Mother Jones, a US magazine, has an article about life in America at $195 a week. This is the income earned by a staff member at Wal-Mart $10.50 an hour:
Edick’s monthly take-home pay—about $800 at the time I visited—doesn’t go far either. She lives in a tiny apartment with a broken stove and mostly empty fridge that barely works. Rent and utilities run about $450 a month; when it’s cold outside, she often sets the thermostat to 50 degrees to lower her bill. Gas and car insurance cost another $160 or so, depending on prices at the pump. And then there are the doctor visits, covered only after a $1,000 deductible—plus medicines for a thyroid problem, chronic anxiety, and osteoporosis.
To balance the budget, Edick often skimps on food, some weeks spending little more than $10 on groceries, about one-quarter what the federal food stamp program calculates is needed for three “thrifty meals” a day. She patronizes the grimy discount stores whose prices run even lower than Wal-Mart’s, and can tick off their notable sales going back for months.
Poverty can occur in any country, any society, and it one of the great tragedies of America that it is so wide spread there. Edick is not the lowest paid American, the US Bureau of Labour Statistics produces a report on the lowest pad workers in America, the top five by occupation are:
2,602,950 food preparation and serving workers paid $8.03 an hour
575,510 fast food cooks paid $8.11 an hour
509,550 dishwashers paid 8.20
541,370 counter attendants, cafeteria and coffee shop workers at $8.57 an hour
401,070 Dining room and cafeteria attendants and bartender helpers $8.36 an hour
Source: Employment and wages for the 10 lowest paying occupation in the United States, May 2007
Poverty is a largely hidden tragedy in societies. It is largely addressable by governments and this is why it is a affliction that American could have cured. This is a society that has just spent $800b on conducted a completely unnecessary war in Iraq (and more on a largely unnecessary war in Afghanistan).
What should a country like America do? There are number of policies that would improve income distribution without much impact on the economy as a whole:
- universal health care provided regardless of ability to pay
- a progressive tax system include negative taxes for low income earners (ie a payment to low income earners)
- a higher minimum wage (there is lots of debate in the economics field on the effect on minimum wages. A simple model of markets would suggest that raising the minimum wage will create unemployment, however the empirical evidence is quite mixed and there a strong arguments why it would not impact greatly on employment)
That wouldn’t solve poverty, but would go a long way.
