more unemployed adults who seek work than there are job openings available. As a result, many impoverished job seekers end up out of work for long periods of time, and no more than half of them qualify for Unemployment Insurance (UI). The underlying job shortage in our economy is one of the major contributors to poverty.
How big is the job shortage? It depends on the overall status of the economy. When the economy is soft (for example, during 2002 and 2003 and from the fall of 2008 through the present), the falling number of job openings drops far below the rising number of unemployed jobseekers, and the job shortage gets bigger. When the economy is more robust (for example, from 2004 through 2006), the growing number of job openings climbs closer to the descending number of unemployed job seekers, and the job shortage shrinks. But with the rarest of exceptions (such as the late 1990s), Milwaukee like the rest of the U.S. has experienced a significant job shortage for most of the last several decades.
There are now well over 9.3 million unemployed Americans and no more than 3.3 million available jobs—a job shortage exceeding 6 million.
Source: U.S. Bureau of Labor Statistcs
We unfortunately don't have specific data for Wisconsin, and the most recent data for the Milwaukee area is over two years old. Based on current U.S. data and the older Milwaukee data, however, it's reasonable to estimate that Wisconsin as a whole has a job shortage of at least 120,000, and that the Milwaukee area's job shortage is in the range of 35,000–40,000.
A Plethora of Low-Wage Jobs
The current Wisconsin minimum wage is $6.55 per hour. In mid-2009, a higher federal minimum wage kicks in at $7.25 per hour. But full-time and year-round workers who earn the minimum wage end up with $14,266–$15,080 in mid-2009 – which is thousands of dollars below the poverty line for a single parent with two (or more) children or a married couple with one (or more) children.
Thousands of Milwaukee, Wisconsin, and American workers – including many adults with families – earn the minimum wage or close to it. They remain poor not because they don’t work, but because their low wages leave them below or barely above the poverty line.
The Lack of Health Insurance…and the Cost of Health Care, Child Care, Housing, Energy, and Food
Poverty also results from a lack of adequate health insurance which makes health care (including addiction treatment and mental health care) unaffordable, as well as the high cost of child care, housing, energy and food. Even among low-income adults who manage to find jobs at wages that technically put them above the poverty line, many still find it impossible to maintain a decent standard of living because the “basics” cost so much. Health, energy, and food costs are a particular problem as they are now rising faster than inflation.
Inadequate Early Childhood Education
Finally, poverty results from failing to provide all children the early education, during the first three years of their lives, that prepares their bodies, their brains, and their habits to succeed in school…and thus in the labor market and their future lives. A growing body of research makes clear how important it is for children, from the moment of birth until they enter school at age four or five, to receive essential health care, positive verbal stimulation, and good learning habits. Without these, many low-income children enter school years behind their peers. But with the help of well-designed early education programs, poor children can narrow and even close much of the gap and do as well as other children in school - leading them ultimately to jobs and incomes that lift them (and their children) out of poverty.
