The True Factor of Poverty

The epidemic of poverty can be best explained by factors like marital status and attributed to minimum wage laws, not capitalism.

By Othman Mekhloufi | United States

Poverty in the United States is classified by several factors. Approximately 40 million Americans are in poverty, with many getting by with the minimum wage mandated by law. Some are homeless, and others suffer from the incapability to support families, not being able to put food on the table, and barely being able to live a happy life. Poverty is a horrible and egregious thing for the individual to have to deal with. However, when the individual makes decisions that worsen or continue their already unpleasant economic status, we have to analyze the reasons why.

Why are so many people impoverished within the United States? First, we must understand what leads to poverty, its factors being single-parent homes, having to raise children on an unstable financial state, low wages such as minimum wage, and a lack of skills. All of which fall under the category of a lack of religious morals, values, and social responsibility.

The Legislated Minimum

Many say that poverty is directly linked to the minimum wage and that it, therefore, should be raised to provide workers with a “living wage” in an attempt to reduce poverty to a respective extent. If employers are simply compelled by law to compensate employees more, they’ll do so without any economic and financial repercussions. However, an increase in the minimum wage would cause inflation. Businesses, now required to increase their expenses, may modify their operations, whether it is in the form of laying off workers, raising prices, or halting the employment of new faces.

A minimum wage is a form of compensating an individual with minimal skills for minimal work production. It’s not necessarily a living wage, but rather a wage paid to what the individual produces in profit capacity for their employer. If a worker’s labor was valued at $5 an hour for their employer, the worker would only merit compensation of $5 an hour, or less; an equal, or lesser value of the work production capacity produced. For example, if a worker were to produce $5 for their employer each hour, and were compensated $2 an hour for their work, the employer would have a margin of $3. If the worker were to be paid $10 an hour for work which only produces $5 an hour, there would be a margin loss of $5.

This method of compensation allows the employer to make a positive margin, and in turn, remain in business. As a general rule, companies remaining in business, whether they be large corporations or small businesses, allow for general economic development. Jobs are created, it allows for more money flow into the economy, it provides a service and or product to the public, allows for workers to gain experience as well as attain some sort of skill set, and allows already employed workers to retain their job.

When this minimum wage is artificially raised by the government, however, the employer paying the wage to the worker would be required to pay the said worker a wage which exceeds the amount the worker produces for his employer. This, in turn, would cause a loss in margin for the company.

When companies experience a margin loss due to minimum wage hikes, there are two courses of action which will be taken to reduce, eliminate, and or compensate for the margin loss; general cutting of labor use, and or raising prices.

Most companies, especially small businesses, cannot afford to compensate the employee for work that does not produce an equal or greater amount of margin that the employee creates. For example, if an employee was to produce $10 in the span of an hour, and the government mandated that the employee be paid $15 an hour, it would be financially unsustainable to keep the employee employed due to the loss of $5 every hour of pay, thus eliminating the job from the market. This continues to happen on a much larger scale, causing common unemployment across the board for jobs that pay a low wage, and require minimum skills. Even our neighbors up north are experiencing such issues with bad economic policies. The Bank of Canada estimates a loss of 60,000 jobs by 2019 due to all the minimum wage increases taking place across the nation. These sorts of jobs will either pay what they do to low skilled workers for minimal production, provide experience, and some sort of skill learning – or these jobs will be simply lost, and cause furthermore unemployment. Although these businesses may have to lay off workers to remain in business, and or eliminate their margin loss, they must continue providing the service, and or product their company offers as the demand remains the same. Therefore; the company turns to automation as a cheaper alternative to now expensive labor. This can be seen through McDonald’s mass automation in replacing its cashiers with automated kiosks in all of its 14,000 stores within the United States as a result of artificial minimum wage raises. This technology overhaul has been prioritized in regions such as Seattle and New York, where the minimum wage is especially high. A 2016 study from the University of Washington on the minimum wage found that in 2015, when Seattle raised its minimum wage from $9.47 to $11 an hour, a 9% decrease in work hours occurred. Furthermore, only a 1% decrease in low wages occurred after this change in the minimum wage, said the 2016 study. Although some, however, very few jobs may be kept after raising the minimum wage, ultimately, a vast majority of employees will be laid off, and hours will be cut to compensate for the loss of margin created by the government’s artificial raising of the minimum wage.

When companies choose the option to raise prices to mediate margin loss, a negative repercussion takes place on both the consumer populace and the company. If prices on services, and or products were to inflate, it would result in fewer sales, loss of customers for the company, as well as the burden of inflated prices for services, and or products placed onto the consumer populace.

