Darcy Calabria

CAS 138T
Lori Bedell
April 10th, 2015
Poverty in America
It is a widely held belief that the United States is a powerful nation, one of the most
powerful nations in the world. Throughout history, the U.S. has taken on the title of the Global
Police Force through decrees such as the Monroe Doctrine and Theodore Roosevelts Big Stick
policy. In addition, the United States holds a permanent seat on the United Nations Security
Council, further showing the extent of the United States power in the world.1 The power of the
United States comes from a number of places, one of which is its wealth and growing economy.
It is a widely known fact that the United States has been a leading economy in the world
for a number of years. Since 1872, the United States has had the largest economy in the world in
terms of net worth.2 As of December 2014, the United States has the second largest economy in
the world, only surpassed by that of China.3 While the U.S. economy is no longer the wealthiest
economy in the world, the net worth of the United States economy is estimated to be $17.4
trillion as of December 2014.4 Clearly, on the international level, the United States is a powerful
nation in economic terms. The money that fuels this economy is generated through the
production of multiple industries, trade, consumerism, etc. In 2013 the Gross Domestic Product
(GDP) of the U.S. was $16,768,100,000,000.00.5 The population of the United States in 2013
was estimated to be more than 316,000,000 people.6 Spread out per capita, the GDP of the
United States comes out to $53,001.7 Yet even though the American economy is extremely welloff in terms of GDP, that is still looking at the economy as a singular entity compared to other
nations. The real issue lies when looking at the United States and its economy as unit by itself,
going from the international level, to the internal, national level.

Looking at the United States and its economy as a singular unit amongst other nations,
the United States seems strong. However, upon looking within the U.S. economy, one will see
that there are many problems on the domestic level, the most prevalent being the gross problem
of poverty. Although the United States has made moves and tried to implement policies to partial
alleviate the situation, the United States government must implement a policy that successfully
raises the minimum wage, directly benefiting the people who are working lower waged jobs.

Poverty in America: The Problem

Within the United States economy, there is a vast income disparity. While the national
median income of 2013 came in to be about $53,046, the per capita income of all people in a 12
month cycle of 2013 came in to be about $28,155.8 While the median number of $53,046
describes the middle income of all people in the United States, the per capita number of $28,155
combines the income of all people in America, takes that total and finds what the average income
is per person in America. The vast difference in these two numbers illustrates clearly the income
disparity present in America. The disparity between these two numbers can be used as an
indicator of poverty in the country.
Although the chart below corresponds to figures in the 2012 U.S. census, a bell curve
distribution for information in the year 2013 would be similar to the following.
9

The chart states that based on the 2012 census, the average income in the United States
was between $15,000 and $20,000, while the median income was roughly $51,000.10 In a normal
bell curve, under optimal conditions, the mean and the median should be relatively the same.
This chart would show a centered bell curve, with 50 percent of the data (in this case, income) on
either side of the mean/median. It would also show the income bracket of 99.7 percent of the
people to be within three standard deviations on either side of the mean/median. The centered
mean/median would describe a society that has little income disparity. The fact that there is such
as large gap between the mean and the median depicted in the chart reflecting 2012 data, but also
in the figures from the 2013 data, show that there is a huge level of poverty in America. In fact,
according to the original data from the 2013 census it was estimated that 14.5 percent or 45
million people were living in poverty.11 However, after review of the numbers, it was calculated

and later released that more than 48 million people living in the United States were
impoverished.12 As mentioned previously, in 2013, the population of the United States was
estimated to be about 316,497,531.13 That updated number raises the percentage of poverty in
America by 0.9 percent, making it 15.4 percent.14 That means that more than fifteen percent of all
people living in America are living in poverty. Yet, what is even more shocking is that double
that number is still less than the percentage of children in the United States living in poverty.

