How to Help Decrease Poverty
Support quality education for all., Make sure people are paid fairly., Increase the social safety net., Broaden ownership.
Step-by-Step Guide
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Step 1: Support quality education for all.
On an individual level, the extent of a person’s education is one of the strongest predictors of income potential.
So by supporting programs that strengthen the educational system, you help give individuals the tools they need to stay out of poverty.Education is multidimensional.
A good education results from a combination of factors, including the skill of the instructors, funding for educational supplies (like textbooks or computers), and diligent attention to performance in every grade level.
So when you want to support quality education, it means supporting a variety of programs—from training of the instructors to equal access—that help students maximize their academic potential.While a good education makes it less likely that a child will grow up to be a poor person, it doesn’t eliminate poverty itself.
Poverty is simply a lack of resources (money, in the modern economy).
If everyone has resources, no one will be poor.
Education doesn’t directly address that problem.
If everyone got a medical degree tomorrow, the world would still need janitors, cashiers, and fruit pickers—and they still wouldn’t make much money. -
Step 2: Make sure people are paid fairly.
The two simplest ways to do this include setting minimum wage levels that keep people out of poverty, and enforcing robust collective bargaining and unionization policies, such as a guaranteed right to strike, protections against retaliation, and automatic union registration.While many economists believe that minimum wages increase unemployment, the evidence for this is weak.Perhaps the best evidence for a high minimum wage is this: not a single rich country has a low minimum wage, and not a single poor country has a high minimum wage.
Although there are a few European countries with no national minimum wage, trade unions negotiate minimum wage rates for each sector of the economy.Strong unions generally mean high wages.
The United States is the only rich country in the world with weak labor laws.
Unsurprisingly, the US has the highest poverty rate of all rich countries, and one of the lowest rates of unionization.
As the share of the unionized workforce has declined, the rise of working poverty has increased in tandem., While education and strong wages prevent people from falling into poverty in the first place, the social safety net safeguards those who do fall into poverty.
The social safety net includes cash transfers, in-kind benefits, and statutes defining the duties of creditors to debtors and employers to employees.
The stronger the social safety net, the farther it pulls people out of poverty.
Social safety net benefits in the US are often insufficient to pull someone all the way out of poverty, meaning that even with their eligible benefits factored in, they still fall below the poverty line.The classic example of US cash transfer programs are Social Security Disability (SSD) benefits and Supplemental Security Insurance (SSI).
SSI, for example, simply gives certain types of poor people money—a cash transfer from the government to the individual.SNAP (food stamp) benefits and Medicaid are in-kind benefits.
These programs don’t give a person money so that they can get their own food and health care, they give them the good or service directly.
Statutes contributing to the social safety net might include usury laws, which define the maximum allowable interest a person can be charged, bankruptcy protection, and paid sick leave laws., The ownership of assets determines wealth, while the amount of money a person makes determines income.
Most poverty reduction programs emphasize increasing incomes, but increasing wealth is just as important, because wealth is more permanent.
Broadening ownership can be accomplished in many ways, including:
Increasing access to low interest credit for poor people.Interest is the price of money.
If money is lent at a low price, it allows people to buy assets, like real estate or businesses, at a low price.Creating strong legal incentives for employee ownership.Giving employees ownership of the firms they work for broadens the distribution of assets.
For example, firms over a certain size might be required to divest stock to their employees in proportion to the profit derived from their labor—imagine the how differently wealth might be distributed if the employees of a huge corporation like Walmart were all stockholders in the company.
Take a house as a metaphor for wealth and income.
The construction crew that builds the house represents income, and the building materials represent the beginnings of wealth.
The crew is a valuable resource, but its benefits are transient.
As long as the crew is used to build the house, the building materials have a permanent benefit. -
Step 3: Increase the social safety net.
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Step 4: Broaden ownership.
Detailed Guide
On an individual level, the extent of a person’s education is one of the strongest predictors of income potential.
So by supporting programs that strengthen the educational system, you help give individuals the tools they need to stay out of poverty.Education is multidimensional.
A good education results from a combination of factors, including the skill of the instructors, funding for educational supplies (like textbooks or computers), and diligent attention to performance in every grade level.
So when you want to support quality education, it means supporting a variety of programs—from training of the instructors to equal access—that help students maximize their academic potential.While a good education makes it less likely that a child will grow up to be a poor person, it doesn’t eliminate poverty itself.
Poverty is simply a lack of resources (money, in the modern economy).
If everyone has resources, no one will be poor.
Education doesn’t directly address that problem.
If everyone got a medical degree tomorrow, the world would still need janitors, cashiers, and fruit pickers—and they still wouldn’t make much money.
The two simplest ways to do this include setting minimum wage levels that keep people out of poverty, and enforcing robust collective bargaining and unionization policies, such as a guaranteed right to strike, protections against retaliation, and automatic union registration.While many economists believe that minimum wages increase unemployment, the evidence for this is weak.Perhaps the best evidence for a high minimum wage is this: not a single rich country has a low minimum wage, and not a single poor country has a high minimum wage.
Although there are a few European countries with no national minimum wage, trade unions negotiate minimum wage rates for each sector of the economy.Strong unions generally mean high wages.
The United States is the only rich country in the world with weak labor laws.
Unsurprisingly, the US has the highest poverty rate of all rich countries, and one of the lowest rates of unionization.
As the share of the unionized workforce has declined, the rise of working poverty has increased in tandem., While education and strong wages prevent people from falling into poverty in the first place, the social safety net safeguards those who do fall into poverty.
The social safety net includes cash transfers, in-kind benefits, and statutes defining the duties of creditors to debtors and employers to employees.
The stronger the social safety net, the farther it pulls people out of poverty.
Social safety net benefits in the US are often insufficient to pull someone all the way out of poverty, meaning that even with their eligible benefits factored in, they still fall below the poverty line.The classic example of US cash transfer programs are Social Security Disability (SSD) benefits and Supplemental Security Insurance (SSI).
SSI, for example, simply gives certain types of poor people money—a cash transfer from the government to the individual.SNAP (food stamp) benefits and Medicaid are in-kind benefits.
These programs don’t give a person money so that they can get their own food and health care, they give them the good or service directly.
Statutes contributing to the social safety net might include usury laws, which define the maximum allowable interest a person can be charged, bankruptcy protection, and paid sick leave laws., The ownership of assets determines wealth, while the amount of money a person makes determines income.
Most poverty reduction programs emphasize increasing incomes, but increasing wealth is just as important, because wealth is more permanent.
Broadening ownership can be accomplished in many ways, including:
Increasing access to low interest credit for poor people.Interest is the price of money.
If money is lent at a low price, it allows people to buy assets, like real estate or businesses, at a low price.Creating strong legal incentives for employee ownership.Giving employees ownership of the firms they work for broadens the distribution of assets.
For example, firms over a certain size might be required to divest stock to their employees in proportion to the profit derived from their labor—imagine the how differently wealth might be distributed if the employees of a huge corporation like Walmart were all stockholders in the company.
Take a house as a metaphor for wealth and income.
The construction crew that builds the house represents income, and the building materials represent the beginnings of wealth.
The crew is a valuable resource, but its benefits are transient.
As long as the crew is used to build the house, the building materials have a permanent benefit.
About the Author
Michael Chavez
Experienced content creator specializing in practical skills guides and tutorials.
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