For many companies, mostly small businesses, immediate automation, labor cuts, and hiking of prices is not a viable option to consider when attempting to mediate margin loss. This is due to small businesses not having such large margins like corporations such as McDonald’s. Therefore; they would not be able to sacrifice labor without going out of business or raise prices without having their customers flow to a cheaper alternative, and in turn, once again, go out of business. The rules of economics can determine that consumers naturally flow to whatever product, and or service is relatively cheaper, and provides respectively good quality. This is why, if a small business were to raise its prices, its customers would proceed to gravitate to other companies which offer lower prices for the same product, and or service, and in turn, have the small business go out of business. Usually, these other companies which can offer lower prices would be large corporations. This is due to these large corporations having a large amount of margin to spare. The other option to mediate margin loss can also be taken into account; cutting of labor hours. Just as McDonald’s did with its 14,000 U.S. locations after minimum wage hikes, small businesses could also try cutting labor hours in an attempt to mediate margin loss. However, if this were to be done, the demand from the consumer side of the market would remain the same, regardless of labor cuts. Therefore something would have to be done to make up for the cut labor, and to maintain the production of the product, and or service the company provides. The problem with this, considering small businesses, is that they cannot afford to immediately automate their labor due to its dire cost. Therefore; the company must reach a point where it goes out of business due to the government mandated hike in wages. When these companies go out of business, more jobs are lost, resulting in common unemployment across the general field of low skilled jobs. Therefore; through this, we can fully determine that a hike in wages would indeed cause for the shutting down of small businesses, and the fueling of consumer pander to large corporations, which, in the end, results in more unemployment.

In all factual sense, with this, we can fully understand that artificial hikes in wages will cause common unemployment, labor cuts and automation, the bankruptcy of small businesses, inflation, and the general economic despair of the mass populace.

Many may now understand it would be an economically destructive, nonsensical policy to raise the minimum wage, but it’d make perfect sense morally – to quote Governor of California Jerry Brown.

“Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense because it binds the community together to make sure parents can take care of their kids.”  -Jerry Brown

Many may say it’d be immoral, and unfair for workers to be paid any sort of minimum wage as it’s not a viable amount of money to live on. In response, we must understand why the said individual is in all actuality only being paid minimum wage, and that reason is, that they are an individual with a minimal set of skills. The reason this individual did not attain a distinct skill set which can be applied to their careers is that they are an irresponsible, and immoral individual.

When seeking employment, and being offered a wage, the reason any individual would be offered any said wage is that it’s what can be afforded to pay the employee by the amount that the employee produces for their employer. Typically, tasks which require a higher skill set pay respectively more than tasks which require a minimal set of skills. This is inherently due to the fact that jobs which require higher skill sets simply produce more money for their employer than jobs which require a minimal set of skills. For example, if we were to take an attorney, and a garbage man into account, an attorney has gained many degrees, has had years of education, and has an in-depth understanding of the law; inherently a distinct skill set which not most of the population possesses, therefore it is placed in high regard. A garbage man, however, is a job which requires a minimum skill set, and simple motor skills which a vast majority of the population possesses. This job can be achieved by almost any individual of the age to work and requires no degrees or distinct education.

A high skill set will earn you a job which pays a sufficient living wage, and a minimal skill set would score you a job which requires minimum skills for a minimum wage.  Through this, we can understand that the reason anybody would make a low wage is that they do not have a distinct set of skills which they can apply to their career. In turn, we must reach the very same conclusion once again; Why did this individual not gain a distinct set of skills, and whose fault is it?

To gain a distinct set of skills, the individual must work on their own accord to be the best there is, and to be irreplaceable. Usually, gaining skills comes from experience, and or education.

In almost all scenarios, the individual, to gain a distinct set of skills, must attain remarkable grades in high school, take part in extracurriculars, develop a genuine passion, apply themselves to the fullest extent of effort possible, go to college, and through this, may the individual be able to attain a distinct set of skills to apply to their career. This is the ideal course of action for all adolescents to be able to succeed in life and avoid the depths of poverty. However, many stray from this path of success due to a lack of care for school work, genuine success, as well as a general lack of passion. Those who stray from this path, partake in substance use, possibly become addicted to alcohol, or other drugs, only aim for popularity, have no real goals, and truly have no passions, are those who are destined to fail. Not only is it their own fault for choosing this path, but it is also most definitely not the fault of the taxpayer, the government, or anybody else for these people’s failures. Through this, we can fully determine that it is a lack of social responsibility, as well as religious morals and values which causes financial failure, and the general plummet to poverty. If these individuals were genuinely able to maintain these simple qualities on their own accord, especially social responsibility, it would have been evidently simple to try in school, apply themselves, develop a passion, and be destined to prosper.

