Economic Causes of Poverty





Economic Causes of Poverty

Executive Summary

Problem Statement

Unemployment is a leading cause of economic inequality within the nation.

Key Stakeholders

The Constitution mandates the federal government to ensure the presence of a favorable environment that allows citizens access to gainful employment. As such, skilled and unskilled workers are integral in addressing this problem. It is also noteworthy that owners of various manufacturing jobs are partly responsible for the existence of income inequality due to their adoption of automation systems. A low education level amongst the populace is another factor as well.

Cause of Dilemma

Addressing the issue of wealth inequality is problematic due to the need for increasing the wage bill. Raising the level of expenditure would reduce revenue streams hence affecting the profitability of businesses. Whereas the government and other policy makers would want to make this happen, most of the unemployed lack the technical capacities for the jobs hence enhancing the poor status. In fact, the application of a capitalistic culture rather than a welfare system prohibits such blanket assistance to the population. Rather, the American Dream lays an emphasis on hard work. It is, however, imperative that something is done to lowers income inequality. As such, can reduction of poverty be pegged on employment alone?

Policy Options

Types of Options

Creation of caps to limit the incentives given to the wealthy would be a better way of ensuring income distribution across the divide is even. Increasing of income tax rates especially on capital income would also optimize such sectors while the initiation of programs to engage the unemployed is also welcome. In these forums, the new recruits should be subject to higher minimum wages thereby having disposable income for use. It is thus evident that lowering the gap between the rich and the poor would entail the input of many entities. For instance, the involvement of employers can be secured by obtaining additional and better apprenticeships to increase the number of proactive personnel.

Pros and Cons

Curtailing tax breaks to wealthy corporations and individuals would lead to their shifting to offshore tax havens thereby reducing the chances of employing American citizens. It would however, lead to the installation of financial discipline. An increase in minimum wages would also disrupt the various sectors due to the clash that would pit labor unions and companies. Such hostility could cause a rise in turnover or even confrontations that are risky to economic development. In contrast, this would ensure that workers are rewarded for their services hence boosting productivity that is relatable in GDP performance. Long-term investment in apprenticeships would also be needed hence increasing expenditure. It is, however, beneficial to the economy because the practical skills and mentorship forums enhance employment chances of attendees thereby offering them hopes for the future. As such, they are able to reduce the rich-poor gap.


Clear Choice

Investing in apprenticeship programs pitting employers and potential employees is the best choice for addressing income inequality in the country. Such an action would lead to the development of useful networks between the two groups while also enhancing productivity in different industries. The practical lessons offered on these platforms would be necessary for offering skills with a ready job market hence aiding in the circulation of money within the economy upon gaining employment. It would also be an ideal way of igniting competition among the unemployed because they would be stirred into acquiring a competitive advantage over each other. Their determination and eventual absorption into the job market would enhance their financial positions as well. In fact, it would be a precursor to the much-needed job growth that is essential in spurring economic growth.

Additional Justification

Low employment levels have been blamed for numerous societal vices such as an increase in crime rates. Upon the occurrence of these incidents, investors lack the confidence to locate their investments in such an area citing instability. Notably, such an environment degrades the standards of living thereby affecting the poor more than the rich. Ensuring that such people are not idle prevents them from engaging in such crimes. Imparting them with practical skills enables them to be self-reliant or even employed in complementary industries. It also helps them to cater for certain responsibilities such as rent payment and purchase of food thereby aiding the circulation of money within the economy. It manages to make such people self-sustaining thereby lowering the gap between the wealthy and the poor. As such, wealth discrimination is better addressed by having unemployed workforce join relevant industries within their locales. These developments would empower the poor thereby helping them live a decent life. Having the means to pay one’s bills is a powerful way of eradicating poverty in one’s life. It would offer them the autonomy to make consumer decisions without having to rely on the state. By reducing the dependency, culture championed by welfare enthusiasts, the rich-poor divide narrows, and the society experiences a boom in its prospects. In some cases, it would develop into long-term friendships between the employees and employers hence increasing chances of engaging in repeated business transactions for longer durations.


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