Americans in Poverty Level and Term Paper

  • Length: 5 pages
  • Subject: Careers
  • Type: Term Paper
  • Paper: #41770563

Excerpt from Term Paper :

Heritage scholars Robert Rector and Rea Hederman found that only a little more than one quarter worked for 2,000 hours or more. They suggested that poverty in America was less of a material deprivation and more of emotional and spiritual loss, the awareness or knowledge of one's dependence on state and federal bureaucrats and a loss of self-esteem resulting from the knowledge of self-insufficiency. The working poor, on the other hand, are capable of facing their future with optimism and confidence, no matter how little they earned. It was the control they had over their lives, which translated into their contribution to the economy (Kersey).

An opposing view was suggested, wherein an increase in the minimum wage would benefit low-income workers, in general, and those below the official poverty line, in particular (Economy Policy Institute 2006). If and when the proposed minimum wage increase was approved, the wages of approximately 7.3% would go up from $5.15 to $7.25 by June next year. It would benefit working families and disadvantaged workers. The 1996-1997 minimum wage increase figures showed that the average minimum wage worker brought home more than half of his or her family's weekly earnings. Adult workers aged 20 and older would stand most to benefit from an increase to $7.25 at 72% in June next year with almost half of them working full time and 34.5% of those working between 20 and 34 hours a week. It would also benefit disadvantaged workers, such as women, at 60.6% from an increase to $7.2 in June 2007. Another disadvantaged group would be the minorities, such as African-Americans at 11.1% and 13.4% Hispanic. But the opinion was that the majority of the benefits at 58.5% would go to families with working, prime-aged adults at the bottom 40% of the income distribution. Most importantly, a minimum wage increase is part of an overall strategy to end poverty, along with the federal Earned Income Tax Credit. A single mother of two who worked 40 hours a week throughout the year and received a minimum wage would have earned $9,893 and became eligible for the maximum tax credit of $3,656, bringing her income to $13,549 or only 5% over the 1997 poverty threshold. But because the current minimum wage has not kept up with increased cost of living, the same family receiving it would now fall below the poverty line. $5.15 today is equivalent to only $4.23 in 1995 or lower than the $4.25 minimum wage level before the increase in 1996-1997 (Economy Policy Institute).

Moreover, a study conducted in 1998 reflected no significant job loss with the 1996-1997 minimum wage increase and even showed better market performance than in previous decades of lower unemployment rates, increased average hourly wages, increased family incomes and decreased poverty rates (Economy Policy Institute 2006). Studies conducted on the 1990-1991 federal minimum wage increase and those by David Card and Alan Krueger likewise reported no significant measurable negative impact on employment. New economic models can explain why there is little evidence of job loss when the minimum wage is increased. They showed that employers could better absorb the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism and raised worker morale (Economy Policy Institute).

Increasing the minimum wage has a liberal voice and a conservative voice (American Voice 2004). The liberal side, impelled by the studies of Card and Krueger, believed that a higher minimum wage could boost employment and reduce job turnover. This side saw that a higher minimum wage could become an effective strategy for generating employment and, therefore, result in greater economic stimulus per dollar of cost than tax cuts for high-income persons. The conservative voice, on the other hand, said that an increased minimum wage would reduce employment, especially for teen-agers, people of color and women. Teen-agers earning the minimum wage typically need the experience offered at entry-level more than a higher minimum wage. Likewise, it did not see an increased wage as an effective tool in fighting poverty because few held full-time jobs (American Voice).

References

1. Economy Policy Institute.2006. Minimum Wage Facts at a Glance. http://www.epinet.org/content.cfm/issueguides_minwage_minwagefacts

2. Kersey, Paul. 2004.…

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