Child Poverty in America

According to a report released by the United Nations International Childrens Emergency Fund
(UNICEF), 32.2 percent of all children living in the United States, nearly one third, are in
poverty15. Among 41 of the wealthiest countries included in this report, the United States ranked
36th.16 To determine child poverty among these nations, UNICEF determined that a child in a
household making less than 60 percent of that nations median income would be considered to be
in poverty.17 While that number does not directly correspond to how the U.S. measures poverty in
America, it can be used as a reliable indicator of low income households. Moreover, while
eighteen of the other nations in the report were able to decrease the level of child poverty in their
respective nations, the number of U.S. children in poverty has increased two percent since the
Great Recession of 2008.18 For the future workforce of America, this is disturbing news.
Although we are no longer in a recession and the economy is growing, it is not producing
jobs that will enable upward mobility for lower-income households. And for students, often
termed the future workforce of America, this is an issue. The concern lies with the correlation
between test results showing proficiency in math and reading and the income backgrounds those
students come from. A report released by the Southern Education Foundation found that of the 90

percent of students in America that go to public schools, about 50 percent of them qualify for
free or reduced priced lunches.19 The study uses the traits of a students financial situation needed
to qualify for free or reduced lunch as a measure to show income level. To clarify, in order to
qualify for free or reduced lunches, a student would come from a household that is either in
poverty, or lives just above the poverty line.20 By using the variable of whether or not a student is
eligible to receive a subsidized lunch, the study then determines whether or not a student comes
from a lower-income household.
Similar to the graph previously shown, there is a huge disparity between income levels on
the following graphs. The difference is that in these graphs, the disparity between these two
groups is not money, but math and reading proficiency among students.

21

The trend of disparity continues and its effects on the youth of America are shown in the
above graphs. As is indicated in the chart, the red and blue represent the percentage of children
from lower income household who meet the proficiency level at eighth grade in math and
reading respectively.22 The gray in both charts indicates the percent of children who do not
qualify for subsidized lunches (determined to not be from lower income households) who meet
the proficiency level at eighth grade.23 In every single category, the percent proficiency of
students from lower income households is less than half of students not from lower income
households. The fact that this line of disparity in education levels reflects the vast disparity of
income levels in America shows that the problem of poverty in America must be dealt with
because the future of America depends on its youth. With nearly one third of all children living in
lower income households and their proficiency in core courses suffering as a result, this problem
is one that needs to be addressed immediately. These children are the future of America, and the
future of America is suffering in their education as a result of their economic status.

The problem of poverty and child poverty in America is clear. While agencies like
UNICEF and the Southern Education Foundation determine poverty or lower income households
differently than the United States Census Bureau, their information is still useful in examining
the problem of poverty and child poverty in America. Yet, oftentimes, one wonders how the
United States determines who is in poverty and how it is done.

How to Define Poverty and the Poverty Line

Poverty is defined as the state of one who lacks a usual or socially acceptable amount of money
or material possessions.24 In America, that means not being able to afford the basic necessities
of life like food and shelter, let alone many of the gadgets and technology that people so often
take for granted. It raises questions like Will I have a place to stay? Can I afford to eat three
meals a day? and What happens if I become ill or injured and I cannot afford the medical
treatment? For people in poverty, these questions pose very real problems that must be dealt
with. In fact, out-of-pocket medical bills are responsible for putting about 11,000 people in
poverty.25
The poverty line is determined by comparing annual income to a set of dollar values.26
The dollar values are called poverty thresholds that vary based on factors such as the size of the
family, the number of dependents, and age.27 If a units income falls below a certain threshold
prior to taxes, then that unit and all of the people in it are determined to be in poverty.28 Thus, a
unit that contain a single person has a different poverty line than a family of four. The poverty
line also varies between metropolitan and rural areas because it costs more for things like food,
transportation, and living in major cities than it does in to rural areas.29 The national poverty line
in America is adjusted for these variable and for a family of four is currently set at $23,288.30

The problems relate directly to minimum wage. Oftentimes, people who are in poverty, if
they are employed, are working lower waged jobs. The federal minimum wage is currently set at
$7.25 an hour.31 Over the course of a year a person working 40 hours a week for a full 52 weeks
a year will make an annual income of $15,000, prior to the deduction of taxes. If that person is
the lone provider for a family of four, that $9,000 difference between his or her earning and the
current poverty level is equivalent to the cost of a years worth of food for that family of four.32
By raising the federal minimum wage, we can decrease the vast income disparity present in
America and thus decrease the level of poverty seen throughout the United States.

