Ending Poverty Starts With Increasing Work And Paychecks, Not Government Budgets

The issue of poverty is a perpetual crisis that requires effective solutions. However, before lawmakers can find a solution, they must understand that poverty is not just a problem of financial scarcity but the lack of economic freedom.

A comprehensive, multi-year study revealed that 26 percent of Pennsylvanians with low incomes who live below 200 percent of the poverty line agreed that poverty exists in the absence of economic freedom. This is not just a problem of one state; it is a national problem that requires a nationwide solution.

According to Ryan, one of the survey respondents who is currently unemployed, a good-paying job with his experience is the way out of poverty. Unfortunately, finding such a job is always the problem.

For the past six decades, federal and state governments have spent trillions of dollars trying to eradicate poverty through monetary means. However, this has not solved the problem, unlike the belief that money alone could solve poverty.

On the other hand, to lift people out of poverty and improve their living standards, lawmakers should focus on creating an environment that promotes an increase in the size and reach of paychecks.

The survey showed that those earning below the poverty line regarded debt (46 percent) or taxes (29 percent) as the biggest obstacles to attaining economic stability. Also, the Commonwealth Foundation, which carried out the survey, found that the average respondent pays around $5,000 in taxes each year, which represents around 14 percent of their gross household income.

Therefore, reducing poverty levels requires expanding opportunities for people like Ethan and Ryan to escape economic distress by affecting policies that increase household incomes. Directly adding more commas to state budgets does not solve the problem. In Pennsylvania, poverty rates continued to increase despite a 51 percent surge in state budgets since 2016, with a 10% increase in the last year alone.

Reducing government spending could significantly reduce poverty rates as observed in a study conducted in February 2023, which established a direct link between poverty rates and government expenditure levels. For instance, achieving a one-point increase in Pennsylvania’s economic freedom would decrease the number of people in poverty by 176,970, and household income would increase by $2,338.

Furthermore, it is essential to break myths surrounding poverty, especially the misconception that the unemployed alone experience poverty. In Pennsylvania, over 60 percent of low-income earners work or actively seek work, with over 30 percent working full-time.

According to the Bureau of Labor Statistics, 6.3 million Americans commonly referred to as the “working poor” worked a minimum of 27 hours weekly but remained below the poverty line. A 2015 study also revealed that 63 percent of Americans living in poverty and eligible to work already have jobs.

Poverty exists both in the urban and rural areas with higher rates observed in rural locations across all races and ethnicities nationwide. Lawmakers can help ease inflation and taxation, which are both known to be linked to unsustainable government spending, by decreasing obstacles that hinder low-income residents’ access to better living standards.

State governments could also offer state-earned income tax credits and prevent the imposition of unnecessary regulations on home-based businesses and the gig economy to increase household incomes for people living in poverty.

If policymakers fail to take action, people will exodus to states like Florida and North Carolina with higher economic freedom for greener pastures, leading to increased poverty levels. Over 250,000 people have left Pennsylvania in the past decade, with many opting for states ranking second and 14th on the economic freedom index, respectively.

Government interference in private welfare is expensive and ineffective. Promoting economic freedom by reducing government spending and offering opportunities through job creation, education, and unfettered business regulations is the key to alleviate poverty in America.

Note: The names of survey respondents have been changed for privacy.

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