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Generational poverty is the opposite of generational wealth. Instead of inheriting a solid financial foundation and getting a leg up in life, kids are taught very little about finance and learn to live hand to mouth. It’s a phenomenon that affects millions of people in the United States alone, and an important one that needs to be addressed.
Poverty In America
In order to understand generational poverty, we first need to have an understanding of poverty in America. Here are some quick facts about poverty, provided by Poverty USA.
- The poverty threshold for an individual is a household income of approximately $13000 per year, and it’s approximately $26000 per year for a family of four
- Over 38 million Americans are living in poverty
- There are over 11 million children in poverty
- There is a racial disparity in poverty – 20% of black families are in poverty, 17% of Hispanic families, and 10% of white and Asian families. Native Americans have the highest rate of poverty, at 25%
- 3 million Americans live in deep poverty
- 93 million Americans live close to poverty
Is Generational Poverty Real?
Generational poverty is very real, and it’s defined by Urban Ventures as a family who has lived in poverty for at least two generations. Many families facing generational poverty have lived in poverty for far longer than that.
People who are trapped in generational poverty often lack the education, resources, and even hope to escape it. Poverty is the only thing they know. There is no planning for the future, there’s only trying to survive day to day.
What Causes Generational Poverty?
It can often seem to those of us looking in from the outside that it’s their own fault they are poor. They spend the little money they have on junk food, cigarettes and alcohol. If they only saved that money – they might be able to dig out of poverty and provide a better outcome for their children. We shake our heads and blame them for their situations, as if saving that twenty bucks every week would help them pay for college or buy a house.
The reality is more difficult to face, because doing so means we have to acknowledge the systematic policies in place that work to keep people trapped in generational poverty. We have to acknowledge that some of those systems have given us a leg up, and they’ve helped us achieve our goals at the expense of others.
In a society where rugged individualism is celebrated above all else, it can be difficult to take a minute and appreciate all the help that we received in reaching our goals. Whether that be in the form of tax breaks, parental help, or even just not having to overcome unconscious (and sometimes very conscious!) biases that hiring officials have in regards to race and gender.
The truth is that there isn’t just one cause of generational poverty. It’s a multi-faced issue with causes ranging from racism to financial policy, access to healthcare to access to education.
How Can Someone Overcome Generational Poverty?
A lot of us only consider the individual. We think that it’s up to each person to claw their way out and overcome the systematic failures that created generational poverty.
Don’t get me wrong – it is possible. There are a few people who have worked incredibly hard and beaten the odds. They worked multiple jobs while in high school, got scholarships for college, and did everything they could to break the cycle of poverty that their family was stuck in. Unfortunately, we as a society often look to those exceptional examples as proof that anyone can do it, and the reality is that isn’t true. Not everyone has the same skills and aptitude. Not everyone can be exceptional, and you know what? That’s okay. We shouldn’t put the onus on the individual to overcome generational poverty when it’s not the individual’s fault that they are stuck in it.
How Can Society Fix Generational Poverty?
The real fix for generational poverty will come at the societal level. There are some social safety-nets in place, like SNAP (Supplemental Nutrition Assistance Program) and TANF (Temporary Assistance for Needy Families) – which are commonly referred to as food stamps and welfare, but they aren’t enough.
We, as a society, could do so much more to help the working poor escape poverty. We just have to collectively decide that programs designed to help people are worthwhile, and make an effort to fix the programs we already have in place.
I’m no policy expert or anything, but these are some of the things we can do, in my opinion, that would help end generational poverty and help give poor families a shot at economic mobility.
This is where we take a small curve away from discussing facts about poverty, and transition into an editorial piece about what I think we can do to fix it.
End the Welfare Cliff
Unfortunately, our system is designed to prevent people from digging out. We have a “welfare cliff”, rather than a slope. That means if people try to do better, get better jobs, they lose all their benefits and are thrust back to square one. This leaves people hopeless and thinking there is no escape. Why try harder when they are going to be punished for it?