For example, we’ll take an attorney, and a garbage man into question once again. An attorney is an individual who is paid relatively well, most likely achieved good grades in high school, applied themselves and put effort into schooling, went to college, gained the proper degrees, and became a member of their state’s bar association to be certified as a practicing attorney. Said individual is one with a respectively high skill set; one with an in-depth understanding of the law, comprehensive debating tactics, and general intellect. This individual achieved said distinct skill set on their own accord by being the best, by trying, and by making good decisions. A garbage man, however, is an individual who is compensated with minimum wage. This individual most likely did not achieve relatively good grades in high school, did not apply themselves or put effort into their schooling, nor went to college, and has a job which can be completed by any individual with basic motor skills.

It is not the fault of the taxpayer, the government, the employer, nor the unions that one individual made bad choices, and did not acquire a proper skill set to be compensated with a livable wage. However, it is entirely the fault of that very individual for not taking it up on their own accord to better themselves, and to gain a distinct set of skills that they can apply to their careers.

Raising a child is a difficult, and financially draining task. It calls for feeding, housing, educating, raising, and caring for an entirely separate individual; all necessities which require money. In all scenarios where parents fall into poverty because of children, whether it be an unplanned pregnancy or not, it always is due to a lack of religious morals and values, and or social responsibility.

In cases where the pregnancy is planned, but the parents still fall into poverty, there is a lack of social responsibility. Unless you have no knowledge of your current financial state, which no real adult doesn’t, it is an evident truth that if the individual were to know they were financially incapable of supporting a child, yet still deliberately choose to have one, they are a socially irresponsible individual. This is due to the evident premise that they are deliberately choosing to take a path in life which they know would bring them to the depths of poverty.

In cases where two individuals have the child in an unplanned event, and proceed to fall into poverty because of it, it is both a case of a lack of religious morals and values, as well as social responsibility. If two individuals were to fall into poverty due to an unplanned pregnancy, it’d be due to being too financially unstable to raise a child. Usually, when the individual is too financially unstable to raise a child, they are most likely in their youth. This is due to not having enough distinct skills at the time of being a youth to be able to apply to their career, and gain a job which pays well. These skills develop over time with experience, and education. Since we can understand that they’d be in their youth, financially unstable, and lack a distinct set of skills to apply to a career, we can safely assume they are most definitely not married; yet, they still had children. Although we can determine that the child is what caused the poverty in the first place, we must determine the actual reason the child was even to be in existence. That reason being premarital sexual relations which lead to the procreation of children out of wedlock. If the two individuals who had conceived the child had been religious, or at the least adhered by religious beliefs, and principles in the moral sense, the entirety of this situation could have, and would have been avoided.

This rule of religious morality, values, and social responsibility also applies to all situations where a child is conceived out of wedlock, and the family falls into poverty because of it; teen pregnancies, accidental pregnancies, and even scenarios where a parent leaves the family, typically the father.

In cases where fathers leave the home for whatever reasons, the mother is then left to raise the child on her own. This, in turn, results in poverty due to the hardships of raising a child. Said hardships would be having to feed, house, raise, educate, and provide for an entirely separate individual; not only is it somewhat difficult with two parents in the home, but it is also astronomically challenging when you must raise the said child on a single person basis of income.

In these scenarios, the father either chooses to leave the family because he wants nothing to do with it, or he is incarcerated due to a crime he committed.  In cases where the father leaves the family due to his incarceration, he is usually being convicted of a crime which is deemed egregious enough to warrant imprisonment. Usually, crimes which warrant imprisonment are felonies, violent offenses, or some sort of act that embodies genuine evil. In cases where the father simply decides to leave out of disinterest in starting a family, or raising a child, he is deliberately making that choice, and abandoning his family. Both of these scenarios embody one specific thing in common; a lack of religious morals, values, as well as social responsibility. A socially responsible, and moral individual does not commit egregious crimes, nor would he unprecedentedly leave his family out of disinterest when fully knowing it would lead to an impoverished situation. Through this, we come to the conclusion to find that the factor of poverty is indeed a lack of the previously mentioned qualities; religious morals and values, as well as social responsibility.

Throughout all of these occurrences, single-motherhood, minimum wage, lack of skills, little to no effort, we must always reach the reasonable truth in which we understand that the true reason poverty is in existence is due to a lack of religious morals, and values, as well as social responsibility.

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