Current Suggestions to fix Minimum Wage

Currently, there are two plans being talked about to solve the issue of minimum wage. One is
considered radical by some, yet there is support behind it. The other is agreed upon by a greater
number of people across the spectrum, but is a greater compromise.

-The Living Wage

The Living Wage is so called because it is what is determined to be a reasonable wage at
which people can make a living and provide for themselves. The Living Wage plan suggests that
the minimum wage be raised to a livable wage of $15 an hour.33 This wage is determined to be
the average wage needed to make a living in America. It is determined to be an average because
as mentioned previously, the cost of living varies from state to state and region to region. Raising
the minimum wage to be a living wage would require that the United States federal government
to more than double the current federal minimum wage. Doing so would raise the annual income
of an employee working a minimum wage job from $15,000 a year to $31,200 a year, working a

40 hour work week for 52 weeks. This raise in wage would push workers over the poverty
threshold, thus reducing the percentage of impoverished people in America.
This approach may seem radical, but there is significant support behind it. A place that often sees
low wage jobs is the fast food industry. One fast food company in New York, the Shake Sack
pays their New York City workers a starting wage of $10 an hour.34 While this is not a the living
wage, it is a significant increase from the states $8.00 an hour law. Even so, with 52% of
Americas fast food workers earning less than the poverty line, this increase in wages is
beneficial.35 Another fast food company based out of Detroit goes further and actually pays their
employees a living wage of $15 an hour.36 This company is called Moo Cluck Moo. These
companies not only believe that paying their workers more is the right thing to do, but it will also
benefit the worker and the company. By increasing the pay of minimum wage workers to a living
wage, the belief is that the caliber of the work and the worker will increase significantly. Support
also comes from towns whose state has the highest minimum wage in the nation, Washington.37
By raising the minimum wage to a living wage, many of the concerns that are constant in the
lives of lower income household, many of whom are impoverished, are addressed and satisfied.

-The Grand Bargain

The other solution being talked about is called the Grand Bargain.38 This plan is a
compromise that is being worked on currently by Congress and is agreed upon by both
Democrats and Republicans more so than the previously discussed Living Wage.
This plan suggests that the federal minimum wage have an immediate increase of $1.25
to make the minimum wage $8.50 an hour.39 In addition, the minimum wage would then be
indexed to inflation and finally, Congress would increase the earned-income tax credits for low

waged workers.40 This increase in wages and income tax benefits would alleviate some of the
concerns that minimum wage workers face such as being able to pay for things like groceries and
bills. Even though the income tax benefit does not go directly to paying bills, the decrease in
money paid to taxes will increase the money that the worker has to pay for other expenses in life.
While the two plans have many benefits that come with raising the minimum wage, each
suggestion has its drawbacks. The Living Wage will be hard to pass through Congress because an
increase in minimum wage that more than doubles the current level will not have the votes it
needs to pass and become law. While the other plan, The Grand Bargain, may have the votes
needed to pass it, there are still major concerns regarding its policy. While a $1.25 increase in
minimum wage is beneficial, the annual income of $16,640 still leaves that person and his or her
family well below the poverty line. Even so, a major concern with both of these plans is the issue
of funding. More simply put, how does this affect the governments buddget? What is need is a
compromise of the two plans, what I call The 1% Plan.