We can fix this by ending the welfare cliff. Instead of losing benefits the second your income reaches a certain threshold, the benefits should taper off slowly. This will give people an incentive to keep working harder – an incentive to try to do better. It will prevent families from having to chose between taking an insecure job and keeping the benefits they had to desperately fight for in the first place. In my opinion, ending the welfare cliff would give thousands of people a real opportunity to get out of poverty.
Make Education and Childcare Affordable
Two of the biggest obstacles to escaping poverty, in my opinion, are the lack of affordable childcare and the lack of affordable education. These two expenses are destroying American families and keeping generations stuck in cycles of poverty.
Having kids is expensive. According to American Progress, it costs Americans on average $1230 per month to pay for childcare. That’s nearly $15000 per year. The poverty threshold for a single parent with one child is a little under $18000 per year. Even if that parent made enough to be just at the threshold, paying for childcare would only leave $3000 to pay for every other expense. If they have more than one child, the cost of working would be far more. That’s just not feasible. It’s no wonder that single parents chose to stay on government assistance rather than work.
Please don’t comment with stuff like “they shouldn’t have gotten pregnant” or “stop having kids you can’t afford”. Having kids shouldn’t be a privilege reserved only for the affluent. People shouldn’t be punished for circumstances outside of their control. You never know someone’s individual situation either, so let’s not judge. Instead, let’s do better for these families.
One of the best ways to dig out of poverty is to get educated and get a good job. That’s great for the middle-class, who have access to student loans and good high schools. For the poor, getting an education is a dream. It’s just prohibitively expensive, and because their families are stuck in poverty, they don’t have access to loans to help them pay for it.
End Trickle Down Economics
Trickle-down economics was a fun thirty-year experiment that didn’t work. It led to huge levels of income inequality and made it more difficult than ever for people to advance in socioeconomic status. It’s time to end this system that benefits only the richest among us, and start looking into programs that would help everyone.
In my opinion, UBI would be the best place to start. Putting cash directly into the hands of the people so that they could spend it on whatever they need would do wonders for lifting people out of poverty and stimulating the economy. Our system is flawed, and it’s time to find a drastic solution to fix it.
Acknowledge and Work to Fix Systematic Racism and Sexism
One thing that our society has failed at is being frank about systematic racism and how it plays into generational poverty. There’s a reason that the statistics show black families are more likely to be in poverty – and that’s racism.
Racism is built into our systems. Racial inequalities in the criminal justice system has led to nearly 1/3 of all black men being issued prison sentences. That’s compared to 1/17 of white men. Black men are more likely to be treated unfairly at every stage of the process – from being targeted and searched more, convicted more, and given harsher sentences. How can you dig yourself out of poverty if you are stuck in prison? How can you help your family escape? Can you even get a decent job if you’ve served time? This situation is untenable and absolutely needs to be fixed.
But racial inequality is prevalent everywhere, not just in our justice system. Black-sounding names on job applications are less likely to get called for an interview than white names. Red-lining was illegal until the 1970s – that was only one generation ago! And the real estate industry still makes it more difficult for black families to buy homes now – they just do it in sneakier ways, like requiring more documentation, requiring higher credit scores, and requiring higher incomes. People of color, especially women of color, earn less on average than any other segment of the population. These are issues that we all need to come to terms with and work to address.
Institutional sexism is also a problem that works to keep single mothers trapped in poverty. The gender pay gap is very real. Women with children, even when they can manage childcare, are discriminated against because employers think they can’t be trusted. God forbid a company give parents (and people in general) time off to be sick or care for loved ones.
We have the power to change this system. We have the power to lift millions of families out of generational poverty. To help our fellow Americans have better lives.
There’s one important thing we can do, and that’s vote. But don’t vote among party lines. Vote for politicians, regardless of party, who have proven track records of working to solve these issues. Vote for the policies that would help reduce generational poverty, even if they might end up costing you a little more in taxes. The health and welfare of millions of Americans depend on it.
Melanie launched Partners in Fire in 2017 to document her quest for financial independence with a mix of finance, fun, and solving the world’s problems. She’s self educated in personal finance and passionate about fighting systematic problems that prevent others from achieving their own financial goals. She also loves travel, anthropology, gaming and her cats.