How the Poverty Trap works to keep people poor

The poverty trap is a mechanism that keeps people stuck in a cycle of poverty. The working poor can’t achieve the dream of upward mobility, because it requires money that they don’t have access to. 

What Causes a Poverty Trap?

Poverty traps are generally caused by limited access to credit & capital markets, the destruction of agriculture, disease, lack of access to health care, war, and degrading infrastructure. 

People get trapped in a cycle of poverty because they don’t have access to savings accounts, investments, or credit.  

The poverty trap affects millions of Americans. There are mechanisms in place in the United States that make it virtually impossible for the working poor to dig themselves out of poverty. Many of them do in fact correspond to the studied causes of the poverty trap. 

The Poverty Trap in The United States

If you’re comfortable in your middle-class bubble, you might not realize that millions of the working poor don’t have access to bank accounts. 

Free Checking Isn't Free if you are Poor

Most banks offer free checking only if you follow certain requirements. Generally, you need to have a certain amount of money direct-deposited each month, maintain a certain balance, or make a certain number of transactions.   The poorest among us can not meet these requirements, and thus have to pay for checking. 

Lack of access to healthcare

Most of the working poor do not get healthcare through their employers. They don’t get time off for sick leave either. Their choices are to go to work sick, or stay home and not get paid (and even risk getting fired). They can’t see a doctor because it’s prohibitively expensive, so they stay sick, or even die of curable diseases. 

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To learn more about the poverty trap in the United States, and what you can do to fight back!