The 1% Plan
The primary concern involved in raising the minimum wage to benefit those who are working
these lower waged jobs, many of whom are in poverty, is the issue of funding. My plan suggests
that it is possible to raise the minimum wage to a respectable level that is nearly above the
poverty line and will not have the federal government suffering a major financial crisis. This is
done through 1% and a compromise of the two plans.
I suggest that the two previous plans to fix minimum wage compromise on a realistic
wage increase of $10 an hour. By increasing the minimum wage to $10 an hour, a full-time
worker will have an annual income $20,800. While this number is still below the poverty line, it

is a significant increase from the current annual income, can be aided through other benefits, and
will alleviate many of the concerns that people in poverty are facing today.
Yet the concern still remains the issue of funding. Roughly 1.6 million people in United
States work for minimum wage.41 In order to raise the minimum wage to $10 an hour, I have
calculated that the government would need about $9 billion a year. This is possible, through the
use of the 1%. The 1% is a term that refers to the richest 1% in America. But my concern is not
with the 1%, it is with the top 1% of the 1%, more clearly, it with the top 0.01% of America. This
group of about 300,000 people makes an average of $5.7 to $7.5 million a year, and they pay on
average an income tax of 23%.42 $9 billion distributed amongst this small, elite group of people
comes out to be roughly $30,000 per person. That may seem like a lot, but if that number were to
be added to the low average of what this group currently pays in income tax ($5.7 million
multiplied by 23%), it would only be an increase of 0.52%.
The government would then need to pass a bill into law declaring that the minimum wage be
raised to $10 an hour. In addition, the bill would state that the money generated from the 1%
increase in earned income tax be allocated to companies so that they would be financially able to
raise their minimum wage.
If the government were to raise the income tax of this small group of people by less than
1%, the government would generate over $9 billion, more than enough to fund the $2.75 increase
in minimum wage to make the minimum wage $10 an hour. In doing so, the millions of people in
poverty who are working those lower waged jobs can ease their concerns about how they will
provide for themselves and their family.
This program will benefit the people working those lower waged jobs in more ways than
just monetarily. By increasing the minimum wage that these workers receive, it will also increase

the caliber of work and workers, as mentioned earlier.43 This benefit goes further in that it also
increases the sense of security that this job will actual provide for the worker, thus improving the
performance, efficiency, and customer service of the worker. This chain reaction will also benefit
the company overall because it will produce an increase in profit. Along with this, that increased
sense of security from the worker will enable him or her to spend more directly as a consumer
and save more in banks, both of which will stimulate the economy overall.
I realize that this solution is not a fix for the issue of poverty as a whole, but it is a
significant step forward in solving the problem. It also holds fast to the value of the American
Dream in that the benefit of this program come from earning what they are making through
labor, as it is not a hand-out.

Concluding Remarks
Raising the minimum wage can give people a chance at a better life. It can enable people to
make an actual living and do more than exist. It can be enough to take a family in poverty and
raise them above that line and let them see beyond the worries and doubts they experience now.
The minimum wage should be raised using The 1% Plan so that people in poverty can do more
than just survive. In raising the minimum wage, the 48 million people in poverty can put to rest
the burning questions and concerns that many of them face on a daily basis like Will I have a
place to live? and Where will my next meal come from?

Poverty has a name, a face, and a story, it doesnt have too.

