Mankind has struggled with poverty ever since societies evolved to the point where some members had more than others. We want to know why some have so much while others have so little. Is it right or wrong that this condition is common in many places and exists, to some extent, virtually everywhere? What can be done about it?
Poverty is common in underdeveloped nations that lack the factors of production such as land, labor, capital and entrepreneurship. It also occurs in industrialized nations according to the Encyclopedia Britannica. In industrialized nations, the rate of poverty is often most influenced by the business cycle, with amounts of business investment and production rising and falling regularly over time based on the rate of inflation. Though industrialized nations like the United States and Great Britain have tremendous total economic output, critics contend that economic inequality, where many people continue to live in poverty despite a growing overall economy, is increasing per the Global Post.
Increasing economic inequality, where the gap between rich and poor is growing, can be caused by many factors. We must ask what diverts income predominantly into the hands of the wealthy, exacerbating the existing income and wealth gaps. First, consider the effects of education and socialization:
Many high-paying jobs can only be attained after completing a high level of formal education, such as a college degree. Lawyers, doctors, and professors, for example, must attain advanced degrees beyond a 4-year bachelor’s degree. Such education is expensive, even with scholarships and government assistance, and is often out-of-reach for people who grew up in poverty. As such, the requirement of attaining expensive formal education to land a lucrative job is a de facto barrier for most people in poverty from landing such jobs.
Additionally, the skills and support needed to excel in secondary education and advance to post-secondary study (college or university) are more likely found among the wealthy than among the poor. Many students from poor families may lack the necessary support to be able to devote time and resources to studying. They may have to work part-time jobs after school, preventing them from completing homework or preparing for tests. Their parents, having also grown up in poverty, may lack the academic ability to help them in school. As a result, growing up in poverty means one is less likely to develop the skills to excel at school, putting one at a disadvantage in competing for scholarships or admission spots at selective universities.
High-paying jobs also often go to people who know how to socially interact well with those who are wealthy, which means that the wealthy often hire those who are from the same or similar socioeconomic groups. A rich lawyer who owns a law firm will most likely hire young lawyers who have upbringings, and therefore outlooks and mannerisms, similar to his own. This means that wealthy employers predominantly employ the offspring of their wealthy peers, preventing people from “lower” socioeconomic classes from gaining access to these high-paying jobs. This social aspect of hiring explains why poor people have a hard time breaking free from poverty: Employers who can offer high-paying jobs are more culturally comfortable hiring people who were raised in more comfortable circumstances.
Finally, success can often depend on who you know. Wealthy people know other wealthy people and can land contracts, such as business and employment contracts, from social relationships. Rich kids are more likely than poor kids to land good jobs because their parents, friends, or relatives knew a person who was hiring. A poor kid is unlikely to know anyone who knows a person who has direct authority to hire a person to a lucrative job offering salary and benefits. A rich kid may get his or her start working at a family business or a business owned by a family friend. Since poor people are less likely to own their own businesses, they cannot give their children a “leg up” on the job market by providing built-in work experience or helping develop business contacts. Wealthy people typically have a distinct advantage in building desirable job experience and networking connections.
Poverty is often entrenched and self-sustaining because it is difficult to develop the formal academic and informal social skills and mannerisms needed to land a high-paying job. Poor kids, despite their best efforts, are likely to have lower grades, not complete their formal education, or have manners and customs different than those preferred by select employers. Wealthy people continue to land the vast majority of “good” jobs because they know that lifestyle.