1 United Nations, United Nations Security Council, http://www.un.org/en/sc/members/ (Mar. 30 2015). United
Nations, Charter of the United Nations, http://www.un.org/en/documents/charter/chapter5.shtml (Mar. 30 2015).
2 Ben Carter, Is Chinas economy really the largest in the world?, http://www.bbc.com/news/magazine30483762 (Mar. 30 2015).
3 Ibid.
4 Ibid.
5 The World Bank Group, GDP (current US$), http://data.worldbank.org/indicator/NY.GDP.MKTP.CD (Mar. 30
2015).
6 United States Census Bureau, USA QuickFacts, http://quickfacts.census.gov/qfd/states/00000.html (Mar. 30
2015).
7 http://www.bbc.com/news/magazine-30483762.
8 http://quickfacts.census.gov/qfd/states/00000.html.
9 United States Census Bureau, as quoted in Wikipedia, Household income in the United States,
http://en.wikipedia.org/wiki/Household_income_in_the_United_States (Mar. 30 2015).
10 Ibid.
11 Mark Gongloff, 45 Million Americans Still Stuck Below Poverty Line: Census, The Huffington Post, Sept.
16, 2014 (http://www.huffingtonpost.com/2014/09/16/poverty-household-income_n_5828974.html).
12 Patrick Gillespie, Over 48 million Americans live in poverty, CNN Money, Oct. 16, 2014
(http://money.cnn.com/2014/10/16/news/economy/48-million-americans-poverty-census-bureau/).
13 http://quickfacts.census.gov/qfd/states/00000.html.
14 Ibid.
15 Christopher Ingraham, Child poverty in the U.S. is among the worst in the developed world, The
Washington Post, Oct. 29, 2014 (http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/29/child-povertyin-the-u-s-is-a).
16 Ibid.
17 Ibid.
18 Ibid.

19 Tami Luhby, The growing poverty problem in Americas schools, CNN Money, Jan. 29, 2015
(http://money.cnn.com/2015/01/29/news/economy/poverty-schools/).
20 Ibid.
21 Ibid.
22 Ibid.
23 Ibid.
24 Oxford English Dictionary, Poverty, http://www.oed.com.ezaccess.libraries.psu.edu/view/Entry/149126?
redirectedFrom=poverty#eid (Feb. 9 2014).
25 CNN Money, Oct. 16, 2014.
26 United States Census Bureau, People of all ages in poverty,
http://quickfacts.census.gov/qfd/meta/long_PVY020213.htm (Apr. 4, 2015).
27 Ibid.
28 Ibid.
29 U.S. Department of Commerce, United States Census Bureau, The Supplemental Poverty Measure: 2013,
Oct. 2014, 2.
30 United States Bureau of the Census, Weighted Average Poverty Thresholds for Families of Specified Size:
1959 to 2013 (http://www.census.gov/hhes/www/poverty/data/historical/hstpov1.xls).
31 United States Department of Labor, Wage and Hour Division (WHD) : Minimum Wage,
http://www.dol.gov/whd/minimumwage.htm (Apr. 5, 2015).
32 United States Department of Agriculture, Official USDA Food Plans: Cost of Food at Home at Four Levels,
U.S. Average, February 2015 (http://www.cnpp.usda.gov/sites/default/files/CostofFoodFeb2015.pdf).
33 Kim Glittleson, Shake Shack is shaking up wages for US fast-food workers, BBC, Jan. 30, 2015
(http://www.bbc.com/news/business-31047840) Feb. 9, 2015.
34 Ibid.
35 Ibid.
36 Ibid.

37 Kirk Johnson and Steven Greenhouse, In Washington State, Home of the Highest Minimum Wage, a City
Aims Higher, The New York Times, Oct. 13, 2013 (http://www.nytimes.com/2013/10/14/us/in-washington-statehome-of-highest-minimum-wage-a-city-aims-higher.html?pagewanted=all&_r=3) Feb. 9, 2015.
38 Charles Lane, It shouldnt take an act of Congress to raise the minimum wage, The Washington Post, Nov.
5, 2014 (http://www.washingtonpost.com/opinions/charles-lane-it-shouldnt-take-an-act-of-congress-to-raise-theminimum-wage/2014/11/05/04cacfa2-6514-11e4-9fdc-d43b053ecb4d_story.html) Feb. 9, 2015.
39 Ibid.
40 Ibid.
41 Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey,
http://www.bls.gov/cps/minwage2012.htm (Apr. 7, 2015)
42 Alan Dunn, Average America vs the One Percent,
http://www.forbes.com/sites/moneywisewomen/2012/03/21/average-america-vs-the-one-percent/2/ (Mar. 24,
2015)
43 BBC, Jan. 30, 2015.